Extension Education: Preconditioning: What’s it Worth?Extension Education:

Fall run is just around the corner. Many producers may be considering preconditioning their calves and wondering what preconditioning is worth. Most pharmaceutical companies and livestock auctions, including video auctions, have specific value-added protocols or preconditioning programs posted on their websites. 

Preconditioning offers many benefits, including reduced stress and reduced sickness, along with improved weight gain in calves, but the economics behind it are sometimes overlooked.

What is the added value, and what are the increased costs associated with preconditioning? 

A scan through the literature indicates weaning calves approximately 30 days prior to shipping would increase their value by roughly $4.50 per hundredweight (cwt). If the cattle meet the criteria for additional value-added programs, the premium can be greater. 

Additional costs associated with preconditioning include, but are not limited to, additional feed, labor, machinery and equipment and potential veterinary costs. 

To evaluate the question, let’s consider two scenarios.

Scenario one

Wean calves directly off of the cow and ship them. 

The combined average weight of steers and heifers is 550 pounds and their current market value is $290 per cwt. The total gross revenue in this scenario is $290*5.50 = $1,595 per head. 

Scenario two

Wean calves but keep them on the ranch for a 30-day preconditioning period. 

The calves will receive free choice hay and two pounds of a distillersʼ grain-based cube and gain approximately 50 pounds extra apiece. 

A $16 per cwt slide will be applied to the sale price of cattle given the additional weight gain over the 30-day period. Their sale price is $282 per cwt – calculated as $290 – ((50/100) * $16) = $282 per cwt. 

For the added value of preconditioning, add $4.50 per cwt to the sale price. So, the actual sale price is $282+$4.50=$286.50 per cwt. The total gross revenue in this scenario is $286.50 per cwt * 6.00 cwt = $1,719 per head. 

But what about additional costs associated with the preconditioning time period?

The following costs are estimated based on current feed prices from the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service and a local co-op in Wyoming. 

Hay costs $127.50 per ton and the distillersʼ-based cube costs $345 per ton, so feed cost would be roughly $32.34 per head, not including trucking costs. 

According to the Bureau of Labor Statistics, farm labor cost is approximately $17 per hour in Wyoming. Assuming one hour each day to feed and check water and one minute to vaccinate each calf, total labor costs for this scenario would be $5.66 per head. 

Vaccine prices vary depending on the value-added program and the pharmaceutical company, but let’s assume vaccine cost is $10.72 per head. 

According to the USDA report in May, pasture for yearlings is roughly one dollar per head day, so total pasture cost can be estimated at $30 per head. Equipment costs can be estimated at $7.50 per head. 

Finally, we’ll charge seven percent interest on the value of the cattle in scenario one against the value of the cattle in scenario two to account for the opportunity cost of not being paid 30 days prior. 

Total interest cost is $8.98 per head for the cattle in scenario two. 

Summing up the costs of feed, labor, vaccine, pasture, equipment and interest results in a total preconditioning cost of $96.38 per head. Assuming zero death loss, the advantage of preconditioning the calves in this example is ($1,719-$96.38)-$1,595)=$27.62 per head compared to selling immediately after weaning. 

If the cattle were eligible for additional value-added programs, the economic advantage may be greater. 

In this example, preconditioning has an economic advantage in addition to improving cattle health and performance attributes. The economics and available resources are ranch specific, so evaluating the revenues and costs of each potential option should be tailored accordingly. 

However, this scenario offers a framework and examples of factors to consider when evaluating preconditioning programs. 

Rob Ziegler is the University of Wyoming Extension livestock production and marketing specialist and can be reached at rziegle3@uwyo.edu.