Beef cattle production in Arkansas, like other states in the Southeast, is predominately recognized as cow-calf. Yet, many calves remain in Arkansas or calves originating from other southeastern states are assembled in Arkansas for post-weaning development before placement in a finishing yard. This growing phase for fall-weaned calves usually fits one of three scenarios: developed on overseeded pasture with 1-1.5 percent body weight delivered feed, developed on hay and 1-1.5 percent body weight delivered feed or grown on annuals used for cover crops in crop management. Despite the vast amount of farm land, the last scenario is rare, and with early field preparation of acreage planted to grains, some consider the number of grazing days not practical.

The two primary scenarios involve at least 1 percent of the calf’s diet being consumed in a trough. Coupled with drought the past two years, the portion of the diet that is typically pasture or grass hay has been substituted with crop residues and gin trash. With corn futures lingering between $6 and $8, the emphasis has been to keep the cost per ton of feed as cheap as possible. However, there are tradeoffs between the cost of the diet, calf performance and target market weights. Therefore, understanding the difference between cost of feed and cost of gain is necessary to maintain profitability in this segment of the beef industry.

Value of Gain

The graph below shows a current trend for sale price (left axis – red line) and gross income (right axis – blue line). The demand for heavy calves has been strong, improving the value of gain on grass. But, those that don’t have pasture are trying to capture the value in additional weight with roughage (hay, baled crop residue, gin trash) and byproduct feeds.

Cost of feed, average daily gain and days on feed

Cost of Feed

Cost of feed per ton is managed by adjusting the ratio of low-cost feed ingredients to high-cost feed ingredients. The following table demonstrates this point where a 70 percent roughage diet will cost $153/ton and a 30 percent roughage diet, $227/ton as-fed.

Cost of feed, average daily gain and days on feed

This ration is for example purposes only and does not consider trace mineral and vitamin requirements.

Average Daily Gain

Generally speaking, the average daily gain of cattle would be less on a high roughage diet compared to a low roughage diet. The high roughage diet example provides sufficient calories for 1 lb/day gain; whereas, the low roughage diet example provides enough calories for 2.5 lb/day gain.

Feed Conversion

Feed conversion is very important to track as it provides a means to examine feed cost to value of gain. Feed conversion is better measured than predicted and is commonly misinterpreted. Sometimes the question asked regarding feed conversion is “How much do I need to feed to get X pounds per day of gain?” For example, the estimated conversion of the high roughage diet is 15:1 (lb feed:lb gain) and the low roughage diet is 6:1. A common mistake is to assume that if 15 pounds of the high roughage diet will provide 1 lb/d gain, to get 1.5 lb/d gain feed 22.5 pounds. The problem with this assumption is it would be very unlikely for calves to consume 50 percent more feed due to physical fill limitations. By monitoring feed conversion, cattle producers can reformulate if feed conversion isn’t sufficient to be profitable. Waiting until 30 to 45 days before marketing to make this decision may not provide sufficient time to fully recover the weight difference.

Cost of Gain

Calculating feed conversion is beneficial for evaluating the difference between cost of gain and value of gain. Combining the knowledge of feed cost with feed conversion, the high roughage example has a $1.15 feed cost per pound of gain and the low roughage example has a $0.68 feed cost per pound of gain. If cattle were bought weighing 475 pounds at $160/cwt and expected to sell for $135/cwt when weighing 750 pounds, the value of gain is $0.92/lb. The difference between value of gain and cost of gain is -0.23 and +0.24 for high and low roughage systems, respectively.

Target Market Weight

Target market weight will affect the number of days on feed. If cattle have a 750-pound target market weight, calves gaining 1 lb/d with the high roughage diet will require 275 days to reach their target weight, whereas the low roughage diet will require 110 days. Market timing is just as important as market weight. One-way price slides can add additional cost if cattle are sold for a minimal weight at a future delivery date. For example, if these cattle were contracted to weigh 750 pounds at delivery in 120 days but fed the high roughage diet, their delivery weight would be 595 pounds. Instead of receiving a greater price per pound if the slide moves in two directions, price may be restricted to the value per pound for a 750-pound calf. As a result, the difference between value of gain and cost of gain for the high roughage diet may be as great as -0.79.

As input costs continue to rise, cattle growers must avoid the “cheap feed” trap. Never base diet strictly on the cost per ton of feed. The use of low-cost roughages to stretch pasture may not be any more cost effective than reducing stocking rate. Ingredients must be examined for the nutritional value as well as their cost.

Source: Shane Gadberry, Associate Professor, and Paul Beck, Professor