Retaining ownership of calves past weaning can boost profits if conditions are right—but it also brings added risk that must be carefully considered. This approach is a form of integration in beef production, covering stages like cow-calf to stocker, stocker to feedlot, or cow-calf to feedlot.
It can be profitable when cattle perform well and meet market demands. Producers also gain more control over marketing and can expand their operations by leveraging the calves’ growth potential. However, each ranch is different, and the feasibility and profitability of retaining ownership should be evaluated individually.
Advantages
Retained ownership increases the number of marketing options available to the producer and may allow for greater economic returns. The producer is able to experience the economic advantage, normally received by others, from both the post-weaning growth phase and the finishing phase of the beef production cycle. Retaining ownership also makes it easier for the cow-calf producer to obtain valuable information on both the feedlot performance and the carcass desirability of calves from that herd. This makes available a vital management tool that can be used to evaluate and improve a herd breeding program. Retaining ownership of feeder calves requires, in most cases, less investment in facilities and equipment than investing in other livestock operations. On many farms building some fence, providing a few feed bunks or self-feeders, adjusting vaccine schedules to complete the programs at or prior to weaning, and perhaps taking advantage of an existing building or barn is all that is required.
Accelerated systems of finishing calves during retained ownership have several advantages in many areas:
- Calves are marketed at slaughter weights at 14 to 16 months of age. This reduces interest costs associated with owning calves for a longer period of time.
- In the marketing of spring-born calves, accelerated finishing in retained ownership systems place the market timing of finished cattle in the seasonally high value spring-early summer period.
- Reduced stress, shrinkage, disease, marketing, transportation and auction expenses combine to greatly lower the cost of production.
- Rapid gains from high energy feeding programs allow the producer to take full advantage of the genetic improvement programs.
- The system utilizes abundant by-product and grain supplies.
Disadvantages
The disadvantages – added risks – of retained ownership of beef calves must also be considered by the producer.
Many cow-calf producers do not have the experience or facilities needed to post-wean feed or finish their cattle, sometimes relying on someone else to provide the service. It is a matter of developing a relationship of trust with the operator of a selected feedlot.
Marketing a small number of fed cattle and the distance from slaughter facilities may present problems. Some feed yards require a minimum number of animals per pen and a small producer may not have enough to fill a pen. It may be possible for two or more individuals to feed in a pen together.
Obtaining credit, maintaining cash flow, and income tax implications must be considered also. Retained ownership increases capital requirements and delays income. This must be considered and adjustments made to be successful.
Increased market price exposure can also be a disadvantage to retaining ownership. Cattlemen interested in retained ownership need not assume the risks of large market swings by accepting whatever the market offers on a market day. There are flexible forward pricing instruments including forward contracts and futures and options contracts that should be considered to avoid much of the price risk. Utilization of these price risk tools may also assist the cattleman in attaining the additional capital required when retaining ownership of cattle for prolonged periods.
Test and Evaluate
A successful retained ownership venture requires more intensive management and a well-planned herd health and feeding program. Favorable weight gains depend upon satisfying the calf’s nutritional needs, efficient feed conversion, as well as keeping the calves healthy throughout the retained ownership. Vaccination and feeding schedules must be planned well in advance.
The longer a producer retains ownership in the cattle, the greater the risk. Changes in the price of cattle and in the price of feeds can adversely affect the potential profitability of retaining ownership. This longer ownership period increases the time in which the owner must provide operating capital and increases the cash flow requirements of the production enterprise. Some lenders may disapprove of the increased capital requirement and risk.
Cattle price risk can be limited by forward contracting/hedging.
Health
Minimizing health problems, especially those associated with weaning and starting on feed, is critical to successful retained ownership programs. The common problems associated with purchasing feeder calves, such as stress, excessive shrink, and exposure to a wide variety of infectious agents, are avoided when weaning and feeding out your own calves.
Creep feeding prior to weaning is not always profitable, but it can be a cost effective “health procedure” in successful weaning. It helps avoid stress, reduces digestive problems, and reduces respiratory diseases which are often associated with the post-weaning period.
Calves nursing cows and eating grass do not need extremely high protein levels in creep rations. The key is to get some concentrate into the calves to condition the rumen for the stress associated with weaning and to aid in the adjustment to a grain and forage diet. Calves eating even a small amount of grain in a creep ration have been shown to wean easier. They adjust to bunk feeding quicker and do less wandering of fence lines at weaning.
Stress, immunosuppression, and subsequent disease are major health problems in the post- weaning period. The key is prevention. The best procedure to follow is a preconditioning program where the vaccination program is completed 21 to 30 days prior to weaning.
Performing any health procedures at weaning is not advised, since the goal of preconditioning and weaning, during a retained ownership program is to extend stress periods and have the calves at a high level of immunity at weaning. If any health procedure is done at weaning it should be limited to the last vaccinations in the planned herd health sequence. Producers should consult with their veterinary professional to develop a sound health care regime.
Nutrition
One of the often-stated restrictions of a cow- calf producer retaining calf ownership is the lack of feeding expertise. The vast majority of problems related to nutrition of feeder calves can be traced to the first two weeks on feed. Once this start-up period is over, a successful feeding program can be accomplished in any phase of the feeding period.
The most important factor in establishing a retained ownership feeding program is to use a feed that will enhance intake. The expected level of feed intake of newly weaned calves will vary between 0.5 percent of body weight in highly stressed calves to 3.5 percent of body weight in calves that are less stressed.
Once a post-weaning feeding period has begun, it should be continued for at least two weeks. Observations have shown that when the post-weaning feeding period was stopped within two weeks, it has caused a multiplier effect on stress levels.
Conclusion
Cattle producers are in constant search of increased profits in production and marketing. Retained ownership offers a way to increase the marketing options and may improve profits for many cattle producers. A producer can take advantage of favorable market conditions and avoid the stress and losses associated with weaning, transfer of ownership, and transportation. Although retained ownership may not be for everyone, retained ownership is a viable alternative that should be considered by cow- calf producers.