Ranchers weigh options on replacement heifers amid historic high prices

COLLEGE STATION – When it comes to replacement heifers in beef cattle operations, producers are faced with a dilemma: Raise them, buy them or sell them and “take the money and run,” said a Texas A&M AgriLife Extension Service economist.

It’s becoming an all too familiar situation among Texas ranchers, said Stan Bevers, an AgriLife Extension economist at Vernon who recently presented a study at the Texas A&M Beef Cattle Short Course.

“We looked at what the market is right now for replacement heifers,” he said. “We were targeting heavy bred heifers, and they were anywhere from $1,650 to $2,300 a head. The second number was what it was costing the rancher to raise them themselves.

When it comes to replacement heifers in beef cattle operations, producers are faced with a dilemma: Raise them, buy them or sell them and “take the money and run.”

“One operation we tracked were heifers weaned in 2010 and 2011, what those heifers were and what their accumulated expenses were over the two years to the point where they were heavy bred. Their expenses totaled $1,100 to $1,400 a head. That ranch was pretty efficient and did a good job of reducing their expenses.”

Bevers said since this ranch was located in Oklahoma, one would need to add $300-$400 a head to that for Texas ranchers and regional market prices to develop replacement heifers.

“That comes out to $1,400 to $1,800 to develop replacement heifers in Texas,” Bevers said.

He said if you look at the current market price, it shows it’s cheaper to “raise them yourself if you are a pretty efficient, cost-reducing type operator.”

“The final number we looked at is if I have to pay much over market cost for them or if I choose to raise a heifer on my own, what is she going to return me over her life?” he said. “We started with a two-year-old heifer that’s going to be having her first calf and added eight years to that. That means we’ve gone out 10 years into the future, so now she is 10 years old,and we came up with what I can pay for her, which was $2,301 a head.”

Bevers said that leaves three numbers to consider.

“We know the market is $1,650 to $2,300, and it takes $1,400 to $1,500 to raise her, and now she is worth $2,300 in my herd economically.

“What do you do with those numbers? Well, if nothing else, it illustrates how complex this decision is right now,” he said. “It’s not right or wrong. It’s based on what type of operation you have and your costs. You finally have to decide to pull the trigger and say this is what we are going to have to do.”

Bevers threw in a fourth number – what feedlots are paying for commercial heifers destined for the beef market. Right now, it’s about $1.93 to $2.03 a pound, he said.

“You are talking about a heifer in the 750-pound range that’s worth $1,500 on the market and that’s for beef,” he said. “So, if you don’t keep her as a replacement heifer, you now have a floor price of about $1,500 a head. If you don’t want to take her and put her back in your operation, the feedlot is going to take her for $1,500 and turn her into beef later down the road.”

The Importance of Buy-In

by Tyler Dean, Junior and Shows Coordinator
International Brangus Breeders Association

 

Tyler Dean, Maysville, Oklahoma

Tyler Dean, Maysville, Oklahoma

In management and decision-making, according to Wikipedia, buy-in (as a verb or noun) signifies the commitment of interested or affected parties to a decision (often called stakeholders) to ‘buy into’ the decision, that is, to agree to give it support, often by having been involved in its formulation.

You might be questioning how this has anything to do with the cattle business and especially with our Journal’s focus on marketing and promotion. My response – it has everything to do with any successful marketing or promotion campaign. Even more, it has huge ramifications in the seedstock business in today’s world.

Today’s commercial producers are more educated than ever before. They have an unlimited stockpile of resources available to them via the internet, and they are using those resources to make their decisions. They are no longer just merely looking for a bull to turn out on some cows. They want to know how the bull has been raised, what performance tests he has been subjected to, how he compares to his contemporaries and how he compares to another ranch’s animals.

Marketing and promotion is essential to get these producers to look at your operation as their source for genetics; however, without them “buying-into” your operation, your development programs and your customer services, they probably won’t be loyal, repeat customers.

As stated, marketing and promotion is integral to getting customers to your doorstep, but how do you start them on the path to buying into your operation? Well, the first step is explaining your operation, your goals, your production practices and the services you provide. Show them your data, your research and why your practices are working. Give them examples of other successful customers.

Next you must follow up with them. Make sure the genetics they obtained from you are working in their given production structure. You must let them know you are genuinely concerned about their success.

Lastly, you have to adjust your program based on the feedback you receive. A “take it or leave it” attitude just will not work in today’s world. Customers have too many options to put up with that kind of philosophy. If your customers can brag about how great their genetic supplier is to their neighbor and how much you have helped them be successful, that is the pinnacle of customer buy-in.

The same can be said about our association on all levels. Without buy-in from our Board of Directors, policies and procedures do not get passed and disseminated to our membership effectively. The same can be said about the lack of buy-in from our staff. Without buy-in from our breeders, those policies and procedures become a source of duress and dissension. Thorough communication among all parties is imperative. That is why the IBBA has developed a strategic plan and implemented specific goals and objectives to guide the association and decision making. It serves as an open communication system to the Board of Directors, the staff, membership and our customers and allows everyone to see where the association’s priorities lie. Without buy in from every angle, goals will not be achieved and the breed will decline and suffer simply from a lack of buy in. Are we not all on the same team? Do we all not want to see the breed progress and our members succeed?

As breeders, I encourage each and every one to be involved in the workings of our association and go ALL IN on this great breed. The future holds a lot of promise for our great breed if we can pull together and position ourselves as THE choice for the rebuilding the American cowherd.

Note:
This article was previously published in the October 2013 issue of the Brangus Journal. Tyler Dean writes a column in each issue. You can read more of Tyler’s columns as well as the Brangus Journal online.

 

Committed to Quality

Brangus producers have had a long-standing commitment to quality, and now the IBBA is partnering with BQA to improve our product for consumers. At www.bqa.org you’ll find an array of educational material to help you improve management practices and your breeding program. To find a breeder near you, check out GoBrangus.com.

Will Cattlemen Restock After Drought?

“This drought is unprecedented- This drought sets into motion a whole new set of circumstances.”

– Jim Robb, director of the Livestock Marketing Information Center in Denver 

Among those new circumstances is the thought that when producers do restock after it rains, they may initially come back with stockers instead of cows, to give them more agility in their pasture-management options. “We’re going to chase stocker animals and that’s going to change the stocker price dynamic.”

And, some ranches will come back with females. “It’s a heck of an opportunity to build genetic quality, and it’s a heck of an opportunity to have fall- and spring-calving herds as part of your operation.”

It’s a tremendous opportunity for cattlemen positioned with the right genetics and management to develop a replacement-heifer enterprise to supply those who are looking to restock. (See “Ten Reasons To Consider A Bred Heifer Enterprise”.)

Continue reading the full story at beefmagazine.com.

One More Reason to ID Your Cattle

“The bottom line of animal ID is that the technology is here. The consumer demand is here. The cost, compared to other cattle production inputs, is nearly negligible.”

The U.S. Meat Export Federation (USMEF) has jumped into the animal identification fray with a study suggesting that foreign demand for traceability is probably enough to pay the costs of a mandatory national ID program.

Here’s why it can be important. Traceability connotes trustworthiness. USMEF points out that we currently face one or more “trust” based restrictions on trade from most of our major trading partners, including China, Europe, Japan, South Korea, Taiwan, Hong Kong, Russia and Mexico.

The European Union, Japan and Korea have already adopted mandatory traceability for their domestic cattle, and there is no reason to presume they won’t apply the same standards to exporters. Of the eight major beef-exporting countries in the world, that would impact only the U.S. and India. The other six have programs up and running.

Continue reading the full story to find out why electronic tag and tracing systems are beneficial.