RANCHING Business
Generally, the market pays more
for gain on lighter cattle because they present more management challenges, thus increasing the risk.
factor in success is getting the right type of cattle for the right price,” he says. Producers who are considering buying stocker cattle
should look at market reports and fi gure the incremen- tal value of gain between weight classes to determine whether it makes sense to “put the weight on” or “pay for the weight” up front, he says. For instance, if the market is paying $0.70 per pound
for the 100 pounds of gain from a 400-pound calf to a 500-pound calf, but it takes $0.80 per pound to put on the weight, then an operator should purchase the weight instead of growing it on. The reverse holds true. If the market is paying
$2.25 per pound for that 100 pounds between 400- and 500-pound calves, and the cost of gain is $1.00 per pound, then it makes sense to buy lighter cattle and put the weight on. “In general, the market pays more for gain on lighter
cattle because they present more management chal- lenges, thus increasing the risk,” he says. “It takes a special skill set to be successful with light cattle and the market recognizes it.”
Additionally, the cattle should be in thin- to moder-
ate-fl esh condition because the potential profi t lies in their effi cient weight gain and they should be “fresh,” he says. “Physically stressed or stale cattle put the producer behind the 8-ball from the very beginning,” he says.
Second biggest expense — cost of feed The second biggest expense is the feed cost; whether
it’s a grain ration or pasturage. Pasture usually provides a producer with the cheapest cost of gain. If supplemental feed is needed, buying in bulk is
typically the most economical. Bulk storage and bulk feeding equipment usually require additional invest- ment. The feed volume purchased in a given year is a
factor in determining if additional investment in bulk handling facilities is economical. “Producers can make a big difference in their bottom
lines by keeping the purchase prices for cattle and feed in line,” he says. “Interestingly, though, the other way to make a really big difference in the bottom line comes from doing a lot of small things right — every day.”
The small costs The small things begin at the time of purchase and
include transporting the cattle soon after purchase in clean trailers with ample room; avoiding transporting cattle during temperature extremes; ensuring that pens, chutes and other infrastructure facilitate low- stress handling; training and instructing personnel to use low-stress handling techniques; and provid- ing a high-quality ration, clean water, wind breaks and shade. “Stress is a hidden expense,” he says. “Stressed cattle
get sick. Sick cattle gain poorly and run up medical costs or they can even die. Increased mortality and morbidity will wreak havoc on profi t.” Childs continued, “The goal, as a stocker operator,
is to keep the calves as comfortable as possible so they stay healthy and gaining. A producer works every day to make this happen.” Producers tend to overlook what a big impact a
Risk management tools are as important as ear tags and good nutrition.
52 The Cattleman May 2015
thecattlemanmagazine.com
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