Categories
News

Implications of Improved Feed Efficiency

Many industry articles of late in the wake of the criminal misinformation on Lean Finely Textured Beef, LFTB, have focused on the efficiency of the beef industry. This focus has largely been on making the most of what we produce and how the capturing LFTB helps keep beef affordable for all demographics.
In these articles it talks about the efficiency of the United States Beef producer. Amazing facts really like though the US is home to only 7% of the world’s cattle yet we account for 20% of the world’s beef production. The fact that since 1977 we have reduced the amount of feed to produce a pound of beef by 20% and land used for beef production has been reduced by 30%.
As Hoop Beef System customers we are doing our part in taking the next step in improving the efficiency of beef production in the United States. We harvest about 34.4 million head of cattle annually in the US. It takes 129 billion pounds of dry feed with and average feed efficiency 7.5 lbs of feed per one pound of gain. Steak on the Grill! A 15% improvement in feed efficiency would save 19 billion pounds of dry feed annually in our industry! That is enough feed to finish another 6 million head of cattle. Improving the hot carcass yield by 1.5% will yield another 619 million pounds of beef annually. Given the average consumption of 59 pounds of beef per capita in the US,together that would feed another 92.5 million people annually.
As the demand for high quality protein increases worldwide we will need to continue to implement the best technology and designs available to increase the volume of beef we produce with limited resources and do it in the most efficient means possible. Thank you for what you do in feeding the world!
We Got Ya Covered….Don’t track it in the house.

Categories
Cattle Management

Success in Starting Calves

All producers whether a feedlot operator or a grain farmer, have a common nemesis, inclement weather, courtesy of Mother Nature.   We cannot control it, and in most cases have to scramble to even begin to prepare for an upcoming weather event.  The starting of beef calves on feed is no exception.   As cattle feeders we have many weather wise tidbits that are passed on by each generation.  ‘Wean by the moon’, ‘Cold weather drives calves to the bunk’, ‘a wet calf is a sick calf’, ‘Heat will kill more calves than cold’.   We could fill a short book with these tidbits of advice as it relates to cattle management and the weather.

Let’s take a look at weather factors and their impacts on health and performance in the first 30 days on feed for an unweaned calf entering the feed yard.  This analysis needs to start with what does and ideal situation in an outside pen look like.

  1. Dry but not so dry we have dust issues.
  2. Moderate temperatures without major temperature swings (less than 30 degree swings between daytime highs and nighttime lows).
  3. No rain, No snow and minimal winds.

These demands do not seem too drastic and SHOULD be relatively easy to achieve.  When you figure out how to accurately predict the weather 30 days in advance let me know and we will become millionaires together.

One of the major factors affecting early feedlot performance is intakes.  Getting calves to eat consistently in the first 7 days has a huge impact on overall performance and health of any group of calves.  This is even more pronounced when dealing with light calves (3-400 lbs.) due to the physical size of the rumen.

Any issue that reduces intakes or increases the maintenance requirement of the calf will put the calf in a negative energy balance (NEB).  In a NEB situation the animal’s body begins to scramble to find all available resources and direct it toward energy production.  The first place the body robs energy is in from the immune system as proteins used for antibody production are easily redirected with slight increases in cortisol (the bodies stress hormone).   This is important for whether the stressor is weaning (pacing, walking, bawling and heightened nervousness caused by unfamiliar surroundings) or weather related, the body reacts similarly.

Fall calves in February

Weather stresses have a huge impact on this calf at this extremely vulnerable time in the production cycle.   Intakes in the first several weeks are barely at a level to support the maintenance requirement of the calf.   A mild weather stress (rain at 50°F) will increase the calves’ maintenance requirement by as much as 20% and for every additional 10°F drop in temperature it will increase by another 20%.   This is not taking into account the additional stressor of the mud in the yard that this calf is dealing with.  Not only will these calves not be gaining any weight but with a suppressed immune system just one or two days under these conditions will cause a severe outbreak of disease.

It is widely accepted that treating a calf just once in the first month will impact significantly the performance of the entire feeding period.  Our records at Grand Meadow Feeders show a 100lb/hd advantage on calves that have never been treated as compared to calves treated just once in the first 90 days.  The numbers grow from there for calves that need to be treated 2 and 3 times.  Groups of calves with high morbidity tend to have higher mortality at closeout even if death rates in the first month of the feeding period are similar.  This is a true performance advantage and does not take into account the additional labor to pull and treat an animal.

According to Kansas State University’s Beef Stocker Unit Director Dale Blasi, “One thing we can’t do much about is the weather, and that is a major factor in the wellness of stressed cattle,” he continues, “ If the weather is favorable a set of calves might almost be bullet-proof; but those weather swings can seriously exacerbate sickness.”

Whether your business is starting and finishing calves or you are strictly a backgrounder, don’t let Mother Nature dictate to you the profitability on any set of calves.  Take the weather out of the equation with the Hoop Beef System and let your cattle perform to their genetic potential.

We Got Ya Covered….Don’t Track it in the House.

