Record-high calf prices in 2004 should have generated record-high profits. Yet, only one out of my last six herds analyzed generated record profits. The rest left considerable money on the table, something I expect is indicative of many U.S. herds.
Why record calf prices and not record beef cow profits for producers?
One key missed profit opportunity was producers doing nothing with the data in their pocket calf book.
A calving book that contains the date each calf is born, its unique number, weaning weight, and related dam number are all the data needed to generate a Herd Calving Distribution Table (HCDT). The goal behind an HCDT is to get as many females as possible to calve in the first or second calving intervals to maximize the herd's pounds of calf weaned. Only one of my last six herds analyzed had an HCDT.
Last month, I introduced the HCDT concept by examining the 21-day calving interval in an actual North Dakota herd (Figure 1). I showed how this manager, by tightening up his calving interval, could increase gross revenue from his 164-cow herd by $5,516, using 2004 calf prices.
To capture this missed profit opportunity, the rancher needed to tighten up his herd's calving interval to match that of North Dakota's Benchmark Herds. These herds are all on the Cow Herd Appraisal Performance System (CHAPS) herd performance system.
Measure then manage
To manage calving interval, you first must measure calving interval. Am I suggesting readers need herd performance records? You bet. Without them, you're likely experiencing these same missed profit opportunities.
Let's apply some economics to last month's HCDT discussion. My IRM-Financial And Reproductive Management System (IRM-FARMS) model can take a CHAPS herd through a cost-and-return analysis (CRA) for 18 different sub-groups of cows within a single herd. It uses the HCDT to provide the physical production data for these 18 sub-groups — six 21-day intervals, 11 cow ages, and the overall herd average. A CRA is then applied to each of these 18 individual groups.
The herd's average profit/cow is then indexed at 100%. Based on this average index of this study herd, females calving in the first 21-day interval had a profit index of 111, or 11% above the herd average. Females calving in the second 21-day interval indexed at 105, or 5% above average.
Meanwhile, females calving in the third 21-day interval had a profit index of 90, or 10% below the herd average. Females calving in the fourth interval had a profit of only 78% of the herd average, and those calving late profit-indexed only 71% of the herd average.
Figure 2 on page 14 summarizes these profit indices by 21-day calving interval for this example herd. We now have used this producer's calf book data to generate an HCDT, and used that data to obtain weaning weights by cow groups.
We fed that data into the IRM-FARMS model to generate a profit index by 21-day calving intervals. Figure 2 illustrates the economic potential of managing as many females as possible into the first two 21-day calving intervals.
Prime candidates for culling
Most cattlemen say they cull cows mostly for old age. Yet, when CHAPS cooperators report why they cull females, the majority consists of 3- to 5-year-old open cows or late breeders. Once a female makes it to 6 years old, she tends to stay in the herd several more years.
The red-shaded portion of Figure 1 indicates the large number of late breeders in this herd. These are prime candidates for culling. This herd has 18 females calving in the fourth 21-day calving interval, eight calving late, and two are open. This suggests 28 head, or 17% of all females, are prime candidates for culling in this herd, not counting those one might cull for bad legs, poor udders, disposition, etc.
As herd culling rate increases and leads to a high replacement rate, another missed profit opportunity surfaces. Replacement heifers don't come cheap, even if raised. As replacement rate increases, so will unit cost of producing a cwt. of calf (UCOP). If UCOP goes up, profits go down. Increased culling rate typically becomes another missed profit opportunity.
Herd performance dam age
The green-shaded material in Figure 1 presents the HCDT included in last month's column. Each age of dam from 2 to 12+ years of age is shown.
This herd had 31 head of 2-year-old dams that calved this year. Eight calved early, 11 calved in the first 21-day calving interval, four in the second, four in the third and four in the fourth. The average calving date was April 13 and average weaning weight was 543 lbs. This same detailed production data is summarized for each age of the females in this herd.
So, what age of cows tends to wean the highest weight calves? Typically, it's the 5- to 7-year-old females. For this herd, it was the 6-year-olds. Unfortunately, this herd had only eight cows in the 6-year-old category. That's another missed profit opportunity.
This herd manager had 55% of his cow herd as 2- to 4-year-old females, 22% as 5- to 7-year-old females and 23% at 7-12 years or more. Only 22% of his herd was in the high production age group — another missed profit opportunity.
If this herd had 60% of its females in the 2- to 4-year age group and 40% in the 5-7 age group, 2004 calve revenue would have been $2,507 higher.
Cow age during the high-priced phase of the beef price cycle makes a significant difference in total profit generated over a complete beef cycle. Many drought-induced herds now have distorted age distribution in their herds. That situation leads to fewer pounds produced in high-price times.
What do you think your missed profit opportunities in producing your 2005 calves are going to cost you this year?
Harlan Hughes is a North Dakota State University professor emeritus. He lives in Laramie, WY. Reach him at 701/238-9607 or [email protected].