Volume XI Number 2 March/April 2003

Capturing the Value of Preconditioned Calves



The following is a summary of a presentation of Dr. Clyde Lane, Jr., Professor of Animal Science at the University of Tennessee. Dr. Lane offered this research at Pfizer's Cattlemen's College during the NCBA Convention.

Feeder calf producers want to receive a premium for calves that have been preconditioned. The key to this premium is a desirable "package" presented to the buyers to receive the full value of the calves. There are several factors that contribute to this "package," including weaning, health status, breeding, size and similarity of the group.

Most calves coming to feedyards from Tennessee and the southeast are not weaned. Popular reasons cited are:

  • weaned calves will not grow as well as calves left on the cow
  • weaned calves will not gain enough to pay for costs associated with weaning
  • weaning requires extensive labor and facilities
A trial was conducted at the University of Tennessee (Neel et al, 2001) where a group of calves were divided into two groups. Group one was left on their dams while Group Two was weaned, dewormed, vaccinated, implanted and fed for 45 days in a dry lot situation.

The weaned calves were maintained on good quality hay plus concentrate feed, fed at one percent of body weight. The supplement was a commercial blend (16 percent Natural Supplement with Rumensin). Weaned calves were administered 7-way clostridial and respiratory vaccines. Weaned calves were also dewormed and implanted with a growth promotant.

The weaned calves gained substantially better than their non-weaned counterparts.

When evaluating the cost for preconditioning these weaned calves, the health treatments, supplemental feed and hay totaled nearly $38 per head, compared to just $13.52 for those not weaned - a difference of $24.22 per head. In order to profit from preconditioning the calves, the additional gain must be worth more than the cost of the gain.

Theoretically, weaned/preconditioned calves should be worth more to the buyers, however that will depend on the marketing situation. Preconditioning calves does not automatically result in increased returns. Calves that have gone through a preconditioning program and then are sold in a weekly auction will probably not be economically advantageous. Producers must couple the preconditioning program with an aggressive marketing program.

In Tennessee, there are several marketing opportunities for preconditioned groups of calves. The information in Table 1 highlights the premiums of marketing preconditioned calves in 2001 and 2002 at the Sweetwater Pride Plus Sale.

In order to get the most premiums available, cooperation among producers is essential. In the Sweetwater Pride Plus Sale, only a few producers cooperated informally to market the lots of cattle with similar genetics. A more structured approach often leads to even more premiums.

Producers in Giles County, Tennessee, organized the Giles County Beef Alliance, where there is a formulated agreement on breeding, management, health, a 45 day preconditioning program and a marketing program. Each producer follows the same protocol. The premiums they received for their cattle are in Table 2.

These results indicate that giving up some individuality in production and marketing can improve returns. Other alliances have shown similar results.

Producers can capture increased returns by preconditioning cattle, if costs are closely monitored. Weight must be put on calves economically during the preconditioning program. An aggressive marketing program must be initiated to reap the value of the calves. The marketing program must put together enough of similar genetics cattle to make them more valuable to the buyer. Changing from a "business as usual" approach can improve the returns of feeder calf producers. ©



Table 1. Comparison of Prices Paid for Different Weight Medium and Large Frame No. 1 Calves at the Sweetwater Pride Sale and Tennessee Livestock Auctions in 2002 (Rawls, 2002)
 

Medium & Large Premium
No. 1 Steers

   No.   Avg. Wt.   Price TN
Auctions
Average		  Premium
($/cwt.)		 Dollar
Premium
($/Hd.)
400 - 500 6 488 $91.00 $84.69 $6.31 $30.79
500 - 600 91 562 84.90 78.17 6.73 37.72
600 - 700 135 654 79.77 76.35 3.42 22.37
700 - 800 121 775 76.15 73.56 2.59 20.07

Medium & Large
No. 1 Heifers

  
400 - 500 14 478 $79.50 $73.10 $6.40 $30.59
500 - 600 108 562 77.42 71.42 6.00 33.72
600 - 700 137 648 76.37 70.01 6.36 41.20
700 - 900 55 750 71.90 67.00 4.90 36.75


Table 2. Comparison of the Value of Cattle Sold by the Giles County Beef Alliance and Tennessee Livestock auctions, August 3, 2001 (Rawls, 2002)
Medium & Large
No. 1 Steers
Giles Beef Alliance
Price
TN Auction
Wt. Average
Price
Premium
Per/cwt.		 Premium
Per/cwt.
Price Average Wt.
(lb)
500 - 600 $102.19 555 $92.80 $ 9.39 $ 52.11
600 - 700 95.52 662 85.32 10.20 67.52
800 - 900 83.60 852 76.14 - 87.20 7.46 - (3.60) 63.56 - 30.67
Medium & Large
No. 1 Heifers		  
500 - 600 $ 92.57 529 $83.81 $ 8.76 $ 46.34
600 - 700 87.49 632 80.41 7.08 44.75
700 - 800 81.00 774 73.23 7.77 60.14
Medium & Large
No. 2 Steers		  
500 - 600 $102.19 555 $84.04 $18.15 $100.73
600 - 700 95.52 662 79.58 15.94 105.52
800 - 900 83.60 852 70.00 13.60 115.87

Medium & Large
No. Heifers

  
500 - 600 $ 92.57 529 $76.51 $16.06 $ 84.96
600 - 700 87.49 632 73.27 14.22 89.87
700 - 800 81.00 774 67.65 13.35 103.33 









  

   
   

   


   

   		
  
   



  

    


   

All information is copywrited by Feed Lot magazine and cannot be printed or re-printed
  without the publishers express consent. Please contact
  Feed Lot Magazine for reprint and copy authorization.