Feed Lot

NOV 2018

Feedlots and cow/calf operations in the beef industry who feed 500 or more has annually on grains and concentrates; maintain 500 or more beef cows; backgrounder, stocker/grower, preconditioner; veterinarian, nutritionist, consultant

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18 FEED•LOT November 2018 Animal Health Monitoring System (NAHMS) 2011 report. Even min- imal progress toward eliminating that loss would result in increased supply of beef and increased de- mand for feedstuffs. The effect of a price decline cre- ates a mixed bag for the segmented beef industry. While beef producers would bear a fiscal burden, beef processors over the course of the study gain $2,061 million due to lower beef cattle prices resulting from increased supply. Additionally, grain and feed- stuff producers benefit by $493 million due to increased demand for feedstuffs. In the first quarter of the model, a 0.001 percent increase in feed con- sumption is observed. As slaughter slowly increases, quarter by quarter over three years, ultimately, so does the cost of feed. Across the 16 quarters of the study, beef cattle producers (beef cow-calf and feed- lot producers) could lose $4,965 million due to lower beef cattle prices and higher feedstuff costs. The winners in this equation are the early adopters, according to Pendell. "It is the early adopters who are most likely to see a net gain, as they realize benefits before cattle mar- ket numbers significantly increase," says Pendell. The Consumer Wins Because the price decreases, beef becomes a more affordable alternative in the meat case. Lower priced beef creates pressure on competing protein sources. Ac- cording to the model, pork, lamb, More than 21 percent of U.S. cattle are affected by bovine respi- ratory disease (BRD), at an annual cost to the industry of more than $800 million. Death, reduced feed efficiency and rate of gain, treatment costs – it all adds up. Research into new technolo- gies and management practices that could help reduce the disease and its effects includes treatment plans, selection criteria models, the development of new vaccines and protocols, and genetic selection. But there is more to the pic- ture. A recent study by Dr. Dustin Pendell, professor of agricultural economics with the Kansas State University Beef Cattle Institute, and Kamina Johnson, USDA-APHIS, looks at the market impact of a reduction in BRD. This research highlights the tradeoffs that occur when reduc- ing the prevalence of an endemic, low mortality disease with negative production impacts. On the up side, cattle producers stand to gain economic efficiencies due to the direct cost savings relat- ed to treating fewer cattle and less death loss, as well as improved feed efficiency seen in healthier animals. "Producers will save money on treatment costs and the labor ex- pense of caring for sick animals, as well as reducing the management needs of separating animals and tracking drug withdrawal periods," says Pendell. "At present, producers with cattle affected by BRD appear to be able to spend up to $23.60 per head on a program to avoid BRD and still break even (using NAHMS Beef Feedlot 2011 Study data)." In addition, revenue generation will be accelerated with cattle no longer in need of treatment arriving at market sooner, and at a heavier weight than if they had weathered the disease. "Cattle will get bigger faster and put to market faster," says Pendell. "That means a faster return on revenue, and the potential for more earned interest on that money." Healthier animals at market also mean fewer discounts for light weights and poor carcass condi- tion, though the research does not account for individual beef cattle performance, nor the effects the absence of disease may have on that performance. Supply and Demand However, reducing BRD prev- alence would result in increased supplies of beef cattle through low- er morbidity and mortality rates, and, as the research shows, simple rules of supply and demand would likely apply. Pendell and Johnson used US- DA-NASS cattle on feed inventory numbers to create a model whereby a linear reduction in the prevalence of BRD by 50 percent is achieved over three years and maintained for one year. The result of this hypothetical model is an increase from 78.8 percent to 89.4 percent in cattle not affected by the disease. Over time, this significantly in- creases the number of feedlot cattle and beef supplied to the market, creating downward price pressure. BRD is responsible for approxi- mately 45-55 percent of all deaths in the feedlot, according to a National MANAGEMENT BCI Research: How would a 50% reduction in BRD impact the industry's bottom line? BY TERRI QUECK-MATZIE

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