How BSE affected cattle marketings

[kpb]

cowman, I kept some of the heifers I bought last fall and they are on grass. The ones that were stretchy at Christmas I started feeding harder and sold them in the spring before the border opened. They did Ok.

I replaced them with light steers and they are also on grass. I should do fine on the remaining heifers that are now heavy on grass and the new steers, which with the good grass up north have gained about 300 to 350 lbs., will be very good. I'm starting to think it's better to be lucky than good when it comes to buying calves.

Along these lines I'd like to hear what you guys think about buying calves to backgrounding or retaining your own calves to background this fall. It seems a little slim to me given the price for the lights. Just don't think there's much advantage to backgrounding at this point.

kpb

[pandiana]

As usual, cowman, I appreciate your mathmatical anyalsis of the cost of production. It is very clear from the government statistics out there, as well as the "Easter Report", that a negative position is just where the 'average' primary producer finds themselves, hence requiring off farm income and supplements to survive.

I agree with you, to survive the primary producer most move up the production chain in order to hedge their losses (and risks) over a broader market.

Somewhere I read a phrase that price (value) follows the line of least resistance and are, therefore, borne by the primary producer. This term 'least resistance' has stuck in my minds since. Another indicator that the producer will continue to wait for next year for the market to suddenly become profitable for more than just the projected 5% who will earn $150,000.

[cowman]

kpb: It is too early to tell just how good backgrounding might be? If this crop comes off we are in all probability going to be awash in a sea of cheap grain? If it freezes we might have a major wreck on our hands although frozen grain can work, but it is more tricky than quality grain?
The other thing that might cause some people to be cautious is where we have been? We know how fickle the American government can be and how they can be influenced by protectionists? We all took a pretty good beating from the radical group R-CALF? Who knows what crazy things they might do to try to destroy the cattle business?
Personally I would be optomistic. Buy them right. Buy your feed right. Do your homework right, and I suspect you will probably do okay? Hey and besides you probably don't really have a lot of choice here? It's either take a chance or pay the taxman! It's a wicked little cycle we get in?

[pandiana]

I am interested in the disussion on preconditioning calves, and more importantly, getting paid for it.
kbp says" Grassfarmer, the reason, in my mind, that pre-conditioned calves do not get a premium is because, in the past, calves were marketed as pre-conditioned that were not. So how about this--I'll pay more for pre-conditioned calves if the cow-calf producer gives me a money back guarantee of no death loss for the first, say, 6 weeks I own the calf?"

So my first question is, How much premium would be generated for preconditioned calves. We vaccinate in the spring Starvac 4 $1.81, Somnustar PH $3.30, 8Way $.55 total 5.66. We boost Starvac and Somnustar in the fall for $5.11. We used Megamectin $3.10. All totalled $13.87 per calf. Add RFID tags $3.00. This does not include cost of handling these calves, etc.
I understand your proposition, sort of put your money where your mouth is...but not only are we expending the extra bucks but you are also asking us to accept the risks if you have a death loss, which as grassfarmer points out, could be totally unrelated to infections. In addition, vaccination is not guaranteed to prevent disease per se but only protect or mitigate the course of the disease. Serious challenge from stress due to weather or handling or dose-dependent contact with other sick animals could potentially overide any protection from vaccination. Possibly, you proposition would work if you were willing to accept a portin of the risk?

[pandiana]

cowman did you get frost last night ? My son works at the Joffre plant and he thought there had been frost down in that area. That will have a lot of bearing on the quality of the crop depending on what stage it is in won't it ?

[grassfarmer]

I think to an extent this preconditioning debate is yesterday's news anyway - just look at the thousands of calves advertised in the Pfizer Gold program alone. Producers are increasingly preconditioning more calves and feedlots are buying them. Many feedlot buyers are quoted as saying they wouldn't buy anything else so at least some of them believe in the program. I equally know some top feedlots that agree with kpb - they buy on price and can handle calves of any size and health status - I would suggest that is a profit opportunity for these feedlots and a profit lost opportunity for the calf producer.
I think there maybe is a price transparancy issue when it comes to working out what, if any, premiums are being paid. Do preconditioned calves make more because they are preconditioned or because the producer that practises this maybe is inclined to have better calves/management anyway?

