A DILEMMA for Osage stocker operator John Hughes is what to do with these and hundreds more steers this year. If he sells them, he’ll take a big loss, and if he retains and feeds them, he risks an even bigger one. Either way, the decision is upon him and his neighbors, because it is time to go somewhere with them.

To Sell Or Feed Them; That’s
$64 Question For John Hughes

By Colleen Schreiber

BARTLESVILLE, Okla. — John Hughes, like so many cattlemen, is doing a lot of soul searching and a lot of figuring. This week, when most of the stockers traditionally start leaving the Osage hills, he has a tough decision to make — Do I sell or do I hold?

"This market was so unexpected," Hughes says. "These cattle cost significantly more than they did the year before. We didn’t expect to make a big profit, by any means, but we thought it certainly wouldn’t be any problem to hold our equity together. And in fact, just the opposite has happened.

"Fat cattle are in the 12th month of losing money, and the feeder price has backed off significantly," he continues. "As a matter of fact, the basis is really bad. Usually you can look at the August board and that’s what our eight-weight cattle will be worth in July and August coming off grass, but right now feeding companies are bidding far under the August board. So there’s virtually no trade. I don’t know of a single steer that’s contracted for July and August at this point."

Hughes predicts that a good many ranchers will opt to retain ownership and feed the cattle, "if they can manage to come up with enough equity.

"They’re faced with the problem of having to start restocking their stockers for the next year. So it kind of takes a double load of money if you’re not used to feeding all your cattle."

Hughes is no stranger to the feeding end of the business. He feeds at least part of his stockers every year, but he doesn’t particularly relish having to feed them all.

"For what we figure they would be worth at the present time and the projected cost of gain, it looks like we would break even out of the yard somewhere in the low $60s," he says.

"So surely the risk isn’t going to be too great — my famous last words. To actually get even, we would probably have to have $70 out of the feedyard with a 50 cent cost of gain."

Hughes, who was born and raised in Bartlesville, has been in the cattle business all his life. At one time he ran a cow-calf operation, but today it’s strictly a stocker steer program. He also contracts with the Department of Interior to provide a refuge for about 1500 wild horses on his ranch. He incorporated the horse program into his operation in 1990 and he recently signed another five year contract.

Hughes partners with his son Robert to form Hughes Cattle Company, and he’s also had a partnership, Tadpole Cattle Company, with Dan Gallery since 1968.

"When we told our banker the name we had chosen for our company, he said, ‘Now boys, are you sure that’s such a good name? You know tadpoles lose their tails.’"

His southeastern cattle, which he describes as No. 1 crossbreds, come primarily from Florida, Louisiana, East Texas and South Texas.

Most of his steers, he says, have a little Brahman influence, but he tries to hold it to a quarter or less; most of them, he adds, have only about an eighth Brahman influence.

"They do a real good job for us," Hughes says. "On days that we have high humidity and high temperature, they’ll still be out there grazing the ridges when the Okie types and the English cattle will be in the ponds with their tongues hanging out.

"It honestly is true. It’s not an old wives’ tale that you can’t move cattle from north to south or from west to east," he continues. "The old timers always told me that, but I always thought that there would be something north of here or west of here that I just couldn’t pass up. Sure enough, the biggest dose I ever got was in 1978 when they had an early blizzard in the Dakotas. The calves were still on the cows and they were dropping hay out of airplanes.

"Those people from up there were calling, saying ‘you won’t believe the weigh-up and the quality on these calves.’ Everything was true what they said," Hughes says. "The quality was outstanding and the weigh-up was good, and I just knew I had made a steal. Well, about the first of June, those cattle hadn’t even thought about shedding. Ended up they just gained about half of what our southern cattle did."

Normally, Hughes buys high three-weight cattle to run on the native prairie, but this year he’s changed his plan a bit and is going with middle two-weight calves.

"One of the problems we run into is that nine-weight cattle aren’t real efficient in the feedyard, and when we have to feed them ourselves is when it really comes home to roost," Hughes says. "Ideally, we would like them to go to the feedlot weighing 800 or 850 and not 900 to 950."

So far he’s gotten along fine with the lighter weight calves and hasn’t noticed any increase in morbidity. The lighter calves, he adds, may not always be as available as they are this year. The drouth in Texas, he says, is forcing a lot of pairs to town ahead of schedule.

"We’re probably averaging about a pound and a half right now on these lighter calves," Hughes says. "If we can average a pound a day from the time we get them in until the next green grass season, we’re happy."

Hughes says his straightening out or preconditioning program isn’t any different than that of the other guys.

"We process them and keep them in close quarters for about 30 days and keep the sick ones doctored," he explains.

The critical time for stocker operators in the Osage, Hughes, points out, is that 100-day window, from the time the grass turns green, approximately the 15th of April, to the middle of July.

"That’s when you’ve got to have everything ready so you can take advantage of that magic 100 days," Hughes stresses.

During that time period, operators can expect to achieve a three pound gain. Cost of gain on grass, he says, is different for every owned or leased place he operates, but in general it varies anywhere from 18 to 30 cents a pound.

"It’s certainly less significant than the cost of feedlot gain," he adds.

Hughes uses a good bit of early intensive grazing, so it takes a lot of cattle to stock his country. He can run a 550 to 600 pound steer for every two acres on early intensive grazing and a steer to one to four acres on country he uses for a full season.

"The gain is the same for either one," Hughes says. "The only difference is on the early intensive we’ll get 150 pounds of beef per acre. With early intensive, you do have to abide by the calendar," Hughes notes. "We have to pull off of it by the 15th of July and we won’t got back on it until a killing frost."

The cattle are reworked the first of November, at which time he does a three-way sort. The very heavy end goes to the feedlot or hopefully to wheat pasture somewhere out in the feedlot country and then to the feedlot. The middle cut is wintered in the Osage on old grass and protein supplement, and the lighter end is wintered on cool season pastures nearby.

Ideally, by the first of April, Hughes wants the cattle to be weighing 550 to 600 pounds. At that time, they’re shaped up again and sorted two ways.

"There’s 30 days’ difference in the delivery day," Hughes says, "between those two sets. In that 30 days we can put an extra 60 pounds on them."

Most of the stockers leave the Osage for feedlots from about July 15 through August 15.

"Because we run crossbreds, we like to have these cattle out of the feedyard no later than mid-December," Hughes notes.

His cattle are scattered out in a number of different feedlots from North Platte, Nebraska to Lubbock, Texas.

Hughes is no stranger to tough times. After all, he came through the 1970s.

"We all think that 1974 was the worse thing we’ve ever seen, but things didn’t cost near as much then. Pickups were a third of what they are now. Everything costs more, so this lick will probably hurt even worse," he laments.

He doesn’t really care to predict or to speculate about the future of the independent cattleman.

"I wouldn’t worry about it so much if I didn’t have a son and grandsons coming on," he remarks. "It’s a little tough for the independents like us to be caught between the battle of the billionaires."