Even as historically high calf prices and elevated financial risk limit participation in some add-value calf programs, others are increasing requirements to meet buyer demand.
Consider the venerable Certified for Preconditioned Health (CPH) program that began in Kentucky 33 years ago. Calves flowing through the program were among the first offered that came with documentation of a standard, certified health program including at least 45 days of weaning (CPH-45). These days, the program is known as the Kentucky-Tennessee CPH.
CPH was also one of the first opportunities for producers offering less than a potload of calves to compete on price with producers who could offer load-lots. Mark Barnett, owner of Kentucky-Tennessee Livestock Market (KTLM) at Guthrie, KY, explains, “With CPH, we’re trying to give producers with fewer cattle the opportunity to sell without a discount.”
Until prices began climbing and overall cow numbers declined, 25,000-30,000 calves would flow through Kentucky CPH sales each year. Last year, only 18,335 did. This year, Kevin Laurent, University of Kentucky Extension, estimates approximately 15,000 head will. Laurent works closely with the CPH sales in Kentucky.
“I’m certainly a believer in the program,” Laurent says, “but I can’t look someone in the eye and tell them they’re wrong to take $900 or $950 for an unweaned calf rather than assume the added cost and risk of preconditioning.”
Determining the relative worth of preconditioned calves marketed through dedicated sales – compared to non-weaned peers – is never exact. According to the data Laurent assembles on the Kentucky sales, since 2005, CPH calves in Kentucky brought approximately $3-$8/cwt. more than the weighted state-average price.
For tighter perspective, calves sold at KTLM brought $5.77-$8.32/cwt. more than the state average between 2005 and 2009. CPH sales are hosted in nine locations across the state. In 2010 and 2011, the price advantage in the KTLM CPH sale at Guthrie was $5.57-$9.43/cwt. In the first sale there this year in January, it was $2.61/cwt.
Rather than conjure ways to make eligibility easier in order to attract more cattle, the folks here upped requirements for the KTML sale to 60 days weaning rather than 45. The first sale was in January; the second sale is scheduled for July.
Laurent readily admits there’s little research suggesting the additional days garner added calf health. But a hallmark of the CPH program is knowing what customers want.
As Barnett visited with CPH buyers, they consistently said they’d rather see calves weaned longer rather than be certified for age through a Process Verified Program as had been the case.
Of course, every buyer of every product offered always wants as much as they can get for their money. Laurent reckons the druthers for longer weaning is a hedge of sorts, buyers figuring that the extra weaning time is added insurance in the commingled sale.
Plus, Laurent figures, conservatively, the extra 15 days is worth another 20 lbs. in calf weight. Arguably, gain and cost of gain during preconditioning determines the economic sense of it for sellers.
“I can’t tell you 60 days is attracting higher prices or more buyers than weaning for 45 days,” Laurent says. “I can tell you the net returns this year are higher than they’ve ever been, so producers are still being rewarded. But there’s more risk (Table 1).”