Feed Lot

APR 2013

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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FEEDLOT FOCUS BY MARC ROTH, M.S., P.A.S. Have you been to the viewing? A friend of mine, a lifelong cattleman and feedlot owner (we���ll call him Mr. A) recently shared that he had received a phone call from another long-time cattleman (Mr. B) who asked ���Have you been to the viewing?��� Mr. A was caught off guard and quickly searched his memory for a common acquaintance that had passed away. Coming up empty, Mr. A replied ���No, I guess I���m not even sure who you are referring to ��� who died?��� Mr. B replied ���The cattle feeding industry.��� We may argue about whether or not the time has come to pen the epitaph, but we can all agree that the patient is certainly sick, even gravely ill. Equity has been drawing from the feeding sector at a pace similar to watching the national debt calculator. Furthermore, we have feedyards filled with cattle that will require a $140 market just to wash out. We may see that kind of a market this spring; but it is unlikely that we will exceed it by enough, or stay there long enough, to revitalize our patient. How did we get here? For several decades, feedlot operators have been learning and implementing the economies of scale and the concept of incremental margin. As we���ve built new capacity, however, none of the older or less efficient facilities ever seem to get bulldozed, so feeding capacity has grown while the cow herd has shrunk. We���ve compensated by placing cattle at lighter weights and feeding them to heavier weights, thus increasing the number of days that the animal will need a pen. This worked fine until $8 coin when we learned that if cost of gain equals the fed cattle price, then prolonged feeding isn���t as much fun. The problem of overcapacity will not go away in the foreseeable future. The problem of $8 coin will improve, but we���ll spend more time in the $6 range than we will in the $4 range as our nation���s voters have decided to use our crop production resources to lower the cost of gasoline rather than to lower the cost of food. Triage measures for our critical patient will include utilizing more of that pen space to wean and grow calves, background stockers, grow replacement heifers, and feed cows. We���ll see even more of the larger feedyards with a packer affiliation and they���ll continue becoming beef factories where a fairly uniform supply of feeder cattle will become an even more uniform supply of fed cattle through highly streamlined and efficient processes. Poor small operators will not enjoy competing on that playing field. Adversity always creates opportunities, but these may be outside of our paradigm and thus difficult for us to recognize. Don���t just think of yourself as a feedlot needing an 800# wheat pasture steer ��� rather think about the life cycle process of beef cattle production and find the place that you can do FL better than most. Circle No. 110 on Reply 12 FEED���LOT April/May 2013

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