What is preconditioning really worth?

Given the value of cattle today, feedyard death loss is more costly than ever, and in spite of the preventative measures and treatments available, death loss percentages seem to have increased in recent years.

Speaking during the recent Cattle Industry Convention, Tom Brink, founder and owner of Top Dollar Angus, presented data showing the margin-busting losses associated with feedyard mortality and illustrating the value of effective preconditioning. Brink has vast experience in cattle feeding after years of helping manage the cattle-ownership branch of JBS Five Rivers Cattle Feeding, the nation's largest cattle-feeding company.

Brink says that in his years with JBS Five Rivers, a 1 percent mortality rate was a long-term average for feedyard cattle. Citing data from Professional Cattle Consultants (PCC), he says the mortality rate has increased to around 2 percent over the past three years, and death losses can run much higher in some feedyards and some lots of cattle. When feeders first noticed the increase around three years ago, they generally assumed it was related to the widespread drought occurring at that time, with poor nutrition back on the ranch adversely affecting immunity. However, mortality rates have remained at that higher level even as moisture and forage conditions have improved in most areas.

Brink provided examples of two pens of cattle in which he shared ownership, finished at a Texas feedyard. In one pen of 113 cattle, 47 percent were pulled once for treatment, 19 percent were pulled twice and two died within the first 45 days on feed. In the second pen of 117 unweaned calves, 53 percent were pulled once, 21 percent pulled twice and four died within the first 45 days. Over the entire feeding period, death loss reached 9.5 percent for the two pens and the cattle lost an average of $485 per head. Based on their purchase price, the feedyard had projected the cattle would close out at $150 per head profit.

Losses at that level are not uncommon. Again citing data from PCC, Brink says that among a large sample of five-weight cattle placed in April and May of 2014, average mortality was 3.6 percent for steers and 4 percent for heifers, and the likelihood of a pen experiencing 5 percent or greater death loss was 21 percent.

Among the steers in the sample, 63 percent of pens had 0 to 3 percent death loss, 16 percent had 3 to five percent, 12 percent had 5 to 10 percent and 8.4 percent had greater than 10 percent mortality. Also, significant numbers of these mortalities occur late in the feeding period, making them even more costly due to the feed, labor and other inputs invested in those animals.

Medical costs naturally increased in the pens with high levels of mortality, and pounds sold per pounds purchased declined, partly due to mortality and also due to lost performance in sick cattle.

Using a baseline of $0 loss for pens with less than 3 percent mortality, losses climbed to $112 per head for 3 to 5 percent death loss, $318 for 5 to 10 percent and $1,431 for greater than 10 percent mortality.

Based on the likelihood of a pen of cattle experiencing these high mortality rates, and the associated financial losses, Brink calculates that unweaned feeder calves should be discounted by about $191 per head. Market competition prevents such steep discounts from occurring though, and buyers assume most of the price risk and health risk.

Looking at preconditioned calves, Brink cited multi-year data from showing that calves managed in certified VAC-45 programs, meaning a full course of preconditioning vaccines and at least a 45-day weaning period prior to shipping, experienced one-third the feedyard morbidity and one-half the mortality seen in unweaned calves. They also posted daily gains averaging 0.3 pounds higher than unweaned calves and better feed conversion.

Based on the previous data showing the likelihood of high mortality rates in non-preconditioned pens, and the financial losses, Brink calculates that VAC-45 calves actually are worth a premium of about $95 per head, due to the 30 percent reduction in morbidity and 50 percent reduction in mortality.

According to data from Superior Livestock Auctions and Zoetis, VAC-45 calves in 2013 brought premiums averaging $6 per hundredweight over non-preconditioned calves, meaning a total premium of $30 to $36 per head.

In summary, Brink says:

·         Cattle health has never been more important.

·         Sickness and death loss in feedyards has gotten worse in some cases.

·         Feedyard mortality is more costly than ever and the financial risk is enormous.

·         Comprehensive vaccination and weaning programs have a positive impact, and are only partially rewarded in the markets.

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