Chronic Economics

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 Blood  Hilbig  MacGregor  Sprowls  Sturgess

 

Editor’s note: Third in a four-part series.

Chronic cattle are an economic drain on the feedlot, and some operations will handle them better economically than others. “It will vary a little bit between yards that own all of their own cattle and have the ability to do some unique things in management that a customer-based yard is not equipped to do,” explains Kynan Sturgess, DVM, Amarillo, Texas. “The prices they’re getting back for railers are poor. It’s hardly worth it at times to sell them, and customers will become quite irritated when they get a check for $50 or $60. Some yards won’t do it anymore. Even with cattle that have had three treatments and are sequestered, we often just feed them by themselves and quit putting them back into the general population. You can’t do that in every feedyard.”

He adds that often a manager will come back six months after you’ve set those pens up, and they’ve sold them on a grid with 75% grade and good cost-of-gain, but they forget to factor in the price of selling those cattle into that lot. “We’ve managed to do some things like that rather than railing. You still lose part of those cattle, but the flip side is getting such poor prices for these animals with so much money invested in them. It isn’t worth it to sell. You’re losing money, but you’re lessening your loss in trying to reduce how much money you’re not getting for them.”

Scott MacGregor, DVM, Livestock Consulting Services, Idaho Falls, Idaho, believes when you look at morbidity and rates during the growing phase, they’re far healthier. “The cost-to-gains are a lot higher because the feed and energy increments are different from the finishing yard that feeds a lot of grain. We don’t know whether the feed helps or the grower yards tend to be smaller and the cattle are looked at more frequently. The health is better during the growing period than it would be with equal calves in the finish yard. The cost-of-gains are notably higher. When you compare a 200-day feeding period where an animal’s been grown for 100 and fed for 100, the ones that have been fed hard with grain for 200 days will have a better feed efficiency and substantially lower cost-of-gain but worse health.”

Ranch to Rail data shows a loss anywhere from $25 to $100 in treating an animal just one time. “So when we treat an animal multiple times, our best hope is that we get back out of it close to what we have in it -- it’s still a salvage operation just to get those calves back to their home pens,” Sturgess says. “But, it’s far better than losing the animal altogether or trying to sell it in a market where you won’t get anything for it.”

Shawn Blood, DVM, Hitch Enterprises, Guymon, Okla., notes that in 2005, there was $510 lost on the sale price alone for chronic cattle that have been railed in one of his yards. “When you add all the other things we’ve done to those animals, it’s a fairly big chunk of change.”

 
How many more treatment notches until this animal becomes an economic drain by being a chronic, railer, realizer or a dead?

How many realizers and deads can a feedlot afford? Sturgess has feedlots report the number of animals they rail each month. “If they rail somewhere around half the number of cattle that are dying, depending on the type of population in the yard, we’re pretty close to where we ought to be in aggressiveness in trying to get cattle gone versus trying to hold them back and restart them. You can get overly aggressive and in a situation where they’re not getting rid of some cattle they really should because they don’t have time to deal with some of these issues. I look at it as somewhere around half the death-loss rate.”

Some people have good options, and some have none. Probably fewer than half don’t have an economic option, surmises MacGregor. “They’d rather have a realizer than a dead. We’re realizing more animals now than 10 years ago. You’ve also reached an economic breakpoint with the animals. They’re going in a new direction, so it tends to be a cattle boss or an assistant manager who gets involved in terms of deciding where they ought to go.”

An option MacGregor says the Northwest doesn’t have are semi-trucks coming around every other week paying 30 to 40 cents per pound. Sale barns aren’t really an option either. “Most feedlots don’t want to send those cattle back to the sale barn because they value their reputation. Because of the economics, it would involve the head doctor for sure, but he might just simply call the attention of either the assistant manager or the cattle boss. And then they could come and make that decision.”

Doug Hilbig, DVM, Hilbig Veterinary Services, Lakin, Kan., notes that it’s not so much that feedlots can’t take the time to care for those chronic cattle, but that they can’t afford to take the time. “Time has a value to it, and you could spend more of it if the animals would be worth $2,000 apiece. As the value becomes less, you have a tendency to spend less of your time. Time is money.”

If there were a cost-effective tool or system available, Robert Sprowls, DVM, PhD, Texas Veterinary Medical Diagnostic Laboratory, Amarillo, thinks it would be in use. “‘Cost-effective’ is the key. Our system of marketing cattle is part of the issue. We need to change that system. We’re probably not going to change morbidity or mortality without changing how we market cattle. We can keep fine-tuning what we already know to do, but until a better calf is delivered as a stocker or as a feeder, our success will be limited. The only other option is to eliminate pathogens. Once we start talking about eliminating pathogens, we can talk about lowering morbidity and mortality.”

The reason that hasn’t happened is price discovery. The best way to get the truest value from that animal is to go through the system we have. Typically, we pay less for cattle that give us more problems. “I think we could give that system a good price discovery and not go through the system we use now,” says Hilbig. “Cattle with fewer problems have a tendency to bring more money. Thus, the yearlings are more expensive, and you know they’re going to perform a certain way all the time and have a tendency to make less money. People will take the higher risk for lower-priced cattle for the higher potential return. If you were to develop a way of getting the true price discovered, you could reduce the stress.”

