backgrounded calves

[just_wondering]

I am looking at getting some cattle backgrounded at a neighbours operation. His family has been custom feeding cows for Neilsons and others for years he has a proper setup and can likely do a better job cheaper.
That said what type of different arangements are there and what are some pro's and cons of each
cost per lb of gain, % of gain , straight custom feeding
What are some questions that should be asked, what are some reference materials to use
we have probably 500-600 lb cave and were thinking of taking them to 800 lb
Any help would be apreciated.
thanks

[kato]

Has this neighbour custom backgrounded calves before? If so, he may have a plan already set up.

We've never done this ourselves, but have seen some nasty contracts that others have signed. These were contracts for backgounding calves for a local dealer, and I've seen where it was possible to custom feed cattle and actually lose money at it! These guys actually signed contracts where they were paid on a pound per gain, had discounts if they gained too much, paid treatment costs for sick ones, and if any died, the weight from the deads came off the total gain that they would be paid for. They had no right to send chronics home, no right to refuse cattle arriving that looked sick, and no control over the vaccination protocol because they were pre-vaccinated. (and auction mart stressed)

We couldn't believe they would take on cattle in this way, but they did, and I know of a couple who went out of business because of it. From a feeders point of view these setups were a disaster, but the guy who owned the cattle couldn't lose! It has to be arranged a little more fairly for both sides.

My best advice is to discuss every detail you can think of in advance, and have a policy in writing for dealing with any problems that come up. Maybe call a few bigger feedlots, and ask for a quote from them. It might give you a place to start.

[just_wondering]

He has backgrounded calves for years some of his own others for Gibsons and others.
4% shrink from us when they get there 10 miles from pasture to backgrounder, then thats backed off 4% on weigh out lbs of gain gotten from that.
His charge is .65 cents per lb of gain with a 2% death loss acounted for. he Figures they will gain 2.5-2.75 lbs/day average.
He has the right of refusal on entry but after that they become his responsability.
We pay drug costs and plan to booster -7 way, IBR/BVD and give them the $5.00 weening shot (sorry I'm not sure what it's called) as well as implant/RFID tag, all using his facilities
we're from the ounce of prevention camp'
He pays all feed /suplement and vitamin Costs.
He will also carry the costs untill we sell them probably March
I have not called any other feeders as it is the weekend but do plan on checking out other prices to see where he fits in I'll let others know how this experement in retained ownership worked out, or if We should have just sold off the cow like we normally do Any other advice would be great.



Has this neighbour custom backgrounded calves before? If so, he may have a plan already set up.

We've never done this ourselves, but have seen some nasty contracts that others have signed. These were contracts for backgounding calves for a local dealer, and I've seen where it was possible to custom feed cattle and actually lose money at it! These guys actually signed contracts where they were paid on a pound per gain, had discounts if they gained too much, paid treatment costs for sick ones, and if any died, the weight from the deads came off the total gain that they would be paid for. They had no right to send chronics home, no right to refuse cattle arriving that looked sick, and no control over the vaccination protocol because they were pre-vaccinated. (and auction mart stressed)

We couldn't believe they would take on cattle in this way, but they did, and I know of a couple who went out of business because of it. From a feeders point of view these setups were a disaster, but the guy who owned the cattle couldn't lose! It has to be arranged a little more fairly for both sides.

My best advice is to discuss every detail you can think of in advance, and have a policy in writing for dealing with any problems that come up. Maybe call a few bigger feedlots, and ask for a quote from them. It might give you a place to start.

[kato]

Doesn't sound too bad, but there's one more thing you might want to check out.

I'm sure there are others here who can wade in on this one, who may disagree, but this is my opinion.

It's important to plan for what you are going to do next with these calves. Are you going to finish them? Or sell them as short keeps?

If you are going to sell them as short keeps, and if they are too fat when you sell them, you won't get the top price. We've found that calves gaining close to 3 pounds per day will be carrying a fair amount of flesh at 800 pounds, unless they are real framey and growthy. Being too fleshy at that size will get a discount.

It's different if you are going to finish them yourself than if you are going to sell them to someone else to finish. Let the feeder know how you want them to look at the other end, and what market you're going after.

Best of luck.

[grassfarmer]

The price of gain you are being quoted looks favourable. The problem is as Kato says what you will be bid for 800lb calves that have been fed heavily? Also more importantly where will the price of 8 weights be next March? if it is around 75 cents as kpb and others think this would be a recipe to lose a lot of money.

[just_wondering]

Talked witha few more people today and folling your advice Kato thanks for the comments we decided to sell our Calves through the TEAM internet Auction and if prices are not what we expect can still reject offers One guy that I talked to Sait that and March put on 800lb calves might not be such a a bad Idea but I need more Info before I pull the trigger on that. We made some Money on Canola and Call options but nowhere near todays prices. I still have much more to learn on the futures side of the business,
thanks again

[kpb]

now grassfarmer you're trying to get me in even more trouble than I can get into myself, lol. I don't think I said 8's would be .75 in the spring. I do think they will be lower than today, likely around .95.

