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Full text of "Feeder calf prices by breed cross and break-even feeder calf pricing."

Bitr B Agriculture 



Canada 

Research Direction generate 
Branch de la recherche 



Technical Bulletin 1 988-1 OE 




Feeder calf prices by breed cross 
and break-even feeder calf 
pricing 




Canada 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/feedercalfprice198810smit 



Feeder calf prices by breed cross 
and break-even feeder calf 
pricing 



ELWIN G. SMITH and G.W. RAHNEFELD 

Research Station 
Brandon, Manitoba 



Technical Bulletin 1988-10E 



Research Branch 
Agriculture Canada 
1988 



Copies t>! this publication are available from 

Information Officei 

Research Station 

Research Branch, Agriculture Canada 

P.O. Box tilt) 

Brandon, Manitoba 

R7 \ :>/: 

Produced In Research Program Service 

I Minister of Suppl) and Services Canada 1988 
Cat No.: A54-8 I988-I0E 
ISBN: 0-662-16469-5 

Egalement disponible en francais sons le titre 

Prix des veawt d'engraissement selon le type genedque et 

et.ihlis\ement des prix des veaux mi seuil de rentabilke 



I Ik duis on the map represent Agriculture 
Canada resean h establishments. 



- Ill - 



CONTENTS 

Summary iv 

Introduction 1 

The Study 2 

Performance of the Steers 2 

Liveweight, Gain, and Feed Conversion 2 

Carcass Dressing Percentages and Grades 3 

The Analysis 4 

Results 5 

Factors Affecting Feeder Steer Prices 6 

Interpretation of Results 8 

Worksheet for Break-even Feeder Calf Prices 10 



- IV - 



SUMMARY 



The price for feeder calves in 
western Canada tends to be higher for 
some breed crosses than for others. 
The existence of a premium or dis- 
counted price can have a major impact 
on the returns to the cow-calf pro- 
ducer. This study analyzed the prof- 
itability of finishing specific breed 
cross steers to determine whether 
feeder calf price differences by 
breed cross of the calf are based on 
their profitability. The study used 
three-breed cross steers produced by 
mating Charolais (C), Simmental (S), 
Limousin (L), and Chianina (Chi) 
terminal sires to first-cross dams of 
Hereford-Angus and nine dam types 
produced by mating C, S, and L sires 
to Hereford, Angus, and Shorthorn 
cows. The cows were maintained and 
the calves raised at Brandon, Man. 



The premiums and discounts across 
specific breed cross feeder calves 
were found to be based on the profit- 
ability of finishing the feeder calf. 
The difference in profitability among 
breed crosses was a direct result of 
the growth and feed conversion per- 
formance of the calf and the quality 
of the carcass produced. High gains 
on feed reduced the cost of gain, 
increasing the profitability of the 
calf. A carcass with a high dressing 
percent and grade was also more prof- 
itable. While the average calf of a 
specific breed cross may gain faster 
or have better carcasses than other 
breed crosses and be more profitable, 
producers should not rely on breed 
cross alone as an indicator of 
prof itabil ity . 



INTRODUCTION 



There are many factors that affect 
the profits from finished cattle. 
Prices for feeder calves, slaughter 
cattle and feed prices are the more 
notable factors. Management factors 
are also very important in determi- 
ning profits. Management includes 
the program of feeding, medication, 
implanting, labour, the facilities, 
and bedding. All of these factors 
will influence the growth and profit- 
ability of the calf. A final factor 
that will influence profits is the 
breed, or breed cross, of the calf. 
Nonmanagement factors that will 
influence profits are subsidies and 
producer levies. 

Cattle feeders consistently pay a 
premium for some breed cross calves 
indicating that these breed crosses 
may be more profitable to finish. In 
the summer of 1986, thirty-one live- 
stock auction market managers in 
western Canada were contacted to 
determine if the price for calves of 
similar size differed by breed cross 
in their market. They indicated that 
within the parkland region of western 
Canada, foreign breed cross calves of 
similar weight, 200-275 kg (440-605 
lb), sell at a premium to straight 
British breed crosses. The premiums 
for foreign X British crosses over 
straight British crosses for steers 
were $10.58/100 kg ($4.80/cwt) for 
Charolais crosses, $9.92/100 kg 
($4.50/cwt) for Limousin crosses, and 
$4.41/100 kg ($2.00/cwt) for Simmen- 
tal crosses. In the prairie region 
of southwestern Saskatchewan and 
southeastern Alberta, Simmental 
crosses were discounted $8.38/100 kg 
($3.80/cwt) and the premium for Cha- 
rolais and Limousin crosses were 
similar to those in the parkland 
region. The major reason stated for 
the different prices was grade re- 
lated. It was indicated that many 
Simmental crosses had to be fed to 
high weights for Al or A2 grades. 



