by Jesse Russell and Dillon Feuz^{*} (8/15)

### Quick Facts…

- The competitive nature of the cattle industry in the arid West means that cattle producers have to continually monitor their herds for efficiency.
- Calf revenue generally represents 75% to 90% of operating revenue making it imperative to raise calves that maximize revenues while minimizing expenses (optimize net returns). It is also important to understand that lighter calves tend to sell for a higher price per pound than heavier calves, while heavier calves tend to bring greater revenue per head than the lighter calves.
- If producers are charged for grazing public lands on an AUE basis, a 1,000 lb. cow generates the greatest return on all three resource bases. However, in reality producers are charged on a per head basis for grazing their cattle on public lands. Current state and federal grazing rate policies play a part in the cow size selected by producers on these two resource bases.

### Introduction

The cattle industry is very competitive, which is forcing cow-calf producers to strive for efficiency. Research has shown that as a cow’s mature weight increases, feed efficiency decreases, as does reproductive efficiency and other production factors.

The debate of the optimum cow size is partially due to the fact that over the last 30 years cattle have been selected for feedlot performance, weaning weight and yearling weight. This selection has increased the average cow size from 1000 lbs. to 1400 lbs. (Schmid 2013).

The purpose of this fact sheet is to illustrate the economic differences of three different cow weights (1,000 lbs., 1,200 lbs. and 1,400 lbs.) on three different resource bases. The first resource base (resource base 1) is able to graze their cow herd year round with minimal supplementation. The second resource base (resource base 2) requires the operation to provide the cow herd with all nutritional requirements for 3 months of the year through the use of mechanically harvested forages. The third resource base (resource base 3) requires the cow herd to be provided with all nutritional requirements for 6 months of the year through theuse of mechanically harvested forages. This paper is based on the findings of Russell (2014).

Table 1. Animal Unit Equivalents |
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Cow Wt. |
1,000 lb. |
1,200 lb. |
1,400 lb. |

Cows | 1 | 1.15 | 1.29 |

First-Calf Heifers | 0.9 | 1.02 | 1.13 |

Replacement Heifers | 0.79 | 0.89 | 0.99 |

### Production

The same production benchmarks were used for each cow weight on each resource base. However, Hersom (2009) pointed out that as mature weight increased the age at puberty increased. Similarly, as weight increased the percent of heifers cycling and conception rate decreased. Hersom also showed that as cow size increased, calving rate decreased. This difference in calving rate specifically led to a reduced ability to remain in the herd (cull rate). Large cows had a cull rate of 52% compared to a 19% cull rate for smaller cows in the first five years. He also showed weaning rates for first and second calving cows were greater for the smaller cow sizes compared to large cows where the large cows had overall weaning rates less than 50%.

### Carrying Capacity

Table 2. Carrying Capacity |
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Cow Wt. |
1,000 lb. |
1,200 lb. |
1,400 lb. |

Cows | 574 | 500 | 446 |

First-Calf Heifers | 106 | 92 | 82 |

Replacement Heifers | 115 | 100 | 89 |

Hersom (2009) also discussed cow feed efficiency and showed that a cow herds feed requirements amounted to 50% to 75% of the annual maintenance costs of the herd. He pointed out the importance of grazing as much as possible, and that stocking density then becomes increasingly important as well. He demonstrated the difference in nutrient requirements for a 1,000 lb. cow and a 1,200 lb. cow during early lactation (three months after calving), at weaning (seven months before calving), and late gestation (one month before calving). Hersom indicated that no matter the stage of production, the heavier cow always required a larger quantity of dry matter, as well as a greater quantity of total digestible nutrients and crude protein. Because of narrowing profit margins and increasing costs, cattle producers must evaluate their management practices. Riggs (2009) noted that maintenance requirements of the cow accounted for about 70% of the feed consumed, leavingthe remaining 30% for production.This means the 70% of feed used for maintenance provided no economic returns.

Dhuyvetter (2009) showed the difference in the weaning weights as a percentage of a cow’s body weight. A 1000 lb. cow weans approx. 48.5% of her body weight, a 1200 lb. cow weans 45.8% of her body weight and a 1400 lb. cow will only weans 43.6% of her body weight. He also illustrated the point: as body weight increased stocking rate decreased, while calf weaning rate increased and the percentage of the cow’s body weight weaned decreased.

The most accepted method of calculating carrying capacity is done by calculating an animal unit equivalent (AUE). The formula for determining an AUE is as follows:

Animal Unit Equivalent (AUE) =

(Live animal weight)^{0.75}

_____________________________

1000^{0.75}

Using this formula the animal unit equivalents were found for each weight and class of animal during the grazing season. These values are found in Table 1.

