Finding a balance between biological and economic efficiency within a cow-calf herd is tricky. The relationship often involves input costs and cattle prices, and a range of other objectives.
Dustin Aherin, vice president, RaboResearch animal protein analyst, Rabo AgriFinance, discussed how cow size translates into profitability during his session, Sept. 9 at Cattle U, sponsored by High Plains Journal.
Many cattle producers have this discussion with their peers about the right cow size and what’s the best fit, and they don’t always agree.
“There's really no consensus in the industry as to what's too big, what’s too small,” Aherin said. “And then we also kind of tend to throw in the milk production question into that conversation as well.”
Research in terms of trying to form a consensus around what’s the most economically efficient profitable cow size doesn’t show much either. There’s really no broad consensus, Aherin said.
“Some studies have found that smaller cows that milk less are more profitable,” he said. “Others have found that profitability increases with larger or heavier milking cows.”
The economics at the time of the study—cattle prices and feed prices at the time, as well as resource conditions and specific environmental conditions the cows were maintained in—are an important consideration, he said.
“Another key point is that efficiency metrics really depend on what you're measuring against,” Aherin said. “Are you measuring efficiency on a per dollar basis a per head basis, maybe a per acre basis? Those are all things to consider when looking at profitability and what really the goals of an operation might be.”
Biological efficiency and economic efficiency aren’t necessarily the same thing. It depends on specific conditions that measure traits.
“It's really important to measure them separately,” he said.
The traits will often align fairly well, but not always.
“There have been several studies and data sets that have shown that you can have different rankings of biological efficiency versus economic efficiency,” Aherin said. “At the same time, these are really key points that the beef industry needs to address as the cow herd accounts for roughly 50% of beef production’s total energy consumption.”
Cattle producers need to figure out how we can consume the energy efficiently from a biological standpoint.
“So pounds of calf weaned, number of calves weaned—things of that nature—as well as an economic efficiency standpoint, what's the cost of that energy?” he said.
Variables to consider
One size really doesn’t fit all and it’s going to depend on the operation’s goals, among other things.
“It's going to depend on the geography. It's going to depend on management practices, marketing strategies, you name it,” Aherin said.
As part of Aherin’s dissertation for his doctorate at Kansas State University, he took a deep dive into the questions surrounding biological and economic efficiency. He specifically looked at production within the Kansas Flint Hills and how different combinations of mature cow weight and peak lactation might influence efficiency metrics. He felt as though having an extended time frame to study was very important. His study modeled the data instead of actually doing a live animal study.
“So why do a model, instead of looking at actually doing a live animal study?” he said. “One, it can really simplify some of the confounding factors and really hone in on what we're what we're aiming to look at.”
Keeping it simple
Doing it this way was less expensive, and took less time too.
“We can also account for biological variation—some of that randomness I think everybody's probably experienced,” he said. “You can manage groups of cattle the exact same way and get different outcomes, whether that's across groups or across individuals and modeling really helps kind of build a strategy and understanding before diving deep into implementing something in the real world.”
Aherin said the model works to combine genetic potential, growth impacts from a nutritional and puberty and reproductive standpoint, combined with health and management, nutrient availability. This helps account for biological variation.
“So instead of saying that this is the average, it allows us to account for some of the risk,” he said.
This helps with questions like what’s the distribution of potential outcomes, what’s the worst or best case scenario—and being able to do it all on a multi-year standpoint.
“When you're maintaining a cow herd, what you did last year is going to impact your production outcomes this year, and so being able to account for multi-year compounding structures is really valuable,” he said. “And being able to do that on an individual basis, also helps to account for that feedback structure and that biological variation.”
Flint Hills study
As far as his parameters go, he looked at the Flint Hills—specifically accounting for precipitation, temperature and estimated forage production. Then he looked at 32 different breeding systems consisting of eight different mature cow weights—ranging from 1,000 pounds to 1,700 pounds in 100 pound increments—then four different peak lactation potentials, ranging from 15 to 30 pounds per day. The herd size simulated was 100 head to account for that biological variation. They assimilated each scenario 100 times and then set up a breeding season of 63 days. The animals were primarily Angus genetics.
“A really key point in all of this is that, in this simulation, we assume that cows were managed to meet their nutritional needs,” Aherin said. “A lot of the efficiency metrics are accounted for on a cost basis.
If a cow requires more energy it’s not that she gets thin and doesn’t breed back, instead it’s the dollars required to keep her in good condition that could increase.
“You could think about the inverse for little cows being cheaper to maintain, not necessarily having better or worse pregnancy rates,” he said.
When looking at the data, he found weaned per cow exposed increased with mature cow size, which “I think mostly makes sense,” he said.
