The three biggest mistakes cattlemen make during a drought? Curt Lacy, University of Georgia livestock Extension economist, borrowed the answers from Texas A&M during a three-hour June 20 webinar on drought management:
1) Do nothing and hope it will rain,
2) Early wean and sell calves at lighter-than-normal weights when everyone else is marketing the same product, thereby getting lower prices, and
3) Save younger cows rather than the more productive four- to seven-year-olds.
"We need to hold on to as much equity as we can and that's a hard thing for people to do," Lacy said.
Cattlemen, he added, should "just sit down and determine what your feed needs are and how much these feeds are going to cost you for the next 60, 90 and maybe 120 and 180 days under different weather scenarios.
"Then, figure out how much feed and how much pasture you have and exactly how much money you're going to have to have to make up the difference," Lacy said.
Next, consider total liquidation and starting over. Or figure how long it will take to come back if considerable losses are incurred. "If you can just figure out what your total loss would be from this coming year and say, 'Okay, I'm going to need to borrow the money to make that up, to get me back to zero. How much is that payment going to be?'
"A lot of times, that will help you make that decision pretty quickly."
Also ask yourself what it will take to restock your current program, Lacy said, especially if you've improved your genetics.
Producers today are consistently asking Lacy four questions, he said. The first is, 'Should I wean early?'
"The answer is 'Yes.' Depending on the severity of the drought conditions, you probably want to start with some of the heavier-weight animals, especially if they're in that 400- to 450-lb range. Then you want to be looking at some stockering or backgrounding opportunities."
Also look at first-calf heifers, he suggested. If they're in early gestation, they'll need a higher level of nutrition than you may be able to provide. Then consider cow age and body condition score.
"You've got to get the calves off them before they get in a body condition score of low 4 or 3. If they're in a body condition score 3 and then you decide to market them, they're not going to be worth hardly anything even though prices are high. There's not a lot of meat there."
The second question: 'Should I feed cows or calves?' Lacy's answer: It depends on the value of gain, which he defines as "the future value of an animal, minus its current value, divided by the pounds of gain.
"Let's say I wean 450-lb calves today and I might think I need to stock them or background them and carry them up to 550 lbs. The way I would consider that value of gain is what they're worth at 550 lbs minus what they're worth today divided by 100 lbs.
Then figure the cost of feeding cows vs. the cost of feeding calves, realizing they will involve two different feeding rations.
Also recognize the differences in price trends for cows, calves and feeders, Lacy said.
"Cow values are going to decline, most likely, whereas, on average, calf prices, if you're putting weight on the calves to get them up to a feeder weight, are going to tend to increase.
"If you're going to make price projections on whether you need to stocker or background calves, here are the things that you need to keep in mind: Cow prices are probably going to stay about where they are or go down from now through the end of the year. These lightweight calf prices, which I'm calling anywhere from 200 to 500 lbs, will stay about where they are until late summer or early fall when they will most likely start declining. Feeder animals, and I'm calling those 500 lbs-plus, look for those to stay steady and to actually increase over the next several months until mid-fall.
"So there are going to be some opportunities to market feeder cattle later on in the year," Lacy said.
"If you're looking to retain ownership all the way to the feedlot, expect those prices to remain steady to actually increasing a little bit through the rest of the year." But there's risk in feeding calves in drought-stress weather – prices could go down, with morbidity or mortality issues to consider and additional facilities are needed. On the bright side, feeding calves to feedlot weights provides additional income and a wider marketing window.
A third question Lacy fields from producers: 'How much can I afford to pay for feed?'
Factor in risk and don't pay exorbitant costs for feed in the current market. However, realize that you may be able to pay more than you think. "Evaluate different feeding programs along with their resulting gains. What happens if the calves gain a pound a day or a pound and a half a day or the price doesn't go up? You need to see what that does to you and that's going to help you determine how much you're willing to spend on feed."
Another option is to trade time for cash. "Maybe instead of trying to feed the calves and gain 2 lbs/day, can you work up a little bit different ration for a little bit less where the calves only gain a pound and a half a day but you carry them later in the year?"
Finally, Lacy said, producers ask, 'Which cows do I sell or cull?'
Open cows, then those that are unprofitable, should be the first and second groups cut from a herd. The third group to cull would be older but still marketable cows.
"Then, believe it or not, your first- and second-calf heifers are going to be probably some of the ones that you want to move. The last cows that need to go are those four- to seven-year-old productive cows. Notice that I'm talking about cows that are productive, not just cows that are four to seven years old."
For information on how to determine which cows are unproductive, visit his presentation at http://www.caes.uga.edu/commodities/fieldcrops/forages/events/drought/Drought%20workshop%20presentation%20-%20Webinar%20-%20june%202011.pdf.