| HOME | HELP | FEEDBACK | SUBSCRIPTIONS | ARCHIVE | SEARCH | TABLE OF CONTENTS |
|
|
|
|||||||
|
|||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ANIMAL PRODUCTION |
* Department of Animal and Range Sciences, and and
Department of Agricultural Economics and Economics, Montana State University, Bozeman 59717
 |
Abstract |
|---|
 Top Abstract INTRODUCTIONMATERIALS AND METHODSRESULTSDISCUSSIONLITERATURE CITED |
|---|
Key Words: beef cattle • calving season • marketing • system
|
INTRODUCTION |
|---|
|
TopAbstractINTRODUCTIONMATERIALS AND METHODSRESULTSDISCUSSIONLITERATURE CITED |
|---|
), exploit seasonal markets, or both. In anecdotal reports about changing calving seasons, most ranches studied have also implemented several management and marketing changes when calving seasons were changed (May et al., 1999). Hence, effects of changing calving dates were confounded with changes in grazing management and marketing of calves. In a companion paper, we evaluated changes in calving date without changes in grazing strategy or calf marketing (Reisenauer Leesburg et al., 2007).
At weaning, cow-calf producers have several marketing options. Retaining ownership of weaned calves to heavier BW or slaughter may increase profits. Cycles in cattle prices within years (seasonal cycles; Peel and Meyer, 2002) and across years (cattle cycle; Anderson et al., 1996) represent significant sources of risk faced by cattle producers (McKissick and Ikerd, 2002) and may affect rankings of management systems. Few studies related to calving season have systematically evaluated effects of calving season in combination with marketing methods for calves.
Our objectives were to evaluate alternate calving seasons and different calf marketing strategies for their effects on profitability. This paper describes methods and results associated with retained ownership scenarios in combination with each of the calving season systems described in our companion paper (Reisenauer Leesburg et al., 2007).
|
MATERIALS AND METHODS |
|---|
|
TopAbstractINTRODUCTIONMATERIALS AND METHODSRESULTSDISCUSSIONLITERATURE CITED |
|---|
,b) was parameterized to represent the production resources of a range-based beef enterprise in eastern Montana. Management protocols representing 5 calving season systems were parameterized and simulated to compare several measures of biological and economic system performance (Reisenauer Leesburg et al., 2007). Three postweaning retained ownership scenarios were simulated for each calving season system using the MARC beef cattle simulation program (Keele et al., 1992). Characteristics of simulated weaned calves from each calving season system were used to parameterize animal inputs for the MARC model. Outputs from the 2 models were combined to evaluate combinations of calving seasons and retained ownership across 4 stages of the cattle cycle. Animal Care and Use Committee approval was not obtained for this study because no animals were used.
Calf Marketing and Retained Ownership Scenarios
In our companion paper (Reisenauer Leesburg et al., 2007), cow-calf enterprise performance was evaluated for 5 calving season systems: spring (SP, calving beginning March 15 and weaning October 31), spring with calf mortality increased by 5% (SP-IM), summer (SU, calving beginning May 15 and weaning December 31), summer with early weaning (SU-EW, calving beginning May 15 and weaning October 31), and fall (FA, calving beginning August 15 and weaning February 1). In this part of the project, we evaluated 4 marketing scenarios for steer calves and nonreplacement heifer calves in each system: 1) sold at weaning (as reported in our companion paper, WS), 2) backgrounded in Montana and sold as feeder cattle (WBS), 3) backgrounded in Montana and then fed to slaughter weight in Nebraska (WBFS), and 4) shipped to Nebraska at weaning and fed to slaughter weight (WFS).
All retained ownership scenarios (WBS, WBFS, and WFS) were assumed to take place in custom facilities. For WBS and WBFS, the backgrounding phase ended when the steer calves reached 363 kg of BW. This allowed trucking or marketing of both sexes to occur on the same day. For WBFS and WFS, steers and heifers were slaughtered at 544 and 499 kg, respectively.
