Cattle-Fax Offers Cautions
On Retained Ownership Plans

DENVER — Low calf prices have stimulated interest among many cow-calf operators in retaining ownership of calves after weaning. However, success with retained ownership depends on several factors that require a producer's attention. This point is made in a special report for cow-calf members by Cattle-Fax, an industry market information and analysis service.

"The goal of retained ownership is simply adding weight to cattle profitably," says Tom Brink, Cattle-Fax director of market analysis. "Making it happen is much more complex."

Brink and associates go on to discuss the key factors that determine retained-ownership success: (1) available resources; (2) market conditions; (3) genetics; (4) health; and (5) weather.

Brink also points out that individual circumstances and management can cause dramatic differences in the results of programs that involve taking calves through a yearling and/or feedlot phase of production. For example, a detailed analysis of a direct-to-the-feedlot program showed that, during the past 15 years, good-quality, well managed cattle had average profits almost $100 per head greater than average returns on poor-quality, poorly managed cattle.

The difference in profit reflects significant differences in animal-health costs and performance, including feed efficiency and daily gain. Discussing the key retained-ownership factors, Brink and Shawn Walter, Cattle-Fax research analyst, made these points:

• Available Resources. The producer keeping calves at home should have low-cost feedstuffs, and he will need the labor and ability to insure top-notch management of the calves. Adequate capital to meet cash-flow needs also is essential.

• Market. The manager must be a "student" of the market and must develop a realistic outlook, with contingency plans and risk management in case of lower-than-expected prices.

• Genetics. Cattle that have the genetic ability to grow rapidly and efficiently and produce desirable carcasses are the cattle that will perform well in a retained-ownership program and will sometimes command better prices when sold. Each producer must evaluate the genetics of his cattle when making decisions on retained ownership.

• Health. Calves that are healthy usually perform more efficiently and become ready for market sooner, which may mean higher selling prices. A Texas A&M analysis of calves going on to the feedlot showed that returns on healthy calves were almost $100 per head higher than returns on calves that got sick. Medicine cost alone averaged $31 per head on the sick calves.

• Weather. Results typically are better if the producer prepares for the possibility of unfavorable weather. Some cow-calf producers split their calf crops between feedlots in different regions when feeding during the winter — which is a type of "risk management." Others graze cattle in more than one summer-grass area to reduce exposure to regional drouth.

Brink notes that Cattle-Fax now can supply computer software that will help the cow-calf operator tailor retained-ownership analyses to fit his particular circumstances.

"If you have a personal computer with Windows, you can quickly determine whether retaining ownership of your calves might work for you," Brink says. For the producer without a computer, Cattle-Fax continues to supply its printed version entitled, "Retained Ownership Analysis."