News Update

News Update
May 2, 2007

Cattle Producers Can Prioritize Managing Costs and Making Wise Investments

Priorities First: Identifying Management Priorities in the Commercial Cow-Calf Business by Tom Field, Fort Collins, Colo., and sponsored by the American Angus Association, is the first comprehensive effort to prioritize management and economic issues for cow-calf producers.

(A detailed summary can be found at www.angus.org or contact the American Angus Association to obtain a printed copy of Priorities First.)

Dissecting a portion of the Priorities First research findings provides an important perspective on the issue of controlling production costs. When the survey was conducted, a cost control question was included with five of the 15 management categories. The survey simply asked how important it was to maintain below industry average costs within individual aspects of the operation. The category “Harvested Forages and Supplemental Feeds” carried some important results, which parallel industry findings.

Survey respondents believed strongly that harvested forage and supplemental feed costs must be monitored. This area was identified as the most critical cost-control point of the five surveyed. However, overall survey results identified herd nutrition as the highest-ranking management priority for cow-calf producers. Respondents are precisely committed to satisfying the cow herd’s nutritional needs. Yet, there was a large difference in how the survey prioritized pasture and range management vs. where it ranked harvested forages and supplemental feeds. The message is clear that herd nutritional needs should be met through grazing. Harvested forages and other supplemental feedstuffs should be secondarily used with a critical eye on costs.

An analysis of 19 university cow-calf budgets supports the Priorities First findings. The analysis detailed both pasture cost per cow and hay/supplemental costs per cow. Of the five budgets with the lowest pasture percentage of total feed costs (average 25%), the total feed cost per cow averaged $255. In comparison, the five budgets with the highest pasture percentage of total feed costs (average 57%), the total feed cost per cow averaged only $218. Thus, a 32% increase in pasture percentage resulted in a cost savings of $37 per cow.

Cattle-Fax research has demonstrated the lowest-cost, most profitable cow-calf producers actually spent more than low-profit producers in three areas: pasture maintenance, herd health and bull genetics. Research also indicated that extending the number of months cows spent grazing (while proportionally reducing time consuming harvested feeds) could lower annual feed costs. On April 13, 2007, Cattle-Fax released additional data on operating returns. According to the data, during the 1980-2006 timeframe, the top one-third of producers generated $24.1 billion in revenue or $89.19 per head on a cash cost basis. The lower one-third of producers generated a net loss of $9 billion and showed a loss of $29.56 per head. The middle one-third of producers was essentially in a breakeven business generating a small per-head profit. The one noteworthy difference between profitable and unprofitable producers was lower cow costs.

In 2002, Oklahoma State University’s (OSU) Cooperative Extension Service (Doye et al. 2002. Oklahoma Cooperative Extension Service, What We Are Learning From Standardized Performance Analysis (SPA) Data. F-231) released an analysis supporting the Cattle-Fax data. The OSU data was based on cow-calf SPA information and compared the average financial and production statistics for low-and high-cost producers in Texas, Oklahoma and New Mexico. Data were sorted by net income ($/cow). Producers with the highest net income were labeled Top 25% (high income), followed by Second 25%, Third 25%, and finally Low 25% (low income).

While the complete study revealed a wealth of financial and cost information, the relevance of the data to Priorities First is clear. High-income producers’ average cost of production was $320 per cow compared with $556 per cow for low-income producers. High-income producers have less invested per cow in all asset categories: current assets (e.g. cash and supplies), breeding livestock, machinery and equipment and real estate. The high-income producers’ average cost of production was $80 per hundredweight (cwt.) compared with $159 per cwt. for low-income producers.

— Release provided by the American Angus Association

Contaminated Feed Issue Continues

The Food and Drug Administration (FDA) has suggested the number of processing plants that received contaminated feed in the pet food recall case could reach into the hundreds, according to CNN.com.

As of April 30, the investigation indicated that approximately 30 broiler poultry farms and eight breeder poultry farms in Indiana received contaminated feed in early February and fed it to poultry within days of receiving it. (See “FDA, USDA Trace Adulterated Animal Feed to Poultry,” in the May 1 e-List).