The straight British crosses received 
a lower price because of lower rates 
of gain and a greater likelihood of 
over finishing at the desired finish 
weight. In November and December of 
1987, 17 feedlot managers and order 
buyers from western and eastern 
Canada were contacted to determine if 
they had breed preferences and what 
premiums they paid. Most indicated 
a breed cross preference, or did not 
want certain breed crosses for their 
feedlot and would pay premiums simi- 
lar to and often greater than those 
indicated above. Most of the feed- 
lots fed a silage-grain diet and few 
would feed high percentage Simmen- 
tals. It was indicated that high 
percentage Simmentals had to be fed 
differently to get top grades at the 
desired market weight. Calves receiv- 
ing premiums over British crosses 
were the average to good calves in 
the breed, not the poor calves. 

An important concern to producers 
with calves that are discounted is 
whether the discounts are justified. 
Are the discounted calves less 
profitable to finish, or are feeders 
making a higher profit from these 
calves because of the lower price 
paid for the calves? If there are 
differences in profitability among 
calves, then what factors are 
primarily responsible? A study was 
undertaken at the Agriculture Canada 
Research Station at Brandon, Manitoba 
to determine the effect of breed on 
the returns from finishing calves and 
whether the method of pricing the 
finished animal (liveweight, carcass, 
or lean) affected returns. To do 
this, the study determined the price 
(break-even) that could be paid for 
feeder calves of specific breed 
crosses, when taking into account all 
costs of production and the quality 
of the finished animal. A high 
feeder calf price would be associated 
with a calf that was more profitable 



to finish. 



THE STUDY 

The study was based on steers fed at 
the Brandon Research Station over a 
six year period from 1973-74 to 1978- 
79. The calves were three-breed 
cross calves from the Foreign Cattle 
Breed Evaluation program. Charolais 
(C), Simmental (S), Limousin (L), and 
Chianina (Chi) terminal sires were 
mated to Hereford-Angus (HA) dams and 
nine dam crosses produced by mating 
C, S, and L to Hereford (H), Angus 
(A), and Shorthorn (N). The breed 
crosses are shown in Table 1. 

TABLE 1. Terminal sires and first- 
cross dams used to produce three- 
breed cross calves in the study. 



First-cross dams 

HA SH SA SN LH LA LN 

HA CH CA CN LH LA LN 

HA CH CA CN SH SA SN 

HA CH CA CN SH SA SN 
LH LA LN 



a C=Charolais, S=Simmental, L=Limou- 
sin, Chi=Chianina , H=Hereford, A= 
Angus, and N=Shorthorn. 

Calves were weaned in October or 
November. The weaned calves went 
directly to a 28-day "warm-up" during 
which they were gradually introduced 
to an all-concentrate pelleted grain 
diet. The diet was fed free choice 
and its composition is shown in Table 
2. No growth hormones or feed 
additives were used. The calves were 
penned by breed cross of dam for 3 
years and by breed of terminal sire 
for 3 years in open front sheds with 
paved lots. Individual animals were 
weighed every 28 days until sent to 
slaughter. Weights during the 
feeding stage were taken after water 
was withheld overnight. Steers to be 



Termina 


1 


sires 




C a 




S 




L 




Chi 





slaughtered were taken off feed and 
water at 4:00 PM , weighed the next 
morning at 6:00 AM, and hauled to a 
local packing plant to be slaughted 
that morning. Feed consumption in 
each pen was measured and recorded 
for every 28-day period. One-half of 
each . breed cross of calf was 
slaughted at 13 1/2 months of age and 
the other half at 15 months of age. 
A total of 1038 steers were slaugh- 
tered over the 6 years and carcass 
data were obtained for each animal. 

TABLE 2. Feedlot diet 3 . 



Ingredient 



Percent of the 
diet by weight 



Barley 


50. 





Oats 


30. 





Dried molasses beet pulp 


15. 


,0 


Molasses 


2. 


,8 


Calcium phosphate 


0. 


. 5 


Limestone 


0. 