“There's that correlation between growth and mature cow size,” he said. “And then, kilograms weaned per cow exposed increased with milk and lactation.”
Because the cattle are managed from a “meeting nutrition standpoint” there isn’t a whole lot of difference in cow sizes and lactation potentials from a pregnancy percentage standpoint.
What about the efficiency of the pounds weaned? In his data he looked at how many kilograms were weaned per unit of energy input into the different production systems.
“What this suggests is that the smaller cows were more efficient in converting energy into pounds of calf weaned and added lactation was also more efficient in terms of energy inputs into pounds of calf weaned,” Aherin said.
While that’s from a biological efficiency standpoint, his study aligned well with other studies that have been done in different resource environments. From a mature cow weight standpoint, it suggests several considerations.
“There probably isn't enough added weaning weights associated with larger mature cows to offset the added nutrient requirements of those larger mature cows,” he said. “From a peak lactation standpoint is still varies a bit in terms of the scientific consensus there. This study found that higher lactation cows were more efficient. Other studies have matched that finding and a couple studies have had a different outcome.”
Aherin thinks it really depends on nutrient availability and how the cows are managed.
“An underlying theme in this research is the importance of having a uniform cow herd and managing cattle on a uniform basis,” he said. “If your cow herd's not uniform—some cows are going to be getting too much nutrition, some cows are going to be getting not enough—and that's really something that I think, as some of the discrepancies in both the research outcomes and what we see out in production.”
From an economic standpoint, revenue in these scenarios was generated from both weaned calves and cull cows. Expenses that were accounted for included fed ration expense, pasture rent, cost of replacement females and interest assuming 100% financing. He ignored labor, fuel, utilities and facilities as these are production costs that are more specific to operation type rather than specific cow type.
“So we really concentrated our focus on the 65 to 70% of total expenses that can be associated with cow type,” Aherin said.
He looked at economic efficiency in terms of annual return per breeding female—dollars returned per cow that’s exposed for breeding. His data suggested as cow size decreases, the return per breeding female tends to increase.
“Obviously there's some overlap,” he said. “There's some variation as part of that biological variation, and it also tends to increase with lactation, but that trend gets a little bit fuzzy, as you get into the some of the heavier weight cows.”
Aherin said that has to do with the interaction between nutrient requirements and dollars of return, pounds of weight—things of that sort.
“One thing I think is really interesting when you look at return from a per head basis, is it really depends on the economic conditions that we're in,” he said. “As the difference between cattle price and ration cost gets wider, the return actually tends to favor those big cows.”
When feed is cheap and cattle prices are high, big cows with a lot of growth and production potential are probably going to return more on a per head basis. On the other hand, when feed prices are really high—like during a drought—those big cows are going to cost you the most money.
As far as lactation goes, when feed costs are cheap relative to cattle prices, producers might be rewarded when they’re able to wean off as many pounds as possible. In this case, those heavy milking cows tend to be more profitable on a per head basis.
“When feed costs are high relative to cattle prices that advantage really goes away again,” he said.
From an acre standpoint, the return per grazing acre—when looking across all his data—Aherin found those smaller cows tend to return more dollars per grazing acre.
“We also tended to see an increase in return per head or return per grazing acre with added lactation,” he said. “Again, those trends start to fade away a bit as you get into heavier cows.”
Perhaps the best metric to look at economic efficiency is return on investment so dollar returned per dollar invested.
“And again, we tend to see an increase in ROI with smaller cows and more lactation potential.”
Most studies also haven’t assumed there isn’t a calf price differentiation based on projected performance after weaning. In Aherin’s work, it was assumed all calves were sold at weaning.
“But, if those animals have different projected performance, that is going to impact the price that you receive at weaning,” he said.
Some studies that have looked at the breakdown of different framed calves when sold at weaning, they suggest there’s about a $6 per hundredweight discount between a small-frame calf and a medium-frame calf based on the standard U.S. Department of Agriculture frame score.
“We can probably assume that a lot of these 1,000 pound cows could end up with calves that might fall in that small frame category,” he said.
From a practical standpoint, producers are often taught to have a uniform cow herd, really feed and maintain cows so they have a body condition score between 4 and 6, try to keep pregnancy percentage above 90%, manage nutrients to match environment and manage cow type to match the environment.
“If we follow these recommended practices and account for those differences in price received at weaning it very well could be that the last two decades have really shown us that the most economically efficient cow weighs somewhere between that 1,200- to 1,400-pound range as lactation is somewhere around 25 pounds per day,” Aherin said.
Everything in moderation is good, and not getting too extreme one way or the other kind of makes sense, he said.
Kylene Scott can be reached at 620-227-1804 or email@example.com.