By: Cody Ringer, Mac Young, Joe Paschal and Steven Klose
The case study found that, compared to ranches that do not use these practices, South Texas ranches may increase their net cash farm income over a 10-year period by:
- 63.7 percent if they administer clostridial vaccinations against blackleg to all calves
- 31.8 percent if they castrate bull calves and implant all calves
- 19.9 percent if they deworm all cattle and calves
- 119.9 percent if they implement all four practices—clostridial vaccinations, castrating, implanting, and deworming
The analysis was based on a 2,000-acre ranch consisting of 1,800 acres of native pasture and 200 acres of established Coastal Bermudagrass used for grazing only. The herd included 200 cows (1 animal unit to 10-acre stocking rate) and 8 bulls (1 bull to 25 cows).
Findings for the five scenarios evaluated were produced using the Financial and Risk Management (FARM) Assistance strategic planning model. For more information on the Financial and Risk Management (FARM) Assistance strategic model, go to the FARM Assistance website at http://farmassistance.tamu.edu/. Although the actual results may vary by producers, management practices, and cattle markets, this example shows the possible bottom-line impacts for a reasonable set of assumptions.
The general assumptions are given in Table 1. Typical rates for the region were used for production inputs, yields, cost, and estimates for overhead charges. In 2010, the income from hunting was $7 per acre. The assets, debts, machinery inventory, and scheduled equipment replacements for the projection period were the same in all management scenarios. It was assumed that the ranch had only intermediate-term debt.
Cattle prices from the Live Oak Livestock Commission Company auction report in Three Rivers, Texas, for May 30, 2010 were used in the evaluations. In Scenarios 3, 4, and 5, a market price slide of $0.02 for each 25 pounds of weight gain was assumed to reflect market changes.
In each of the scenarios, the operation of the representative ranch begins the first year with a cash balance of $10,000, and, if profitable, accumulates cash over the 10-year period. The base year for the 10-year analysis is 2010; projections are carried through 2019. Off-farm income and hunting contribute to the cash flow of the ranching business. The ranch pregnancy tests cows, does breeding soundness examinations on bulls, and has an 85 percent calving rate.
Weight gain and death loss assumptions are based on research conducted by Texas AgriLife Research and the Texas AgriLife Extension Service. Commodity and livestock price trends follow projections provided by the Food and Agricultural Policy Research Institute (FAPRI, University of Missouri) with costs adjusted for inflation.
No clostridial vaccinations, implants, castration, growth implants, or deworming
The ranch does not use blackleg vaccinations, castration, or implants, and does not deworm calves. With no calf management, this scenario has an assumed 6 percent death loss.
- With no selected calf management practices, the average net cash farm income is $8,480 a year or $42 per cow per year and $50 per calf per year.
- Average cash reserve at the end of the 10-year projections is $1,517 per cow and $1,785 per calf.
Clostridial vaccinations administered to all calves
Calves receive a clostridial vaccination and a booster once a season. The two vaccinations cost 84 cents per calf or $144 per year for all calves. Calf prices and weights are the same as in Scenario 1. A 1 percent death loss is assumed because of the use of the 7-way vaccination that prevents disease. A $2 per calf charge or $340 per year for all calves is added for extra day labor.
- Clostridial vaccination offers the greatest potential for improving the profitability and financial performance of a cow-calf operation, assuming the death loss reduction from a high of 6 percent to a low of 1 percent.
- Net cash farm income averages $13,880 per year over the 10-year projection, 63.7 percent more than with the no-vaccination scenario.
- Returns per cow were $69, an increase of $27 per cow more than the no vaccination scenario.
- Returns per calf were $82, an increase of $32 per calf due to a reduction in death loss.
- Average cash reserves at the end of the 10-year period increased $188 per cow and $220 per calf.
Bull calves castrated and all calves implanted
All bull calves are castrated and growth-promoting implants used in all calves. Implant cost is estimated to be $1.74 per calf. The cost of castrating and implanting is $2.11 per calf. Research by the Texas AgriLife Extension Service shows that implants would increase weight gain by 5 percent; steers weigh 550 pounds and heifers weigh 500 pounds at weaning as a result of this practice. The heavier-weight cattle will result in a market price slide of $0.02 per hundredweight for each 25 pounds of weight gain for calves. A $1.50 per calf charge or $255 per year for extra day labor is added to work the calves.