, 75 


Urea (45% N feed grade) 


0. 


.5 


Salt 


0, 


4 


Vitamin A 


0. 


,05 



a Note this was the diet used 

throughout the study. It may not 

be the least cost diet given 
current grain prices. 

PERFORMANCE OF THE STEERS 

Liveweight, Gain, and Feed Conversion 

Initial weight, 140 day, 196 day and 
252 day weights for the progeny of 
the breed crosses are shown in Table 
3. Average daily gain from the ini- 
tial weight to 140, 196, and 252 days 
are all in the table. Average daily 
gains declined as liveweight in- 
creased. Feed conversion to 140, 196 
and 252 days was estimated from pen 
feed consumption and gain, which were 
recorded every 28 days. Feed per 
unit of gain increased as liveweight 
increased. Average daily gains were 
similar for the C, S, and Chi sired 



TABLE 3. Weight, average daily gain, and feed conversion for progeny of terminal 
sire breeds and dam crosses. 



Weight (kg) 



Days 



Initial 140 196 252 

Breed of terminal sire" 

C 252 443 495 543 

S 243 428 477 523 

L 237 410 459 497 

Chi 253 441 500 541 



ADG a (kg/day) 
140 196 252 



Feed/gain ratio 
140 196 252 



1.36 1.24 1.15 

1.32 1. 19 1.11 

1. 24 1.13 1.03 

1.34 1.26 1.14 



6.50 6.94 7.37 
6.53 6.99 7.63 
6. 74 7. 23 7. 70 

6.51 6.96 7.54 



Breed of dam cross 1 



HA 


231 


412 


460 


503 


1.29 


1. 17 


1.08 


6. 78 


7. 16 


7.55 


CH 


245 


433 


493 


525 


1.35 


1. 27 


1. 11 


6.43 


6.98 


7.57 


CA 


244 


427 


486 


525 


1.30 


1. 23 


1. 12 


6.60 


7.05 


7.47 


CN 


254 


445 


495 


544 


1.36 


1.23 


1. 15 


6.34 


6.86 


7.34 


SH 


250 


431 


481 


526 


1.29 


1. 18 


1. 10 


6.68 


7. 11 


7.32 


SA 


251 


430 


491 


524 


1.27 


1. 22 


1.08 


6.65 


7. 10 


7.62 


SN 


259 


444 


492 


545 


1.34 


1. 19 


1. 13 


6.52 


6.95 


7.49 


LH 


244 


421 


488 


519 


1.26 


1. 24 


1.09 


6.83 


7.20 


7.88 


LA 


244 


428 


480 


534 


1.32 


1. 20 


1. 15 


6.51 


7.04 


7.68 


LN 


244 


440 


486 


531 


1.40 


1.23 


1.14 


6.24 


6. 76 


7. 71 



a Average daily gain. 

° The breeds are as defined in Table 1 



calves and lower for L sired calves. 
Feed required per unit gain for the 
C, S, and Chi were similar, with L 
higher. The calves that were 50% L 
grew slower and required more feed 
per unit of gain than did calves from 
the other three terminal sire breeds. 
Daily gain and feed conversion by 
breed of dam cross fell into three 
groupings. The dam crosses with the 
highest gain and lowest feed per unit 
gain were the CH, CN, SN, and LN. 
The HA, SH, SA, and LH comprised the 
group with the lowest growth rate and 
the highest feed per unit gain. The 
CA and LA were in a mid grouping. 
These dam cross groupings were 
similar regardless of the breed of 
sire of calf. 



Carcass 
Grades 



Dressing Percentages and 



The dressing percent and grade dis- 



tribution of the carcasses are shown 
in Table 4. The dressing percent was 
highest for progeny of the L terminal 
sire cross and lowest for the HA dam 
cross. A high percent of all car- 
casses graded Al . Animals were 
slaughtered on an age basis (one-half 
of each breed cross group at 13 1/2 
months and the other half at 15 
months of age). Weight and potential 
finish were not considered as 
slaughter criteria. An age basis for 
slaughter was used to facilitate the 
slaughter schedule and differences in 
finishing ability of breed crosses 
would be more evident than if slaugh- 
tered on a finish basis. As a re- 
sult, some carcasses had insufficient 
finish to grade in the A category and 
some were over finished grading A3 or 
A4. The majority of those grading Bl 
were under 450 kg (992 lb), but there 
were three animals which weighed over 
550 kg (1212 lb) that graded Bl. The 
Limousin terminal sire and the Here- 



TABLE 4. Dressing percent and grades for progeny of terminal sire breeds and dam 
crosses . 



