Will this be your last year in the cow/calf business?

Sep 22, 2008 11:44 AM

By Jason K. Ahola, Ph.D.

Unfortunately, it could be… unless your feed costs can be kept under control. With cow harvest up almost 10% from year-ago levels, it’s clear that a decent number of cow/calf producers are throwing in the towel and leaving the business, most likely due to increasing cost of production. 

In the next 18-24 months (or more, dare I say), it will be vital for cow/calf producers to change their management practices in response to increased forage and fossil fuel costs.Thus, at a time when cost-cutting has become vital, smart grazing strategies can reduce reliance on harvested feeds.

Make Your Cows Work for You
Across much of the U.S., hay and forage prices have doubled in the past 2 to 3 years. Although caused by many reasons, these increases are directly hitting the cow/calf sector of the industry.  As ranch income from the sale of calves remains relatively flat or declines (due decreased calf and yearling prices caused by high grain prices), the cost end of the profit equation should be the priority on cow/calf operations.

Cow winter feed cost is the largest expense on most ranches, but efforts to reduce it will help to ensure a profit.  The more days cattle can graze vs. being hand-fed harvested feeds, the lower feed cost will be.

It costs less for cattle to harvest feed on their own, compared to equipment doing it for them.  It appears that ranch and farm activities that depend on any one of 3 key factors – fossil fuel, equipment, or labor – will drive up costs.  Therefore, avoiding dependence on tractors, balers, trucks, and employees to get cows through the winter is a great place to start.

It Costs a Lot to Make Hay
Before we discuss options for extending grazing, let’s first look closely at the costs associated with baling hay.  Costs for custom hay harvesting vary widely; however, it appears that the ultimate cost to produce a ton of hay is fairly similar.  Check out rates for yourself at www.nass.usda.gov/ by searching for “custom harvest rates” on the National Agricultural Statistics Service website.

Custom hay swathing rates run anywhere from $15-25/acre, somewhat depending on how dense or light a forage stand is.  Assuming one acre generates about 1.5 tons of baled hay per cutting, swathing costs about $10-17/ton.  Custom baling rates for small bales are at about $0.50-0.60/bale or $13-16/ton (if a bale weighs 75 lbs).  If raking is needed, another $5-8/acre (or $3-5/ton) should be added.  Finally, unless there are a bunch of unemployed high school kids around, custom stacking of small bales costs around $0.45-0.55/bale or $12-15/ton.  

Using these estimates, getting your standing forage cut, raked, baled, and stacked will cost $38-53/ton – and that’s just to get it harvested.  You will likely have additional costs for transportation, storage, and feeding.

Costs to transport hay from the field to a storage site or feeding location vary tremendously, and depend on bale size (small vs. large) and shape (square vs. round).  Retrieving and hauling small square bales (about 4 ton per stack) typically includes a fee to pick up the stack ($15-30/stack) and a per-mile fee ($3.50-4.00/mile).  So, if small bales are hauled 20 miles from the field, for every ton moved it will cost $20-28/ton.  In contrast, loading and hauling large bales on a semi could run $15-20/ton (based on a $4.50/mile rate) depending on truck size, availability, and hauling distance.  However, significant equipment costs will be incurred for loading and unloading large bales.

Based on these current rough estimates, the total cost for the custom harvest and transport of a ton of hay appears to be running at least $53-81/ton.

It Costs a Lot to Feed Hay
Beyond the cost for baling, hauling, and storing hay, there is also a significant cost associated with feeding it.  Recently, Ron Torell and colleagues with University of Nevada Extension reported on the cost to use a ranch pickup.  Whether using a pickup for work or pleasure, today’s elevated costs for everything from fuel to tires to the initial purchase price should be causing cattle producers to think twice about depending on their pickup to feed cows.

Using on a modified spreadsheet from Texas A&M University, they calculated that the current cost to drive a one-ton diesel pickup was estimated at $0.67/mile.  Total cost could be reduced by depending on an older and smaller pickup ($0.34/mile) vs. using a dream $40,000 one-ton pickup ($0.91/mile).  And, variables including fuel efficiency (assumed at 15 mpg), miles driven per year (estimated at 20,000), and price per gallon ($4/gal) could also be managed to reduce cost per mile driven.

Based on these numbers, using a pickup to feed cows daily adds up.  For instance, the estimated cost to feed 1,000 lbs of hay to a group of 50 cows with a pickup would be $6.70/day or 13.40/ton (assuming a 10-mile roundtrip).  A nicer, newer pickup would cost $9.10/day or $18.20/ton (using $0.91/mile).  As a result, your hay now costs $13-18/ton more.  This adds up to $66-99/ton for hay, not accounting for labor or other equipment costs (e.g. loader tractor, feeders, etc.) required to deliver and feed it.

Options for Extending the Grazing Season
Several options exist for extending the grazing season in order to reduce hay harvesting and feeding costs.  These include:
1. Stockpiling perennial forages for deferred grazing.
2. Windrowing forages for deferred grazing.
3. Grazing crop residues or aftermath.

Stockpiling.  Unfortunately, at this point in the year it is probably too late to create and utilize stockpiled forages this fall, if you have not already planned ahead to do so.  However, if you are contemplating mowing and baling your hay fields one last time this year – you might think twice.

Stockpiled perennial forages can provide a great source of good quality pasture (notice, I didn’t say “low” quality pasture) that matches perfectly with the reduced nutrient requirements of pregnant cows (mid-gestation) during the fall.

The quality of stockpiled forages is affected directly by factors including when the stockpiling was initiated, forage species present, and the period of time from stockpiling until grazing.  The best way to utilize stockpiled forage involves the use of movable electric fencing that is moved often (ideally every few days) so that cows are forced to consume all forage that is available.

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