Marketing and restarting chronics

Chronics aren’t a total loss -- there are ways to market them. Blood says it’s just like any other market -- the more buyers you have in the market, the more competitive the price discovery will be. In one of his feedlots three railer buyers come in and essentially have an auction every other week. Two other yards don’t have that option, and Blood says there is a big difference in railer prices. “So, we pursue the railer management a little bit differently between those yards because of the variation in price and the price discovery of what a railer is worth. It must work for the buyers because they keep coming back.”

Hilbig says the prices vary in a tight area. “You’ll get $0.30 to $0.40 on them. Some of the others may get $0.20. They just don’t sell.”

Restarting chronics that don’t die or get realized may be an economic option for some feedlots. “You’re paying $300 for a calf and getting $100 for him as a chronic versus $700,” says Hilbig. “You’re more likely to take a third of the value. If you can still get a third of the value versus nothing, you will.”

Sturgess says restarting is dictated by how much time management is going to allot. “If it’s saving or making money, then you’ll find the time and labor. If costs were that much lower, they would tend to just buy more calves and keep rolling through it.”

A restart candidate sometimes is a calf that’s been treated maybe three or four times in a fairly short time frame and appears to be doing well. Hilbig says it may not be a true chronic. MacGregor agrees. “I don’t know if we send a real chronic back to the home pen. They may have had three treatments, but we don’t call them chronic. If they go through the system, they would tend to be sent back to a different home pen, with new mates that have all been through the same scenario. The importance of competition and pecking order plays a role. They probably didn’t do well in the home pen, which may be part of the problem in the first place.”

Those cattle tend to be fed a long time, says MacGregor. “If you can get them to grade, they’ll grade quite well. The economic values we looked at indicated that the ones that were restarted were better than we thought. If you have an animal doctored three times to gain 1.5 lb., ours were gaining 2.3 lb. Costs-of-gain were $0.87 instead of a $1.10, which is what we model for.”

When you figure loss of weight, railer, feed costs and salvage price for a realizer, MacGregor says the feedlot is probably getting somewhere less than 30% of the value of the animal. “The one’s we restart go up to 40 to 50%. They still have increased costs of gain and feed values and so forth and aren’t as efficient, but 50% is still better than a dead, in my opinion.”

This information is from a Bovine Veterinarian roundtable sponsored by Pfizer Animal  Health.

Next: Can we prevent chronics?


 
Some feedlots are using grass traps to help chronic cattle do better.

Are Grass Traps An Economic Option?

Taking a look at how people in other geographic areas manage the same thing can be eye-opening. Scott MacGregor, DVM, MS, consults with feedlots in South Africa and has brought some new ideas back to his clients. One of them is using grass traps on which to place high-risk/chronic cattle.

The feedlot operations in South Africa tend to be on huge farms and vertically integrated with packing houses. “I noticed they would take animals that looked high-risk at about 450 lbs., bring them into the feedyard from multiple origins, process them, and put them on what they call ‘camps,’ which are 20-acre grass pastures with a bunkline board,” explains MacGregor. For three weeks they’ll be on the grass plus a milled ration and appraised on a daily basis similar to a pen rider’s observations, then put into a large yard. So for the difficult period, they’re on grass.

Then, they go through a typical therapy regimen set up with three rotations. If the animal is returned after the third treatment, it goes back to a camp. The animals have well over 1,000 sq. ft.  each, and they are left there for 45 days. At that point, they’re restarted.

MacGregor has been trying this method with his U.S. clients.  “I’ve become interested in the theory that grass might stimulate the immune system,” he says. “Whether it is all of the fatty acids or whatever through the rumen, or lower stress because of the forage, I don’t know, but something allows a bloom to take place if you allow them to be there for 45 days.”

Back in the United States, MacGregor went into three feedyards where they allocated traps. Though they had no grass, they had 2,000-plus square-feet, a windbreak, a place to lie down, free choice mineral, milled ration and a round-bale feeder. “We used the same 45 days, and we lost fewer than you’d think on that system,” he says. “When they come off the 45 days, they have the option to either realize the animal, which was the minority, or restart them together in small pens of 25 to 50.”

Average daily gains were higher than expected at close to 2.5 lbs. Costs-of-gain were less than a dollar, and conversion rates were better than expected. “Instead of 10+ they came back somewhere between eight and nine.” Out-weights were lower at 1,150 lbs. for a steer instead of 1,350. Deads past the three-treatment period and the 45 days were fewer than 3%, though MacGregor expected closer to 5-10%. Condemns were also fewer at 2%, though it was expected they might be 20%.

“Economically, that system made better sense than not having a plan and letting them die in small convalescent pens,” state MacGregor. “In the morning when you see them lying down in these camps as chronics, there’s usually 100 feet between them. They’re not in bunches because they have all the space to spread themselves apart naturally, and maybe that’s all there is to it. We’ve monitored our numbers since 2002, and realizers have gone down steadily and linearly since that period, and the crews are convinced it’s because of the traps.”


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