Table 3. Costs When Charged on a True AUM Basis |
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Cow Weight |
1000 lb. |
1200 lb. |
1400 lb. |

All Animals | 795 | 692 | 617 |

Resource Base 1 |
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Fixed Cow Cost | $106,756 | $93,023 | $82,927 |

Feed Costs | $201,018 | $202,640 | $205,600 |

Total Costs | $307,774 | $295,663 | $288,527 |

Cost per Head | $387.14 | $427.26 | $467.63 |

Resource Base 2 |
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Fixed Cow Cost | $113,340 | $98,760 | $88,042 |

Feed Costs | $251,686 | $253,585 | $255,404 |

Total Costs | $365,026 | $352,345 | $343,445 |

Cost per Head | $459.15 | $509.17 | $556.64 |

Resource Base 3 |
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Fixed Cow Cost | $119,296 | $103,950 | $92,830 |

Feed Costs | $292,152 | $293,711 | $295,788 |

Total Costs | $411,448 | $397,660 | $388,618 |

Cost per Head | $517.54 | $574.65 | $629.85 |

Table 2 shows the difference in carrying capacity of an operation that is able to run 500, 1,200 lb. mother cows, 92 first-calf heifers and 100 replacement heifers. The same operation is able to run 74 more 1,000 lb. mother cows and 54 fewer 1,400 lb. mother cows on the same resource base.

### Expenses

The resources that are available to an operation will largely determine feed expenses. However mature cow weight also plays a role. Russell (2014) showed that supplement costs per head for hay and range cubes (protein) increased with body weight in all cases. When charged for federal and state grazing permits on a true Animal Unit Month (AUM) basis, the lighter cows had a lower feed cost and a higher total cost. However, as illustrated in Table 3, the higher total cost is due to the increased number of lighter cows a given resource base was able to sustain. Table 4 shows that when an operation was charged for federal and state grazing permits on a per head basis, as is the normal practice, the heavier cows had the higher feed costs and total costs. These points led us to examine revenues from nine different options.

### Revenue

Since calf revenue generally represents 75% to 90% of operating revenue it is imperative to raise calves that maximize revenues while minimizing expenses (optimize net returns). It is also important to understand that lighter calves tend to sell for a higher price per pound than heavier calves, while heavier calves tend to bring greater revenue per head than the lighter calves.

Furthermore, price per head for cull animals generally increases with body weight. However as carrying capacity went up so did the number of cattle culled. At first glance one may think that selling the larger animal will generate the greatest net return. Still, if we consider the difference in stocking rate on a fixed resource base this does not always hold true.

Table 4. Costs When Charged on a per Head Basis |
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Cow Weight |
1000 lb. |
1200 lb. |
1400 lb. |

All Animals | 692 | 692 | 692 |

Resource Base 1 |
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Fixed Cow Cost | $93,023 | $93,023 | $93,023 |

Feed Costs | $175,687 | $191,772 | $209,135 |

Total Costs | $268,710 | $284,794 | $302,158 |

Cost per Head | $388.31 | $411.55 | $436.64 |

Resource Base 2 |
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Fixed Cow Cost | $98,760 | $98,760 | $98,760 |

Feed Costs | $219,837 | $246,484 | $272,285 |

Total Costs | $318,597 | $345,244 | $371,045 |

Cost per Head | $460.40 | $498.91 | $536.19 |

Resource Base 3 |
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Fixed Cow Cost | $103,950 | $103,950 | $103,950 |

Feed Costs | $255,097 | $289,300 | $322,211 |

Total Costs | $359,047 | $393,250 | $426,161 |

Cost per Head | $518.85 | $568.28 | $615.84 |

Based on the stocking rate for a given resource base, the number of calves weaned at a 90% weaning rate is illustrated in Table 5. Table 5 also shows calf weight based on mature cow weight. The amount of revenue generated by an operation also depends on retention of calves for growing and/or heifer development. Nonetheless, the point is clear that a larger number of light weight calves will generate more revenue.

### Net Returns

When grazing fees are charged on a true AUM basis, Russell (2014) showed the lighter cattle generated the greatest net return for all resource bases even though resource base three had a negative return for every cow size (Table 6).

Table 7 shows the differences in net returns on a per cow basis when grazing fees were charged on a per head basis as is more typically the case.

### Grazing Costs on Public Lands

There is a difference in the net returns when grazing fees are charged on a true AUM basis compared to charging on a per cow basis, the latter of which is the current method used by the federal and state agencies. When the major constraint for an operation is the amount of forage available on public lands, and grazing fees are charged on a per cow basis then carrying capacity does not change based on AUE or cow weight.

