Calf size verses profit

[countryguy]

I thought I'd start a new topic in regards to cowman's post in the carcass weight thread asking if a 450 pd calf will make you money every year.Cowman,I think you better seriously ask yourself if an 800 pd calf is profitable every year.

A couple weeks ago I had the opportunity to listen to Kit Pharo speak.I believe this guy has the beef business figured out.

What he spoke about was your land base can only produce so many pds of beef in a year no matter what,so why wouldn't you want to harvest that beef in smaller packages and get more dollars per pound for every pd of beef you sell?Combining that with later calving putting your cow in sinc with nature you can feed her for next to nothing all winter.Sure sounds like common sense?

[cowman]

Well country guy I asked that question because I really don't know. And I realize that $350 a year for a winter feed bill isn't reality...at least in commercial cow/calf production?
I doubt I'd ever be able to go that 450 lb. route, you know how it is you get into a system and it works for you? Now maybe if I was a lot younger and actually cared all that much...then things might be different!
I am often fascinated by how some of these younger guys think and I've actually changed how we do some things around here...not sure if it is a positive thing or not yet...but it is easier! And hey "easy" gets a lot more important...every year!

[farmers_son]

I checked out this fellows site www.pharocattle.com If nothing else he is a super salesman. I did read as much as I could of his newsletters but have not had the advantage of hearing him speak in person. I am however of the opinion that I would not go too far these days to hear an American cattle producer speak on how to make money raising cattle when I know full well that if those SOBs had not shut out Canadian producers out from the highest cattle prices in history that I could have been making money without his wisdom. No matter what he says in his newsletters, since 2003 he has been making money at our expense and any idiot could be profitable at the prices they have had in the U.S.

This fellow seems to be a excellent marketer. And there is a fine line between marketing and BS. As such you need to interpret what he says very carefully. He advocates small packages because he sells bulls that produce small calves. If his theory was correct we should be producing ever smaller and smaller cattle because obviously those tiny calves bring more cents per pound at the auction and since we can only produce X pounds of calves anyway the more the merrier.

Obviously on any farm there is going to be an optimum weight calf to aim for and one would assume that at some point beyond that smaller will mean less overall pounds of calf produced and less net revenue for the operation.

Most people calve in order to produce a calf of optimum weight for the fall weaned calf market. While I am a fan of calving in better weather the reality is that summer and fall calving has been in existence for quite a few years and has not taken the country by storm. Some other factors must be driving the choice of calving time other than being in sync with nature.

It is my belief that calving times are determined by our income tax laws more than any other single factor. Our income tax laws influence the marketing of weaned calves and there is no getting around that. As long as there are people out there with money that can save 30% or more of the purchase price of that calf on income tax by purchasing before year end then there is going to an incentive to produce calves for that fall market.

For most producers the challenge is how to produce the most pounds of calves for that fall market in spite of nature. I believe the income tax laws are a little different in the U.S. and that cattle are not a taxable expense the same as cattle in Canada.

[Horse]

I defy anyone to come up with a consistent winner as Gary Jarvis of TJ auctions once told me you cant win all the time but as long as you win more than you loose you can stay in the game.
I feel we need to downsize the whole cattle herd as a cow can only produce 1 calf a yr would we not be better off by reducing the size of that finished animal by say 15% and suposedly the free market will pay more for less beef. That is of course if we are truly in a free market.

[greybeard]

Volumes have been written on this “big cow vs. small cow” debate. Everybody above makes good points, but Horse is right when he says you can’t win all the time, especially if you line up on the extreme end. FS was unusually hostile to a fellow producer, considering he usually promotes co-operation in getting the most out of the multi-nationals. Part of Pharo’s argument is that the small size returns the most to the producer. Grassfarmer brought some good ideas with him and he came from an area that hasn’t imported beef from us for a generation.
I don’t agree with everything these Pharo types say. Most come from feed-deficient areas. Most years I can’t bale all the feed offered to me. Although I don’t use much grain, it is even cheaper than cheap this year.
I think the most important point they make is that cow –calf producers raise cows and grass. If we choose our Bulls to raise the type of cows that will make a low input, long lasting cow, we will have good steers to sell. If you choose bulls based on the size of steers at weaning you are probably not going to be right some of the time. Your cow size will always creep up, and you will risk loosing the convenience traits of good feet, udders fertility, etc. It takes generations of breeding to get a good cow herd. A #2500 bull will give you big steers in one pass.

[Willowcreek]

I like reading Kit Pharoah's thoughts- I think he has some ideas that can work for most, but not all will probably work for everyone...

Many people in my area found the cost related to having those 1700-1800 lb cows a couple years ago when winter moved in with a heavy snow in October, 80 inches of snow over the next few months, and cold and blizzards almost daily until May...That combined with the statewide drought and $70-80 Ton hay made some realize how much those big old cows need to eat to keep warm...

I do agree with him that some cattle have gotten way too big- anyway for my country I'd prefer a cow that matures in the 1050 to 1250 range that can be wintered on 20-25lbs a day of hay when the pasture is knee deep in snow.....

