Ranch economics: UNL Extension educator shares profitable cattle management strategies

The University of Nebraska-Lincoln (UNL) BeefWatch podcast on June 22 featured UNL Extension Educator Alfredo DiCostanzo discussing the article he wrote titled, “Coping with Effects of High Feed Prices and Possible Drought in 2022.” 

DiCostanzo explains how producers can maintain cows and breakeven or be profitable while dealing with high input costs and drought. He notes the importance of producers always having a management plan for their operation.

“If nothing else, this article helps readers be aware of potential scenarios developing,” he says. “At the end of the day, if we have a reasonable idea of cow costs, and performance is something we are proud of, it’s very likely it will be a profit or breakeven scenario.”

Considerations

DiCostanzo mentions producers should take into consideration their input costs and the predicted profit of their operation each year. He notes this is especially important with increasing feed costs.

“The first thing I think should come to everyone’s mind is to recognize annual cow costs at operations,” he says.

He notes it will be more expensive to maintain a cow in some states than others due to the varying price of pasture. In the article, DiCostanzo uses $1,000 as an average annual cow cost for producers in Nebraska to simulate various production scenarios.

The next consideration is to determine the annual weaning weight in the particular state the operation is located in, says DiCostanzo.

“This number is a bit illusive in the nation, but assuming a couple of scenarios which would reflect a 12.5 percent difference between the high and low number, I chose 500 pounds on the low end and 565 pounds on the high end,” he says. “Similarly, I looked at a 90 percent weaning rate versus 80 percent.”

He notes producers can use these numbers to help determine what they will need to produce to breakeven or be profitable in their operation. In order to determine the actual breakeven price, the effective weaning weight is needed. 

Calculations

Performance scenarios were developed to assist producers with understanding how to stay profitable while battling high input costs and drought. In these scenarios, DiCostanzo used weaning weight and weaning rate to determine an effective weaning weight.

Weaning rate is the number of calves weaned from the total number of cows exposed and effective weaning weight is the total pounds of calf weaned divided by total cows exposed.

“To go through the calculation, we divide the annual cow cost by the multiplication between actual weaning weight multiplied by weaning rate, and that gives us an effective weaning weight,” he says.

For example, at 565 pounds of weaning weight, take 90 percent of that, and the effective weaning weight would come back to 508 pounds, he says. At 500 pounds, multiplied by 90 percent, it would be 450 pounds. 

“So, when producers divide $1,000 by the effective weaning weight, in each scenario it will give us somewhere in the range of $1.77 to $2.20 a pound for feeder calf required to breakeven, so then what producers would need to do is recognize what feeder prices would be in the fall,” he says. “Considering what we are seeing today, we expect the price will remain somewhere in the range of $1.80 to $1.90 per pound for fall sales.” 

DiCostanzo says, with this information in mind, producers can determine the scenario with the weaning rate of 90 percent and weaning weight of 565 pounds would be best for the producer. 

“Anything less on performance or more in annual cow cost will force the breakeven price to increase,” he says.

Performance
and creep feeding

DiCostanzo notes it’s crucial for producers to maintain cow performance year after year.

“If producers have good performance and reasonable annual cow costs, they have to make sure in 2022 they retain the reasonable performance,” he says. 

He mentions some producers may want to creep feed to maintain performance, but this is not always a necessary step, depending on the operation.

“Consider any potential for creep grazing or creep feeding, and this depends on what part of the state we are talking about for those scenarios,” he says.

DiCostanzo mentions producers need to consider if creep feed will make a positive contribution to their operation or not.

“If we look at feed prices, they are expensive, but we recognize, too, that feeder prices are also coming up. 

He encourages producers to make a plan and reach out for help before creep feeding. 

“We have expertise in our beef team to help producers interested in formulating low cost creep feeding options,” he says. “Start talking to local feed dealers or to beef educators to think of formulating low cost creep diets which can be added to the summer management or late summer management of these calves to create more weight, even if it’s towards the end of their weaning period.”

“I wouldn’t get too excited about creep feeding right away, but perhaps sometime past August when quality of grass begins to fade, particularly in cool-season grasses, and the coolness of the fall brings on better gains for calves,” he adds.

Kaitlyn Root is an editor for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.