Here are five stories trending in the cattle business.
1. Producers incorporate strategic use of rye as substitute for corn
Corn prices are up.
This is great for corn producers, rough on livestock feeders.
“Feed is high. It’s high for everyone,” Warren Rusche said during a seminar Jan. 5 at the Dakota Farm Show in Vermillion.
Costs may have some producers rethinking their feedstuffs. Rusche, a feedlot specialist for South Dakota State University Extension, said replacing 20% of corn with rye may be an alternative that producers can use strategically.
For a number of reasons including palatability and performance, rye hasn’t been considered a possible feedstuff for cattle. However, hybrid technology has resulted in improvement in yields and ergot alkaloids, researchers decided it was worth another look.
In 2019, Rusche and the SDSU Extension team conducted a study swapping out corn with various amounts of hybrid rye in cattle feed.
The team started with 240 Angus steers. They were initially fed a base diet of corn, distillers, silage and supplement. The corn ration was 60%.
They then replaced either one-third, two-thirds or 100% of the corn with hybrid rye.
One question the study addressed was whether or not the cattle would actually eat the rye blend.
During the first third of the trial period, cattle ate the feed well. As the trial continued, feed with the higher rations of rye began to plateau, but the group eating the ration with one-third rye continued to eat the same amount as the control group that was eating the traditional blend.
The performance results were roughly the same as the feed intake trials.
Early on in the trials, performance was nearly identical, but as the trial went on, cattle eating the higher rye rations began to slow down just a bit.
Those eating the one-third hybrid rye rations had performance rates nearly identical to the control group. There was virtually no difference in terms of carcasses.
“Our final conclusions were, yeah, we can feed rye to cattle and do so successfully,” Rusche said.
However, the way the rye is processed makes a difference in feed efficiency.
Feeding whole rye was not found to be profitable. Processing it with a hammermill increased margins slightly.
The greatest impact on feed efficiency and margins came from rolling the rye.
“Whether or not that’s advisable or not is going to depend on the relative price differences between rye and other foodstuffs,” he said.
2. Limit hay waste to lower feed costs
As the new year begins, often it is a time when people begin budgeting. In the cattle business, the drought of 2022 is influencing how producers are having to manage reduced access to feedstuffs, say the experts at Kansas State University’s Beef Cattle Institute on a recent Cattle Chat podcast.
“This year it is going to be hard to lower feed costs,” said Phillip Lancaster, beef cattle nutritionist. “In a drought year, there isn’t enough moisture to plant winter annuals and by now producers are likely out of native prairie pasture that cows can graze, so that leaves producers with no option but to supplement the herd with feed and hay.”
To address this challenge, Lancaster recommends producers assess their stockpiled feed resources and begin checking around to find the most economical feedstuffs to carry the herd through the balance of the winter.
“Give yourself time to find those deals so you can negotiate a good price instead of just taking what is available because you are out of feed,” Lancaster said.
He adds that producers need to look at the nutritional value of the feeds they are considering.
Also, veterinarian Brad White said that producers need to evaluate the dollars per pound of energy.
“There are a lot of different densities of energy and protein in the feed,” White said.
When transitioning cattle to different feeds, Lancaster said producers need to understand what type of carbohydrate is in the new and old feedstuff.
“As long as the type of carbohydrate is the same, the cattle can make the switch to the new feed fairly easily, but moving cattle from a fiber-based feed to a high-starch feed will create problems,” Lancaster said.
Regarding the type of forages to feed, Lancaster recommends producers test the quality of the hay before they purchase it.
“This is a year when testing the forage that you purchase will pay for itself so that you are able to negotiate a fair price and you’ll know what the cost per unit of nutrient is,” Lancaster said.
Also, the experts agreed that though it is labor intensive, limiting the number of hours in a day that cows have access to the hay is one way to reduce hay waste without negatively impacting the body condition score of the herd.
“With this strategy, producers put the cows in a dry lot and give them access to the hay for 8-12 hours a day and then fence them out the rest of the 24-hour period,” said Bob Larson, veterinarian. “If you are tight on forage resources, this may help extend them because the cows waste less hay.”
Lancaster said the type of feeder will also influence how much hay the cows waste.
“Cone-shaped feeders that keep the hay off the ground and force the cattle to take a bite at a time rather than feeders that allow them to put their head in the middle of the bale and toss the hay around,” Lancaster said.
If budgets are really tight, Larson said it may be time to consider culling some of the herd.
“I don’t want to feed animals that aren’t going to be productive, so this may be the time to cull the open and late-bred cows,” Larson said.
3. New York investors eye increasingly scarce water in the West
With the federal government poised to force Western states to change how they manage the alarming shortfall in Colorado River water, there is one constituency with a growing interest in the river's fate that's little known to some: Wall Street investors.
Private investment firms are showing a growing interest in an increasingly scarce natural resource in the American West: water in the Colorado River, a joint investigation by CBS News and The Weather Channel has found. For some of the farmers and cities that depend on the river as a lifeline, that interest is concerning.
"Our only source of water is the Colorado," says Joe Bernal, who raises cattle and grows crops on land across Colorado's Grand Valley, relying on water from the drought-depleted Colorado River.
"That's all we've got is that river," he says.
Bernal's family came to the Grand Valley nearly 100 years ago, and he has lived there his whole life.
But now, he has a new neighbor: a New York-based investment firm called Water Asset Management, which he says bought a farm in the valley around 2017 that Bernal now rents and helps operate.
According to public records, the hedge fund — which is headquartered on Madison Avenue in Manhattan — has bought at least $20 million worth of land in Western Colorado in the last five years, making it one of the largest landowners in the Grand Valley.
