Is There Profit in Holstein Steers?

4/8/2015
IS THERE PROFIT IN HOLSTEIN STEERS?
Robert Tigner, Nebraska Extension Educator
WHY ARE WE INTERESTED?
1
4/8/2015
ISU NET RETURNS TO FEEDING
Returns to Marketing 1300 lb Finished Steer
Jul‐14
Aug‐14
Sep‐14
Oct‐14
Nov‐14
Dec‐14
Jan‐15
Feb‐15
Net Returns
292.35
211.47
229.69
269.70
312.32
185.22
112.01
‐6.83
WHO IS INTERESTED?
•
•
•
•
•
Transitioning dairy farmers
Operating dairy farms
Feeders looking for calves to fill pens
Feeders selling to specific markets
Add an enterprise to increase income: How big is
enough?
• Next generation
2
4/8/2015
KEYS TO SUCCESS OR PROFIT
• Understand the market
• Who is buying and what do they want
• Calf fed high energy diets
• Finish rather than grower diets due to
Holstein genetics
• COG
• Mortality-Morbidity
MARKETING DAIRY STEERS
3
4/8/2015
MARKETING OPTIONS
• Sale barns: small numbers
• Direct country sales: full loads
• JBS-Greenbay WI
• Cargill-Fort Morgan
• American Foods Group: Green Bay WI
• Tyson-Dakota City and Denison
MARKETING OPTIONS-2
• Delivery contracts: yearlings or calf-fed
• Meeting the specs
• Hip height limit
• 58 inches for Tyson, JBS none
• 20% chance of reaching at 425 DOF
• Carcass size
• JBS 700-1000 pounds
4
4/8/2015
PRICING GUIDELINES
• Expect discounts for Holstein steers
• Due to lower dressing %
• VetLife benchmark data shows ~3% less
• Smaller size primal cuts
• Expect to pay less for Holstein feeders
• Higher mortality
• Lower feed efficiency (similar to beef heifers)
JBS
• Formerly Packerland then Smithfield
• Announced calf fed (high energy) market strategy at
Smithfield purchase
5
4/8/2015
6
4/8/2015
TYSON/IBP
• Holstein steer slaughter for over 30 years
• 20-30,000 head weekly Holstein slaughter across
the company
• Dakota City and Denison
TYSON/IBP-2
• Specs for slaughter
• 58 inch shoulder height, over 58 inch will be
rejected
• 1 inch added height adds 3 inches to
carcass length
• 1350 pounds target weight, 1500 pounds limit
7
4/8/2015
TYSON/IBP-3
• Within 10% of plant average for acceptable livers
and open abscesses
• Target is 65% Choice or higher, “grading less than
the plant average is unacceptable.”
TYSON/IBP PRICING
• Holsteins discounted $4 to $10 compared to native
cattle
8
4/8/2015
TYSON/IBP OBSERVATIONS
• Holsteins on early high energy diets can meet
Tyson specs
• Beta-agonist and implant strategies
• Holsteins under roof, on rubberized slats perform
best at the plant
AMERICAN FOODS GROUP
• Green Bay WI
• Main procurement area: WI, IA, MN, SD
9
4/8/2015
CONTRACT DIFFERENCES
•
•
•
•
Light weight cattle
Over 30 months
Dressing %
Some companies have a range of specs in
contracts while others will have a discrete spec to
hit.
10
4/8/2015
ECONOMICS OF HOLSTEIN FEEDING
CLOSEOUT DATA
11
4/8/2015
ACTUAL PENS OF HOLSTEIN STEERS
• Contacted a feeding company
• They shared their Holstein steer pen closeouts
• 355 pens
• Averages
ADG
Init
Wgt
Final Wtg
COG
Morb
idity
Mort
ality
Yield
2.9
7.1
1311
528
26.9
3.2
61.3
AVERAGES ARE DECEIVING
Min
Max
Median
Intake Daily gain, lb Feed/pound of gain Out BW Cost of Gain Initial BW Days on Feed Morbidity, % Mortality, % Yield
15.2
2.1
5.6 1114.6
87.2
275.0
121.0
0.0
0.0 59.0
26.5
4.0
9.3 1432.1
137.7
919.0
364.0
100.0
11.0 64.4
20.2
2.9
7.0 1313.5
105.1
533.5
263.0
20.6
2.6 61.3
12
4/8/2015
FINBIN DATA SET
• Production differences by size
• Over 250 head feedlots had higher death loses:
7% vs 3.7%
• Over 250 head lots had higher ROG 2.43 vs
2.27Over 25o head lots had lower total feed
cost: $39.21over 250 head averaged higher sale
price: $3.60/cwt.
13
4/8/2015
WHAT DO THESE MEAN
• Holsteins are a little more challenging for feedlots
• Costs increase due to the challenges
• Feedlot managers must be aware of the
challenges to be financially successful
U OF WI BEEF FEEDING WEB SITE
WI Beef Information Center:
http://fyi.uwex.edu/wbic/dairybeef/
14
4/8/2015
15
4/8/2015
Example-Feeder-Budgets-3-13-15.xlsx
16
4/8/2015
IOWA STATE UNIVERSITY
Feeder calf bid calculator:
http://www.iowabeefcenter.org/software_calculators.ht
ml
17
4/8/2015
CURRENT BID PRICE EXAMPLE
ADDING THE NEXT GENERATION
18
4/8/2015
HOW BIG IS BIG ENOUGH
• FinBin data average about $36 per head return for
labor and management 2009-2013
• Range is -$44.54 to $84.68
• How many head do you need for the income you
want?
SIZE MATTERS
• If adding the enterprise to increase income or
replace dairy income
19
4/8/2015
TAKE HOME MESSAGE
FINANCIAL SUCCESS?
• Holstein feeding profitability has been more
consistent in the last 5-7 years than at previous
times.
• Calf fed or high energy diets meet the grid specs.
20
4/8/2015
CONCLUSIONS
• Low beef herd numbers have helped Holstein
profitability
• Reduced feed costs have helped profitability
• Feeders have several tools to estimate profitability
• Size must be considered if trying to transition to or
adding Holstein feeding
SOURCES
•
•
•
•
•
•
•
•
American Foods Group
JBS
Tyson/IBP
FINBIN: Center for Farm Financial
Management
Managing and Marketing Holstein Steers
Proceedings
ISU Beef Center
WI Beef Information Center
Innovative Livestock Services provided
recent Holstein steer closeouts.
21
4/8/2015
QUESTIONS?
ROBERT.TIGNER@UNL.EDU
22