Dressing 
Percentage 



Al 



Carcass grades (%) 
A2 A3&A4 



B1&C1 



Breed of terminal sire a 

C 60. 5 

S 60. 2 

L 61.6 

Chi 61.4 



81.0 
83.3 
78.3 
92.4 



14.5 

13.6 

18.7 

5.2 



1.4 


3. 1 


0.9 


2.2 


1.5 


1.5 


0.0 


2.4 



Breed of 


dam cross 3 


HA 


60. 1 


CH 


60. 7 


CA 


61.3 


CN 


61.4 


SH 


60.9 


SA 


60. 7 


SN 


61. 1 


LH 


60. 7 


LA 


61.0 


LN 


61.4 



72.0 



83. 


7 


84. 


9 


91. 


6 


86. 


7 


82. 


2 


87. 


1 


89. 


6 


87. 


1 


85. 


3 



26, 
11, 

11, 
6, 
9, 

13 

11 
8, 
9, 
9, 



1.5 


0.0 


1. 2 


3.5 


0.0 


3.8 


1. 2 


1. 2 


1.8 


1.8 


0.8 


3. 1 


0.9 


0.8 


0.0 


2.3 


0.0 


3.2 


1.0 


4.2 



The breeds are as defined in Table 1. 



ford-Angus dam crosses produced a 
higher percent of A2s. The Chianina 
terminal sires produced the highest 
percent of Al carcasses. 



THE ANALYSIS 

When purchasing feeder calves, how 
much can you afford to pay? It will 
depend on the expected price of 
slaughter cattle, the cost of feeding 
and maintaining the calves, and the 
expected weight gain. The excess of 
returns over the cost of gain can be 
applied to the purchase price of the 
calf. If calves can be purchased for 
less than the break-even price then a 
profit can be made on feeding the 
calves. The expected returns depend 
on the price of slaughter cattle, the 
grade, and the market weight. Costs 
depend on feed prices, feed conver- 
sion, length of time on feed, facili- 
ties, and veterinary and medicine 
(including implants). The analysis 
determined the price that could be 
paid for feeder calves under three 



methods of pricing the slaughter 
animal. The three pricing methods 
were liveweight, dressed carcass 
weight, and yield of lean. There is 
a worksheet at the end of the report 
that works through the determination 
of the price that could be paid for a 
feeder calf using dressed carcass 
weight of the slaughter animal. 

The October 1987 market prices and 
1987 Manitoba Agriculture Farm 
Business Management costs were used. 
Liveweight price for Al was $187.20/ 
100 kg ($84.92/cwt) and the carcass 
price was $320/100 kg ($145 . 16/cwt ) . 
Grade discounts were based on the 
Montreal wholesale carlot prices in 
October 1987. Wholesale prices for 
were used to determine 
prices for lean cuts, 
are not sold in Canada 
yield basis, producer 
lean were derived from 



primal cuts 

the producer 

Since cattle 

on a lean 

prices for 

wholesale prices for specific cuts 

(loin, round, rib, brisket, chuck, 

flank, shank, and plate) and the 

average yield of lean for these cuts. 



The lean cut prices were set to 
equate the value of an average 
carcass sold on a lean basis to 
that on a carcass basis. Feed costs 
were October 1987 costs for the diet 
in Table 2. 



RESULTS 

The break-even price for the three 
pricing methods was determined. The 
average break-even prices for progeny 
by terminal sire breed and breed 
cross of dam were calculated and 
adjusted to the same initial weight 
on feed and the same slaughter age. 
These break-even prices are reported 
in Table 5. When pricing slaughter 
animals on a liveweight basis, the 
break-even price that could be paid 
for feeder steer progeny of C, S, and 
Chi and of the same weight was 
similar and higher than what could be 
paid for L. These results reflect 
the daily gain and feed conversion in 
Table 3. Daily gain and feed 
efficiency were lowest for the L 
terminal sire. Selling slaughter 
animals on a hot carcass basis, the 
break-even price for Chi sired calves 
was higher than the C, and both were 
higher than S and L, which were 
similar. The L and Chi break-even 
prices were relatively higher than 
the S and C when based on hot carcass 
weight instead of liveweight because 
of relatively higher dressing 
percentages. When selling slaughter 
animals based on lean meat, the 
break-even price for Chi sired calves 
was higher than for the C and L, 
which were similar and higher than 
for the S sired calves. The yield of 
lean was lowest for the S and highest 
for the L sired calves. Regardless 
of the pricing method used for the 
finished steer, the price that could 
be paid for feeder calves of similar 
weight was highest for Chi followed 
by the C sired calves. The method of 
pricing did affect the S and L sired 
break-even calf prices with the L 



priced higher when based on lean 
yield. The S price was comparatively 
higher than the L when based on 
liveweight pricing. 

