By Lee Hart
Does preconditoning calves at weaning make economic sense? Most articles and arguments I’ve seen over the years usually point toward “Yes”, but the Beef Cattle Research Council (BCRC) recently posted a report with a preconditioning calculator.
Don’t just wonder if weaning, feeding, vaccinating calves for a few weeks or months before they are sold actually pays. Use the calculator and find out. The BCRC has worked through three different scenarios, which also show how the numbers pencil out.
Here is the introduction to the BCRC article and then visit their website at: www.beefresearch.ca and then click on the BCRC Blog button to find the report and the calculator.
Calculating Net Returns From Preconditioning Programs
Low calf prices, low feed costs and good grass conditions make hardy arguments for retained ownership. Depending on the market in your area, it could make economic sense to hold on to calves a bit longer this year. The Beef Cattle Research Council’s Preconditioning Calculator is a decision-making tool designed to identify economic opportunities and risks from adding a preconditioning program to traditional management.
The BCRC preconditioning topic page provides an overview on the advantages of preconditioning for animal health. Preconditioned calves may return higher gross revenues because they sell at higher weights. They often have lower cost of gain at the feedlot, improved feed efficiency, require fewer treatments and have lower death loss; for these reasons, preconditioned calves may be sold with an added premium. These higher revenues may however come with added costs.
The disadvantages of preconditioning? It costs more to retain ownership, through added feed and labour. Greater input costs don’t necessarily mean margins will shrink though. The balance of net returns will depend on both the cost of retained ownership as well as the projected price at a later sale date. These are unique to each operation.
Deciding if preconditioning makes economic sense? That’s where the decision-making tool can help. The calculator provides a summary of estimated net returns and projected breakeven price premiums based on your costs for up to three different preconditioning programs. While the length of preconditioning programs can be adjusted in the calculator, typical time periods are 30, 45 or 60 days. The tool has a built-in database going back 10 years for price projection comparisons.
Using the Tool: Three Scenarios
The potential net returns from preconditioning a steer calf, born at 85 lbs in mid-March 2020 in Western Canada are evaluated. The net-return from preconditioning will be determined by estimating the sale price and weight, then defining base prices for 30, 45 and 60 days out. The tool will account for added fixed costs and feed costs. Since these costs will vary among producers, they can be adjusted when using the tool. There is also an option to factor in a sale premium to the final price.
Visit the BCRC website for more details on the scenarios: www.beefresearch.ca
Lee Hart is editor of Cattleman’s Corner based in Calgary. Contact him at 403-592-1964 or by email at [email protected]