A rancher that doesn’t plan an exit strategy for his cows at the end of their careers is leaving money on the table.
“The value of the cull cow is extremely important to the bottom line of the operation,” explained Robert Wells, livestock consultant for the Noble Research Institute, Ardmore, Oklahoma. “Of the total revenue of most cow-calf operations, cull cows can be 15 percent, as high as 25 percent, of the ranch’s revenue on an annual basis.” With that much at stake, it pays ranchers to thoughtfully plan for cull cow exit strategies from their herds.
Timing her exit
The decision to cull or keep is complicated because you’re trying to hit a moving target, said Matt Stockton, agricultural economist with the University of Nebraska West Central Research and Extension Center. It really depends on the market, and your management system, and your cows, he added. All cattlemen should be looking at different ways to manage their different mix of resources. Do they have the facilities or time to mess with a cow? If they don’t, Stockton warned, it could cost more in feed, hay and resources to get her pregnant to sell with a calf at her side for just the possibility of more money than an open cull cow.
Economically, ranchers have to understand their cost to keep the cow, and be realistic, Stockton said. Wells added that ranchers have the opportunity to think outside of the box when it comes to their cull cow strategy, and capture that value for themselves.
“Just because others are deciding right now to take cull cows to town, that’s not always when you need to do it,” Wells said. “Think ahead of the market, or think a way to weather through the market into a better time of the year.”
Aaron Berger, University of Nebraska beef systems Extension educator at the Panhandle Research and Extension Center, Kimball, Nebraska, said more and more cattlemen are seeing cows as part of their business. An asset that has value and can depreciate over time.
Old, open and ornery
Wells reminds cattlemen that there are three key attributes to keep in mind when deciding to cull a cow from their herd.
“I call them the three O’s,” he said. “Old, open and ornery. Those are the first that need to go.” But ranchers need to remember that after shipping off these cull cows, they still have to pay for their replacements. If ranchers do it right, those cull cows can foot a sizable part of the bill.
“If she’s open, why is she open?” Wells asked. If it’s not age-related, maybe this middle-aged cow was a late calver and slipped far enough in the program that she didn’t get rebred in a timely fashion, he said.
“I tell them to expose her to a bull and get her rebred as quickly as possible,” Wells said. A healthy cow that may not fit into a spring calving management system for one rancher might work out better in another rancher’s fall calving management, he added.
Berger said he’s seeing ranchers trying for a really long breeding season, but a short calving season. By tightening up the calving window and selling those cows that would have been open means they have improved the efficiency of their herd. Those culled cows may have produced a calf, but just don’t fit the management and labor resources of their current ranch. They could, however, fit into someone else’s herd, Berger said.
Stockton said selling a pregnant cow or a cow with a calf at her side works if you identify the right buyer and the right market. He said in most years a pregnant cow will be more valuable than an open cull. If you and your neighbors ship open cull cows right after pregnancy checks, prices will be depressed, he added.
“If you’re trying to hit a good market, it may pay to retain and put some flesh on her for the white fat market,” Stockton said. “You can hope for April where prices are up and she maybe gained enough with cheap enough feed.” But, this all means that you have the facility, time, labor and access to feed in order to make this market pay for you, he warned.
“One of the first things I say, when I’m thinking of that cull cow, is never let that cull cow have the opportunity to take a bite of food out of a productive cow’s mouth,” Wells said. “If a ranchers’ short on pasture or feed resources or hay resources, from an economic standpoint he can’t afford the extra feed. Even if she could be kept around longer, you don’t take good quality grass from the others.”
The cow to keep around is one that has a high degree of potential success, Wells said. Consider the environmental conditions and the cow’s condition before you ask her to weather another cold winter. “If she’s lame or sick or a gummer and not able to adequately put the forage to work, then cut your losses on her,” he said. “A thin cow doesn’t have the body reserves to draw from to keep warm in cold snaps. If she’s fragile and frail, a couple of cold snaps could push her over the edge.” And at that point, you’ve likely lost a valuable cull cow and added a veterinarian bill to her cost, he added.
