Can we compete?
February 1, 2024
Do you know what it costs per pound of beef produced from your operation? How much does it cost to maintain a cow annually? How has the increase in inputs impacted your beef operations profitability? The old saying of you can only manage what you measure still holds. One cannot control the market price. The commodity markets have trends in which prices ebb and flow. Most of us are familiar with the cattle cycle. The cattle cycle historically was a 10-year period between the peaks or valleys of cattle inventory and subsequent prices as a function of macroeconomics. This cycle can be seen in Figure 1 from USDA ERS. The impact of continued drought, land prices, aging farmers, and other factors have resulted in the US Beef Cow inventory being at levels similar to those of the mid 1960’s. This bodes well for market prices over the next couple of years as demand for beef holds steady.
I started my professional career during the early 2000’s. At this time, I was pondering in my mind whether beef cattle systems could compete with grain production. Corn prices were $2.05 to $2.46 per bushel. Figure 2 illustrates the price per bushel and return per acre from corn production for central Illinois as an example. The corn belt area had corn yields that averaged 120-165 bushels per acre for state averages. A gross value of production of 160 bushels at $2.25/bushel would be about $350/acre. I wondered if converting cropland to pasture would be economically viable; the return per acre was less than $50/acre from grain. Look at the chart closely for recent years and ponder if marginal land is profitable for grain. I had deduced that if beef production per acre could be near 1,000 pounds, the beef system could compete economically with grain production. Much of this was based on the economic conditions. Heavy feeder cattle were selling for $70-$80/cwt while light weights were near $110/cwt. Value of gain was near $0.50 so 700 pounds of gain per acre would gross $350 per acre. I was accounting for a bit of market fluctuations plus 1,000 pounds of beef gain per acre was a lofty goal to shoot for in a northern grazing season of about 180 days.
Some quick math means one would need just over 5 pounds of gain daily per acre to achieve the 1,000 pounds of gain per acre mark. This would require a stocking density of roughly two animals per acre that would gain 2.5 pounds/day grazing along with no grain inputs. Putting 450-pound calves out in the spring and pulling them ~ 200 days later weighing 950. An average weight of 700 pounds from start of the grazing season to the end could be used to estimate forage production required. Assuming a dry matter intake of 2.5% of body weight, 1400 pounds of animal weight per acre, recall two animals per acre, would be 3.5 tons of forage consumed. If one assumes a 60% forage utilization in a managed grazing system, then forage production would need to be roughly 11,700 pounds or just under six tons of dry matter per acre.
This is where reality began to challenge theory. I knew that we had alfalfa yields that were in the 6-7 tons per acre range. I also knew that forage production would not be linear over the growing season with more grass production coming in the spring and fall. From a scientific perspective, we used a put-and-take system to adjust stocking density based on available forage. We used endophyte-free tall fescue or orchardgrass as the cool-season grass with or without either white or kura clover. We also were studying gains of Holstein steers in comparison to beef steers and heifers back at this time.
Can we compete with corn production on high quality soil and achieve the gain per acre needed to financially compete? With regards to forage production, I would argue that soil moisture or rather precipitation received combined with temperature has more of an impact on grass growth than our corn hybrids today. In other words, researchers through breeding and selection have developed corn hybrids that are quite productive under marginal precipitation. Corn handles higher temperatures better than the cool-season perennial grass species that dominate the pastures in our region. In addition, animals subjected to heat stress are not going to achieve maximal performance. Internal parasites also can pose a greater detrimental impact on gains when stocking rates are higher and must be managed.
So how did we fair? It took us a couple seasons to convert the fields and get decent stands for grazing. Our results are shown in Figure 3. This three-year study began in 2005 and we never quite achieved the 1,000-pound target for any of the forage systems we were studying. My colleague, Dr. Ken Albrecht, had achieved 1,000 pound/acre at the Lancaster station grazing kura clover-grass mixture. They removed heavy animals and replaced them with lighter animals while we kept the same animals the full season. However, we did hit the 700+ pound per acre mark in several systems over a few years. The effect of drought can be seen in 2007 and the reason for such gain per acre. Do you know what your beef production per acre is in your stocker or cow-calf system? If we assume three acres to support a cow-calf pair and have an adjusted weaning weight of 450 pounds, then it is 150 pounds per acre. If a steer is grazing 0.75 acres for the season and gaining 1.5 pounds per day over 240 days (8 months), the gain per acre is 480 pounds. I also want to note that our beef cattle systems are also not going to be utilizing the most fertile soils either and there will be limits of production that can be achieved.
So, what’s the point? I was unsuccessful at reaching 1,000 pounds of beef gain per acre, but land availability is decreasing while land prices are increasing. How many of us think as grain producers in product production per unit of land mass like bushels per acre or pounds of beef produced per acre? As the beef industry continues to be berated about greenhouse gas emissions, we can chase a lot of technology. However, let’s not overlook the tools we currently have available to us for reducing inefficiencies in the production system. For cow-calf production, pounds of calf weaned per cow exposed is a key factor in profitability but also system efficiency. Changes in forage systems or slight improvements in forage systems can yield improvements in production. Yet, we don’t even have to make changes in the forage system, just improving our management of the forages currently in the fields can have a positive impact. I have mentioned this before and will reiterate that managed grazing is recognized as a climate smart agricultural practice. Use of growth promoting implants can increase daily gains by 0.1-0.2 of a pound per day. Use of vaccines to keep cattle healthy and reducing abortion losses is a simple technology to improve efficiency. Spend the next few weeks before spring thinking about what small changes in your production system can be made to improve your production efficiency and profitability.