Inputs and Assumptions for Simulations
Inputs to the MARC model were patterned after those of Williams et al. (1992) and Williams and Bennett (1995). Cattle breed composition was assumed to be a Hereford-Angus rotation. Growing periods in the MARC model were parameterized so that weaning weights of the calves matched those from the systems described in our companion paper (Reisenauer Leesburg et al., 2007). Steers were assumed to be fed separately from the heifers. Backgrounding and finishing diets were formulated based on feedstuffs and management practices representative of Montana and Nebraska, respectively. Rations were balanced using commercial software (The Consulting Nutritionist, Dalex Computer Systems Inc., Waconia, MN) with consideration given to initial BW, target gains and ending BW, feedstuffs available, and feedstuff prices. Energy densities of backgrounding diets ranged from 2.49 to 2.57 Mcal of ME/kg of DM, and 2.81 to 2.96 Mcal of ME/kg of DM for feedlot diets. Diets were based on alfalfa hay, corn silage, corn gluten, wheat middlings, limestone, and a 40% CP supplement. Table 1 presents assumptions used for each retained ownership-calving season scenario. Yardage costs were assumed to be $0.15 and $0.25 per animal per day in the background lot and feedlot, respectively. Opportunity costs on owned assets and expenses not financed (cattle, transportation, and veterinary expenses) were calculated based on a rate of 5%. Feeding expenses were assumed to be financed with borrowed funds at an interest rate of 10%, with expenses paid as billed throughout the feeding period.
|
In setting cattle prices, our goal was to fairly represent the pattern of price fluctuations that occur within years (seasonal) and across years (cattle cycle) associated with changes in beef supply and demand. We attempted to remove the variation associated with inflation or very short-term price fluctuations. Weekly cattle price data for cattle of all BW classes were obtained via the Livestock Marketing Information Center (Lake-wood, CO) as reported by the USDA Livestock Reporting Commission in Billings, Montana. The years 1989 through 2000 were chosen to represent a complete cattle cycle. Prices were averaged to monthly and then quarterly prices and adjusted for inflation using the gross domestic product implicit price deflator (base = 1996) as published by the Bureau of Economic Analysis (Economagic, 2006). Quarterly prices used for the simulations were taken from the peak (1990), valley (1996), and midpoint years of the descending (1994) and ascending (1999) phases within the 1989 to 2000 cattle cycle. Price slides for steers and heifers were determined from prices associated with representative BW increments and were used to determine the final sale price. Prices used for the sale of weaned calves were illustrated in our companion paper (Reisenauer Lees-burg et al., 2007). Representative prices for feeder cattle and slaughter-weight cattle are presented in Figure 1.
|
presents these prices as ratios to prices in the fourth quarter of 1996 (index units). Using the fourth quarter of 1996 as a base, feed costs for each sex by scenario combination were adjusted for changes in feedstuff prices. Rations were priced during the quarter during which the cattle started on feed (quarter IV for SP-WBS and SP-WFS and quarter I for SP-WBFS). Costs for corn, corn silage, and corn gluten were indexed to changes in inflation-adjusted corn prices, whereas diet costs for protein supplements were indexed to changes in inflation-adjusted soybean meal prices.
|
) and the net return from retained ownership in each subsequent feeding phase. For example, CGM for SP-WBS was computed by adding the net return from backgrounding steer and heifer calves to the ranch gross margin for the SP system. In other words, ranch gross margin (corresponding to WS here and computed in the companion paper) represents income and expenses from a single production year, whereas for WBS, WBFS, and WFS, CGM carries on to track the additional income and expenses associated with the calves until they are finally sold or slaughtered. To aid in interpreting these results, we also report net return per animal for each calving season retained ownership scenario. Ending market values for one phase were used as the beginning market values for the subsequent phase.
