Dairy Beef Feeding as an Alternative Enterprise
by Richard K. Knipe, Ed Ballard, Dave Fischer, Dave Seibert and Dave Shue, Animal Systems Educators
Cattle feeding over the past 5 years has shown respectable profits and therefore dairymen are studying the options of growing and\or finishing their steer calves. It is important to remember in this discussion that retaining ownership does not mean that you have to own the calves to slaughter or even that you need to feed the calves yourself. It is also important to remember that after 8 weeks of age the dairy steer must be fed much differently than the replacement heifer or even the beef steer.
This paper will discuss dairy steer feeding in four stages. Stage 1 is the first eight weeks of life where the steer calves are handled identical to the replacement heifer calves. Stage 2 is a grower period to approximately twenty weeks of age or a weight of 350-400 pounds. Stage 3 feeding period takes the steers from 400 pounds up to a weight of 650-750 pounds and the finishing phase is Stage 4, which ideally would be at a weight of 1150-1300 pounds.
Table 1 shows a summary of the 1992 profit and loss statements on 8,439 Holstein steers fed by customers of DeKalb Feeds Inc. As a dairyman you must realize that cattle feeding is a very special- ized, competitive enterprise. Feedlot operations are not the effortless animal agriculture enterprises that many might perceive them to be. You will also note that profit margins tend to be narrow and therefore not much room for error. The goal of this paper is to help you, the dairymen find that narrow window of opportunity for profit in your dairy steer calves.
In Table 1 you should note that the highest profit group was the cattle purchased at an average weight of 604 pounds with an average net profit of $23.85 per head. This data set shows that it is possible to make money feeding Holstein steers, even if the profit margin is relatively low. As a dairyman, you will not be feeding large numbers so you must find ways to improve this profit margin. You must reduce overhead costs, interest costs, and death rate. In Table 1, the problem in 1992 placing Holstein steers on feed at light weights was they paid too much for the cattle. When these cattle were purchased at an average weight of 436 pounds at $93.68 per hundred weight, the feeder was locked into a loss without an unexpected rise in the fed cattle market. This is why we recommend that feeders run computer projections purchasing cattle, to prevent a situation where they are locked into a pen of cattle that cannot make money.
Table 1. 1992 Summary of closeouts on Holstein steers - DeKalb Feeds, Inc.
|Death Loss %
|Avg. Daily Gain
|D.M. Intake (%BW)
|Feed $ of Gain
|Total $ of Gain
|Return of Equity
Cattle feeders are working in a different environment than you as a dairyman would be feeding calves. Therefore we want to look at the limited amount of dairy steer feeding enterprise records available. Table 2 shows four individual dairymen that are feeding steers much as you would be. Individuals A and B are Illinois dairymen doing an excellent job of managing their calves and feeding them to market. Their 1992 profits are respectable returns and dairyman B's are much higher than you will find in any feedlot. They both feed calves on a high energy ration without roughage and keep their overhead cost at a minimum by using existing facilities or rented barns. Dairymen C and D are both located in New York and moved into Holstein steer feeding at a larger scale after selling their cow herds in the Dairy Buyout. Their profits figures are from 1989, but again indicate that there is profit potential in dairy steers.
Table 2. Net profit of Individual dairymen feeding Holstein steers.
Profit and loss projections for dairy steers show profit potential. It is important to remember that a computer projection that shows a profit does not guarantee a profit, however if the computer predicts a loss on a pen of cattle they are not likely to make money.
Using a feedlot projection program we have compared two types of feeding strategies using current production costs. Table 3 compares a high forage diet to a high energy diet in Stages 1 and 2, and in Stage 3 both groups receive the finishing ration. As one would expect, the high energy diet steers gained 0.6 pounds per day faster than the high forage fed steers. This becomes critical when we begin to charge the cattle for interest and yardage. In this scenario we charged 5 percent interest on the feed investment and 6 percent interest on the cattle investment. Even with today's low interest rates, the high energy ration saved us $8.78 in interest costs. If interest rates should climb back to early 1980 levels, the high energy diet becomes even more critical. If you are fortunate enough to not need to borrow any money in your feeding operation, you have more feeding options. Yardage charge in this scenario was calculated at 25 cents per head per day. As you can see, yardage costs begin to consume your profits in the high forage diets.
