Is There Profit in Holstein Steers?
4/8/2015 IS THERE PROFIT IN HOLSTEIN STEERS? Robert Tigner, Nebraska Extension Educator WHY ARE WE INTERESTED? 1 4/8/2015 ISU NET RETURNS TO FEEDING Returns to Marketing 1300 lb Finished Steer Jul‐14 Aug‐14 Sep‐14 Oct‐14 Nov‐14 Dec‐14 Jan‐15 Feb‐15 Net Returns 292.35 211.47 229.69 269.70 312.32 185.22 112.01 ‐6.83 WHO IS INTERESTED? • • • • • Transitioning dairy farmers Operating dairy farms Feeders looking for calves to fill pens Feeders selling to specific markets Add an enterprise to increase income: How big is enough? • Next generation 2 4/8/2015 KEYS TO SUCCESS OR PROFIT • Understand the market • Who is buying and what do they want • Calf fed high energy diets • Finish rather than grower diets due to Holstein genetics • COG • Mortality-Morbidity MARKETING DAIRY STEERS 3 4/8/2015 MARKETING OPTIONS • Sale barns: small numbers • Direct country sales: full loads • JBS-Greenbay WI • Cargill-Fort Morgan • American Foods Group: Green Bay WI • Tyson-Dakota City and Denison MARKETING OPTIONS-2 • Delivery contracts: yearlings or calf-fed • Meeting the specs • Hip height limit • 58 inches for Tyson, JBS none • 20% chance of reaching at 425 DOF • Carcass size • JBS 700-1000 pounds 4 4/8/2015 PRICING GUIDELINES • Expect discounts for Holstein steers • Due to lower dressing % • VetLife benchmark data shows ~3% less • Smaller size primal cuts • Expect to pay less for Holstein feeders • Higher mortality • Lower feed efficiency (similar to beef heifers) JBS • Formerly Packerland then Smithfield • Announced calf fed (high energy) market strategy at Smithfield purchase 5 4/8/2015 6 4/8/2015 TYSON/IBP • Holstein steer slaughter for over 30 years • 20-30,000 head weekly Holstein slaughter across the company • Dakota City and Denison TYSON/IBP-2 • Specs for slaughter • 58 inch shoulder height, over 58 inch will be rejected • 1 inch added height adds 3 inches to carcass length • 1350 pounds target weight, 1500 pounds limit 7 4/8/2015 TYSON/IBP-3 • Within 10% of plant average for acceptable livers and open abscesses • Target is 65% Choice or higher, “grading less than the plant average is unacceptable.” TYSON/IBP PRICING • Holsteins discounted $4 to $10 compared to native cattle 8 4/8/2015 TYSON/IBP OBSERVATIONS • Holsteins on early high energy diets can meet Tyson specs • Beta-agonist and implant strategies • Holsteins under roof, on rubberized slats perform best at the plant AMERICAN FOODS GROUP • Green Bay WI • Main procurement area: WI, IA, MN, SD 9 4/8/2015 CONTRACT DIFFERENCES • • • • Light weight cattle Over 30 months Dressing % Some companies have a range of specs in contracts while others will have a discrete spec to hit. 10 4/8/2015 ECONOMICS OF HOLSTEIN FEEDING CLOSEOUT DATA 11 4/8/2015 ACTUAL PENS OF HOLSTEIN STEERS • Contacted a feeding company • They shared their Holstein steer pen closeouts • 355 pens • Averages ADG Init Wgt Final Wtg COG Morb idity Mort ality Yield 2.9 7.1 1311 528 26.9 3.2 61.3 AVERAGES ARE DECEIVING Min Max Median Intake Daily gain, lb Feed/pound of gain Out BW Cost of Gain Initial BW Days on Feed Morbidity, % Mortality, % Yield 15.2 2.1 5.6 1114.6 87.2 275.0 121.0 0.0 0.0 59.0 26.5 4.0 9.3 1432.1 137.7 919.0 364.0 100.0 11.0 64.4 20.2 2.9 7.0 1313.5 105.1 533.5 263.0 20.6 2.6 61.3 12 4/8/2015 FINBIN DATA SET • Production differences by size • Over 250 head feedlots had higher death loses: 7% vs 3.7% • Over 250 head lots had higher ROG 2.43 vs 2.27Over 25o head lots had lower total feed cost: $39.21over 250 head averaged higher sale price: $3.60/cwt. 13 4/8/2015 WHAT DO THESE MEAN • Holsteins are a little more challenging for feedlots • Costs increase due to the challenges • Feedlot managers must be aware of the challenges to be financially successful U OF WI BEEF FEEDING WEB SITE WI Beef Information Center: http://fyi.uwex.edu/wbic/dairybeef/ 14 4/8/2015 15 4/8/2015 Example-Feeder-Budgets-3-13-15.xlsx 16 4/8/2015 IOWA STATE UNIVERSITY Feeder calf bid calculator: http://www.iowabeefcenter.org/software_calculators.ht ml 17 4/8/2015 CURRENT BID PRICE EXAMPLE ADDING THE NEXT GENERATION 18 4/8/2015 HOW BIG IS BIG ENOUGH • FinBin data average about $36 per head return for labor and management 2009-2013 • Range is -$44.54 to $84.68 • How many head do you need for the income you want? SIZE MATTERS • If adding the enterprise to increase income or replace dairy income 19 4/8/2015 TAKE HOME MESSAGE FINANCIAL SUCCESS? • Holstein feeding profitability has been more consistent in the last 5-7 years than at previous times. • Calf fed or high energy diets meet the grid specs. 20 4/8/2015 CONCLUSIONS • Low beef herd numbers have helped Holstein profitability • Reduced feed costs have helped profitability • Feeders have several tools to estimate profitability • Size must be considered if trying to transition to or adding Holstein feeding SOURCES • • • • • • • • American Foods Group JBS Tyson/IBP FINBIN: Center for Farm Financial Management Managing and Marketing Holstein Steers Proceedings ISU Beef Center WI Beef Information Center Innovative Livestock Services provided recent Holstein steer closeouts. 21 4/8/2015 QUESTIONS? ROBERT.TIGNER@UNL.EDU 22
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