Because the MARC model is deterministic, statistical analyses of its outputs are not possible. To make the outputs from the Montana State University model used in our companion paper (Reisenauer Leesburg et al., 2007) compatible with the MARC model, we used 30 replications of the Montana State University model to compute means for each calving season by cattle cycle phase combination, some of which became inputs to the MARC model. By using many replications, the SEM becomes small, making the means of the model outputs essentially deterministic. Therefore, all results reported here are deterministic (i.e., only means are reported).
|
RESULTS |
|---|
|
TopAbstractINTRODUCTIONMATERIALS AND METHODSRESULTSDISCUSSIONLITERATURE CITED |
|---|
. Differences in net returns per animal among systems reflect differences in BW gain, cost of gain, and differences in initial value and final value. Net returns per animal also reflect the profit-ability of these systems for producers who purchase the cattle at the beginning of the feeding period and have the cattle custom fed. In such cases, the proper unit of production is the animal. For WBFS, values presented represent net returns for the feedlot phase. Net returns for the backgrounding portion of WBFS were identical to those presented for WBS for the same calving season.
|
). Net returns per animal for retained ownership varied greatly across the cattle cycle as cattle prices, price slides, and feed prices changed throughout the cycle. Greatest values tended to be at the peak and ascending phases of the cycle, and lowest tended to be during the descending and valley phases. Positive returns were most frequent for FA systems.
Cumulative Gross Margin
Estimates of CGM for all combinations of calving season, calf marketing, and cattle cycle phase are presented in Table 3. Results for WS were presented and discussed in Reisenauer Leesburg et al. (2007) but are presented again here to facilitate comparison among marketing alternatives. Differences shown in Table 3 represent the effects of calving season on production costs and cattle performance, differences among calving seasons in the number of calves to feed and market, differences in BW gain and cost of gain, and differences in initial value and final value.
|
). Because prices tend to be different between these quarters, rankings of FA-WFS systems were very sensitive to this assumption. Marketing FA steers in quarter IV instead of quarter III was always more profitable. For the purpose of the following comparisons among systems, the 2 estimates for FA-WFS at each phase of the cattle cycle (Table 3) were averaged in an attempt to represent the transition of prices during this time of year (Figure 3).
|
), holding ownership through backgrounding (WBS) or on to slaughter weight (WBFS and WFS) was more profitable than selling calves at weaning (WS) for all calving seasons. Estimates of CGM for WFS were 20 to 69% greater than for WS. Differences between WBFS and WFS were small for SP and SP-IM and also between WBS and WBFS for SU.
During the descending phase of the cattle cycle, retained ownership was generally not profitable (Figure 3b). The exception was WBS for SU-EW, which weaned light calves yet still sold calves during quarter I. Cattle prices were greater during quarter I than in subsequent quarters. For WBFS and WFS, cattle were sold during quarters II, III, and IV (Table 1 and Figure 1). For SP and SP-IM, WBS was essentially equal to WS. For FA, WFS was very similar to WS. These results suggest little incentive for retained ownership for cow-calf producers during this phase of the cattle cycle.
At the valley of the cattle cycle, all retained ownership scenarios yielded losses for SP and SP-IM, whereas WFS was profitable for SU and SU-EW (Figure 3c). All forms of retained ownership were profitable for FA, and differences were much larger than for other calving seasons. Slaughter-weight prices were considerably greater during quarters III (Figure 1b, sale time for SU, SU-EW) and IV (sale time for FA) than quarter II (sale time for SP and SP-IM).
During the ascending phase of the cattle cycle, retained ownership was profitable for all calving season-marketing combinations (Figure 3d). For SP, SP-IM, and SU marketing scenarios, WBS and WBFS were similar, whereas WBS was superior to WBFS for SU-EW. Advantages of retained ownership were largest for FA. Note that slaughter-weight prices were greater during quarter IV (sale time for FA) than for other quarters.