The break-even price that could be 
paid for a feeder calf, of the same 
weight, also depends on the breed of 
dam cross. Slaughter pricing on a 
liveweight basis resulted in three 
dam groupings which matched those of 
daily gain and feed conversion. The 
CH, CN, SN, and LN have the highest 
break-even price and the HA, SH, SA, 
and LH the lowest break-even price. 
Pricing on a hot carcass basis re- 
sulted in the highest break-even 
price for CN, SN, and LN steer calves 
and the lowest for HA. Slaughter 
pricing on a lean basis resulted in 
the CN, and LN having the highest and 
HA the lowest break-even price for 
feeder calves of the same weight. 
The breed cross of dam groupings are 
similar irrespective of the terminal 

TABLE 5. Break-even feeder price by 
pricing method and breed, ($/100 kg). 

Pricing method of 

finished steer 

Live- Hot Lean 

weight carcass meat 



Breed 


of 


terminal 


sire a 




C 




260 


273 


271 


S 




257 


267 


263 


L 




246 


264 


268 


Chi 




262 


280 


282 



Breed of dam cross 3 



HA 


251 


260 


252 


CH 


260 


275 


275 


CA 


256 


273 


275 


CN 


261 


280 


281 


SH 


254 


269 


271 


SA 


254 


269 


271 


SN 


260 


277 


273 


LH 


254 


267 


270 


LA 


257 


273 


274 


LN 


262 


281 


280 



a The breeds are as defined in Table 
1. 



sire breed. The major effect of 
slaughter cattle pricing method on 
the dam crosses was the break-even 
price for HA was comparatively lower 
when pricing the slaughter steer by 
carcass or by lean yield. 

The price premiums over the HA ob- 
tained in the analysis do not direct- 
ly correspond to those observed in 
the market. This analysis would 
price L cross calves lower and S and 
Chi cross calves higher than what has 
been observed in the feeder calf 
market. Slaughter pricing on a lean 
basis reflected the market pricing of 
feeder calves better than slaughter 
pricing by liveweight or hot carcass 
weight. This may indicate that the 
industry is partly taking lean yield 
into account . 

The S sired calves did better in this 
analysis than would be expected based 
on feeder calf prices. There are 
four possible reasons. First, S 
sired calves in this study were at 
most 50% S. The higher the percent S 
in the cross, the less the feeding 
industry is willing to pay. Percent- 
ages greater than 50 are being 
discounted the most. Secondly, this 
analysis used an all concentrate 
diet, while many feedlots use a 
silage-grain diet. (Corn silage in 
eastern Canada and corn and barley 
silage and haylage in western 
Canada). With the all concentrate 
diet fed in this study, the S crosses 
were able to obtain adequate finish 
at lower weights. Thirdly, there is 
variation within the S breed that may 
be greater than some other breeds, 
producing nonbeef types. The beef 
type S are generally not discounted, 
while the nonbeef types are not 
wanted by the feeding industry and 
will be purchased only if heavily 
discounted. This study may have had 
few of the nonbeef types. And 
fourthly, many feeders have indicated 
health problems and bad legs occur 
too often, which was not a problem in 



this study. 

The results indicate the Chi cross 
calves would sell at premiums, which 
is contrary to what is occurring in 
the industry where Chi crosses gener- 
ally sell at a discount to all other 
breed crosses ($2.25/100 kg [$5/cwt] 
less than straight British crosses). 
In this study, the Chi produced a 
good carcass and a very high percent 
of Al grades. And as with the S 
crosses, the diet could have been a 
major factor in the grades. A diet 
containing silage, or hay, may have 
resulted in more calves having in- 
adequate finish and grading Bl. This 
occurrence may even be more likely 
for the Chi than the S, given that 
fewer Chi graded A2, A3, or A4 . 
There may also be additional building 
and facility costs for these tall 
animals which were not accounted for 
in this analysis. 



