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Previous issues of the BEEF Cattle letter
Issue # 632
Improving Reproduction Management, Part 1 - John Grimes, OSU Extension Educator, Highland County
If you want to start a lively discussion with a group of cattle breeders, ask one of the following two questions: (1.) "What production traits are important to you?" and (2.) "What time of year do you prefer to calve?" We do not have adequate time or space in this article to address the merits of various production traits. However, I would like to make a case for reproduction rates being the most important trait for any cattle breeder to focus upon. Emphasis on any given production trait will be meaningless unless the female conceives and has a live calf every 12 months. Timing and length of the calving season will have a huge impact on eventual reproduction rates.
Results from the Ohio Beef Heifer Development Survey conducted in 2008 indicated that Ohio cow-calf producers are willing to calve during every month of the year. When asked the question "In what months do you calve on your farm?", producers indicated some strong preferences. By a large margin, the most frequent month listed for calving was March at 74.6%. Following next were April (57.8%), February (51.1%), January (25.7%), and May (25.2%). A smaller group of producers indicated a preference for fall calving with September coming in at 18.8% and October at 17.8%. The remaining five months all had responses below 8.5%.
The decision of when to calve did not happen overnight. I believe much of these results can be attributed to tradition. Some operations have had the same calving season for generations and aren't about to change. January through March are preferred calving times for those individuals looking for heavier calves to sell in the fall and by many seedstock or club calf producers. Others prefer to calve in warmer weather when the grass is growing (April, May, September, and October). I am struggling to find a sound rationale for calving in mid-summer!
What do our choices in regards to calving season mean in terms of reproductive performance and ultimately profitability? There are many factors to consider when choosing the proper calving season that will positively impact your operation's profitability. Weather and the changes associated with seasonality have obvious impacts on conception and calving percentages. The species and amount of forages available to the cow herd play a large role in reproductive success. The owner's labor availability (full-time farmer vs. off-farm employment) is a huge consideration in this process.
Let's first discuss the impact of weather on reproductive performance. As we saw from the previously mentioned survey results, Ohio producers prefer to calve in the first five month's of the year. Choosing when to concentrate your calving in this time frame is tough. Calving in February and March is challenging in Ohio because these months are typically wet and/or cold. Extra facilities for calving cows or young calves will help, but it is not unusual to see 5-10% calf death losses. Calf death losses are typically much lower with fall calving herds.
With the poor calving conditions in February and March, many producers choose to move their peak calving season to April and May. This would seem to be a logical choice as calf losses will likely be lower because of the greater odds of warmer weather, green grass, and less mud. However, calving later in the spring will move the breeding season in to the summer and result in lower pregnancy rates.
Dr. Les Anderson, Beef Extension Specialist, University of Kentucky, provides us with some interesting data from their Research Center at Princeton, Kentucky. They conducted a trial where cows were exposed to a 45-day natural breeding season. The breeding seasons were early (4/21-6/5), typical (5/21-7/6), or late (6/19-8/4). Pregnancy rates declined dramatically in cows that were bred later in the summer. Pregnancy rates were 89% for the cows bred early, 78% for the cows bred during the typical time, and only 59% for the cows bred to calve later. Why is pregnancy rate markedly lower for cows bred in mid- to late summer?
The primary factor that reduces pregnancy rates is heat stress. Heat stress occurs when the body temperature is elevated by more than two degrees above normal for more than 48 consecutive hours. Heat stress reduces pregnancy rates by increasing embryonic mortality. These losses typically can occur at two different times: before day 7 post-breeding (loss of the developing embryo) and from day 25-45 post-breeding (early fetal loss). Data from trials at the University of Kentucky illustrate that fetal death losses range from 5-25% depending upon the level of heat stress.
Heat stress problems are increased by the consumption of endophyte-infected fescue. Endophyte is a fungus that grows in fescue and it produces chemical compounds that reduce the ability of a cow to dissipate heat. These chemicals redirect blood flow in an animal's body such that the blood supply pools in the interior regions of the body. Typically in the summer, an animal's blood supply flows more to the exterior of the body so that it can be cooled. This redirection of the blood flow reduces the ability of an animal to cool itself during the night which results in tremendous heat stress on the body and lower pregnancy rates. This phenomenon explains why you see many cows on endophyte-infected fescue pastures frequenting wet, muddy areas and seeking shade for large portions of the day.
