“Add Value Through Preconditioning”
by Chris Reinhardt, feedlot specialist
The strong dollar is good for a lot of things, or so I’m told. However, the strong dollar also hurts our export markets because our product instantly becomes more expensive to buyers around the world simply because their currency loses its purchasing power vs. U.S. products. The U.S. beef industry saw beef exports climb out of the doldrums post-2001 and a dip after the recession in 2009 to record levels in 2011, 2012, 2013, and 2014. This led to record prices for boxed beef, fed cattle, and subsequently feeder calves. Heady times indeed… Conversely, the U.S. dollar began a steady climb in value vs. other global currencies in mid-2014 and has increased in value by 20-25% over the past 18 months, resulting in a significant drop in beef exports; this has placed and will continue to place downward pressure on boxed beef value, fed cattle prices, and feeder calf prices. Therefore, we will likely experience low calf prices this fall compared to recent years; we’ve already seen feeder cattle futures decline by 40% since the mid-2014 highs.
Vaccine and antimicrobial technology continues to improve at a breakneck pace. Yet we continue to see that calves which are unprepared for the stress of transition and life in the feedlot will have morbidity upwards of 30% and first treatment success is often only 30-50%. Calves which get mild respiratory disease will gain 0.2-0.4 lbs less weight per day in the feedlot and those calves requiring multiple treatments will gain 0.6 lbs less weight per day for the entire feeding period. This translates to about 15 lb less carcass weight and 10-15% fewer choice carcasses. It pays to keep calves healthy.
Preconditioning has many different definitions for different people, ranging from simply giving calves a vaccination prior to weaning, all the way to 2 complete rounds of vaccination for respiratory viral and bacterial pathogens and clostridial pathogens, given pre- and post-weaning, weaning from their dams for 45 to 60 days, and transitioned onto a total mixed ration, feedbunks, and waterers.
As far as animal performance is concerned, the extent of preconditioning needed to minimize post-arrival problems and maximize feedlot performance depends on the extent of stress imposed on the calf during transition.
Recent studies here at K-State suggest that single-source calves shipped 4 hours to a feedlot will benefit from pre-weaning vaccination and weaning and feeding for at least 2 weeks pre-shipment. If calves will be shipped a great deal farther; if calves will be commingled with other calves from multiple sources either prior to shipment or after arrival at the feedlot; if calves may experience adverse weather conditions post-feedlot-arrival, vaccination and weaning for 6-8 weeks pre-shipment will likely be beneficial to subsequent calf health and performance.
Investing the necessary time, technology, capital, and labor into the soon-to-be-weaned calf crop has very real costs for the rancher. But the risk of respiratory disease and the financial uncertainty that respiratory disease causes for feedlot producers has real financial costs as well. Many feedlot producers are willing to pay ranchers a premium to mitigate some of this disease risk which causes them economic uncertainty—consider it “biological risk management.” When certified preconditioned calves are sold at special preconditioned calf sales, they have the potential to bring significant premiums compared to non-preconditioned calves.
Finally, do not assume that buyers at the conventional weekly calf sales will pay substantial premiums for preconditioned calves; on the contrary most buyers at conventional auctions come with the expectation of paying commodity prices for commodity calves, with prices determined mostly on lot size, sex, weight, and breed type. If you can find a special sale in your area specifically organized to market value-added, preconditioned calves, the buyers at this type of sale will come with the full expectation of finding value-added calves and are more likely expecting and willing to pay value-added prices. Some feeders and stocker producers business philosophy is to buy low, keep them alive, make them perform, and sell at the market; other feeders are looking for predictability of performance and are willing to pay for this predictability. Find these buyers and you will find a market for preconditioned calves.
Respiratory disease is the most costly disease in the cattle industry—by a significant margin, and the single greatest factor affecting calf performance in the feedlot. If you can prevent or control disease, you can, to a certain extent, control performance of calves. Feedlots are paying premiums for calves which are prepared for life at the feedlot. Why? Because they perform. As a rancher, you can and should get paid for your investments of time, money, and management. And entering a potentially down-market year, you can increase the value of your existing investment by investing a bit more and by finding buyers who recognize and are willing to pay for the extra value added by preconditioning calves.