Like most mature industries, the beef cattle business is broken up into different segments in the production chain. Why? Because as the industry developed over the past century, it became more efficient for a particular business to focus on a smaller segment of overall production. Efficiency means lower cost and more productivity, which is why the beef business is segmented like it is today.
The segmented industry means that a calf born on a farm will likely make three moves before it is slaughtered and ends up on the supermarket shelves or restaurant plate. Most calves start on a cow-calf operation, move to a backgrounder, are finished at a feedlot, and then go to the packing plant. It seems that this should cost more than a simple permanent stay on the home farm, but efficiencies of production at higher scales make this the lowest cost option.
The three sectors of the beef cattle industry are as follows:
-Cow/Calf
-Stocker/Backgrounder
-Feed Yard/Finisher
Cow Calf
The cow-calf operation is the typical family farm or ranch most people imagine when they think of cattle. The farm/ranch maintains a number of mother cows and breeds them each year. Calves are born and raised by the cows until a determined age. The calves are then weaned and sold via private sale or at auction. Average age at weaning is about 7 months, or 205 days. Calves typically weigh around 550 pounds at weaning.
Stocker/Backgrounder
While most of the nation’s cattle are finished at a feedlot, freshly weaned calves are often too small to go straight to a feedlot and need more time to grow frame and develop their digestive systems. The majority of weaned calves go to a stocker or backgrounder. While these terms are used interchangeably, the stocker typically brings in weaned calves and puts them out on grass for a couple hundred pounds of gain. When I think backgrounder, it’s usually a term reserved for a type of feedyard that specializes in feeding small calves in the stocker phase, but on a more concentrated diet.
Feeder/Finisher
At an average of about 700-800 lbs (but this can vary significantly), young cattle enter the finishing phase of their life. They are usually finished in a feedlot on a high energy diet of grain to allow them to gain weight quickly and fatten easily. While the health aspect of eating grain-fed cattle is often debated, it’s tough to argue that cattle with lots of fat and marbling taste great!
Conclusion
So that’s the American cattle industry in a few paragraphs. No doubt there are many variations, but this general model is the one that produces most of the country’s beef. The grass-fed cattle movement is growing fast, but still makes up a miniscule part of the industry. The beauty of cattle is that there is still room for the family farm to make a living with a few hundred cows. In contrast, the pork and poultry industries have become so industrialized that the factory farm is the norm. There’s still a level of personal attention, adaptive management, and TLC needed to successfully maintain a productive cow herd, and the family farm continues to be one of the best models around.
We have been rotationally grazing cow calf herd for another farmer for 12 years. Our pastures and fencing are in place. this year we are looking at buying weaned calves and grazing our own calves, then selling them in the fall to a feeder operation.Having trouble finding current info on buying feeder calves, and would like to know a ball park figure in potential profit in dollars and cents. We would like to be sure we would profit at least what we have been getting in rent. Do you have any info as to what weaned calves can be bought for and what they would sell for in the fall?
Great question Russ, thanks. Because the answer to your question is highly dependent on the specifics of your situation, I can’t answer the question with specifics. However, let’s look at an example based on projections for my area.
In today’s market, feeder cattle are about $1.50/lb for a 500-600 lb calf.
Let’s buy that calf at 550 lbs x 1.50 = $825.
We’ll put him out on pasture for 120 days, at 1.5 lbs of gain per day (assuming good pasture), which gives us 180 lbs of gain. So in the fall we have a calf to sell at 730 lbs.
A 700 lb feeder sells lower than a 500 lb calf, and the fall market is usually lower than the spring market. A realistic selling price would be around $1.30/lb.
This puts us at around $950.
Before costs, we’ve made $125 on the calf.
Now factor in cost of grazing (mineral, water and labor, usually comes out to around $0.40/lb of gain), purchase cost, opportunity cost, interest etc.
You’ve probably made $50 profit per head. Hope this helps. You can adjust based on your local markets and conditions, etc.