Adding Value for Oklahoma Cow-Calf Operators

1. Adding Value for Oklahoma Cow-Calf Operators Kellie Curry Raper Livestock Extension Specialist CentraIn-Service November 14, 2012

2. Sources of Revenue for Cow-Calf Operations • Commercial Product • Calves • Salvage Value of Assets • Cull Cows

3. Marketing Calves: Why OQBN? • Moving calves off the ranch means increased stress and illness • Impacts of preconditioning • Feedlot and Carcass performance increase • Medication Costs decrease • OQBN Preconditioning Protocol • 45 days minimum weaning; respiratory vaccinations; other standards • Third party certified Vac-45 program • Increase producers’ access to value added marketing opportunities • Encourage adoption of best management practices • Asymmetric information • Value in knowledge

4. Data • Collected at 16 sales from 7 locations in Fall 2010. • Records on 2973 lots/ 25,839 cattle. • OQBN Cattle • 833 lots (28.02%) • 7,287 head (28.20%) • Reported characteristics of each lot. • Physical characteristics • Management characteristics

5. Lot Size Impact 29hd95 %ile 16 hd 90 %ile

6. Price Slide – 2010

7. Hide Color Discounts ($/cwt) – 2010 Black Brahman Influence $-3.48/cwt

8. Value of Subjective Traits 2010 • Flesh • Thin lots $9.26/cwt • Muscling • Mixed #2&3 -$10.11/cwt • All #3 -$20.07/cwt • Fill, Age & Source, and Reputation • No statistical difference

9. Gender Discounts 2010

10. The Big Picture: OQBN Premiums at OQBN Calf Sales, Fall 2009-Fall 2011 45 Day Weaning Vaccinations

11. OQBN History

12. OQBN – Fall 2012 • Drought impact – Still down in numbers • One sale under our belt (172 calves) • Lightweights (<500) sold very well ($16 to $32 premiums) • Midweights (500-700) brought “standard” premiums of $6 to $7 • Not much over 700 to compare to…. • OQBN calves sold higher or very close to non-certified preconditioned calves • Weighted average prices – NOT adjusted for any quality or breed differences

13. Does the premium tell the whole story? • Cost (feed, vaccines, handling) • Increased revenue doesn’t come without costs! • Value of added weight gain • Value of preconditioning “health benefits” • Budgeting tool available at • www.agecon.okstate.edu/faculty/publications/3943.xlsx

14. Maximizing Salvage Value of Cull Cows • Cull cows represent 15-30% of a cow-calf herd’s revenue • Determine if retaining and managing cull cows on native pasture or low-cost drylotsystems is more profitable than selling in October at the time of culling • Does body condition score matter? • Is selling culls as bred cows a profitable alternative? Acknowledgements: Zakou Amadou, Clem Ward, Billy Cook (Noble), Jon Biermacher (Noble), Devlon Ford (Noble)

15. Opportunity lies in the Seasonality… Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

16. Does BCS Matter? Strohbehn and Sellers (2002) reported feeding sound and healthy cull cows with thin to moderate BCS led to overall profitability of cull cows Peel and Doye (2004) indicated positive relationship between BCS , marketing classification and estimated dressing percentage Apple (1999) and Cater (2007) showed that ending BCS and the value of cow carcass are related BCS is a useful tool for making culling decision, but most previous research focused on the impact of ending BCS on carcass value

17. Cull Cow Retention Management Systems • Drylot System • Start feeding rye hay with 10% crude protein in mid-October • Start feeding 25% crude protein cubes at ~ 5 lbs/day/head in December • Native Pasture System • Stockpiled native grass pasture (350 acres) • Hay and cubes only during icy periods

18. Data and Methods • Culled cows randomly assigned to either native pasture or drylot systems: • 48 cows in 2007/08, 43cows in 2008/09, and 71 cows in 2009/10 • NF Cows; Black hided Angus; four years of age in 2007 • Data collected in October, November, December, January, February, and March • Weight • USDA grade and dressing percentage • Each grading period: • Calculate/simulate net return (revenue – costs) over revenue if sold at culling • Revenue (AMS price by grade and DP times cow weight) • Accumulated costs (feed, hay, labor, pasture, interest)

19. Beginning Body Condition Score Three categories for Beginning BCS • Thin: BBCS<4.5 • Medium: 4.5 <=BBCS<=6.0 • Heavy: BBCS > 6.0 Determine influence of beginning BCS on net returns by management system

20. Summary Statistics

21. Drylot System: Change in Net Revenue from Culling to Marketing Period

22. Native Grass System: Change in Net Revenue from Culling to Marketing Period

23. Feed Cost for Pasture versus Drylot Management Systems

24. Preferred System and Feeding Length • Get rid of your big ones… • Heavy, higher BCS cows were not profitable in either system • Find an inexpensive way to feed the rest • Little difference in returns between thin and medium • Native Grass system more profitable than low-cost drylot system in every case • Retaining on native grass from 90 to 150 days resulted in highest returns

25. Yet Another Option…. • Marketing culls as bred cows • Retain cows beyond culling • Potential to breed back at least some of them • Market as bred • Potential replacements for fall calving herds or year-round herds • Bull has to eat regardless of where you keep him…

26. Bred vs. Slaughter, Native Grass System

27. Bred vs. Slaughter, Drylot System

28. Limitations • Three years of data on young, well managed cattle (4 to 7 years age). • Small sample size each year (~50 cows). • We only compared two systems. • Level of variation in body condition of animals • Producer resources are key!

29. Questions?

30. Results