Stocker operators say they've seen good profits the past few years, according to research conducted by Drovers. Nearly two-thirds (66 percent) of stocker operators surveyed by Drovers said their business was profitable last year, with 16 percent calling their operation breakeven. But that's down some from 1999, when 74 percent of respondents called their operation profitable. Profitability in 2000, however, remained higher than the average of the past 5 years when 61 percent of respondents said their operations were profitable.
Drovers collected the information through a mail survey last fall of 1,000 subscribers who annually maintain stocker herds of 200 or more head. The response rate for the survey was 30 percent. Overall, respondents tended to have relatively large herds, as the average number of stocker cattle reported was 1,010 head, with a median of 450 head. The survey was conducted to better understand the management and marketing practices of today's stocker operators, and to help identify issues of concern for those producers.
In addition to profitability, stocker operators were asked a variety of questions about health programs, grazing programs, cattle type preferred and months of the year that represent peak periods of activity.
For marketing year 2000, just 4.8 percent of stocker operators called their business unprofitable, while 10.3 percent were unsure. When asked to describe the profitability of their operations over the past five years, 8.9 percent said they were unprofitable while 4.1 percent said they were unsure.
Profitability was only slightly better for larger herds than for the smaller ones. Of those with fewer than 500 head, 64.6 percent called their operations profitable, while 69.1 percent of operations with more than 500 head called their operations profitable.
Cattle size and profitability
Size of cattle at the start of the stocker program, however, had a significant impact on profitability. Respondents indicated the average weight of incoming cattle was 457 pounds. Specifically, 29 percent said they typically buy cattle weighing under 425 pounds, 36 percent say they buy cattle in the 426 to 500 pound range, and 35 percent of respondents say they start with cattle weighing over 500 pounds.
Respondents who said their cattle weighed less than 425 pounds to start and those who said their cattle were heavier than 500 pounds were the least profitable. Just 59.7 percent of respondents with lighter cattle, and 60.4 percent of those with cattle over 500 pounds called their operations profitable. However, 76 .3 percent of respondents who said their cattle started from 426 to 500 pounds (the middle range weight group) called their operations profitable.
Respondents also were asked to provide similar information for their operations over the past five years. Again, the larger herds were only slightly more profitable than those under 500 head, 62.6 percent profitable and 59.2 percent profitable, respectively.
Weight categories, however, found a shift in profitability. Reviewing the past five years, respondents found the heavier cattle were less profitable. Just 52.7 percent of respondents who started with cattle over 500 pounds said they were profitable over the past five years. Of those respondents who started with lightweight cattle (under 425 pounds) 64.9 percent were profitable, while 63.4 percent of those with cattle in the middle range weight group called their operations profitable over the past five years.
Stocker health programs
Excluding labor and implant costs, stocker operators say they typically spend $7.28 per head on health products for their cattle. Those dollars are spent on parasite control products, vaccines and antibiotics.
Larger producers tended to spend more on health programs than smaller producers. Those claiming more than 500 head in their stocker herd spent an average of $7.72 on health products last year, excluding labor and implants. Operators with herds under 500 head say they spent an average of $6.92 on the same products.
Not surprisingly, pneumonia and other respiratory diseases caused the most problems for stocker operations. Slightly more than 40 percent of respondents said respiratory diseases "regularly" caused problems in their herds during the first month after arrival. Parasite problems such as worms, flies and lice "regularly" caused problems during the first month for slightly more than 15 percent of producers. Pinkeye and other eye problems were listed as "regular" first month problems by 10.7 percent of respondents. Foot rot and lameness was next, mentioned by 7.4 percent of producers.
Stocker operators also prefer to start cattle in the fall. October was the most preferred month, with 30.3 percent of respondents indicating they receive the majority of their cattle at that time. November was second most preferred with 15.1 percent, and September was third at 10 percent.
March, April and May all registered slightly more than 6 percent preference. The least preferable months for receiving stocker cattle were June and July, with about one percent each. January was next with just over 2 percent preference by respondents.