The hedge fund, founded in 2005, says it invests exclusively in assets and companies that ensure water supply and quality. In 2021, its co-founder and president, Matthew Diserio, called water in the United States "a trillion-dollar market opportunity."
Bernal says that when first heard of the firm, he was concerned.
"Would I have invited them here? No." Bernal says. "Am I glad that there's a big company here buying properties in our valley, under our system? Not really."
Andy Mueller, general manager of the Colorado River Water Conservation District, says he doesn't think the firm wants much with the land.
"It's the water," Mueller says.
"These are folks that have identified the drought as an opportunity to make money," he added.
Mueller's job is to protect Colorado's share of the river, which flows through seven states and is an important water source for cities including Denver, Salt Lake City, Albuquerque and Los Angeles. He said Water Asset Management has acquired more than 2,500 acres of farmland and is interested in the water rights that come with it.
"I view these drought profiteers as vultures," Mueller said. "They're looking to make a lot of money off this public resource. Water in Colorado, water in the West, is your future. Without water you have no future."
Water Asset Management declined requests from CBS News for an interview. Three years ago, in an interview with Fintech TV, the company's president, Diserio, said one of his firm's strategies is to profit from water in part by making the farms it buys more efficient and then selling parts of its water rights to other farmers and cities increasingly desperate for the natural resource.
Water Asset Management hired Colorado's former top water official as one of its lawyers.
The company's website states, "scarce clean water is the resource defining this century, much like plentiful oil defined the last."
Clean water is growing increasingly scarce due to a number of factors.
"The Colorado River relies mostly on snowpack in the Rocky Mountains that feeds into the river as it melts in the spring and summer," says Greg Postel, a storm specialist at The Weather Channel. "But climate change is making the west hotter and drier. For every degree the temperature has gone up, the flow of the river has dropped by about 5% — a nearly 20% reduction over the past century."
On top of that, there has been a 23-year megadrought, the worst in 1,200 years. That's in addition to overuse by Western states.
"It's taken a major toll on the nation's largest reservoirs," Postel says. "Lake Powell in Arizona and Lake Mead in Nevada — they are at historic lows. They're at just 25% of their full, combined capacity. There are real fears that this crucial water supply for the West is on the brink of disaster."
People across the region are concerned, including ranchers high in the Colorado Rockies like Kerry Donovan, a former Colorado state senator. She is alarmed by the amount of land being bought in her state by investors for water rights.
"Scarcity does equal value, right?" Donovan says.
Donovan tried to make Colorado's anti-speculation laws stronger, but that effort failed.
She offered a theory on how investors could profit from water rights in the state.
"They'll probably make money," she says, "because the state will be forced to create a system that doesn't exist right now to allow more flexibility in how a water right is used."
As the arid West gets more desperate, the federal government is expected to make sure the taps keep flowing in cities including Denver, Las Vegas, Phoenix and Los Angeles.
Congress recently allocated $4 billion in drought funding that can be used to pay farmers to fallow their land and not use their water. Some Western states, including Colorado, are also considering paying some farmers to keep their lands fallow.
As for Bernal, his fate is now tied — at least in part — to Water Asset Management and his new landlords from New York.
"They've invested in the properties with new irrigation systems," Bernal says. "So far, so good."
But Bernal said he's paying close attention.
"Good stewards of the land and stewards of the water rights will have their eyes open," Bernal says. "We'll be watching for what may be coming."
4. A very (very) early look at post-drought herd rebuilding (Texas A&M AgriLife Extension)
The average of various ENSO (El Niño and the Southern Oscillation) models suggest a trend out of La Niña conditions and toward neutral conditions through the spring and into El Niño territory by the May-June-July quarter.
Where La Niña typically brings drought to the Southern Plains and other parts of the South, neutral to El Niño conditions are associated with average and above average rainfall.
The combination of increasing calf values and the potential for improved rainfall through the summer has some ranchers considering restocking strategies from drought-induced culling.
We’re still very early in the decision-making process of whether to grow a herd and in some cases, there may not be replacement cows available that naturally fit your environment. However, it’s worth beginning to think about what cows are a financial fit for your operation so that you can take advantage of opportunities and avoid overpriced replacements when the market takes off.
Let’s take a look at various replacements offered around Texas in the month of December. Using Texas A&M AgriLife Extension’s Cow Bid Price estimator, forecast of price, and forecasts of expected cow costs for the area we’ve estimated Net Present Value (NPV) of the investment in these replacements and what a rough break-even bid would be.
We can see several trends in the data. First, the ratio of number of calves produced by the cow to price paid for the cow is a critical component.
The Table below looks at 2 cows that differ by stage of pregnancy, weight, purchase price, and number of calves expected to produce over her remaining life. The number of calves to produce in her expected life is key, but don’t forget her value as a cull cow.
Often the cull cow value is a major part of the cow’s income producing life.
It’s also important to note that though the last cow on the list is the cheapest, in this case, she represents a negative NPV. However, were she roughly $100 less expensive she would net a profit in the next year and likely generate additional cash flow as a cull.
There are thousands of combinations and considerations when making the decision to restock a herd. The key is to use your data to evaluate your own business.
There is the potential that the $1,100 cow is a steal, but in other cases, she could steal from you, and if we return to the $3,000 replacement market the need to run the numbers will become all the more important.
5. U.S. calls for new panel to resolve Canadian TRQ dispute
Trade Representative Katherine Tai announced the United States is establishing a dispute settlement panel under the terms of the United States-Mexico-Canada agreement. The move is the latest response to Canada’s dairy Tariff Rate Quota policies, which U.S. officials maintain unfairly undermine market access for American dairy producers.