Plan Now to Manage 2024 Forage Costs

Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

 

Cattle prices are expected to average higher in 2024 compared to 2023, which means that cow-calf producers are expecting increased returns and profitability. However, profit maximization implies careful cost management regardless of the revenue potential. The biggest cost component of cow-calf production is feed costs and specifically, harvested, and supplemental feeds. January may seem early to start planning grazing for the coming growing season but the ability to minimize non-grazing feed costs will depend on comprehensive grazing plans and management for the entire year.

 

The economic basis for cow-calf production is growing grass and using cows to harvest the grass. Feed costs are typically the largest component of annual cow costs in cow-calf operations. Total feed cost includes grazing cost, harvested forage and purchased supplemental feed. Producers can minimize annual feed costs by managing for maximum grazing; with minimal use of hay and supplemental feed to seasonally overcome lack of forage quantity and/or quality.

 

Planning grazing management now for the growing season and beyond can significantly influence hay needs next winter. Summer grazing management will set up the potential for stockpiling forage for fall and winter grazing. For introduced forages, strategic fertilization can be used to increase forage quantity and quality beyond the growing season. Grazing of native range can be deferred to save forage for later use. Of course, grazing management must be planned and implemented according to the wide range of forage types as well as climate and soil conditions where cattle production occurs. In all cases, proper stocking rates are critical to achieve grazing management objectives. It is important to assess forage condition and production potential in order to develop realistic grazing management plans. The assessment should be completed now, i.e. prior to or at the beginning of the growing season.

 

Considering the distinction between pasture and non-pasture costs is particularly useful because it focuses on the forage, which is the primary production of cow-calf and stocker operations, and the management of that grazing resource compared to the use of harvested forages and supplemental feed to augment the quantity and quality of grazed forages. Often tradeoffs are possible in the efficient use of grazed forage compared to the use of more expensive harvested forages and purchased supplemental feeds. Forage fed as harvested hay costs 2.5 to 5 times more than grazed forage. Of course, all of this takes place against the backdrop of herd nutritional management as an important component of herd health, reproductive efficiency and overall productivity. Both feed quantity and quality are critically important in herd nutritional management.

 

Hay use for beef cow-calf production is predominantly round bales. Round bale technology is convenient and saves labor. Unfortunately, the convenience of round bales has also frequently encouraged production of low-quality hay and poor storage and feeding management. Often hay production is a residual to poor pasture management where mature, rank grass that was not grazed effectively is baled, resulting in expensive, poor-quality feed. Good pasture management and good hay management are two sides of the same coin. The labor saving and convenience of round bales has, in many cases, fostered poor pasture management that results in increased hay needs and production of low-quality hay.

 

Perhaps rounds bales are too convenient. In days of old, producers feeding small square bales were typically more aware of the quality of the hay, how much they were feeding, how much was being wasted and, as a result, often did a better job of managing cow herd nutrition and feed cost. It takes some additional management to capture the advantages of round bales without wasting hay and incurring additional cost. For example, in Oklahoma, hay production per beef cow has more than doubled in the past 40 years. It appears that now significantly more hay is wasted and that poor pasture management has increased the number of days that cows are fed hay. Round bales very probably have contributed to this trend. Better grazing management and efficient, minimal hay use can reduce costs and add $150-$250/head or more to per cow profitability in 2024. Now is the time to start planning forage management.

 

 

The Cattle Market Cycle - How Long Will These Prices Last?

Mark Z. Johnson, Oklahoma State University Extension Beef Cattle Breeding Specialist

 

The complexity and dynamics of the beef industry can create financial opportunities for cow-calf operations willing to take a business approach to their decision-making process. The cattle cycle, often referred to in this newsletter, is the topic of my article this week. This cycle is repeated time after time and summarized as follows:

 

Figure 1. The Cattle Cycle flow of supply and demand.

 

The cattle cycle reflects the impact that supply and demand has on cattle prices. When cow inventory is low the prices of calves and all age and weight categories of cattle will move higher and vice versa. At the onset of 2024, our national cow inventory is the lowest since the early 1960s and prices of calves, yearlings, fed cattle and cull cows are historically high. High profit potential exist for the cow-calf sector in 2024.

 

How Long Will This Last?

This is the question being asked and debated in early 2024. As of now there is little indication of a rising cow inventory in the near future, Why? Several factors are working against it, these include:

• High interest rates

• High numbers of cull cows marketed in 2023

• Persistence of drought in parts of the country

• Low hay and feed inventories relative to drought

• Age demographic of cattle producers who have liquidated cow inventory * Little evidence of heifer retention

 

These factors, coupled with cow biology and the long term process and turning replacement heifers into cows, indicate a slow rebuild. Bottomline: The economic future looks bright for those in the cow-calf sector with inventory. The cow-calf sector serves as the initial source of product in the beef production chain. For producers who can cost-effectively manage their expense of maintaining a cow herd, the value of weaned calves should lead to excellent profit potential.