When carrying capacity does not change with cow weight then there is not enough increase in net returns for the lighter cattle to offset the decrease in the costs of the heavier cattle.

The carrying capacity of all three resource bases when state and federal grazing permits are charged on a per head basis is 500 head of cows and will require 92 first-calf heifers and 100 replacement heifers regardless of weight to maintain the herd.

However, this policy in the long run, likely contributes to over grazing of range allotments which may then result in a forced reduction in the number of permitted cattle on an allotment.

Table 5. Calves Weaned and Weaning Weight. |
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Cow Weight |
1,000 lb. |
1,200 lb. |
1,400 lb. |

Steers | |||

Calf Weight | 500 | 565 | 630 |

Weaned Calves | 306 | 266 | 238 |

$/lb. | $1.45 | $1.33 | $1.28 |

Steer Revenue | $221,850 | $199,886 | $191,923 |

Heifers | |||

Calf Weight | 470 | 535 | 590 |

Weaned Calves | 306 | 266 | 238 |

$/lb. | $1.29 | $1.23 | $1.21 |

Heifer Revenue | $185,528 | $175,041 | $169,908 |

Steers and Heifers | |||

Total Calf Revenue | $407,378 | $374,927 | $361,831 |

### Conclusion

These data strongly suggest if producers are charged for grazing public lands on an AUE basis, a 1,000 lb. cow generates the greatest return on all three resource bases. However, in reality producers are charged on a per head basis for grazing their cattle on public lands.

This current policy from the perspective of maximizing profit resulted in the 1,400 lb. cow being the best option for resource bases 1 and 2. This suggests that the current state and federal grazing rate policies play a part in the cow size selected by producers on these two resource bases. However, on resource base 3, the 1,000 lb. cow lost the least amount of money. These results suggest the current grazing rate policies have little or no effect on cow size selected by producers on resource base 3.

In this and other research, it has been shown that body weight effects dry matter consumption and indicates that charging for grazing fees on a per head basis is not an accurate method of charging for the amount of forage removed. Not accounting for different forage intake from different sized cows could have a negative effect on range condition.

Each rancher should carefully evaluate their resources and select the cow size best for their operation. This research has shown that “Bigger” is not always “Better.”

Table 6. Net Returns per Cow When Charged on a True AUM Basis |
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Cow Wt. |
1000 lb |
1200 lb. |
1400 lb. |

Cows Bred | 680 | 592 | 528 |

Resource Base 1 |
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Net Return Per Cow | $51.30 | $39.28 | $36.73 |

Resource Base 2 |
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Net Return Per Cow | $135.50 | $135.03 | $140.74 |

Resource Base 3 |
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Net Return Per Cow | ($16.96) | ($37.26) | ($47.63) |

Table 7. Net Returns per Cow When Charged on a per Head Basis |
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Cow Wt. |
1000 lb. |
1200 lb. |
1400 lb. |

Cows Bred | 592 | 592 | 592 |

Resource Base 1 |
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Net Return Per Cow | $134.72 | $153.39 | $177.11 |

Resource Base 2 |
|||

Net Return Per Cow | $50.46 | $51.28 | $60.75 |

Resource Base 3 |
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Net Return Per Cow | ($17.87) | ($29.81) | ($32.35) |

### References

Dhuyvetter, J. 2009. Focusing on Cows in a High Cost World. http://www.ag.ndsu.edu/northcentralrec/livestock-extention/pps/Focusing%20on%20Cows%20in%20a%20High%20Cost%20World.pdf/view (accessed May 13, 2014)

Hersom, M. 2009. Relationship of Cow Size to Nutrient Requirements and Production Management Issues. University of Flordia Extension.

Riggs, B. 2009. Fitting the Cow Herd to the Environment. http://beefcattle.ans.oregonstate.edu/html/publications/BEEF007-FittingtheCowHerdtotheEnvironment.pdf.pdf. (accessed March 2014).

Russell, Jesse, “The Optimal Cow Size for Intermountain Cow-Calf Operations: The Impact of Public Grazing Fees on the Optimal Cow Size” (2014). All Graduate Theses and Dissertations. Paper 3575.

http://digitalcommons.usu.edu/etd/3575

Schmid, K. 2013. Bigger Is Not Always Better: Finding the Right Sized Cow | BeefResearch.ca. http://www.beefresearch.ca/blog/finding-the-right-sized-cow/. (accessed March 2014).

^{*}Jesse Russell, Agricultural & Business Mgmt Economist, Colorado State University Extension, Dillon Feuz, Head, Applied Economics, Utah State University

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