From the economic perspective, high energy rations will generally out perform high forage diets. However, there are other factors to consider. The negative aspect of the high energy diet is that it requires a higher level of management. Steers on a high energy ration are constantly on the edge of acidosis, and therefore good bunk management becomes critical. Many dairymen/cattle feeders will use self-feeders to force the cattle to manage their own bunk. This works well as long as the feeder has fresh feed in it. It is also critical to include tylosin in the ration for prevention of liver abscesses.
In the given scenario, we used alfalfa haylage as the forage in the ration. Dairymen always have both corn silage and haylage available for lactating cow rations. Try to avoid the temptation to feed large quantities of either forage to feedlot steers just because it is available and relatively cheap. Corn silage was recommended for midwest feedlot rations in the late 60's and early 70's. It is this authors opinion that this recommendation was a contributing factor in the migration of cattle feeding out of the midwest. The recommendation most widely used was to feed cattle one per cent of their body weight in corn, plus all of the corn silage that they will consume. The result is what is referred to as a negative associative effect. In this case the rumen environment becomes more acidic as the corn content of the ration increases. As the rumen pH drops the microorganisms that digest the forage are unable to survive, therefore the forage passes through without being digested. Corn silage is currently being recommended in growing rations for small frame cattle. Dairy steers are large frame steers and therefore do not require a growing phase. If dairy steers are developed on a growing ration, they will reach the choice quality grade at a heavier weight. The beef industry no longer has a place for 1500 pound slaughter steers and would ideally prefer the choice steer in the 1200 pound range. Therefore, the only place that corn silage has in a dairy ration would be at low levels (less than 10% of the ration) strictly as a roughage source.
Table 3. Economic projections for two types of dairy steer feeding strategies
||Step 2 200 - 400 lbs.
||Step 3 400 - 750 lbs.
||Step 4 750 - 1200 lbs.
|Days on Feed
|Break Even Prices
*Switched to high energy finishing ration
**Based on sale prices of $80.00/cwt for 400 pound calf
$70.00/cwt for 750 pound calf
$65.00/cwt for 1200 pound calf
On the other hand, work at Wisconsin (Schaefer et.al. 1986) and Cornell University (Fox and Ketchen 1991) have shown that varying levels of alfalfa haylage added to the diet during Stage 2 did not reduce gains for the entire feeding trial. Holstein calves started on high grain diets (Stage 1) were switched to high forage diets (alfalfa haylage) for Stage 2 and gained over 2.5 pounds per day. If you can experience this type of gain using haylage and corn mixture, then you can probably reduce your ration cost while reducing subacute acidosis problems and cattle stalling caused by the high energy rations.
As you begin to study the profit numbers listed in Table 2 the expected selling prices are always subject to error. But when you look at profits and particularly breakeven prices at the different stages, it would appear that most of the profit in the dairy steers is gone by the time the steers weigh 750 pounds. As prices and costs change this point will also change, however, it is the managers job to determine at what stage of production there is little or no profit left in the cattle. At that point one should move the cattle to slaughter or to a cattle feeder that can live with the narrow margins.
Proper bunk management helps reduce digestive and metabolic disorders, the leading cause of death in feedlot cattle. Seventy- one percent of the deaths in feedlots are caused by acidosis, bloat and sudden death. A good manager would like to see the last of the feed being licked from the bunk as the wagon is pulling up to deliver the next feeding. One should avoid a situation where cattle have been without feed for a long period of time, or finding large quantities of feed still in the bunk at feeding time. Delivering the proper amount of feed at each feeding results in maximum dry matter intake and maximum gains. Learn how to avoid the roller coaster effect by not overreacting to an empty bunk or excess feed left over. Also remember that bunk cleaning, feeder height, and feeder space are important parts of bunk management.
As cattle grow they also increase their dry matter intake. It is important in proper bunk management to move them up at a steady rate, rather than increasing intake too fast, throwing the cattle off feed and starting the cycle over again. As was mentioned earlier, many dairymen/feeders will use a self-feeder so the cattle have access to feed at all times. This system probably results in a 5 percent reduction in dry matter consumption, however that is small compared to the drop in dry matter consumption in cattle that have experienced the roller coaster effect.
FEED ADDITIVES AND IMPLANTS
An ionophore should be used at all stages of production to improve feed efficiency, prevent coccidiosis, and to reduce digestive disorders and acidosis. The two ionophores most commonly used are lasalocid and monensin.