Officials made the announcement as part of the continuing investigation into imported rice protein concentrate and wheat gluten that have been found to contain melamine — an industrial chemical allegedly used in China to “spike” protein content in certain feed materials. Alleged use of melamine and cyanuric acid sparked a massive recall that began March 16 of more than 150 brands and 5,300 pet food products, according to CNN figures.

As with exposure from hogs fed contaminated pet food, FDA and USDA officials said they believe the likelihood of human illness after eating chicken fed the contaminated product is very low.

According to CNN, FDA last week detained all vegetable protein imports from China that are used in animal feed and human food — including wheat gluten, corn gluten meal, corn byproducts, soy protein and much more.

Three FDA investigators are in China now to investigate the cause of contamination, said Walter Batts of FDA’s Office of International Programs during a press conference yesterday. An FDA senior international policy analyst met with Chinese officials earlier this week, Batts added, where the specialist secured an agreement for full cooperation from the government after an investigation briefing.

Grants Available for Sustainable Ag Projects

Colorado ranchers and farmers are invited to submit grant proposals for research projects that focus on sustainable agriculture. The Western Sustainable Agriculture Research and Education (SARE) program has made more than $2 million in grants available to agriculture producers and individuals from universities, farm support agencies, agri-businesses and nonprofit organizations.

The grants typically explore, develop or promote some aspect of agricultural sustainability, which embraces profitable farms and ranches, a healthy environment and strong families and communities.

Categories for research grants include research and education; farmer/rancher; professional and producer; professional development programs; and graduate fellow grants in sustainable agriculture.

“These grants encourage ranchers and farmers to create new methods which care for the land while still turning a profit,” said Dennis Lamm, state coordinator of the professional development program and agriculture Extension education director at Colorado State University (CSU).

Western SARE, administered through Utah State University, is one of four regions of SARE under the U.S. Department of Agriculture (USDA). The Western region includes 13 states and four U.S. Pacific Island protectorates. Since the program started in 1988, Western SARE has distributed more than $40 million in competitive grants to nearly 1,000 recipients in the region.

This year’s requests for applications and grant deadlines can be obtained from the Western SARE web site, http://wsare.usu.edu, by calling 435-797-2257 or by e-mailing wsare@ext.usu.edu. For more information, contact Lamm at 970-491-2074 or via e-mail at Dennis.Lamm@colostate.edu.

For more information about sustainable agriculture programs at CSU, visit www.coopext.colostate.edu/sustag.

— Release provided by CSU.

Upcoming K-State Ag Conferences

Kansas State University (K-State) Research and Extension is offering the following area and statewide agricultural conferences and field days to all interested persons. For more information about these events and local and county events, check with your local Extension office.

• May 22 — South Central Experiment Spring Field Day, Hutchinson, 620-662-9021
• May 22 — Southeast Agricultural Research Center Wheat Tour, Parsons, 620-421-4826
• May 27 — Agronomy Field Day, Manhattan, 785-532-5776
• May 27 — Dryland Wheat Trial Tour, Garden City, 620-276-8286
• May 28 — Wheat Variety Demonstration, Hays, 785-625-3425
• May 28 — Agricultural Lenders Conference, Manhattan, 785-532-1505
• May 29 — Agricultural Lenders Conference, Garden City, 785-532-1505}
• May 29 — Hesston Experiment Field Spring Field Day, Hesston, 620-327-2547
• June 4 — North Central Kansas Experiment Field Spring Field Day, Belleville, 785-335-2836
• June 4 —Wheat Field Day, Southwest Research-Ext. Center, Tribune, 620-376-4761
• June 25-26 — Composting Operators’ School, Manhattan, 785-532-5776
• July 15-17 — Crop Diagnostic School, Manhattan, 785-532-6183
• July 22-23 — Kansas Ag Retailers Association Crop School, Manhattan, 785-532-6183
• Aug. 14-15 — Risk and Profit Conference, Manhattan, 785-532-1504

— compiled by Crystal Albers, associate editor, Angus Productions Inc.