What can you do to reduce the impacts of heat stress? First, limit the access of your cows to endophyte-infected fescue during the heat stress periods (mid-June through August). Give them access to orchard grass, warm season grasses, endophyte-free fescue, annual forages, or pastures with higher legume content. Adding red clover to fescue pastures via frost seeding is a very economical way to diminish the effects of the endophyte fungus. Feeding supplemental feed higher in fat can also reduce heat stress.
So where do we go from here? It may be easier to calve your cows later in the spring but fewer of them will calve. Calving earlier will increase pregnancy rates but will likely increase calf death loss. However, a 5-10% death loss may be more financially sound than a 60-70% pregnancy rate. What other options do you have? I would suggest that you give fall calving strong consideration as a viable option.
While we do not have space in this article to discuss fall calving in great length, I will try to hit the major pros and cons. September and October provide excellent calving conditions with warmer temperatures and drier ground than the earlier months of the year. Calf birth weights are usually smaller in a fall season when compared to winter calving. Conception rates are typically better when breeding in November and December versus July and August. Another strong advantage for fall calving is that it gives you a feeder calf to market at a time (April-May) when prices are historically at their highest levels. On the negative side, cows nursing calves into the winter will have higher feed costs and they will require higher quality forages (harvested or stockpiled) or supplemental grain to maintain adequate body condition. Consider early weaning of the calves at 100-125 days of age to offset the increased feed requirements for the cows. The Ohio State University and other institutions have conducted a fair amount of research on the viability of early weaning as a sound management practice.
This article has focused largely on the differences in calving seasons facing Ohio cow-calf producers. There is no doubt that there are significant economic impacts resulting from the calving season that you choose. However, there are other reproductive improvements that can be made. Next week, we will follow-up with a discussion on shortening the length of the calving season that you choose and methods to utilize higher quality genetics and still maintain acceptable conception rates.
AgSight: Food Consumers: Looking Out 20 Years - Nevil C. Speer, PhD, MBA, Western Kentucky University
"What's the consumer going to be doing in 20 years?" That complex question was asked at a recent meeting at which my presentation included some discussion of the current financial crisis. My response was quick to point out that I won't even pretend to know the answer; given the time frame it's nearly impossible to extrapolate that far out.
However, despite uncertainty surrounding a definitive target it's an important question to kick around - it relates directly to strategic decision making and risk management going forward. Most notably, all businesses need to be concerned about potential legacy effect of the current economic turmoil on consumer behavior. Therefore, it's a critical question as it surrounds long-term, permanent shifts in preferences, decision making and spending patterns.
Addressing the question, though, requires assessment of current economic conditions and analysis of both the short-and-long-term impacts upon consumers. First, recessions are good for the grocery trade: consumers are eating out less and cooking at home more. That's evidenced by the National Restaurant Association's monthly Restaurant Performance Index which established an all-time low in December and remained below 100 (indicating contraction) in February - the 16th consecutive month and the report stating that the ". . . outlook for sales growth in months ahead remains uncertain." Second, both restaurant and retail markets are seeing consumers are trade down. The illustration outlines same-store sales for the most recent reported quarter across a variety of publicly traded companies - note the self-explanatory trend across the various types of restaurants included in the analysis (high-end versus mid-scale versus quick-serve). Meanwhile, results of the recent Power of Meat survey (American Meat Institute / Food Marketing Institute) reveal some important retail trends: namely, shoppers are more aware of features (71%), stocking up on specials (69%) and either always or frequently purchasing less expensive cuts (67%). Regardless of the analysis, the price/value relationship is increasingly important.
Clearly, the food industry is working hard to respond to a decline in spending. Consider the following examples of efforts to ramp up value:
* Wal-Mart: expanding the company's private-label Great Value brand to include 80 new products.
