Mon­i­tor­ing the fea­si­bil­ity of feed and over­win­ter­ing herds

Prairie Post (East Edition) - - FALL AUCTION GUIDE -

The two main fac­tors to con­sider in de­vel­op­ing feed­ing economies are price and avail­abil­ity of feed. High feed costs again in 2019 have many pro­duc­ers won­der­ing about the eco­nomics of over­win­ter­ing their cows. Ted Ni­bourg, farm busi­ness man­age­ment spe­cial­ist at the Al­berta Ag-Info Cen­tre, looks at the eco­nomic fac­tors when de­vel­op­ing a feed strat­egy for this win­ter.

“The ques­tion,” says Ni­bourg, “Is it even fea­si­ble to keep cows? Some are liq­ui­dat­ing their en­tire herds. Oth­ers are culling heav­ily, and many are try­ing to find eco­nom­i­cal ways of main­tain­ing them.”

He says that the two main fac­tors to con­sider in de­vel­op­ing feed­ing economies are price and avail­abil­ity of feed.

“One fac­tor to con­sider this win­ter will be the avail­abil­ity of qual­ity for­age. Parts of the prov­ince ex­pe­ri­enced drought again this sum­mer while oth­ers suf­fered the other end of the spec­trum. The wet ar­eas of the prov­ince had dif­fi­culty get­ting their hay off dry and many pro­duc­ers re­sorted to putting their for­age up as silage or hay­lage. This tends to solve the sup­ply dilemma lo­cally, but it greatly in­creases trans­porta­tion costs to ar­eas of re­duced sup­ply as much of what is be­ing trucked is wa­ter.”

To ar­rive at daily feed costs, Ni­bourg ran some ra­tions through CowBytes to add per­spec­tive to feed price vari­a­tions, and its ef­fect on a pro­ducer’s bot­tom line.

“The ra­tions as­sumed 1,400 pound cows at mid­preg­nancy. The bar­ley-straw ra­tion priced bar­ley at $5 per bushel and bar­ley straw at $50 per ton. The re­sult was a ra­tion that came to $2.20 per head per day. With a straight grass hay ra­tion for hay priced at 8 cents per lb., the daily cost in­creased to $2.75 per head. Hay priced at 10 cents per lb. jumped the daily cost to $3.40 per head. With hay at 12 cents per lb., the daily cost bounced up to $4.10 per head. “

Ni­bourg then ran the num­bers through Rancher’s Risk and Re­turn to pro­vide insight into the ef­fect vary­ing feed prices have on a pro­ducer’s bot­tom line. “Us­ing a 100 head herd with a wean­ing per­cent­age of 85%, it as­sumed that 650 lb. steer calves av­er­aged $210 per cwt and 600 lb. heifer calves av­er­aged $190 per cwt. The feed costs for the bar­ley-straw ra­tion amounted to 53% of the to­tal pro­duc­tion costs for the herd and re­sulted in a gross mar­gin of $13,250. A hay ra­tion priced at 8 cents per lb. in­creased feed costs to 58.5% of to­tal pro­duc­tion costs and re­duced the gross mar­gin to mi­nus $250 - ba­si­cally break even. Hay at 10 cents per lb. jumped feed costs to 63.5% of the to­tal, re­sult­ing in a neg­a­tive $15,131 gross mar­gin. Feed costs in­creased to 68% of to­tal pro­duc­tion costs for hay priced at 12 cents per lb. re­sulted in a loss of $30,350.”

“Feed costs this win­ter are ba­si­cally charges against next year’s calf crop,” he ex­plains. “Break evens in the fall of 2020 for this ex­am­ple herd on a bar­ley-straw ra­tion, comes in at $176 per cwt for next year’s calves. The herd on 8 cent per lb. hay ra­tion would need $202 per cwt to break even. At 10 cents per lb., break evens are $229 per cwt. Break evens for 12 cent per lb. hay are $258 per cwt. This anal­y­sis un­der­scores the ne­ces­sity of man­ag­ing feed costs for a cow-calf op­er­a­tor. Feed costs are by and far the largest com­po­nent of the pro­duc­tion costs in a cow-calf op­er­a­tion.”

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