With the changing structure of the cattle industry, what's the future of the stocker segment?
Cattle were introduced into much of the U.S. to utilize the cheap grass often available for the taking.
Over the decades, the stocker cattle business blossomed from this immigration of livestock. But, things have changed over time grass is no longer free, nor is it even cheap. In recent years, however, the demand for feedlot placements has exceeded calf production, and the inventory of “grass calves” has been pulled down. This is evidenced by the fact that the average age of fed cattle at slaughter has declined since the mid-1990s.
Don Gill is a professor of animal science at Oklahoma State University in Stillwater. He agreed to offer his thoughts, in light of the industry's changing structure, on the status of traditional stocker industry thinking.
Tradition: Calves will grow better if they go through a stocker program before entering the feedyard.
Reality: “Much of the nation's feeding industry was developed around the yearling steer. In recent years, however, increasing numbers of lighter weight cattle have been entering feedlots.
“Backed by extensive research, the increasingly common practice of feeding calves in feedyards should clearly demonstrate that calves do not need to be aged or grown on grass before entering feedlots. With modern rations, feed-to-gain ratios of 4.75 lbs. of feed/l lb. of gain are easily obtainable with well-bred young cattle.
“All else being equal, however, more age on cattle makes it easier to reach quality grade with a reasonable fat cover. Grazing cattle for a few months after weaning greatly reduces the risk of shipping fever diseases in the feedlot. In the past, cattle feeders given the choice of a 600-lb., 7-month-old calf, versus a 600-lb. yearling, would have taken the yearling by a wide margin.”
Tradition: From an economic standpoint, calves can be raised cheaper when put back on grass.
Reality: “Cattlemen who don't carefully budget all costs in a cattle operation most often make this statement. It's true some people can put grass gains on cattle at a very low cost. In many cases, there is no alternative use for the land, including leasing to other cattlemen.
“The problem today is that stocker cattle and calves cost so much that the daily ownership costs of the cattle when divided by the daily gains leads to a very high cost of gain.
“As a stocker operator, you must know your costs and those of your competition and then concentrate on those areas where you have the greatest advantage. The apparent opportunity for survival in the stocker business appears to be shifting to stocker programs to utilize even lighter or younger cattle.”
Tradition: Calves will get too fat if placed on feed immediately after weaning.
Reality: “There are some small-frame cattle which, if placed on feed at weaning, will be too small when finished. But, these kinds of cattle seem to be disappearing from the cattle population at a rapid rate. These cattle are often not very acceptable even after extended grazing periods.
“There are still plenty of cattlemen in the feedlot industry today who believe or want to believe this. Thus, there will probably be a market for aged cattle for some time.”
Tradition: If stocker cattle are owned long enough, you're in a better position to make a profit.
Reality: “A number of expenses involved in the ownership of cattle occur one time, and many of these costs occur in the first few weeks of ownership. Most notable are costs associated with death loss, transportation, health treatment and marketing.
“It's difficult, however, to find a combination of pasture programs that will sustain high rates of gain over long periods of time. This may explain why some cattlemen custom-feed following their grazing programs. A growing number of cattlemen feed cattle in confinement for 40-60 days or more before the cattle are placed on pasture.”
Tradition: Money can be made by straightening out mismanaged cattle on grass.
Reality: “Poor performing cattle are usually a poor risk because low rates of gain and high death losses are never compatible with reducing the high daily costs of ownership. On the other hand, any business opportunity must be evaluated in terms of how a cattleman might be able to compete with others in the industry.”
Tradition: It's hard to go wrong buying steers to put on grass that will otherwise go ungrazed.
Reality: “This depends on two important factors. The first is the cost of gain, which in recent years has been relatively low. Stocker operators recently have been assigning a value of 50-60¢/lb. as a value of gain. Feedlot cost of gain with lightweight cattle is far below this figure.
“The second factor, which cannot be emphasized enough, is the cost of cattle. When cattle are very expensive, they are expensive harvesters of forage. However, at times when cattle are low in cost and the value of added weight gain is high, the risk factor with stocker cattle is greatly reduced.”
Tradition: The stocker business is a time-proven way to make calves more valuable to feeders.
Reality: “There are factors that may place some restrictions on future stocker programs and continue to remove feedlot bias against calves. In the past, feedlots have been more interested in the rate of gain on cattle than on feed efficiency. Older cattle frequently gain more per day than younger cattle.
“With high-cost cattle, maximum rate of gain reduces non-feed costs, which are substantial with feedlot cattle. A serious potential problem may be developing for some cattle used in extended grazing programs, however. The problem is that cattle carried for extended periods on lower-quality forage are far less efficient than expected.
“It's been known for some time that feedlot cattle consume more feed in the last half of the year. Only recently has it become apparent that the cause of this high intake is related to the previous nutritional and management history of the cattle before entering the feedlot.
“In the future, especially if feed costs are high, it can be anticipated that cattle feeders will be reluctant to buy cattle that have been grazed too long.
Is The Stocker Side Dying?
The stocker business is not dead. But, the trend for younger cattle entering the feedlot will continue. Feedlots have been placing on-feed at weaning the medium-weight and heavyweight end of the medium- and large-frame cattle in increasing numbers each year. This decreases the number of cattle available for grazing programs.
“The ability to receive calves in dry lot and to feed them efficient and economical growing rations can greatly complement the traditional stocker business,” says Oklahoma State's Don Gill. “The receiving/backgrounding end of the business can solve many of the industry's serious problems related to consistency of performance.”
In addition, cattle can be received and any health and adaptation problems solved before the cattle go to grass.
“Cattle producers can optimize their programs if they will first figure the optimum month for their cattle to reach the slaughter market and then work backward to develop the production plan,” concludes Gill. “Market timing has always been important and it will likely remain the most important item to achieve maximum profits.”