FACTORS AFFECTING FEEDER STEER PRICES 



Break-even feeder 
calculated for a ra 
feed prices, weig 
average daily gain 
mine their effect 
price. Feeder cal 
used to develop ta 
feeder calf prices 
The break-even 
calves will be 
following conditi 
slaughter prices, ( 
feed, (3) lower 
higher average dail 



calf prices were 
nge of carcass and 
ht on feed, and 
on feed to deter- 
on the break-even 
f prices were then 
bles of break-even 
(Tables 6 to 11). 
price for feeder 
higher under the 
ons : ( 1 ) higher 
2) lower weight on 
feed cost, and (4) 
y gain on feed. 



Table 6 shows break-even feeder calf 
prices for different prices for the 
hot carcass and for feed, with 
initial calf weight on feed at 245 kg 
(540 lb) and average daily gain on 
feed of 1.25 kg/day (2.76 lb/day). 
At a carcass price of $320/100 kg 
( $145 . 16/cwt ) and a feed price of 
$130/tonne, the break-even feeder 
calf price is $233/100 kg 



($105. 70/cwt). An additional $40/100 
kg ($18.14/cwt) in the price of the 
carcass would allow paying an addi- 
tional $46/100 kg ($20.87/cwt) for 
the feeder calf. An increase in the 
price of feed by $20/tonne would 
result in paying $14/100 kg 
($6.35/cwt) less for the feeder calf. 

TABLE 6. Break-even feeder calf prices 
($/100 kg) for different carcass 
prices vs. feed prices 3 . 

Carcass prices ($/100 kg) 

Feed prices 

($/tonne) 200 240 280 320 360 

70 137 183 229 275 321 

90 123 169 215 261 307 

110 109 155 201 247 293 

130 95 141 187 233 279 

150 81 127 173 219 265 

3 Initial weight on feed = 245 kg; 
average daily gain on feed = 1.25 
kg/day. 

Table 7 has break-even prices for 
different carcass prices and initial 
weight on feed, with a feed cost of 
$90/tonne and average daily gain on 
feed of 1.25 kg/day (2.76 lb/day). 

TABLE 7. Break-even feeder calf prices 
($/100 kg) for different carcass 
prices vs. initial weights 3 . 

Initial Carcass prices ($/100 kg) 

weight 

(kg) 200 240 280 320 360 

195 169 215 261 307 353 

220 144 190 236 282 328 

245 123 169 215 261 307 

270 106 152 198 244 290 

295 92 138 184 230 276 

3 Feed price = $90/tonne; average 
daily gain on feed = 1.25 kg/day. 

When the carcass price is $240/100 kg 
($108.87/cwt) and the initial calf 
weight 270 kg (595 lb), the break- 



even price is $152/100 kg ($68.95/ 
cwt ) . The effect of carcass price on 
the feeder calf price is the same as 
in Table 6. An additional 25 kg 
(55.11 lb) in feeder calf weight will 
reduce the feeder calf price from $14 
to $25/100 kg ($6.35 to $11.34/cwt), 
depending on the weight of the calf. 

Table 8 shows break-even feeder calf 
prices for different carcass prices 
and average daily gain on feed, with 
feed costs of $90/tonne and initial 
weight of 245 kg (540.1 lb). A 
carcass price of $280/100 kg 
( $1 27 . 01/cwt ) and average daily gain 
of 1.05 kg/day (2.31 lb/day), will 
result in a break-even feeder price 
of $188/100 kg ($85. 28/cwt). The 
effect of carcass price on the break- 
even feeder calf price is the same as 
in Tables 6 and 7. An increase in 
average daily gain on feed of .2 
kg/day (.44 lb/day) will increase the 
break-even feeder calf price $28/100 
kg ($12. 70/cwt). 

TABLE 8. Break-even feeder calf prices 
($/100 kg) for different carcass 
prices vs. daily gains 3 . 

