Friday, March 9, 2012

Cattle Economic Forecasting - Some Prescient Words from the Noble Foundation

J.West's Stella and her Tom Sawyer sired Heifer


The following is a full reprint of a Noble Foundation article published in September of 2008.  It certainly is pertinent to today's cattle business environment, I'd say even more so today than in the fall of 2008 -- and without a doubt the livestock industry is " . . . about as interesting as most of us can stand."  Cattlemen following the advice of Mr. Wells back in 2008, would have weathered the past year and more of Texas drought with less hardship to their bank account and their cattle herd.




Interesting Times for Cattle Economics (Sept. 2008)

by Robert Wells

"There is an old Chinese curse that says, "May you live in interesting times." The current era in the livestock industry is about as interesting as most of us can stand. I believe we are in the midst of a paradigm shift. The cattle industry of tomorrow will almost certainly look different than it has in recent years. During 2008, many ranchers did not apply the same amount of fertilizer as they have in the past. Thus, in combination with low rainfall, forage quality and quantity this fall and winter may be lower than in the past. The price of feed has increased by 20-25 percent compared to fall 2007; therefore, feeding the current herd size though the winter may not be economically justifiable.
So what can a rancher do to stay economically viable given the high input costs? Ranchers need to look at several aspects of their cow herd: mature cow size, milking ability of the cow and stocking rate.

Mature Cow Size:
There have been many articles written to advise ranchers that they may need to moderate the mature size of their cow herd. We should always match the cow with the environment and the bull with the market. If you are in western Oklahoma or the Texas Panhandle, the optimum cow for your operation will typically be smaller than a cow on a ranch in the southeastern U.S. If your stocking rate (without fertilizer) is in the double digits of acres per animal unit, you might consider using a moderate-framed (smaller) cow (i.e., less than 1,000-1,100 pounds). Using a calving-ease, terminal-cross, and performance breed bull could yield calves that will be 50-60 percent of the cow's weight at weaning.
J.West's MsRae and her El Presidente Heifer Calf


Milking Ability of the Cow:
If you have a moderate-framed cow, but she is a heavy milker, then her requirements are higher than those of a low or moderate milking cow. Granted, a heavier milking cow may wean a heavier calf, but if you have to supplement that cow to a greater extent for her to recover flesh before the next calving season, are you really making more money? A heavier milking cow has a higher maintenance requirement even when she is not lactating. Thus, she requires more forage and feed to maintain her body condition score.

Stocking Rate:
Stocking rates will have to be adjusted if you have changed fertilizer rates from previous years. This reduction should take place in September before the flood of open and old cows goes to market in the fall. October and November are typically some of the lowest priced months to sell a cow. With the high cost of feed, it will be difficult to economically support feeding all the cows if the herd is at a maximum stocking rate. Many producers will get to the first frost and then realize that they will be short on pasture and hay this year. We need to get out of the mindset that a particular ranch needs to have a specific number of head to support itself. If your current number of head requires a lot of inputs, the ranch may be more economical at a lower number of cattle with fewer inputs.
As input costs continue to increase, we may need to look back to our grandparents' era to see how cattle were raised before we had easy access to fuel, feed and fertilizer. With every change in the industry, new opportunities abound. Those who dare to venture out of their comfort zone are those who will stay in the business for years to come.
 By becoming more efficient today, you will have a better chance of weathering the storm."

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