This is also relevant to the initial post here about Harlan Hughes survey - the figures he shows for Manitoba herds were from herds that were recording their data - by implication I would expect recorded herds would have better results than the non-recorded herds. Maybe 88% calves weaned per 100 cows exposed is quite a bit higher than the overall Manitoba average? How many guys that are making a poor job and getting wrecks all the time will provide their production information?

[kpb]

pandiana, thx for your comments--I appreciate your concerns about my money back guarantee proposal. But I would point out that the reason I will not pay up for pre-conditioned calves is because some cow-calf guys continue to market calves that are, in fact, not pre-conditioned as treated animals. Because of this I have to treat every animal that I bring in as if it had no pre-conditioning and, therefore, I will not pay up for calves that I do not know what their past is.

In addition I would like to point out that backgrounders also assume a risk on the animal, pre-conditioned or not, because they do not generally know where the animal came from. If the cow-calf operator is a rough handler, those calves can be a nightmare to handle for a long time. And since the backgrounder is in the position of customer and the calf producer is the one that wants to sell the calf, I think that the cow-calf producer should be the one that provides the guarantee that the calves are, in fact, pre-condtioned.

kpb

[pandiana]

When you buy calves, kbp, that may not been vaccinated, and then throw the whole 9 yards at them, do you really expect that you are getting protection for those calves during this, the most stressful period of a calves life. It normally takes several weeks before the immune system responds to a vaccine challenge enough that they will recognize a pathogen and 'effective' immunity is usually not attainted until a second challenge or boost is given.

As a buyer, I would think the onus would be on you to search out 'reputation' sellers to give you the kind of cattle that will provide you with a risk you can live with. Under your scenario, the no frills producer's risk is zero when his calves are sold. The risk is all yours. In addition the seller could save as much as $13.87 per calf right off the top. On the other hand, right now, I would be paying $13.87 to lower your risk for no compensation. What kind of documentation do you require to confirm the calves are preconditioned?

[kpb]

pandiana, first of all I do not throw "the whole nine yards at them" as you put it when the calves arrive at my lot. My protocol is to get them eating and drinking as quickly as possible when they arrive, make them feel comfortable and quiet for a few days with no treatment at all. So the drug treatments usually don't start until the calves start to look a little under the weather. As someone once said "you can't make a well calf weller" so there's no sense in my book in treating something that does not get sick. My own calves, that I background off my own cows, are rarely treated with any drugs and I rarely lose any of them.

I'm not sure why you're defensive about selling pre-conditioned calves. If you are so confident in your treatment procedures then I see no reason why you wouldn't want to provide a money back guarantee for some period of time. What have you got to lose? A cattle feeder is unlikely to pay the trucking bills and so-called pre-conditioned premium to buy your calves and then kill them at his place.

As long as there are lots of guys out there who have weaned their calves last week, then shipped them to a pre-conditioned sale the following week to get mixed with a bunch of other calves and then sold as pre-conditioned, I and most other backgrounders will not pay a premium for them. We have no confidence in the system. It's pretty straightforward, pandiana, I can't afford to not treat these calves at some point because they are going to get sick and die if I don't so I'm not going to pay you extra for them. I am the customer and and as long as the sellers provide a commodity that cannot be trusted, I guess I'll buy on price and appearance not what somebody I don't know tells me is true. That may be hard news to you but I don't see it changing as long as some people try to twist the system. There's only one way I'd buy them and you, for some reason that escapes me, will not accept it. You lack faith in my ability to feed the calves properly--I lack trust in you treating the calves the way you said you did. So there's the impasse--but the difference between us is that you are trying to get me to buy something that is yours whereas I have lots of other choices.

kpb

[grassfarmer]

Fear not Pandiana, there are feedlots that are prepared to pay for preconditioned calves. Let kpb buy market calves and treat them as raw, weaned calves - that works for many feedlots as he says. I still think that the producers of many of the better calves will be selling preconditioned ones so we can all be happy.