5 May 2012

4 minute read

“It’s pretty tough margins at most feed yards,” said Dale Moore, owner and manager of Cattleman’s Choice Feedyard. But they all maintain strategies for profit, so before taking a step toward doing business with any feedlot, he suggested, “ask them to share their closeouts.”

Speaking at a recent field day in Chickasha, Oklahoma, Mr Moore reminded cattlemen that whether they retain ownership of cattle on feed or simply supply feeder cattle, everything comes back to the bottom line: “The feed yard and the customer both need to be profitable. It’s just that simple.”

For him, that means finding customers who care about the same cattle qualities, namely health, nutrition, data tracking and relationships. Mr Moore shared performance and harvest data tracked in his Gage, Oklahoma, yard on the value of those factors.

Cattle that never required treatment for health problems there averaged a 19 per cent Certified Angus Beef brand acceptance rate across all pens regardless of breed makeup. That compared to just 11 per cent in animals that had to be treated twice.
“So in today’s market with a $5-per-hundredweight (cwt.) CAB spread, you lose almost half, and that’s a huge, huge loss of income,” he pointed out. But the more dramatic drop showed up in Choice grading cattle. Between zero and three-times-treated cattle, the share of Choice-grading cattle fell from 73 per cent to 56 per cent, accounting for a $25- $50-per-head decline in profitability.

He saw the same magnitude of effects on performance at the bunk. Healthy cattle gained an average of 568 pounds (lb.) during the feeding period versus 489 lb. on those triple-treated. Average daily gain suffered nearly a 0.75-lb. difference and, and carcass weights varied from 833 lb. to 780 lb. in those respective groups.

“Now, you take that on a $2/lb. carcass and you guys can figure that math pretty quick,” Mr Moore noted. To keep cattle in the profitably healthy group, he offered one critical piece of advice: “The worst thing you can do to yourself on the cow-calf side is take a calf that’s been weaned 12 to 15 days to a feed yard or sale barn, either one.” This is one case where it makes the most sense to shoot for all or nothing.

“That time frame can be very detrimental to those cattle. In all the research we’ve done, we’ve found that either 45 days weaned or right off the cow is fine,” he said. “There are some challenges to coming in right off the cow, but you’re just hurting yourself if you try to do something in the middle, and you’re sure not going to build a relationship with whoever buys them.”

It’s not just about a given pen of cattle making money; it’s those relationships that develop over time that reap the most rewards for both parties in cattle feeding.

“I love it when my customers make money, because then they’re going to continue to come back. They’re going to be happy about making a few changes in their cowherd,” Mr Moore said. Those changes may include updating bull selection criteria or strategic heifer retention, areas where a little feedlot data can greatly inform the decisions.

He shared an example from a steer feedout Cattleman’s Choice hosted. One customer supplied detailed genetic information, including sire groups. The first year in the feedout, that customer’s cattle graded an average of 55 per cent to 58 per cent Choice. They tracked grade barriers back to two sire groups – one that averaged 42% Choice offspring, the other just 36 per cent.

“Now, whether you’re a retained-ownership customer or whether you’re a supplier to a feed yard, if you have a set of cattle that are 55 per cent Choice, you have average cattle, and you’re going to get paid an average price,” Mr Moore said.

That wouldn’t do in his yard, of course, nor for that feedout customer, who removed those two bulls and their progeny. With all other variable constant, the next calf crop averaged 74 per cent Choice and paid premiums more than $100 per head higher than the first year.

“It’s just amazing what a little bit of data tracking will do to increase profitability,” he said.

Cattlemen must be able to show their herd’s performance history to potential feeders to cash in on that kind of improvement though.

“History, remember, is not ‘my cattle topped the sale last year.’ That’s not history,” Mr Moore cautioned. “True history comes from feed yard data. If you’re profitable, the feed yard’s profitable, and that builds awfully good relationships.”

Of course, it all leads back to building those relationships in every aspect of a cattleman’s operation, from start to finish. There are a million ways to measure profitability and success in the beef industry, despite those narrow margins and tight breakevens.

“You measure your profits by performance, you measure your profits by quality, you measure profit by dollars—but all of those things come back to improving carcass quality,” Mr Moore said, adding one ultimate goal should exceed all.

“The consumer is where we all need to go back to. Consumers are willing to pay for what they get, and in return they want a tremendous eating experience,” he said. “You’re going to get paid for quality if you continuously produce it.”