Stocker calves purchased in late winter, with a longer period of ownership, can generate higher gross returns compared with those purchased later in the spring. Gross margins, though, could be lower.
In the alternative system, producers purchase heavier stocker calves in March or April, paying more per head but owning the cattle for roughly half as long. “Now, the gross return to that scenario is significantly less than the gross return to the traditional stocker production scenario. But the gross margin, out of which the operator has to pay all variable costs, is twice as large. Instead of 44 cents per animal per day, the operator now has roughly a dollar per animal per day out of which to pay those variable costs.” Olson adds that the analysis was based on historical prices for feed, pasture and cattle between 1995 and 2005, before the recent increase in feed and pasture prices. Higher production costs will affect gross margins, he says, but the basic relationships between maintenance cost, rate of gain and daily margins remain the same. For the full interview, click here.