Preconditioning payback

Nov 25, 2011
by WLJ

Last year was a slam dunk for Herman Laramore’s preconditioning program, even with feed prices clocking in around $160 a ton. He hopes this year turns out as well.

“That [feed] was 8 cents a pound with us feeding them 10 to 12 pounds a day. That’s 80 cents a day. They gained 2 to 2.5 pounds a day.” The Marianna, FL, rancher adds that the cattle were also on good-quality Tifton 85 bermudagrass and Argentine bahiagrass pastures.

On sale day, Laramore’s 700-pound calves brought $115.50 per cwt. Since they put on 100 to 150 pounds during preconditioning, he figures the value of the gain was $2.30 a day.

“The feed costs us a third of what we got back,” he adds. And while he also had pasture costs, minerals and $10 a head in a health program, Laramore still made money. His program hits the mark for anyone questioning the value of preconditioning these days. But, he points out, part of his success is due to the Anguscross calves he grows.

Walt Prevatt, Auburn University Extension economist, says when it comes to preconditioning, you can’t do much better than a growthy, muscled conversion machine like Laramore raises. In his case, it’s largely the result of high-accuracy AI sires.

Aiming for faster gains

Any preconditioning program today has to be multifaceted. Of course it includes the weaning of calves and keeping them 45 days or longer. But it also focuses on building up immune systems and administering vaccines and parasite controls. Even a seemingly simple thing like teaching calves to eat and drink out of troughs adds to the value of the end product.

While all of this takes time and investment, even with today’s feed prices in the ozone, there is plenty of evidence preconditioning pays. One reason: Preconditioning usually provides quick gains, Prevatt says.

“Cattle can normally put on 80 to 120 pounds in 45 days or so,” he says. “With the high feed prices this year, the cost of that gain is giving us heartburn.”

But if a producer set a goal of keeping feed costs between $120 and $140, and he feeds to the right kind of animal, the numbers can still work.

Auburn’s Prevatt, a beef specialist, defines the “right kind of animal” as a medium- to large-framed calf with number one muscling. The calf should be able to convert feed at a 6-1 ratio, meaning for every 6 pounds of feed, he yields 1 pound of gain.

Stretching the feed

Clarksville, TN, cattleman Mark Barnett hasn’t found feed under that $140 mark, but he’s trying to stretch out what he has.

Barnett’s premixed preconditioning feed this year cost him $166 a ton delivered. And he isn’t being as generous with it as he has in the past.

“We have self-feeders, but this year we’re hand-feeding it,” he says. Barnett adds that he normally gets gains of around 2.5 pounds a day, but he expects that to drop back to 2 pounds a day, even with good pasture taking up part of the slack.

“We figure that is probably going to put our cost of gain around 70 cents. If we can sell the calves for $115/ cwt., we should be OK.”

Saving on shrink

One thing on the side of producers like Barnett is the fact that preconditioning means less shrink than for calves shipped straight off the cow.

“This is a big savings,” Prevatt says. He adds the increased return is even more evident if you sell preconditioned calves directly off the farm rather than one at a time at the stockyard.

“It varies on the size of the calf and the time of year, but some studies show they’ll shrink 10 percent to 15 percent straight off the cow,” he says. “A calf that has been weaned, has already been through that stress period and knows how to eat and drink from a trough will only shrink 5 percent to 6 percent, particularly if they are sorted into truckload lots two weeks before they are shipped. There are a lot of pounds left in the cow pen at sorting.”

Barnett, who is a partner in the Kentucky-Tennessee Livestock Market in Guthrie, KY, hosts his area’s Certified Preconditioned for Health (CPH) sales. All calves in the sale meet stringent preconditioning requirements.

“Our buyers tell us even if the CPH calves do shrink, they’re over it in two days and back on the plus side,” he reports. In addition to less shrink, there is typically a premium on the preconditioned calves.

“We’ve seen it from $3 to $15/cwt.,” Prevatt says. “If it is a 7 weight calf and it brings $7 more, that is $49 a head.

“Buyers are willing to pay more for preconditioned cattle because they have already been through the stress of weaning and have an improved immune system from a vaccination program,” he adds.

Prevatt says research shows preconditioned cattle are less likely to get sick when they get to the feedlot, which translates into higher gains there as well as better grades at harvest.

More demand, more money

All together it means better demand for preconditioned cattle. Barnett, who holds a weekly graded sale at the Kentucky-Tennessee market, as well as the CPH sales, says, “We compared the CPH sales held on Monday night to the graded sales the Thursday before. There was an average advantage for the CPH calves of $7.50/cwt. across all weight classes. Statewide, there is usually a $6.25 advantage.”

For Florida’s Laramore, preconditioning his cattle means they are eligible for the Southeast Alabama Feeder Cattle Marketing Association (SAFE) sale. “Even when you are selling 10 truckloads of calves, when you offer them with others that have 10 truckloads, it draws buyers. The more people bidding on them the better.”

The rancher, who’s sold through SAFE for the last eight years, adds: “All the calves have had the same preconditioning protocol, and they’ve built a reputation. They draw a lot of attention.” — Becky Mills, DTN