- Castration and growth implants increased profitability. Net cash farm income averaged $11,180 per year or 31.8 percent more than Scenario 1. This amounts to a $14 per cow and $16 per calf increase over doing nothing.
- Average ending cash reserves improved by $93 per cow and $109 per calf.
- A market price slide of $0.02 per hundredweight was assumed since the calves were an average of 25 pounds heavier, reducing potential gains in income and cash reserves.
All cattle and calves dewormed
A pour-on application for deworming and horn fly protection is used for the entire herd. The cows and bulls are dewormed twice a year and the calves once. The estimated cost of deworming all cattle and calves is $3.39 per cow per year. A charge of $0.85 per cow or $170 per year labor is added for the second round of deworming. Based on a study at California Polytechnic State University, a 5 percent weight gain for calves is assumed; steers weighed 550 pounds and heifers weighed 500 pounds at weaning. A market price slide of $0.02 per hundredweight is assumed for each 25 pounds of weight gain on calves at sale.
- Deworming offers gains to the bottom line of a cow-calf operation. Net cash farm income averages $10,170 or 19.9 percent more than Scenario 1 (Table 2). This is a net increase of $9 per cow and $10 per calf over Scenario 1.
- Ending cash reserves increased by $58 per cow and $68 per calf.
- Gains in net cash farm income and cash reserves were again tempered by the market price slide of $0.02 per hundredweight.
All selected management practices used— clostridial vaccinations, castrating and implanting, and deworming
Clostridial vaccinations, castration and implants, and deworming are used. Average calf weights will increase 10 percent; steers weigh 525 to 575 pounds and heifers weigh 475 to 525 pounds.
The extra labor charge for the combined three practices is $4.68 per cow or $935 total per year. The $0.02 per hundredweight price slide for each 25-pound weight gain is also applicable.
- All-calf management combines the benefits of clostridial vaccinations, castration and implants, and deworming.
- Net cash farm income averages $17,970 and represents $90 per cow and $106 per calf per year (Table 2 and Fig. 1). This reflects a 111.9 percent or $9,490 increase ($47 per cow and $56 per calf) over Scenario 1 with no calf management practices.
- Ending cash reserves increase by 21.5 percent.
The financial implications of each scenario were assessed using representative measures, including profitability and liquidity. Profitability gauges the extent that a farm or ranch generates income from its resources. One indicator of profitability is net cash farm income. Liquidity measures the ability of a farm or ranch to meet its short-term financial obligations without disrupting normal operations. The ending cash balance, which is net of taxes, may show the liquidity of the operation. Each measure provides information on the projected variability in the ranch’s financial position and performance.
When taken as a whole, the analysis provides insight into the risks and return expectations of the ranch under each management practice. Comprehensive financial projections, including price and weaning weight risks, are illustrated in Table 2 and Figure 1. Table 2 presents the average outcomes for selected financial projection, while the graphic illustrates the range of possibilities for the selected variable. The actual slide in calf prices from extra weight gain of 5 to 10 percent may vary according to existing market conditions and will directly impact overall profitability.
Animal and Plant Health Inspection Service. December 2009. Parasite Control Practices on U.S. Cow-calf Operations, 2007–2008. USDA. http://www. aphis.usda.gov/animal_health/nahms/beefcowcalf/ downloads/beef0708/Beef0708_is_Deworming.pdf.
Animal and Plant Health Inspection Service. December 2009. Vaccination of Cattle and Calves on U.S. Beef Cow-calf Operations, 2007–2008. USDA. http://www.aphis.usda.gov/animal_health/nahms/ beefcowcalf/downloads/beef0708/Beef0708_is_ GenVacc.pdf.
McCollum, F. T. 1998. Implanting Beef Calves and Stocker Cattle. Texas AgriLife Extension Service, Beef Cattle Publications, L-2291.
Becket, J. L. 2003. Effectiveness of Pour-on Dewormers in Stocker Cattle Performance and Carcass Characteristics. Department of Animal Science, College of Agriculture, Cal Poly State University. 01-3-001.
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