I agree with everything else you wrote. The numbers in this case are easy to figure out--if the calves are 5 and half weights, you'll likely get around $1.10 for them now and will net, after deductions from the mart, about $580. Feeding costs to get to 800 pounds are $162.50 so you're in for $742.50. To break even you have to get .928 for each calf. Given that you will have selling deductions on this end too, you will be looking at getting about .95 to $1. to break-even on this arrangement.

Of course I could be wrong and prices go up in the spring and make this better but if I'm wrong and they go down below .95 you're in the glue for sure.

By the way, at the risk of someone telling me I'm the gloomiest bugger around, my neighbour sold some decent red bred cows the other day and, after deductions, averaged $224 per head. And with the number of dispersals going on that price will likely go down more. I mean who's buying all these bred cows? Those guys in the Western Producer who are advertising bred cows at $1,000 are dreaming in technicolor.

kpb

[grassfarmer]

Sorry kpb, I read the 75 cent price in Jerry Klassen's article in grain news - and it was for 700lb calves in March. Hopefully they won't be that bad!

[kato]

Let's see here....

Bred cow $224.00.

Heifer calf at 500 pounds would have to go for 44.8 cents a pound to be worth the cost of a cow that will have a calf in a couple of months.

Why is anyone keeping heifers?????

[kato]

I didn't see the Grainnews article. Talk like that doesn't do anyone any good. Was it written a couple of weeks ago when the markets were all upset over grain price speculation? Things have calmed down a lot since then.

[grassfarmer]

Surely that's an over simplified view of the current situation? As I understand it the problem is low grain supply/ higher prices across N. America. There will be no relief from this until next years crop is in the bin and this is reflected in both the barley and cattle futures. Calves have certainly picked up a little from a month ago but that was more to do with the usual seasonal glut than a short term panic over grain prices. Calves are still what - $150 back on the year? That is a lot of money out of cow/calf producers pockets.

[cowman]

Grassfarmer: I suspect you are right on a tough market, however how come we have a tough market? Was the grain situation so bad worldwide that it warranted the high "barley" prices? Locally the yield was pretty average...was it worse in other places in Western Canada? I suspect...not much difference?
Now I'm no big expert on the grain business...but I think when barley gets around that $3/bu figure...I'd better be selling...barley!
Okay, bottom line(idiot that I am) I figure calves at $1.05 are just too cheap! Tough them through as cheap as possible....take them to grass if price doesn't look favorable in the spring...and hope like hell things are more optomistic in the grain end of things? Am I retarded?
All my life I have ignored the "experts" and gone with the gut feeling? I believe I've won more than I've lost...maybe wishful thinking...but I'm still here!
Now maybe I'm still here because I have other income...but I've never lost money on any of my farming ventures! Maybe didn't make one hell of a lot(and maybe had to do some voodoo math!) but bottom line I've never paid out cold hard cash to farm!

[greybeard]

It seems to me that every year in November it looks like the bred cow market is in the tank. This year may be worse than most, as there was panic in the calf market. Cull cows are trading at BSe levels. Bred cow prices start at one bid above the meat buyers.
Agribition sold about 250 heifers at an average of $1138. Prices there generally reflect the value of top quality breeding stock. Maybe someone who was at the sale can supply more detail as to what was in demand.
I used to breed Charlais and purchased all my cows and heifers. Some improved my genetic pool and some hurt it. Looking back, some were great bargains, some were overpriced. One thing for sure they aren’t very uniform, even within purchased groups.
In my opinion, the biggest losses in calf values show up in a distressed market like we have had,in the price between top quality and second cut cattle. The second cut always starts a lot sooner in a buyers market. Small lots and individual animals get screwed.
Uniformity can pay big dividends. Your cheque can be a 30% disappointment if you send small lots or they can break them into small groups.
Electronic sales make up 20 to 30 percent of the volume currently. I haven’t used them, but plan to. You get one price for the whole lot, and have the option to pass if you don’t like it. Of course, we’re back to those larger uniform lots. Maybe the second cuts can be sent to a presort, as Grass farmer suggests.
Fat cattle quit the auction markets a generation ago, for all the same reasons.

[just_wondering]

We passed on the bid 103 lbs steers 5 cent slide were hoping for 110 but might have accepted 108? Have now decided on the local heartland auction mart and their presort satalite sale on tues. so My weekend will be all booked up. Going with the pre-sort as it seems to me that like gray-beard says large lots are the way to go.
I was mistaken earlier I said that the internet market was TEAM but it was DLMS I was NOT impressed at all Four pictures the sound kept cutting in and out I never even heard what they said about our calves It was nice to be able to pass on their bid though maybe if they get their technology better I might look again in a few years.

[cswilson]

If 700 pound calves are .75 cents in march Im going to be buying as many as I can find grass for. I'll go out on a limb right now and predict that 900 weight yearlings will be a heck of alot more than that in the late summer. But I'm just a foolish optomist not busy trying to analyze myself out of the cattle business.