Average 

daily Carcass prices ($/100 kg) 

gain 

(kg/day) 200 240 280 320 360 

0.65 40 86 132 178 224 

0.85 68 114 160 206 252 

1.05 96 142 188 234 280 

1.25 124 170 216 262 308 

1.45 152 198 244 290 336 

3 Initial weight on feed = 245 kg; 
feed price = $90/tonne. 

Table 9 contains break-even prices 
for different feed prices and initial 
weight on feed, with a carcass price 
of $320/100 kg ($145. 16/cwt) and 
average daily gain of 1.25 kg/day 
(2.76 lb/day). With feed priced at 
$110/tonne and the calf weighing 245 
kg (540.1 lb), the break-even calf 



price is $247/100 kg ( $1 1 2 . 04/cwt ) . 
As previously indicated, feed price 
increases of $20/tonne will reduce 
the break-even feeder calf price 
$14/100 kg ($6.35/cwt) and a 25 kg 
(55.11 lb) increase in the initial 
weight of the calf will reduce the 
break-even price from $14 to 
$25/100 kg ($6.35 to $11.34/cwt). 



Table 11 contains break-even feeder 
calf prices for different levels of 
average daily gain on feed and 
initial weight. At a gain of 1.05 
kg/day (2.31 lb/day) and an initial 
weight of 220 kg (485 lb), the 
break-even price is $254/100 kg 
(115. 72/cwt). 



TABLE 9. Break-even feeder calf prices 
($/100 kg) for different feed prices 
vs. initial weights 3 . 

Initial Feed prices ($/tonne) 

weight 

(kg) 70 90 110 130 150 

195 321 307 293 279 265 

220 296 282 268 254 204 

245 275 261 247 233 219 

270 258 244 230 216 202 

295 244 230 216 202 188 

a Carcass price=$320/100 kg; average 
daily gain on feed=1.25 kg/day. 

Table 10 has break-even prices for 
different levels of feed price and 
average daily gain on feed. At a 
feed price of $110/tonne and gains of 
1.25 kg/day (2.76 lb/day), the 
break-even calf price is $248/100 kg 
($112.50/cwt) . The impacts from 
changes in feed price and daily gains 
are as previously indicated. 

TABLE 10. Break-even feeder calf 
prices ($/100 kg) for different feed 
price vs. daily gains 3 . 

Average Feed prices ($/tonne) 

daily gain 

(kg/day) 70 90 110 130 150 

0.65 192 178 164 150 136 

0.85 220 206 192 178 164 

1.05 248 234 220 206 192 

1.25 276 262 248 234 220 

1.45 304 290 276 262 248 

3 Carcass price = $320/100 kg; 
initial weight = 245 kg. 



TABLE 11. Break-even feeder calf 

prices ($/100 kg) for different daily 
gains vs. initial weights 3 . 

Average 

daily gain 

Initial (kg/day) 

weight 

0.65 0.85 1.05 1.25 1.45 

195 223 251 279 307 335 

220 198 226 254 282 310 

245 177 205 233 261 289 

270 160 188 216 244 272 

295 146 174 202 230 258 



3 Carcass price = $320/100 kg; feed 
price = $90/tonne. 

INTERPRETATION OF RESULTS 

The objective of the study was to 
determine whether feeder calf price 
differences by breed cross of calf 
are justified on an economic basis, 
and, if there were differences, to 
determine what were the major factors 
causing the differences. Economic 
bases for differences in feeder calf 
prices among the breed crosses were 
found and the causes of the differ- 
ences were directly related to the 
performance of the calf on feed and 
the quality of the carcass produced. 
While the breeds in this study were 
limited to four terminal sire breeds 
and 10 first-cross dam types, the 
factors which affect the feeder calf 
price and the break-even prices in 
Tables 6 to 11 will apply to all 
breeds . 



The economic reasons for differences 
in feeder calf prices by the breed 
cross of the calf are the result of 
the gain while on feed, the cost of 
gain, and the carcass grade and 
yield. 



While breed cross differences were 
found in this study, there are also 
differences within breeds that may be 
as large as those across breeds. 
When selecting calves for feeding, 
producers should choose them on the 
basis of their growth and profit 
potential rather than on breed 
make-up alone. 



Some breed crosses may be discounted 
in the market for reasons other than 
feedlot performance and profitabili- 
ty. Possible reasons for this are 
too few numbers to fill pens, addi- 
tional costs not accounted for in 
this analysis, or a lack of informa- 
tion on the performance and 
profitability of the crosses. 



Producers should consider selling 
slaughter cattle on a rail grade 
basis. There can be a large benefit 
from selling rail grade, especially 
if the animals have been shrunk prior 
to shipping and they have low amounts 
of tag on the hide. If slaughter 
cattle have high dressing 
percentages, then returns will 
generally be higher by selling on the 
rail . 



