5 Keys to Quality Cattle
A popular industry magazine found its way to my desk this week. An article that described five essential “wisdoms” for producing quality cattle piqued my curiosity. According to the author, the first key is “Be fanatic about animal health.” Key number two is “Pay the extra money for a good bull and build a reputation for quality cattle.” According to the article that “will come back ten-fold when it’s time to market your calves.” Really? Instead of $1.60 a pound I’ll get $16.00 a pound?
The article did get me thinking about principles that are important to producing quality cattle. The obvious prerequisite is to define what quality cattle means. If you are ranching for profit, there is only one possible definition. It doesn’t matter how big or old an animal is. It doesn’t matter what color it is or what pedigree it has. It can have one eye or three. Quality cattle are cattle that make you money. More specifically, quality cattle are cattle that produce a healthy gross margin.
Gross margin measures the economic efficiency of production. Rather than measuring the productivity of an animal, it measures the value of an animal’s production relative to the direct costs required to support that production.
Which are the quality cattle: A herd of sleek black cows with 95% conception rate and an average of 600 pounds per cow with a gross margin of $300 per animal unit, or a herd with cows that are every color imaginable, that have a 75% conception rate and produce a gross margin of $500 per animal unit? If you are ranching for profit the answer is OBVIOUSLY the second herd.
Here are the keys to producing quality (high gross margin) cattle, or any species of livestock for that matter:
- Fit the enterprise to the resource. It doesn’t matter how productive your cows are if you shouldn’t have cows. You can cram a square peg in a round hole, but it is expensive, exhausting and unsustainable.
- Fit the production schedule to the environment. Why don’t elk in Montana calve in March? It’s because nature’s production cycle is in synch with the seasonal availability of forage and because photoperiod has a big effect on the seasonal fertility of ALL grazing animals. This isn’t to say that everyone should be calving in late May or June. But being able to reduce hay feeding by $200-$300 per cow probably adds more value to most ranches than the extra $100 you might get for the calf weaned by the cow that consumed all that hay.
- Find animals that fit the environment. Hot and humid or cold and dry, subtropical or temperate, prairie, mountain or desert, a cow that works in one environment may not be suited to another. That goes for the production schedule too. A cow selected to be productive in a March-April calving program may not be fit for a May-June calving program.
- Hit depreciation head on. For most producers the biggest cost of keeping a cow isn’t feed, rent, or labor. It’s depreciation. We rarely even think of depreciation as a cost of keeping a cow, let alone the biggest cost! In a typical herd, depreciation averages $250-$350 per cow per year. That’s $250-$350 ON EVERY COW EVERY YEAR! Many Ranching For Profit grads have drastically reduced depreciation in their herds. Some have even eliminated it. In my mind’s eye, cattle that don’t depreciate are quality cattle.
- Come up with a replacement strategy that works. Most cow/calf producers have no idea of the REAL cost of raising their own replacements. The gross margin of a productive cow is almost always at least a couple hundred dollars higher than the gross margin of H1’s or H2’s on the same ranch. There are alternatives to raising your own replacement heifers. You can contract with someone else to raise them, buy them, or buy older, depreciated cows as your replacements. It is a breakthrough for some producers to realize that they don’t need replacement heifers. It’s not heifers they need to replace, it’s cows. That paradigm shift opens the door to several profitable opportunities.
These five principles can help you improve the economic efficiency of any kind of livestock. Please share with me and ProfitTips readers the principles you’ve found essential to producing quality (high gross margin) livestock.