On a relative basis, changes in prices across the cattle cycle affected different marketing scenarios differently. Using the cycle peak as a reference, systems that fed cattle to slaughter weight (WBFS and WFS) generally experienced larger effects than systems marketing calves (WS) or feeder cattle (WBS). For example, estimates of CGM for WS during the descending phase were 89 to 92% of those at the cycle peak. Corresponding values for WBS, WBFS, and WFS were 65 to 86%, 52 to 62%, and 53 to 63%, respectively. At the descending and valley phases, reductions in CGM were greatest for FA systems but greatest for SP-IM and SU-EW during the ascending phase.
Comparisons of Marketing Scenarios Across Calving Seasons
Systems based on SP-IM had lower CGM than corresponding SP systems at all points in the cattle cycle, simply because SP-IM had lower ranch gross margin than SP (Reisenauer Leesburg et al., 2007). Ranks of calving season-marketing scenarios for SP-IM and SP were closely related at all points of the cattle cycle. Similarly, estimates of CGM for systems based on SU-EW were closely related to those for SU.
Retained ownership beyond weaning was profitable for SP, SP-IM, and SU in 7 of 12 scenarios but in 9 of 12 scenarios for SU-EW and FA. These results suggest that retained ownership beyond weaning is more likely to be profitable for early-weaned calves than for calves weaned at older ages and heavier BW. Further, at phases of the cattle cycle in which retained ownership is profitable, the relative benefit of retained ownership is greater for early-weaned calves.
At the cattle cycle peak, of the top 4 systems, 2 were in SP and 2 were in FA. During the descending phase, 2 of the top 4 were in SP, 1 in SP-IM, and 1 in SU-EW. At the cycle valley, SP, SU, SU-EW, and FA each contained 1 of the top 4 systems. During the ascending phase, 2 of the best 4 systems were in SP and 2 in FA. Systems with the greatest CGM at each phase of the cattle cycle were FA-WFS, SP-WBS, FA-WFS, and FA-WFS at the peak, descending, valley, and ascending phases, respectively.
|
DISCUSSION |
|---|
|
TopAbstractINTRODUCTIONMATERIALS AND METHODSRESULTSDISCUSSIONLITERATURE CITED |
|---|
A key aspect of our approach was the sampling of years (or phases) within the 1990s cattle cycle in an attempt to represent the changes in cattle and feedstuff prices associated with the cattle cycle. These changes include large swings in price levels for each class of cattle, changes in price slides associated with BW within class, and changes in the relative value of different classes. Feeder cattle prices are closely related to feedstuff prices (Dhuyvetter et al., 2002). Prices were adjusted for inflation so that comparisons between different phases of the cycle were not sensitive to which phase started the sample. Inflation-adjusted prices were averaged by quarter to remove what we assumed to be random differences among days and weeks within years. However, this averaging also probably removed some precision from the results. For example, the slaughter date for FA-WFS steers occurred at the junction of quarters III and IV, making the interpretation of results for this system more difficult.
We assumed that calf performance, morbidity, and mortality were not systematically associated with the feeding scenarios we modeled. In other words, we assumed that risks and costs associated with beginning calves on feed at different times of the year were equal. Differences in mortality among systems could easily change ranks based on profit.
Retained ownership should be regarded as a separate enterprise from the cow-calf production enterprise. For cow-calf managers dependent on custom feedlots to retain ownership of their calves, the decision to retain ownership can be a new decision every year. McKissick and Ikerd (2002) referred to retained ownership decisions as short run when compared with cow-calf decisions. It should be emphasized that profitability of any retained ownership enterprise is dependent on several factors that can vary greatly across specific sets of circumstances, including market values of weaned calves, feed costs, transportation costs, morbidity, mortality, and sale prices. Quality factors associated with producers, genetics, and health management (source, genetic, and process verification) can also bring market discounts or premiums. Additional decision factors not considered in this study include cash flow, financing, income taxes, risk aversion, herd size, and contractual commitments to marketing alliances. White et al. (2007) provide a more complete discussion of the decision factors associated with retained ownership. Although our results may be representative of a reasonable set of circumstances, they do not necessarily accurately predict results for any specific situation.
