Livestock Management and Marketing Considerations in Dealing With Drought Dr. Curt Lacy and Dr. John McKissick Extension Economists-Livestock University of Georgia

Livestock Management & Marketing Considerations in a Drought Three Biggest Mistakes Cattlemen Make During a Drought 1. Do nothing hoping it rains or that additional land can be rented or hay purchased. 2. Early weaning AND marketing calves hoping that cows wont have to be liquidated. 3. Once culling begins, saving young cows (less than 4 yrs) instead of more productive (4-7 yrs) cows. Adapted from Gill and Pinchak. Destocking Strategies During Drought. TX A&M University.

Livestock Management & Marketing Considerations in a Drought The Basics 1. Most cattlemen have a finite amount of money to put into an operation. 2. Money comes from 3 places: 1. Cash on hand 2. Sales of assets (feed inventories, cows, equipment, real estate) 3. Borrowed capital 3. Assets-Liabilities = Equity 4. EQUITY IS OUR MOST IMPORTANT FINANCIAL ASSET

Livestock Management & Marketing Considerations in a Drought Suggested Operating Procedure (SOP) for Cattlemen in a Drought 1. Wean early (60 doa+) 2. Segregate and feed animals by nutritional needs 3. Cull cows 4. Precondition/stocker calves BE LOOKING FOR WAYS TO CUT COSTS

Livestock Management & Marketing Considerations in a Drought Marketing Order 1. Open cows (old) 2. Open cows (young) 3. Unprofitable cows 4. Replacement heifers 5. Current calf crop 6. Marginally profitable cows year old cows

Livestock Management & Marketing Considerations in a Drought Short-Term Profitability (Cash-flow) Net Cash Flow = Revenue – Expense – Payments Net Cash Flow = Calf Sales + Cow Sales – Feed Costs – Other Costs – Pmts Where calf sales or cow sales = Wt. X Price Drought Math 400# calf X $1.15/# = $460 1,100 pound cow x $0.48/# = $528 Cost per day = $1.00/day for calf gaining 2#/day Cost per day = $1.40/day for dry cow to maintain weight

Livestock Management & Marketing Considerations in a Drought Cost-cutting Guidelines 1. There is a difference in cutting costs and cutting corners. 2. Focus on $/Cwt. not $/cow or total $$. 3. Identify the largest costs in the operation that can be changed. 4. Identify ways to reduce these costs. 5. Dont cut the important things (nutrition, health, genetics).

Livestock Management & Marketing Considerations in a Drought Cull Unprofitable Cows Yeah Buts: Must be able to match cows and calves Based on average cow cost Borderline young cows may get a pass

Marketing Strategies for Cows and Calves

Livestock Management & Marketing Considerations in a Drought What Determines Cow Value 1. Percent Lean Meat Yield 2. Live weight

Livestock Management & Marketing Considerations in a Drought Marketing Classifications of Cull Cows ClassificationLean Percentage of Trimmings Body Condition Score Premium (Discount) Cutter/Canner85%+1-3($3.50/Cwt.) Boning Utility80-85%4-6Base Breaking UtilityLess than 80%7+($2.00/Cwt.)

Livestock Management & Marketing Considerations in a Drought Cull Cow Marketing When Before October 1 What Cows in good flesh (BCS 4+) Cows without obvious defects How Local market Direct???? Live weight Carcass basis

Livestock Management & Marketing Considerations in a Drought Increasing Income Calf Crop Short-term backgrounding/creep feeding Retained ownership Stockering Custom-finishing Forward price part of your production

Livestock Management & Marketing Considerations in a Drought What is the Market Offering Today- Futures Based Price Projections

Livestock Management & Marketing Considerations in a Drought What is the Market Offering Today- Futures Based Price Projections

Livestock Management & Marketing Considerations in a Drought What You Can Sell for Today-Futures Based Price Projections

Livestock Management & Marketing Considerations in a Drought Forward Pricing Part of Your Production Producers with 50,000# or more can use futures. Can use video auctions either through local markets or other to forward price calves up to 90 days. Forward cash contract with order buyers and feedyards.

Livestock Management & Marketing Considerations in a Drought Computer Decision-Aids Alternative Feedstuffs Calculator Marketing Alternatives Calculator Budgets Cow-calf Stockering Custom Finishing

Livestock Management & Marketing Considerations in a Drought Dealing With The Drought Summary 1. Keep in mind where we are in cycle – Better to do good job with fewer cattle than HA job with a lot! 2. Cull all LIKELY non-productive mature cows (10yrs plus, open etc.)–remember relation between nutrition and putting a calf on the ground. Keep the productive factory in place - 4 to 7 year old cows. 3. If they aint growing, they need to be going! Can wean 60 days plus. 4. Put emphasis on things will get you more NET money –Marketing, Management records (vaccinations, implants, feed products, etc.), Performance records. A SHARP PENCIL.