* Kroger: recently announced that same-store sales increased 3.8% for the quarter ending January 31 - the company attributed much of the increase to sales growth of lower-priced Kroger brands.
* Cargill: establishing a new promotional program with grocery chains with the tagline being "Feed the whole family for $10".
* Outback Steakhouse: the restaurant chain has introduced a new merchandising campaign: "15 meals under $15 starting at $9.95".
* Dominos Pizza: recently initiated a new promotion called "Big Taste Bailout" - any three items for $15. * Applebee's: now running a special, "2 for $20", that prices 2 full-sized entrees and 1 appetizer for $20.
Regardless of where you look, companies are responding to the reality that consumers are increasingly value conscious - they're being ever-more careful about their food expenditures.
Going forward, to understand what might happen it's critical to understand the importance of consumer cohorts and consumer behavior. Consumer cohorts are defined as those experiencing similar emotional events and/or continual exposure to comparable external influences. And in general, they tend to respond in a similar manner to those factors: the experiences and inductions help to shape and define their preferences, attitudes and purchasing behavior. That's especially true when they are "coming of age" - the period in life in which individuals begin to develop and establish their own lifestyles independent of family influence; they're investing their own money in respective consumer products. That typically occurs between the ages of 17 and 25. Purchasing habits developed during that period often remain with us during our lifetime. That's especially important given a recent (April 1) report by the NPD group citing decline in annual restaurant visits during 2008 was steepest among 18-to-24-year olds.
Granted, long-run consumer behavior is very difficult to change. Despite short-term shifts, shoppers often revert back to their previously established purchasing habits. But consider the influence of the current economic crisis upon young adults - if the cohort theory holds true then we could potentially see a long-term change in food purchasing habits. Yes, that's an arguable point and one which remains to be seen but important consider as we look out 20 years.
What's also important to consider here is that we've come through a period of unprecedented prosperity. As alluded to above, much of that was underwritten by free flowing credit and rising real-estate values. Those days are gone. The Wall Street Journal's Real Time Economics Newsletter recently addressed the broader economic situation and provided an excellent synopsis of current consumer behavior (March 17, 2009): One thing the outsized finance sector was doing was helping underwrite a lot of consumer spending. [. . .] That jump in debt levels [since 2000] coincided with a jump in consumer expenditures as a share of GDP - it averaged about 71% last year, compared with 67% in the 1990s. The bottom line is that the financial sector may not be as big a part of the new economy, employing fewer people and paying them less. And consumer spending may not be as big a share of the economy, either, which would mean fewer stores and fewer people who work in them. If that's right, the economy could be on the verge of a shift that's on a scale with the move away from manufacturing in the early 1980s. Such changes are never easy.
Along those lines two quotes of late caught my eye:
"We don't expect any rebound in aggregate consumer spending to the historical peak." Richard Hastings, Consumer Analyst, Global Hunter Securities (CNBC 3/26/09: Don't Count On A Consumer-Led Recovery
". . . rising unemployment and the rising savings rate will cause a long-lasting shift to austerity in consumer spending, even in the grocery store." Robert Moskow, Analyst, Credit-Suisse (Wall Street Journal 3/27/09: Store Brands Squeeze Big Food Firms)
It's important to remember that we often spend based on how we feel. That's why reports such as consumer confidence and unemployment are so important; it also underscores the importance of monitoring perceptions around the "wealth effect". Manifestation of those influences, positive and negative, are felt by the food industry via decisions in the grocery store aisle and at the restaurant level. And it's why changing consumer behavior is so difficult.
Looking ahead what's important is that consumer credit availability will continue to contract, wealth perception has dramatically declined and there's a large population of consumers coming to age in a tumultuous and uncertain period who will begin to enter their peak earning phase in 20 years. Bottom-line: change is on the horizon! How and/or to what extent that occurs remains to be seen but undoubtedly the food industry is in for some major adjustments.
