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Impact of Calving Month on Margin over Feed Cost for the Athabasca Region

 
  From the June 25, 2018 Issue of Agri-News
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 In the May 21, 2018 edition of Agri-News, Herman Simons, farm management specialist with Alberta Agriculture and Forestry (AF), and Barry Yaremcio, beef and forage specialist with AF, explored the impact of calving in each of the months on the margin over feed for a 550 lb. weaned calf in the Strathmore region. Now, they look at the margin over feed cost for the Athabasca region and some of the differences seen between the two regions.

Revenue

Looking at the regional market price of a 550 lb. calf in Alberta, Clyde, and Strathmore over 15 years, the graph shows the average revenue per calf sold. It is sourced from the different auction market reports and the Alberta average price as reported by Canfax.

“While each of the lines show a clear seasonality in annual market prices with January being the lowest month for average revenue per calf, not each market is peaking at the same time,” explains Simons. “Local dynamics in the market area seem to affect the price. This again reiterates the importance of knowing your market as clearly not every market is the same. It also needs to be noted that the difference in long term average price between the Clyde and Strathmore markets is less than $1.50 per hundredweight (cwt).”

Feed cost Athabasca

About 80 per cent of the cost of raising a calf is feed, according to AgriProfit$ Benchmark Information for Alberta Cattlemen. The next step is to determine the feed cost. Yaremcio used the following assumptions when developing the rations:

    • Average weight of the cow is 1,400 lb.
    • AUMs for pasture and swath grazing are adjusted for the month of lactating/gestating and size of the calf.
    • For the winter feeding, no adjustments have been made for feed requirements of the calf which should start to take in some nutrients at about 6 to 8 weeks of age.
    • Average gain of the calf is about 2.3 lb. per day achieving 550lb of market weight in about 7 months, regardless of month of calving.
    • Pasture time for Athabasca is from June 10 to September 15, with a cost of $0.90 per AUM per day.
    • Swath grazing is done from September 16 to December 16, with a cost of $0.75 per AUM per day.
    • Rations are calculated using the average temperatures of the Athabasca area.
    • Two sets of balanced rations:
    • Hay based: cost at $0.042 per lb.
    • Silage based: cost of $0.025 per lb.
    • Cost of ingredients, straw, barley, minerals and vitamins based on AFSC 2017 fall price reporting for the Edmonton North region.
CowBytes is a beef ration balancing software package available from AF and has been used as the tool for formulating the different rations.

The following graph shows the annual feed cost per cower for each of the calving months for the Athabasca region.

“Based on the assumptions, it is clear that the difference in price between hay and silage makes hay the feed of choice in the Athabasca region,” says Simons. “The cost advantage for hay is a minimum of $60 per head for the June calving month to as much as $92 for the November calving month. The cheaper hay more than offsets the shorter period of having the animals on pasture. The net result is that the feed cost in Athabasca is about $40 a head lower than in Strathmore region when calving in June. The feed cost advantage for Athabasca increases to as much as $105 per head if the month of calving would be November.”

The Margin

“The first graph below shows the margin over feed cost for the Athabasca region using the Alberta average prices,” explains Simons. “This is what is remaining to pay all your other expenses, provide you with the resources for your living, and your profit, which will allow you to achieve your ultimate goals. This is the number that should really tell us what may be best for the long haul.”

Adds Simons, “It seems that the highest months for margin over feed cost for Athabasca is from August to November. The margin ranges from $345 to $360 per head, with a strong advantage for feeding a hay based program rather than barley silage. The months with the lowest margins are the February and March calving months with $270 of margin over feed per head. For a 100 cow herd, it translates to a $7,500 to $9,000 profit difference.”

Below are the margins when calculating the regional margin over feed cost using the Clyde market.

“The seasonality still shows but it seems to be less of an advantage to calf between August and November,” adds Simons.

Below is the margin over feed cost for Strathmore using regional pricing.

Explains Simons, “The impact of regional pricing resulted in the best margins to be from March to September calving, with May and June providing the best opportunities.”

Simons makes these observations when comparing both regions using their respective pricing and feed cost:

    • Best margin over feed for Strathmore is in May and June, with an average of about $270. For Athabasca is August to November, with an average of about $350.
    • January and February are low margin months for both regions.
    • Know your market. It may influence when you can get the best margin over feed cost.
    • Build a nutrition program that will minimize your cost while optimizing production is one of the most important activities on your farm.
While this information is interesting, Simons stresses that there is more to consider than just the revenue and feed cost. For example:
    • What are the investment requirements for the different months? Does it require more or less capital invested in equipment and buildings?
    • Can you expect differences for each of the calving months in production performances like mortality, growth performances and conception rates?
    • What management implications does each month have? Not just during the calving period but also for the growth period of the calf until it is sold.
    • Do you have any specific marketing opportunities to consider?
    • How does changing the calving period impact time available to do other tasks on the farm?
For more information, contact the Alberta Ag-Info Centre at 310-FARM (3276).

Contact:
Alberta Ag-Info Centre
310-FARM (3276)

 
 
 
 
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For more information about the content of this document, contact Dean Dyck.
This document is maintained by Christine Chomiak.
This information published to the web on June 18, 2018.