Beef producers are being paid more for steers than ever before. However, with rising input costs, profitability is not as big as it was ten years ago. In a recent Agri-View online article, Jeffrey Hoffelt discusses the merit of assessing the cost of gain in a feedlot to help decrease input costs and increase profitability.
Due to its unpredictability, the price paid for cattle should not be a beef producer’s focus for increasing profitability. According to Amy Radunz, UW-Extension Beef Specialist, the focus should be placed on decreasing input costs in areas that producers have control over, such as:
- Cost of feed
- Weight of and price paid for incoming cattle
- Feeding efficiency and nutrition management
- Regular evaluations of herd health and mortality rates
Radunz emphasized that average daily gain actually has very little impact on profitability. With current high feed costs and the potential for heavy-weight discounts, keeping steers on feed longer to obtain high hundredweight prices could actually decrease net return.
Feeding efficiency is what ultimately ensures profits. This is accomplished by reaching the most pounds gained on the least expensive feedstuffs.
The UW-Extension’s “Feedlot Cost of Gain Assessment” table is a valuable tool for performing a self-evaluation of a feedlot. Fifteen questions are listed with three possible answers, each reflecting a high, average, or low cost of gain.
Here are a few examples of these questions with their “Low Cost of Gain” answers:
- When do you determine the ingredients in your ration? Throughout the year to determine costs and select least cost rations.
- What is the source of most of your feed? Mostly home-grown.
- What equipment do you have for feeding your cattle: Tractor, feeder/mixer wagon to feed a totally mixed ration.
Source: “Increased profitability begins with cost of gain assessment.” agriview.com. Agri-View, Jeffrey Hoffelt. Web. 3 March 2011.