Results of this study indicate that, for the systems represented, there is not a single calving season or a single calf marketing strategy that is always most profitable. Ranks of systems changed considerably over the different phases of the cattle cycle. For SP, SP-IM, SU, and SU-EW, our results suggest that the best marketing strategy may be sensitive to the phase of the cattle cycle. Because FA-born calves were weaned at much lighter BW, and because FA systems tend to exploit seasonal price variation better than SP and SU, it could be more safely concluded that retained ownership would always be appropriate for FA systems. The FA-WFS system was consistently superior to other FA systems but not much different from FA-WS during the descending phase of the cattle cycle.
As discussed in our companion paper (Reisenauer Leesburg et al., 2007), amounts and quality of forage resources, especially in the fall and winter, may have large effects on the success of alternative calving seasons. The efficiency of calf production, reflected in ranch gross margin, carries through to comparisons based on CGM. Few previous studies have evaluated combinations of calving season and marketing strategies for calves. In anecdotal reports about changing calving seasons, most ranches studied have also implemented several management and marketing changes when calving seasons were changed (May et al., 1999). Hence, the effects of changing calving dates were confounded with changes in grazing management and calf marketing.
Using a small number of cows, Kreft et al. (1998) compared spring and fall calving systems in North Dakota. Spring-born calves were fed to slaughter weight in a feedlot, whereas fall-born calves grazed pastures for 4 mo before entering the feedlot. Net returns favored the fall system. Pang et al. (1999) simulated spring vs. fall calving with several weaning ages and found that for weaning ages of less than 200 d, spring calving was more efficient than fall calving (net returns per cow per year), but fall calving was more efficient at older weaning ages. In this study, we attempted to more systematically evaluate effects of these changes in Northern Great Plains range-based operations.
Choices among breeding, calving and weaning dates, and calf marketing strategies are dynamic and can have important effects on the profitability of beef enterprises. The multiple combinations of calving season-marketing strategies possible allow beef producers to exploit a variety of production and marketing opportunities. In beef enterprises representative of the Northern Great Plains, with a restricted grazing season and limited access to low-cost, high-quality grazeable forage, no single calving season and no single combination of calving season and calf marketing is expected to be superior throughout the cattle cycle. Profit from retained ownership is dependent on many factors, many of which may be unique to specific enterprises. Fall calving and early weaning systems most often benefit from retained ownership through slaughter.
|
Footnotes |
|---|
2 Corresponding author: mwtess{at}montana.edu
Received for publication January 19, 2007. Accepted for publication May 11, 2007.
|
LITERATURE CITED |
|---|
|
TopAbstractINTRODUCTIONMATERIALS AND METHODSRESULTSDISCUSSIONLITERATURE CITED |
|---|
This article has been cited by other articles:
|
|
 |
|
  R. E. Kruse, M. W. Tess, E. E. Grings, R. E. Short, R. K. Heitschmidt, W. A. Phillips, and H. S. Mayeux Evaluation of Beef Cattle Operations Utilizing Different Seasons of Calving, Weaning Strategies, Postweaning Management, and Retained Ownership Professional Animal Scientist, August 1, 2008; 24(4): 319 - 327. [Abstract] [PDF]
|
|
|
|
 |
|
 V. L. Reisenauer Leesburg, M. W. Tess, and D. Griffith Evaluation of calving seasons and marketing strategies in Northern Great Plains beef enterprises: I. Cow-calf systems J Anim Sci, September 1, 2007; 85(9): 2314 - 2321. [Abstract] [Full Text] [PDF]
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HOME | HELP | FEEDBACK | SUBSCRIPTIONS | ARCHIVE | SEARCH | TABLE OF CONTENTS |