For optimum performance, calves should be implanted with growth promotant implants. Available implants include estrogenic like products Ralgro and Synovex-S which are 80 to 100 products. Compudose is another estrogenic product which is a 180-day implant. More recently a testosterone like product Trenbolone Acetate (TBA) became available that by itself showed similar results to the estrogenic products. The TBA product was marketed as Finaplix-S and is also a 100 day implant. However, more recent research has shown that combining TBA with an estrogenic product results in maximum gains. This product is marketed as Revalor and Iowa State University work showed a 9.8 percent increase in average daily gain from a single implant and 17.0 percent increase in gain from multiple implanting of Revalor.
Cattle fed a high energy ration will begin to show liver abscesses at slaughter. This is an indication that the cattle are experiencing less than optimal production levels. As was mentioned earlier, addition of tylosin to the ration will help alleviate this problem.
In Illinois, corn will be the basic ingredient in most feedlot rations under current economic conditions. When feeding a no-roughage ration, it is important to feed whole shelled corn to feedlot cattle. As the percentage of roughage in the ration increases the more you process the corn. In a ration with ten to fifteen percent roughage, it would be advisable to course crack the corn for best efficiency.
Dairymen generally produce higher quality hay and haylage than beef producers. Forages are included in feedlot rations for a roughage source of normal rumen function, as well as a protein source. However, it is possible to produce alfalfa haylage of such high quality that it does not act as a roughage source. Particularly in a ration including processed corn, it is possible to create digestive disorders simply because the forage is too high quality.
STAGE 1: PREWEANING
Large frame dairy calves are typically fed high energy diets to ensure the utilization of energy for maintenance and gain in the most efficient manner. Maximizing energy intake ensures a smooth transition from the pre-ruminant calf to one with a mature functioning rumen. Calf starters should be coarse textured, palatable, and high energy to encourage dry feed intake.
The pre-weaning phase steer calf should be handled much as you would your replacement heifers. Even if you plan to sell calves at 3 to 7 days of age, it is extremely important that the calves receive colostrum shortly after birth. Without colostrum the calf has little chance of survival in his new environment, which only results in unhappy customers.
The pre-wean calf should be gaining approximately 2.0 pounds per day. For budgeting purposes we assumed that in the first 60 days the calf will consume 60 pounds of milk replacer and 120 pounds of calf starter. Some dairymen reduce the cost of milk replacer by mixing it with "throw away milk". The dry pre-weaning ration should be high in crude protein (18 percent). An example of a highly effective pre-weaning ration would be 34 percent cracked corn, 33 percent oats and 33 percent protein pellets.
Estimated cost of 70 cents per pound for milk replacer and 15 cents per pound for the calf starter, our estimated total feed cost to weaning is $70.00. If the newborn calf is worth between $100 and $125 in your area it is safe to assume that you now have an investment worth $200.00 at weaning. Once you make the decision not to sell the calf at birth, the numbers would indicate that you will need to retain ownership at least through Stage 1 to 400 pounds.
Stage 2 is the period of feeding the calves from 200 to 400 pounds. Attainable weight gains for this age calf should be in the 2.2 to 2.4 pounds per day. Calves are group housed with approximately 20 square feet per steer. Group size should not exceed 40 calves per pen for best management. Feeder space should be 18 to 22 inches per steer for hand fed calves and 3 to 4 inches per calf for self-feeders.
Stage 3 is the feeding period from 400 to 750 pounds. Rations should be 16 percent crude protein and can be high energy or high forage (50 percent haylage) as previously discussed. Pen space should be 25 square feet per steer and feeder space should be 22 to 26 inches per steer.
Stage 4 is the finishing phase using a high energy diet of 80 to 90 per cent corn and the balance of the ration dependent on previous feeding background. Building space should be 30 square feet per steer and feeder space similar to Stage 3. It is important to market the cattle as soon as a high percentage are grading choice. When cattle reach the choice grade they begin to level off on dry matter intake. The cattle will continue to grow and get fatter, but intake does not increase. This results in a decrease in energy efficiency and therefore the cattle should be marketed as soon as possible. As feed costs rise it will be increasingly important to market larger dairy steers sooner, rather than feeding them on to a heavier weight.
There are several aspects of dairy steer feeding that are quite different from the dairy industry. There is money to be made feeding dairy steers, however for profit and an acceptable product it is important to feed a high energy diet for much of the feeding period. It is important not to use the dairy steer as a way to get rid of low quality forages, for example oat hay.
Profit margins in the cattle feeding business are narrow and dairymen can not make up for that in volume. Therefore, to show a significant profit from this enterprise the dairyman must reduce death losses, overhead and interest costs.