Converting to stocker operations may be a viable response to brucellosis
Worland – “There has been a lot of work in the past on what it costs producers if they get brucellosis in their herds,” said University of Wyoming Graduate Student Shane Ruff. “I looked at whether switching to a stocker operation would be a good way to reduce your risk of brucellosis.”
Using a modeled 400 cow/calf pair ranch with 200 yearlings, consistent with previous work, Ruff shifted the operation to all stockers in several ways to determine the most economic methods.
Model basics
“We assumed 400 pairs and 280 yearlings,” explained Ruff. “All of the calves are retained and all 180 steers are put back into the yearling operation.”
Of the heifer calves, 100 are kept as yearlings and 80 are held back as replacements.
In the yearling operation, calves are received at 550 pounds for steers and 500 pounds for heifers and sold the following fall at 1,000 pounds and 950 pounds for steers and heifers, respectively.
“All of these numbers are consistent with previous work, so we can go back to reference and compare my data to previous work,” added Ruff of his work.
The ranch used in the operation utilizes deeded land, BLM land and Forest Service land for grazing.
“We included all three areas of land to be most consistent with the producers in northwest Wyoming,” said Ruff.
He continued, “Additionally, the cow/calf and yearling operation has a haying operation that produces just enough hay to feed all 400 pair and 280 yearlings.”
Transitioning
Both models transition to pure stocker operations, differing in the amount of time the transition takes.
In transitioning from a cow/calf and yearling operation, Ruff noted that there will be leftover hay, as yearlings require less feed than cows.
“There is going to be extra hay to sell, so we consider that in our profitability,” said Ruff. “In a pure stocker steer budget, all the hay is sold and none of it is fed, because those steers are run over the summer.”
How to switch?
The first model incorporated a shift over time from cow/calf to yearlings.
“I figured it would be easiest to build off of our current operation and sell off the cows over a period of time,” explained Ruff. “Producers at one brucellosis meeting brought it to my attention that if you sell all of your cows at once, taxes can be heavy, and that was a concern.”
As a result, his first model looked to cull 15 percent, or between 67 and 68 cows, of the herd each year until a full yearling operation was achieved.
“Because I have heifers, they have to be spayed to reduce the risk of brucellosis,” he added, noting that without spaying the animals, reducing risk of brucellosis – the goal of the transition – was not accomplished. “It took seven years to go from a base cow/calf operation to 823 yearlings with no cows.”
In the model, Ruff also added that yearling calves were purchased from the operation in the fall to better reflect the actual profit of the operation.
The other model considered selling off all the cows in one transaction and purchasing yearlings in the summer.
“Stocker steers are purchased in May and sold in November, so they only run for six to seven months,” he explained. “For this operation, steers were purchased at 700 pounds in the spring and sold at 1,000 pounds in the fall. The same 823 stockers were used.”
Additionally, Ruff noted that he ran the scenario out seven years to coincide with the first scenario for a more accurate comparison of profit.
The results
In using historical price simulations over a seven year period for both cow/calf pairs, stockers and hay prices, Ruff’s models resulted in profit ranges, showing the potential for one operation over the others.
In a long-term switch, Ruff saw average profit was at $123,000, yielding $865,000 over the seven-year period. Net present value for the operation was at $666,000.
“In the first year of the stocker-steer operation run just over the summer, we see profit at $476,000 because all the pairs were sold up-front,” he explained. “In years two through seven, we saw an average of $193,000 for a total of $1.6 million. The net present value is $1.3 million.”
For the long-term shift, Ruff noted profit at $181 per head, compared to $235 per head in an immediate sell-off situation.
Caveats
Despite the ability to earn higher profits with a pure stocker steer operation according to his models, Ruff cautioned producers that the risk is also higher for stockers.
“In the base cow/calf operation, there is very little chance that the enterprise will lose money,” he explained. “About 99.6 percent of the time you can expect a profit, and there isn’t a lot of variation.”
With low volatility, Ruff added that producers are more certain about where they are going to be.
“Compared to stocker steer enterprises, roughly 17 percent of the time, producers can expect to lose money,” he continued. “However, there is a lot of range of profit. There are years where you could make up to $900,000, but you could also lose up to $400,000.”
Depending on a producer’s aversion to risk, Ruff noted that switching to stockers may or may not work in an operation. However, as a method of decreasing risk of brucellosis, it is a viable option.
“You have to know your own risk of contracting brucellosis in deciding whether you want to be a full stocker steer operation, full yearlings or maybe a mix of both,” Ruff added.
Shane Ruff is a graduate student at the University of Wyoming in Agriculture and Applied Economics and can be reached at sruff1@uwyo.edu.
Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.