Processing, sickness rates
Slightly more than 35 percent of those responding to the Drovers 2000 Stocker Survey said they process incoming cattle on the day of arrival. And 33.6 percent say they process incoming cattle two to three days after arrival. Interestingly, 9.2 percent claim they "do not process cattle new to my operation," while 7.4 percent say the cattle are processed "before shipment to me."
Larger operations tended to process cattle sooner than operations with fewer than 500 head. Nearly 41 percent of operations with 500 or more stockers process cattle on the day of arrival, compared with 30.6 percent of respondents with fewer than 500 head. Nearly 37 percent of the larger operators process the cattle within two to three days, compared with 30.6 percent of the smaller operations. Only 5.7 percent of the larger operations say they don't pro-cess incoming cattle, compared with 12.2 percent of the smaller operations.
A majority of respondents, 51.7 percent, say the typical sickness rate for incoming stockers is less than 5 percent. More smaller operators, 57.8 percent, say the sickness rate is under 5 percent, while just 44.7 percent of the larger operations say illness is below the 5 percent level.
Twenty-eight percent of respondents say sickness rates are 5 percent to 10 percent, while 12.5 percent say sickness is 11 percent to 20 percent. Sickness rates over 20 percent were noted by 4.5 percent of respondents.
Stocker death losses were put at 1 percent to 3 percent by 48.7 percent of respondents, while 46.5 percent said their death losses were under 1 percent. Just 1.8 percent of respondents had death losses from 4 percent to 5 percent.
A significant difference was seen in death losses between small operations and larger ones, with the advantage going to the smaller herds. Among respondents with fewer than 500 head, 53.7 percent claim death losses under 1 percent, compared to just 38.2 percent among stocker operations with more than 500 head. Forty percent of respondents with smaller herds say death losses were in the 1 percent to 3 percent range, compared to 58.5 percent of the larger operations.
Stocker cattle genetics
While the majority of respondents (55 percent) say they do not know the genetics of the stocker cattle they buy, 35 percent say they typically buy stocker cattle with known genetics. And more smaller operators (38 percent) claim to know the
genetics of the cattle they buy than larger operations (31 percent).
Asked if they buy source verified cattle from ranch of origin when possible, 44.6 percent of respondents said "yes." Again, smaller operations tended to favor this practice more than larger operations, 47.6 percent to 41.5 percent, respectively.
Almost two-thirds (64 percent) say British and British crossbreds (including Angus, Hereford and Shorthorn) are their preferred breed types to purchase or manage. British and continental crossbreds rank second with 41 percent of respondents. Continental and continental crossbreds were favored by 12.5 percent of respondents, as was Brahman crossbreds.
Just under a third (32 percent) say their main source for obtaining stocker cattle is a local livestock auction market. Twenty-seven percent source cattle from their cowherd. Local order buyers provide cattle to 13 percent of respondents, while 12 percent obtain cattle from an out-of-state order buyer. Seven percent say they obtain stocker cattle directly from a cow-calf producer, and 6 percent obtain cattle from a regional livestock market. Direct from a backgrounding operation was listed by 2.4 percent of respondents, while a video auction was listed by less than 1 percent.
Other highlights from the Drovers 2000 Stocker Study:
- 51.7 percent of respondents say changing market conditions may cause them to vary marketing strategies from year to year.
- 49.8 percent of respondents say they may buy heifers instead of steers if price and profit expectations dictate a switch.
- 41.7 percent of respondents say they may delay or not purchase stockers when cattle prices move higher.
- 40.2 percent of respondents say they may buy lighter cattle than they prefer, depending on price and profit expectations.
- 69.7 percent of respondents say they keep detailed financial information.
- 49.8 percent of respondents say they keep detailed health treatment records.
- 76 percent of respondents say they vaccinate their cattle.
- 57 percent of those who vaccinate their cattle also revaccinate their cattle.
Demographics of respondents
Twenty-eight percent of respondents are between 46 and 55 years of age, while 22 percent are over age 65. Twenty-one percent are in the 36 to 45 age range, 18 percent between 56 and 65 years, 9 percent in the 26 to 35 age group and 2 percent are 18 to 25 years old.
Thirty-one percent of respondents are college graduates, the most common response. An additional 30 percent had some college, 12 percent have done post-graduate work, 23 percent are high school graduates, and 4 percent have not completed high school.