Not All Gain is The Same
By: Wesley Moore, Beef Technical Specialist, Cargill Animal Nutrition
Optimal gain for the stocker/backgrounder segment is difficult to discuss because the common answer when asked to define “optimal” is “it depends on your goals.” There’s truth to that, because not every business approach or set up is the same. Targeting optimal gain can be challenging because the gain program that maximizes profitability depends on your specific situation. That said, maximizing efficient gain or only focusing on least cost of gain may not be the most profitable decision for your business or those operations purchasing your feeder calf downstream.
Cattle sex, genetics, your implant program, and feed cost are all important factors to consider when optimizing gain on your operation. Out of those, I’d call out your marketing program and feed cost as the two most critical pieces that enable you to advance the rate of gain and profitability in your backgrounding operation.
For example, if weaned calves are purchased and taken to finish, any method to push cattle to maximum energy intake and gain is likely the right decision for your operation in terms of feed efficiency and grade. Research has demonstrated that high energy density early in the finishing phase leads to an increase of gain efficiency and a higher quality grade. Then, this drives you to a lower cost of gain and an improved quality grade at comparable fat thickness despite lower finishing weights. On the flip side, if your goal is to sell maximum value feeder calves to a finishing operation, slower lean gain might be the right decision. Although it is a more expensive gain, cattle have the potential to capture more value as feeders because they are capable of achieving higher carcass weights and gain during the finishing period. These are things the feedlot operator can count on when purchasing feeder cattle.
Another element to consider is how drastically quality grade has evolved in the last three years, with seven to eight percent prime quality grade cattle now becoming the norm. The largest influence on quality grade appears to be genetics, while nutrition allows for expression of genetic potential. The biggest unknown is what carcass quality premiums will be at the time cattle are marketed. From a hedged margin standpoint, achievement of higher carcass weights can be of more value than “hoping” for a premium in quality grade at the end of the feeding period. This is why “fleshy” weaned calves that have been exposed to starch earlier in life still trade at a discount to lean yearlings at the same weight, despite fleshy calves who will likely have higher quality grade at the end of the feeding period.
One thing research is clear on is the impact of health on both performance and carcass quality. This is a strong reason for us to consider preconditioning or backgrounding calves prior to marketing them to a feedlot or grower operation. When cattle are subject to health challenges, primarily bovine respiratory disease (BRD), genetic potential for gain or carcass quality will be lost. A BRD treatment has costs beyond financials. Cattle never truly recover, which shows up as lower gains and a reduced quality grade, leading to a significant decrease in revenue on top of the increased cost to produce that calf.
Other important drivers of optimizing gain in any backgrounding operation are resources and feed cost. The definition of nutritional consulting is to optimize the use of nutrient resources to maximize profitability on your operation. For example, if you can achieve a grazing cost of gain of $0.50 per pound vs. the cost of $0.80 per pound of gain with TMR fed drylot cattle, the difference in total cost of gain for 350 pounds is $105 more per head in your TMR fed drylot cattle. This difference will likely trump any premiums in quality grade if cattle are owned until finish.
In any partnership, clear communication of your goals is the most critical component to developing your best plan to grow a profitable calf. With current technology and genetics, we have the capability of meeting just about any goal of your operation. Technically, the design of the operation and segment of ownership really drive the gain targets during the backgrounding phase. It is also important to remember that health and implant programs are also essential components to any growing-finishing program.
In summary, you pay for the gain in one way or another. The biggest decision your business needs to make is how you’ll optimize practices to maximize profitability. If your goal is to develop feeder cattle and own until harvest, the right thing might be finishing cattle earlier at lighter weights to maximize profitability of the calf. If your goal is to sell a value added feeder calf, perhaps growing cattle gains of <3 pounds are the right thing to consider. When you look at managing risk, it is safe to assume that additional carcass weight will always yield more gross dollars regardless of quality grade. On the other hand, purchasing quality cattle with the genetic potential to generate margin will always be of value, it just depends on how much you can count on that value when the cattle are closed out. This is where you can analyze your resources and work with your trusted advisors to define a nutrition program that’s right for you.