[cowman]

I would think the packers prefer a large carcass...just makes sense? Doesn't cost anymore to kill a 1400 lb. steer than a 1100 lb. one...as long as he fits in the box?
At Cargill High River everything goes out in a box so I guess they would have to fit in a certain weight range?
My hog farmer neighbor says market hogs need to be right on a certain weight range and degree of finish or the discounts are very high? In fact if you aren't hitting the target consistently you don't get your contract renewed! I wonder if someday it will come to that in the beef industry?

[Willowcreek]

cowman- I think some of it involves the market you are selling beef into...I know one buyer/feeder that didn't want the big cattle because by the time you had them finished right the cuts were too large to fit the average the restaurant trade wanted...

Apparently those New York City folks can't eat a 2 inch thick hunk of beef steak the size some of us do...

[cswilson]

You could raise cows that eat trees and crap gold bricks and everybody wouldn't raise them-to each their own lol.

[cowman]

Well at one time hogs came in many different sizes and different breeds? Today they are basically one size and one high end composite breed? Everyone buys their breeding stock from a couple of companies because the pigs have to fit a certain industry standard?
Do you ever see the day when for economic reasons you raise calves that have to meet certain specs? A very specific grade at a specific weight...or there just won't be anyone to buy them...at least at a price you could live with? Don't forget the hog business was where we are now, about 25 years ago? As the big packers consolidate and control more of the industry, can you see the day when they will require steers of "brand X" genetics, fed how they want them and maybe even using the genetics that they will produce? Isn't that basically what has happened in the hog business?

[bward]

yes thats exactly what happened to the Hog industry, and the only edible thing left on a hog now is the bacon and the tenderloin. Chops and roasts are so bone dry and tough now.... they effectively removed the aroma, and all succulant - ness out of a pork loin roast. You can be sure that in time we will not only be dictated as to what the packers will buy from us, we will also be sourcing our breeding stock and genetics from them.

[bward]

bward, good comments. The worst possible advertising for either the hog or beef industry are the precooked prepackaged roasts, they are horrible !!!
If any consumer realized just how much they were paying for a very small amount of poor quality protein they would be shocked.
As far as carcass size goes, it would be interesting to see the input/return comparison of producing the 1400 pound steer vs the 1250 pound critter, and maybe factor in the price of feeding the 1300-1400 pound cow vs the 1800 pound ones while we are at it.

[cowman]

I would assume the feedlots know where they make a dollar? If the most profit is in a 1400 lb. steer...they will hit that target? I think most breeds have the genetics available to hit that target?
Not so sure that taste really matters anymore? Modern pork is terrible, in my opinion, as is chicken...but times change and tastes change? If all pork/chicken tastes the same then people just get used to it...probably to the point where they wouldn't eat anything that was different...and especially more costly! Not talking about niche markets but the general commodity market.
Consider how we have been led into producing what the packers desire? In the seventies they said too much fat not enough meat...we switched to lean continentals? Later they decided we needed more marbling...we all switched to Angus! A few years ago they decided Simmental cattle were a no-no...out they went!
Today Simmental cattle are acceptable again and I suspect the trend will be less Angus? And here are all us farmers trying to conform to a pattern that changes every few years!

[cswilson]

A 1250-1350 pound steer has been an acceptable harvest point since Christ was a cowboy-a British X cross cow will produce a steer that finishes 10-0-140 pounds heavier than she is if you use the right type of bull on her. The pig business became soo standardized breed wise when the pretty much went to total confinement production systems-beef cows are raised in some pretty varied enviroments-you can muddle through just about any ranch situation with baldie cows and whatever bull you wish to use.

[farmers_son]

I have given the statement “your land base can only produce so many pds of beef in a year no matter what,so why wouldn't you want to harvest that beef in smaller packages and get more dollars per pound for every pd of beef you sell” quite a bit of thought.

I checked back to last Octobers average prices for weaned calves and found that if you sold 200 400 pound calves last October you would only have had to sell 158 600 pound calves to come home with the same cheque. Actually the cheque would be slightly better for the larger calves because of a number of per head checkoffs, the bigger calves would have about a $168 total or a little over $1 per head advantage. Another way of looking at it if we aim to maximize the pound of weaned calf produced off of a given land base is that that land base can only support a given weight of cows. I calculated that if that land base could support 200 1150 pound cows then it be equivalent to support 158 1450 pound cows.

What then comes to mind is that the size of the cow is probably much less important than her ability to get in calf year after year, to wean live calves and her longevity. On our operation we place a lot of emphasis on some soft criteria like the cows have to quiet and decent to handle because we view the cost of handling man killer cows as quite high especially because I rely on my wife and children for help throughout the year as well as at calving time. Plus to the extent possible all other things being equal we like cows that are nice to look at.

A lot of ranchers in Canada are aware that they can increase their profitability by outsourcing part of their resource requirement such as winter feed instead of limiting their production to what can be grown with their available land base. While they are exposing themselves to more market risk because they now have to enter the cash market for purchases as well as sales it does work if you can buy feed for less than the cost of production on your individual operation. The ability to purchase resources off farm than opens the option of keeping 200 cows that can wean a 600 pound calf instead of 200 cows weaning a 400 pound calf.

The conclusion I draw is that cow size by itself would not increase or decrease a farms profitability and that other factors play a greater role in determining profitability.