Cattle Trails Cow-Calf Conference looks at profitability factors

The Cattle Trails Cow-Calf Conference brought cattlemen and researchers together in Wichita Falls, Texas, Dec. 1, to discuss how to keep operations profitable in times of pressure.

Jason Johnson, associate professor and Texas AgriLife Extension economist, of Stephenville, Texas, brought a cattle market update and outlook to producers.

Johnson cautioned cattlemen that we are entering a cycle of building herd inventories now and into 2018, which is a cause for some realistic thinking on their parts.

“The rate of growth of the herd may slow down, but still as an industry we are facing a headwind of supplies,” he said. “The next year or two years, prices may be at this level they are now or just a little lower. So, they need to develop the mentality that we aren’t going to return to the heydays of $2 per pound calves. Be realistic about market expectations.” The most valuable asset cattlemen manage is the land, he added, and operating a herd with flexibility regarding stocking rates will position them to weather low market prices and be in a position to capitalize when the market comes out of the low spell.

Part of the trifecta of issues facing cattle producers is weather. Johnson showed the U.S. Drought Monitor is showing more abnormally dry to moderate drought creeping into cattle country in the Red River region. Right now 19 percent of the U.S. cattle area is experiencing some form of drought, he added. Additionally 20 percent of the major hay producing regions are seeing drought, he said.

“We know in this area we’re just around the corner from the next drought—it’s part of life in this part of the world,” Johnson said. “What concerns me is if we have drought combined with low cattle prices at the same time. What we have going for us right now is a good period of low feed cost.” This year’s corn harvest was a big crop and the low corn prices give a little support to the cattle price. There’s also some good news for those who graze wheat, with an excess surplus of wheat that’s pressured the price and made it more appealing to some to graze wheat rather than try to harvest it for grain.

Finally, there’s one part of the trifecta that producers just have to hope saner heads prevail, and that’s politics regarding trade negotiations.

“The fact is agriculture as an industry is very dependent on our ability to export the agriculture commodities we are very good at producing to other countries,” Johnson said. “It takes a large amount of the supply for all commodities off the table and generates some sustainability in prices for our ag producers.”

Johnson advised cattlemen to keep Warren Buffet’s No. 1 rule in mind—“Don’t lose money.”

“When times get tight, producers have to look at their options and figure out how to stem the bleeding,” Johnson said. “Minimize your losses as much as possible. Just like we are one corner away from a drought, we are also one corner from being in a situation where prices take an upturn.

“Position yourselves to survive through hard times so you can enjoy the good when they return,” he said.

Part of that positioning is to manage resources conservatively. James Jackson, Extension program specialist with Texas AgriLife Extension Service, Stephenville, spoke about weed and mesquite management on rangeland to improve grazing. Suppressing mesquite with spraying comes down to keeping the droplet size small to get a good kill, as well as using the correct amount of the correct herbicide.

Too often, Jackson said, ranchers will spray a product that won’t kill mesquite but will kill other weeds and defoliate the mesquite.

“It sounds really good,” Jackson said. “You’re knocking off the leaves of those mesquite to open up the canopy and get sunlight down to the ground and grow some more grass.” But, he cautioned that a defoliation program just allows the mesquite to come back the following year and often it has grown more stems and has become a “meaner plant” to control.

“You never do kill a mesquite when you’re suppressing versus controlling,” he said. “Mesquite will put back on the leaves, especially if you have a wet period later on in the summer. It can take a single stem to a multi-stem mesquite and then it’s a lot tougher to kill. It makes existing ones harder to control.”

Suppression may fit into an area surrounded by sensitive crops like cotton, or in a parcel with low density of mesquite. But Jackson cautioned growers to really be wary of that as a long-term tactic.

Dave Lalman, professor and Oklahoma State University Extension beef cattle specialist, Stillwater, Oklahoma, spoke to cattlemen about maximizing their herd efficiency with genetic selection for moderation.

“The biggest cow isn’t necessarily the best one,” Lalman said. A cow of moderate mature size, milk and growth traits can dramatically affect the cowherd’s ability to match the available resources, he said.

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“Today’s cattle have tremendous capacity for post weaning growth and carcass weight,” Lalman said. “We’ve been in a never-ending arms race for growth for about 50 years.” But, he asked, what do those type of cattle do for the cow-calf producer at home if he’s not retaining ownership through the feedyard?

“Average daily gain in feedlots is increasing,” he said. “Cattle are getting fatter faster than they used to and they eat more feed than they used to because we are creating cattle with greater appetites when we continue to select for growth.”

Seedstock producers differentiate their bulls from the next guy with genetics that emphasize growth. But, what good is that for the cow, the pastures and the ranch profitability, Lalman asked.

Looking at returns per cow from the Kansas Farm Management Association, he showed that of the operations surveyed, the highly profitable one-third of the ranches averaged $415 more net return per cow than the bottom one-third of the ranches. The difference was that the profitable ranches controlled their costs.

“For every 1 pound of added weaning weight, over five years, on average it adds 86 cents of cost per cow,” he said. That comes down to an average value of weight gain at weaning to about $1. At the cost of valuable forage and other resources.

Lalman said it’s hard to sell “average” as a seedstock producer, but a savvy commercial producer will seek it out.

“Find a source of seedstock that puts priority on fertility, stayability and heifer pregnancy,” he said. “A source that culls open cows, keeps only early breeding heifers and puts environmental pressures on their cattle to weed out those who don’t match. Match your management and resources to your operation. Use selection indexes that consider input costs as well as outputs like fertility, weaning weight and carcass weight.” Looking for stayability traits can really help cattlemen weather any pressures from market or Mother Nature.

Jennifer M. Latzke can be reached at 620-227-1807 or [email protected].