An entrance into the cow business
For beginning cattlemen, a cull cow’s exit from one herd just might be the path to building their own herds.
“Maybe they can buy some aged cows that are pregnant that don’t fit into someone else’s system,” Stockton said. “They can get them almost at cull price and then you don’t have to pay a lot of money for one calf. Maybe that cow has that calf and it can replace her in the herd and then you have an open cull cow to sell. That’s an opportunity for new producers.”
“A guy could buy middle-aged cows, priced reasonably, and save about $400 to $500 a head,” Wells said. A savvy cattleman can find those bargains out there, bring them home, calve them out and bring in revenue to buy younger replacements without a large capital outlay at first, he said. It was a strategy, in fact, that helped him build his own cowherd.
Of course there are the old and open cull cows that are in relatively good shape and could utilize feed. If someone’s looking for a winter project to stretch his feed and labor resources, feeding these cull cows to get a little extra weight on them before the spring market upswing can be a good strategy. Only if they put pencil to paper first and fully understand their costs and potential revenues, Wells said.
Stockton agreed and said if a rancher is already feeding cattle, and doesn’t have a lot of labor or facility costs to consider, feeding cull cows for a while to time the market might work out.
“If the cost of forage isn’t an issue, or if you have grain or access to it like many of the farmers here in Nebraska, it might be worth your time,” he said. Berger agreed and said that cows on dry lot, as long as they can get to the feed bunk under their own power, can be quite productive. Just don’t be asking older cows to travel long distances without good shelter from harsh winter weather, he said.
“Match your resources to the cow and what you’re willing to do management-wise,” Berger said. Do you really want to be pushing feed in the middle of a blizzard and monitoring the health of those cows? Or is that an opportunity for someone else to capture? Cattlemen need to be realistic, he said.
“For a small operator, the stocker cow business can be rewarding,” Wells said. “The key is to find a cow that’s maybe neglected but she’s functionally correct and has a good udder, good teats, good legs under her. If you keep her through winter, put some gain on her and give her good dry grass and extra protein, you could sell her in the spring once the market has moved in your direction.” It’s a way to help a new producer start to generate more revenue that they can then turnover and use to break into the cow-calf business.
But, Stockton and Wells both warned cattlemen to be wary of single cull cows offered for sale at auction barns. They aren’t always the bargain they seem.
“She’s usually there for a reason,” Wells said. “Either she keeps coming up open, or she tore down something on the place, or she’s got a bad quarter, it’s something. If she’s there by herself she didn’t get there by happenstance. Someone made the conscious decision to get rid of her.”
Know her return on investment
The trick to making the most out of cull cows is to understand the total costs and potential revenues of either keeping them around, or shipping them off to market.
“There aren’t really too many who sit down and put numbers to their costs,” Stockton said. Cattlemen should consider: Cow cost, forecasted costs for replacement heifers, labor to feed through the winter, feed costs, veterinary expenses, equipment and other resources that are tied up in that pen of cull cows, he said.
“The thing that’s really hard is that a ranch isn’t one year of production, it’s multiple years,” Stockton said. That’s where it helps to have a cull plan written down and options to consider when situations change.
“What will you do if cow prices change this year up or down?” he added. Having options on paper to consider will take some of the anxiety out of that cull decision. Whether that’s immediately sending them to market, feeding them through the winter to try and capture the spring market upswing, or culling at a set age range and identifying a secondary market for those pregnant cull cows, Wells and Stockton said.
“When is the right time to cull a cow?” Wells asked. “One of our senior economists says it’s the year before she comes up open. But of course we don’t know that.” The better strategy is to have a plan to identify cull cows in your herd; identify the markets that they might fit; and time those exits to capture the most value possible for the herd’s future.
Jennifer M. Latzke can be reached at 620-227-1807 or [email protected].