If the grading system were to take 
yield of lean into account, then 
muscle to bone ratios of the finished 
animal should also be considered. 



calf for best economic results. 
Calves with a high percent of British 
breeding should be fed so as to not 
over finish the calves. Calves with 
high percentage Simmental or Chianina 
may require high energy diets to 
prevent under finishing at the 
optimal market weights. 



The feeding program used and the 
energy concentration of the diet may 
have to differ by breed cross of the 



10 



WORKSHEET 

The following worksheet estimates the from sale of the slaughter animal, 
price that could be paid for a feeder daily gain, feed to gain conversion 
calf and cover all production costs. ratio, cost of feed, and interest 
The column on the right and the blank expense on operating capital, 
spaces are provided for your esti- 
mates. The example assumed that the 
calf was on feed for 252 days with an 
initial weight of 240 kg and a final 
weight of 520 kg. The gains while on 
feed can be obtained from Table 3 and 
in this case an average value of 1.11 
kg/day was used. The dressing per- 
cent was 59.5 and the grade was A2. 
Building and facility investment per 
calf was $110 with a life expectancy 
of 20 years and salvage value of $30. 
Machine investment per calf was $70 
with a life expectancy of 10 years 
and a salvage value of $40. 

The feed to gain (F/G) ratios can be 
obtained from Table 3 for different 
lengths of time on feed and the dif- 
ferent breed crosses. There are F/G 
ratios for 140, 196 and 252 days on 
feed. These ratios are an average 
over the entire feeding period. For 
the worksheet, use the F/G ratio that 
is closest to the length of time your 
animals will be on feed. An average 
F/G ratio of 7.56 to 252 days was 
used in the worksheet. 

A calf cost of $600 was used as an 
initial value to compute the cost of 
death losses and the interest on 
operating capital. Because the work- 
sheet calculates the price that can 
be paid for a feeder calf and part of 
the costs of feeding the calf are 
death losses and interest expenses, 
you need to start with a calf value 
that will be close to the break-even 
value of the calf. 

In this example, $640.86 was the 
maximum amount that could be paid for 
a 240 kg calf on feed for 252 days 
and with these prices and costs. The 
major factors that affect the price 
of the feeder calf are gross return 



RETURN FROM SALE OF SLAUGHTER ANIMAL (A2) 
520.0 kg X $311.58/100 kg X 59.5 dress % 
kg X $ /100 kg X dress % 



$/HEAD YOUR ESTIMATE 



964.03 



OPERATING COSTS 

Feed to 252d (280.0 kg gain X 7.56 F/G X $0.07/kg) 

Feed to d ( kg gain X F/G X $ /kg) 

Bedding " 1.5 kg/d X 252d X $.025/kg 

Vet., Medicine, Implants 

Building Repairs & Maintenance (2% of $110) 

Machine Repairs & Maintenance (5% of $70) 

Fuel, Electricity, Etc. 

Death Loss (2% of average value) 

, 964.03 + 600 , x 2% 

I 2 ' 
Trucking 

Commission and Yardage 
SUBTOTAL 



148, 


, 18 


9. 


45 


10. 


25 


2. 


20 


3. 


50 


5. 


00 



15.64 

11.00 

12.00 

217.22 



Interest on operating capital (12%) 



600 X 12% X 25J2 
365 



) + ( 



217. 22 X 12% X 252 . 
2 365- 



TOTAL OPERATING COSTS 



58. 71 



275.93 



FIXED COSTS 

Depreciation Buildings (110-30)/20 

Depreciation Machinery (70-40)/10 

Interest on Investment (8%) 



[( 



110 + 30, 



70 



+ 40 n x 8% 



•)] 



TOTAL OPERATING AND FIXED COSTS 



4, 


.00 


3, 


,00 


10. 


00 



292.93 



LABOUR COSTS 

.015 hours/d X $8/hour X 252d 
TOTAL OPERATING, FIXED, AND LABOUR COSTS 

RETURNS OVER TOTAL COSTS (964.03 - 323.17) 



30.24 
323. 17 

640.86 



BREAK-EVEN PURCHASE PRICE FOR 240 kg CALF 
(640.86 * 240) 



2.67 



METRIC SYSTEM CONVERSIONS 

When you know Multiply by To find 

kilogram (kg) 2.20 pound (lb) 

$/100 kg 0.454 $/hundred weight ($/cwt)