Iowa Farmer Today
05-05-07
Cost of gain drives operation
By Jeff DeYoung, Iowa Farmer Today
CARSON -- Cost of gain is always important to Jeff Clausen, but with higher corn
prices and a subsequent jump in the price of ethanol co-products, it could be
more important than ever.
“We are always looking at our cost of gain, perhaps even more than feed
efficiency,” says Clausen, who feeds about 3,000 head near here in
Pottawattamie County. “They are definitely related, and feed efficiency is just as
important, but the factors that affect cost of gain are easier to get a handle on.”
Feedlot rations consist primarily of dry corn, high-moisture corn, two types of wet
distillers, ground cornstalks and hay. Clausen also uses supplements to balance
the ration.
Right now, the Southwest Iowa producer says his cost of gain is running about
55 cents per pound.
“We have seen anywhere from the low-50s to the mid-60s, but those higher
numbers were impacted by some of the bad weather we have had,” Clausen
says. “I think we can get below 50 if corn comes down to $3.50 or less (per
bushel), and I would be happy with that.”
Clausen uses six rations in the feedlot. He includes some soybean hulls in his
step-up ration, and does not use the high-moisture corn in his starter ration.
He also uses Iowa State University’s feedlot monitoring system.
“We do some custom feeding as well, and something like that is a must to
maintain accuracy,” Clausen says.
The availability of ethanol co-products should help lower cost of gain for most
producers, says Dan Loy, ISU Extension beef specialist in Ames.
“It’s going to depend on how much you feed, but right now feeding wet distillers is
about 85 percent the price of corn, with (content) adjusted for moisture,” he says.
“So, if you are feeding 30 to 40 percent wet distillers, you can reduce costs by
about 10 percent.”
Loy says using a 7.5 or 8 feed conversion rate, he says cost of gain should be in
the low- to mid-50s.
“If you add yardage and interest, you are looking at the upper-60s,” he says. “So,
any improvement you can make in feed efficiency is going to be important.”
Loy says the best method to improve cost of gain is improving feed efficiency.
Also, some producers can use available technology, such as implants.
Others may choose to market cattle sooner, although Loy says there is a tradeoff if cattle are sold on a marketing grid.
Keeping feedlot cattle healthy also will help feed efficiency as well as carcass
quality, Loy says.
Producers also need to take a look at how they manage feedstuffs, he says.
“You have to look at how the feed is being stored and handled, as well as any
feeding losses. If you are using wet feed, is there some way you can reduce
storage loss?”
Loy says feedlot performance seems to be a little better with wet distillers but
adds dry distillers may be better suited for producers with fewer cattle.
“You can store dry distillers for a long time,” he says. “Regardless of what you
use, you need to educate yourself about pricing.
“Availability is seasonal, so in the summer you have fewer cattle in the lot and
can have an over-supply of distillers. That gives you more of an opportunity to
lock in your prices.”
Clausen says his wet distillers contract expires in September, and he realizes
prices are going to be higher for the coming year.
He’ll also keep a close eye on corn prices and won’t hesitate to pull the trigger if
he sees an opportunity to save some money on his feed bill.
“The demand for by-products is pretty high right now, but you usually see a
period where demand drops some, and we’ll be watching for that,” Clausen says.
“We’re always changing our rations to try and improve our cost of gain.”