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Beef Insider: Is there finally a light at the end of the tunnel?
Cattle producers have seen their share of ups and downs over the past few years. As the economy begins to recover, how long will it take for those who were able to weather the storm to reap the benefits?
Or, is it more prudent to set expectations low and look at additional ways to reduce costs? University experts weigh in on what the future holds for the beef industry and how weaning calves early could be a viable alternative for some producers.
Beef, the economy's barometer
Cattle prices made a very, very nice recovery from the end of last year through the first half of 2010. Last December, finished cattle were selling for about $80 a hundred. Four months later, they were $100. Feeder cattle went from about $105 to $130.
A decline in beef production of 1% helped. But there's more to it than that. Chris Hurt, Purdue University agricultural economist, says the rebound in beef prices is also an indication of a recovering world economy. U.S. and international consumers are competing now for reduced meat supplies around the globe.
In just the first two months of 2010, U.S. beef exports were up 24%. And supplies of competing international imports were down 23%. It's a simple formula: less beef + increasing demand = significantly higher prices.
"The 2010 prices may average about $93 – dramatically above the $83 of 2009," says Hurt. "Prospects for 2011 should remain strong as well, perhaps moving close to $95 for the year."
The economy here and around the world will recover. And, it looks like that will happen more quickly than beef supplies can be turned upward. Those of you who are still in the cattle business are going to do just fine -- or more than just fine -- in the next few years.
Advantages of early weaning
Not everyone is going to switch to weaning calves earlier. But there are a number of things pushing you in that direction.
For one, it could give you more flexibility in pasture utilization. Cows could go on a lower-energy maintenance feeding program at a time in the year when pastures are running thin. It may help cows in terms of reproductive performance. Calves may actually achieve cheaper gains after they're weaned than before.
A recent study at the University of Illinois lends a little more weight to the early-weaning story. A group of heifer calves were weaned at just 77 days old and put on a high corn ration for 146 days to initiate marbling. Then the calves were divided into four groups for 73 days: pasture, high starch, intermediate starch, and low starch. The starch diets used varying levels of corn coproducts such as distillers' grains, corn gluten, and soy hulls. After that period, all the cattle were fed intermediate-level starch diets until they reached harvest weight.
"The cattle on pasture had significantly lower marbling," says Dan Shike, University of Illinois animal scientist. "But there were no differences in marbling in the cattle fed varying levels of starch."
Results remained constant through harvest with pasture-fed cattle receiving lower marbling scores and few cattle achieving a low-choice grade. Cattle fed varying levels of the corn coproducts had no difference in marbling scores.
There were big differences in profit per head. "If you look at overall profitability, we actually lost money on the high-starch group. The pastured cattle barely made any money, but the intermediate- and low-starch groups showed a big swing," says Shike. "There's about a $45 difference between the high-starch and intermediate-starch groups; low-starch was comparable to intermediate."
One big advantage of weaning early and starting calves on feed this way is that it speeds up the growth rate and gets them to harvest much quicker than later-weaning systems.
"This is really an accelerated finishing system," says Shike. "It's not uncommon for our cattle to reach market end point and harvest weight in 12 to 13 months of age. In a more traditional weaning system, they might be 15, 16, or even 17 months."
When corn prices are high, this system of early weaning and feeding is more cost-effective because it utilizes lower-priced coproducts. And it doesn't sacrifice marbling quality, meaning cattle can still qualify for better prices of choice and low-choice grade.
Shike says more research is needed, but he thinks this system is the most profitable way to produce high-quality beef.
Successful Farming Contributing Editor Gene Johnston compiled this report.