When calves are scarce and prices are high, interest in preconditioning programs – despite data showing their economic benefits – is diminished.
According to the United States Department of Agriculture (USDA), as of January 2010 the U.S. beef cow herd was at a 47 year low of 31.3 million head; the head count has declined 12 of the last 14 years, and the 2010 calf crop is thought to have been a 60 year low of 35.4 million head. Combined with aggressive beef export demand, this has cattle feeders scrambling to keep their lots full so they can capitalize on historically high fat cattle prices, and they’ve bid up the calves the week of Dec. 20-24. January 2011 feeder cattle futures on the Chicago Mercentile Exchange (CME) reached an all-time record high of $122.30/cwt, and average prices for 500 pound steers in 2010 were $18/cwt above those of 2009.
Given all that, University of Missouri Extension Beef Cattle Specialist and Professor Justin Sexten said it’s hard for many producers to justify the cost of preconditioning. Part of the problem is that every rancher computes his expenses differently. “In one case a producer may value their time and labor in feeding the calves,” Justin said. “They may value the additional cost of keeping the calf around and the cash outlay for the extra vaccines, and the feed that they may be raising. Whereas another producer may not put in a value for his time, may not charge yardage because the facilities were already there, and may not charge a true cost to the feed. And so, the cost of the preconditioning program will vary wildly, as much due to accounting as anything else.”
Weaning the calf well ahead of marketing produces the greatest added cost. Although programs vary, the typical preconditioning regime requires placing the calf on feed for 45 days. Justin estimated the daily feed and yardage cost at $1.00-1.25 a day, producing additional expense of $45.00-56.25 per animal. “Some preconditioning programs mandate a certain kind of feed that you have to use,” he said, “so that may result in a little bit higher cost compared to home-raised feeds.” In addition, there will be $7-9 per head in vaccine charges.
The relative scarcity of calves produces less discrimination by buyers, who are reluctant to compensate cattle raisers for the full cost of their preconditioning regime. This is not to say cattle raisers do not benefit from preconditioning; buyers are more willing to pay a premium when cattle supplies are ample and when they can capitalize on the health benefits. Justin said, “In October, those preconditioned calves would likely have more value because they should be less likely to get sick, and they’ve already been weaned… As we get into January, February and March buyers are looking to get cattle accumulated to turn out to pasture, and so those calves tend to be hardier since the weather has stabilized and the calves are older.” There have also been studies showing calves that have been weaned longer than 30 days show a dramatically lower incidence of bovine respiratory disease, both initially and recurring. “The challenge with preconditioning is producers need to make sure that they’re marketing those cattle in a manner that they can capture that value,” said Justin.
