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Integrity Beef preconditioning creates financial advantage

By Steve Swigert, Agricultural Economics Consultant (Retired)

Posted Sep. 1, 2013

The Integrity Beef Alliance is a Noble Research Institute-sponsored, cow/calf program that standardizes management decisions and supports value-added production practices. Producers in this program are already committed to retaining ownership of calves through a 45-day preconditioning program. Therefore, when producers in the program market calves this fall, the decision will be where to market the calves - not should the calves be kept after weaning. At the end of the 45-day preconditioning period, calves are marketed, retained on winter pasture or retained in a feeding program. Several of the producers will sell calves at the sale sponsored by the Integrity Beef Alliance in December, where the calves are commingled into truckload lots of like-kind cattle.

With constant changes in input prices and value of gains since 2009, the 45-day preconditioning program and subsequent retained ownership of calves to a planned marketing point has proven to be extremely valuable to cow-calf producers. In many cases, more financial margin was generated each year in this preconditioning process than prior to weaning.

One thing that makes retained ownership so valuable in the Integrity Beef program is that the calves are sired by bulls with known high-growth genetics. Calves from spring-calving cows perform well on the cow and during the preconditioning period, increasing the performance on the ranch. The average sale weight has exceeded 630 pounds over the past four years. (Graph 1)

The production performance and subsequent financial margins are significant when Integrity Beef calves with a +2 percent to -2 percent shrink at the end of a 45-day preconditioning period with no price discount (for being a calf) are compared to unweaned calves with 4 to 12 percent shrink (depending on the sale and weather conditions) and a $6 to $10 per hundredweight discount because they have not been preconditioned. (Graph 2)

In addition to not having lost weight through increased shrink and being discounted at sale time, Integrity Beef calves can gain 2.5 to 3 pounds a day and typically sell during a higher market at the end of a 45-day preconditioning period. (Graph 3) To optimize the margins through this preconditioning process, it is crucial to keep the cost of gain as low as possible. The range in average cost of gain for Integrity Beef calves over the past four years has been between 59 cents and 97 cents, resulting in a wide range of profitability. It is imperative that the producers monitor costs, especially for feed and forage. (Graph 4)

Graphs

By marketing calves like those enrolled in the Integrity Beef Alliance after a 45-day preconditioning period, consistently positive margins are achievable when having a production system in place to take advantage of superior genetics. In addition to the marketing opportunities at the end of a preconditioning period, these same calves will continue to perform through a wheat pasture or post-preconditioning feeding program and be in demand by feedlots looking for additional calf performance.

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