Choice-Select Spread - Dillon Feuz, Ph.D., Professor, Department of Economics, Utah State University (4/9/09)
The USDA Choice-Select spread for box beef went negative this week. Why? Don't we all like Choice better than Select beef? Doesn't it cost more to raise Choice than Select beef? Hasn't the cattle industry spent years and many dollars trying to figure out how to get more cattle to grade Choice? Is there some conspiracy here by the packers and retailers? Let me try and answer a few of these questions. Not all consumers like Choice better than Select beef. In fact, at equal levels of tenderness, many prefer Select. Therefore retailers have found that they have consumers who are loyal to Choice and those who are loyal to Select beef. If we view the Choice market and the Select market has separate but related markets, let''s examine what has been happening in each market. Over the last year there has been an increase in the percentage of cattle grading Choice. This may be correlated with feeding cattle to heavier carcass weights, but it is also likely due to improvements in the grading system. Never the less, if nothing else changed in the world and you had an increase in the supply of Choice beef and therefore a reduction in the supply of Select beef, you would expect Choice beef prices to decline and Select beef prices to increase. Now consider the demand side of the market. If my income has been reduced because of the economy, or if I fear that it may be reduced, than when I go to the market to buy a steak and I see higher priced Choice steak and lower price Select steak, perhaps I choose the Select steak now compared to choosing the Choice steak in the past. If my budget is even tighter, perhaps I buy ground beef instead of a steak, and there generally is not a segregation of Choice and Select ground beef. The resulting demand pressure would be reduced demand for Choice and increased demand for Select, which would further pressure Choice prices lower and Select prices higher. That is how we can arrive at a zero spread, or even a negative spread for a short time period as retailers may need more Select product and less Choice product to refill their meat case. No conspiracy involved, just the fundamental market forces of supply and demand.
Weekly Roberts Agricultural Commodity Market Report - Mike Roberts, Commodity Marketing Agent, Virginia Tech
LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished steady to off Monday. The APR''09LC contract closed at $87.475/cwt; off $0.050/cwt. The AUG''09LC contract was down $0.100/cwt at $85.175/cwt; $0.100/cwt over last week. DEC''09LC futures closed at $90.875/cwt; even for the session while $0.725/cwt higher than my last report. A lower DOW and crude oil prices pressured prices as well as unexpectedly lower cash cattle. USDA put the 5-area price at $86.01/cwt, mostly unchanged from last week on light volume. Floor sources said the market was expecting $88/cwt cattle on Friday but never got them. The market was supported by a stronger tone to cash beef even though prices haven''t come through yet. USDA on Monday put Choice Boxed Beef Cutout at $140.18/cwt; up $1.15/cwt and up $3.43/cwt over this time last week. USDA also put beef exports for February at 122.7 mi lbs vs. January exports at 128.6 mi lbs and 115.2 mi lbs this time last year. According to HedgersEdge.com average packer margins were $2.25/head over last week. The average processor margin was placed at a negative $49.15/head based on the average buy of $85.22/cwt vs. the average breakeven of $81.39/cwt. Feed buyers should consider buying feed needs now.
FEEDER CATTLE at the CME closed up on Monday. The APR''09FC contract closed at $98.95 /cwt; up $0.800cwt and $3.000/cwt over last week. The April futures contract will expire on April 30. AUG''09FC futures finished at $101.475/cwt; up $0.575/cwt and $1.875/cwt higher than last report. April futures set a 5-month high with May futures close behind. Higher cash feeders were supportive as grass begins to green up. Cash feeders in Oklahoma City were $3-$5/cwt over last week''s offerings. The CME Feeder Cattle Index for April 8 was placed at $96.13/cwt; up $0.030/cwt. The CME group noted that for the first time electronic feeder cattle volume of 3,491 contracts surpassed pit trading volume of 3,382 lots. Hopefully you don''t need any corn but if you do it would be a good idea to consider buying now. If you have grass you''re in good shape. It will begin to pay to hold feeders to heavier weights if you have the grass and growing conditions.
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BEEF Cattle is a weekly publication of Ohio State University Extension in Fairfield County and the OSU Beef Team. Contributors include members of the Beef Team and other beef cattle specialists and economists from across the U.S.
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