 

 

Are Your Cows Too Large?

Paul Beck, Oklahoma State University State Extension Beef Cattle Nutrition Specialist

 

From the 2012 Ag Census to the 2017 Ag Census, the number of beef farms decreased by 3.9% but cow numbers slightly increased. The consolidation was from a 5% reduction in small ranches (1 to 100 cows), but 6% increases in medium ranches with 100 to 500 cows and 1% increase in large ranches with 500 or more cows. We will get to see what impact the recent droughts had on consolidation of cattle farms with the release of the 2022 Ag Census in mid February.

 

There are several barriers for young or new farmers entering beef cattle operations, these include high cost of land and equipment and relatively low returns on investment. The average annual cost per breeding female increased to over $1000 dollars per cow in 2022 and have remained at that level. The recent good calf prices have resulted in positive returns over cash costs for the last few years for cow-calf producers.

 

These numbers should grab your attention, because I don't believe the costs and returns can be much different across the regions where beef cows are produced. The costs of maintaining a beef cow and the unit cost of production of weaned calves have increased tremendously over the past 5 years. Variable costs such as fuel, fertilizer and herbicides have been blamed as the primary culprits; however, fixed costs such as equipment, hired labor, and land have increased as well. When cattle numbers rebound, and they always do, will these high calf prices remain stable enough to cover these high costs of production?

 

Additionally, cow carrying costs have increased because of a 30% increase in cow size over the last 30 years from 1,047 pounds in the mid 1970's to 1,369 pounds in the mid 2000's, and this trend appears to have continued. A 30% larger cow requires 22% more energy per day for maintenance and will consume 20 to 30% more forage per day, decreasing cow carrying capacity of the farm or increasing input costs associated with pasture management, supplementation, and stored forages. Smaller cows also have been shown to have greater weaning efficiency (lbs of calf weaned per lb of cow body weight).

 

 

The increased cow mature weight equates to an increase in stocking rate if cows numbers are not adjusted. As stocking rate increases we know that weaning weights and rebreeding rates decrease. This has been linked to reductions in forage allowance (lbs of forage available/ lb animal body weight) limiting diet selectivity, diet quality, dry matter intake, and forage regrowth rate. Total weaning weight/acre has been shown to increase up to a point even though individual animal is decreased; until animal performance is reduced to such an extent that weaning weight/acre begins to decrease.

 

In research on introduced warm season grasses in the Southeastern U.S. (Beck and others, 2016; doi:10.2527/jas2015-0049) cow-calf pairs were separated into heavy (weighing 1,220 lb) and light (weighing 970 lbs) cow size groups and stocked on pastures 2.5, 1.7, 1.2, and 1 acres per cow unit over 4 years. These pastures were fertilized with 100 lbs of nitrogen per acre over the summer.

 

Heavy cows weaned calves than light cows, but the increase was only 19 lbs heavier weaning weight for every 100 pound increase in cow mature weight. Larger cows also lost more weight and body condition than smaller cows. Weaning efficiency ratios of smaller cows were higher (0.49 lbs of calf weaned per lb of cow for small cows vs. 0.42 for large cows). As stocking rate increased, lbs of calf weaned per acre increased from 130 lbs at the lightest stocking rate to 411 at the heaviest stocking rate.

 

The increase in weight and condition loss with larger cows is a concern and this could lead to reduction in fertility and increases in rebreeding interval for large cows, especially those with higher stocking rates. Because hay was fed when needed and cows were supplemented to maintain appropriate body condition, rebreeding rates were not affected. But, as cow mature weight and stocking rate increased the amount of hay and annual cow costs increased as well. Increasing stocking rate reduces individual calf body weigh gain but increases total calf gain per acre.

 

For the larger cows, any advantage in calf weaning weight was diminished during 2 year long periods of drought while this research was conducted, but were enhanced during periods of normal rainfall. These responses to drought indicate production systems with higher stocking rates and larger cows are more impacted by climatic stressors and thus less resilient to harsh environments.

 

The Cooperative Extension Service from Kansas State University, Oklahoma State University, University of Missouri, and University of Arkansas are providing a joint conference in Missouri and Oklahoma titled the KOMA Beef Cattle Conference. Register online at Missouri Extension. To attend at the Poteau, Oklahoma site register by February 7th LeFlore County Extension KOMA Cattle Conference Form or email Liana Jones County Extension Ag Educator at Liana Jones.