Categories
Design and layout

Hoop Beef System vs. Open lots 5000 head

Open lots vs. Hoop Beef System

It is always interesting the types of questions I am asked in regards to the Hoop Beef System.  For the non ag folks, they always seem a bit confused as to the need for cattle housing.  I explain to them how it is important not only for my customers but also on a global standpoint to produce quality, nutritious beef utilizing the least amount of inputs as possible.   They can relate to the need for housing when it is put in terms they can understand.  Ironically enough some of the most “professional” cattle people have a hard time grasping that there is a better way to feed cattle than fencing off a 50,000 sq. ft. pen per 200 head of cattle and hoping for good weather.

In a recent conversation with a prospect, I walked through this analysis comparing the costs of constructing a new outside feedlot to the Hoop Beef System for 5000 head capacity.   We agreed that in both situations we have bunks and waters and fencing to move cattle from their pens to a working facility and load out.  The question really becomes can I build the Hoop Beef System  building for amount of the additional land costs and cost of a lagoon assuming an equal cost of operation.  The Hoop Beef System footprint is 16.3 acres versus 52.6 acres on an outside feedlot.    At $10,000.00 per acre there is a $363,000 difference in land cost between the two layouts. 

In the land needs assessment 6 acres was allotted for the lagoon.   We will assume that this will cost approximately $1.5 million to construct to today’s requirements. With the additional land cost and lagoon totaling $1.863 million difference it means there is $372 dollars per head to build a Hoop Beef System and end with the same cost per head of capacity.   It will most take an additional $100 per head of capacity to build the Hoop Beef System.    This difference can be paid off in one turn of cattle with the same over $100 per head advantage over the lifetime of the facility when you achieve the 14% improvement in Average Daily Gain and 17% improvement in feed efficiency that we see at our feedlot vs. closeouts in outside yards using a national database.

Contact us and we will do the comparison for your Feedlot.  We look forward to hearing from you.

 

We Got Ya Covered…Don’t Track it in the House.

Categories
News

The Million Dollar Advantage

The Million Dollar Advantage

            How would you spend a million dollars? It is kind of a million dollar question.  Would you put your kids through college?  Take your family on a nice vacation to a place you have only dreamed of?   Maybe even buy 100 acres of farm ground in Northwest Iowa.  Why the question? What does it matter?   Recently when walking a perspective customer through his options with Hoop Beef System, as compared to another way of feeding cattle under roof, the difference was over $1,000,000.00** in ten years!

Now, before you stop reading because you think this impossible, let me show you the money.  This is basis a 500 head project of new construction in the upper Midwest.  Names have been changed to protect the innocent.

Jim was considering a single sloped cattle feeding building (a building not a system there is a difference) for his operation.   Jim is considering the same capacity of the Hoop Beef System.   As a trusted advisor to his operation, we began the comparison with the basic equation: Cost of construction + Cost of daily operation=cost per head per day (yardage) over the amortization period.    Jim had chosen a 10 year payoff period for his project.  With the single sloped building he was considering, the per head of capacity cost was $250 per head more than the same capacity Hoop Beef System.  The difference in up-front cost was $125,000.00 with interest at 5.75%; this was a $164,653.00 difference over ten years. Advantage Hoop Beef System.  That’s just the additional cost of construction.

The other building was fully concreted throughout the floor plan.  The best university research available today states that a single sloped building will require 11lbs of bedding per head of capacity per day.  This correlates to 3.3, 1100 lb. corn stalk bales per head of capacity annually or in Jim’s case 1650 bales.  At Grand Meadow Feeders, a Hoop Beef System feed yard, the annual bedding usage is less than one bale per head of capacity, but for the sake of argument let’s say 1.   For a 500 head operation, that is 1100 bales difference annually.  According to Rock Valley’s hay auction last fall that bale is worth on average $32.50 per bale.  That is a $35,750.00 per year advantage to the Hoop Beef System.   That is $35750 x 10 years = $357,500.00 advantage.

What goes in must come out.  As there is no available university information on manure production, we will assume at minimum that you will have to haul at least the additional 2530 lbs. of bedding, used plus an additional 40% in moisture for a total increase of 1.77 tons per head or 885 tons per year, at an average spreading cost of $10 per ton that is $8850.00 per year.  Note that the crop nutrients come from the cattle, not the bedding and adding additional volume to the manure dilutes the manure resource, which increases the tons required to get the same crop nutrients dispersed. For ten years, $8850 x 10 = $88,500.00; advantage Hoop Beef System.

The best advantage is the knowledge and cattle feeding and marketing experience that we bring to our customers.  Our marketing agreement with those that purchase our cattle, over the past 6 months has added an average of $37.50 per head over what the average producer received for his cattle in the same period.  Our ration design and its corresponding cattle performance saves on average $.1925 per head per day, in a 210 day feeding period that is $40.42 per head per turn.   Follow the money, $37.50+$40.42=$77.92 per head.  Assuming an occupancy rate of 90% on an annual basis gives us 1.64 head fed per space of capacity annually.  500 head capacity markets 820 head per year.   820 hd x $77.92=$63,894.00 x 10 years is $638,940.00.    Advantage Hoop Beef System.

  1. Cost of Construction                       $164,653.00
  2. Cost of Operation                            $357,500.00
  3. Manure Hauling                                 $88,500.00
  4. Hoop Beef System Premium          $638,940.00

Total Hoop Beef System Advantage              $1,249,593.00**

I believe you know what Jim decided was the best way to position his operation for the future.  When you do the comparison, you see there is no comparison!  This is why we are the leader in cattle feeding facility construction and management in the nation.   Who will you hitch your wagon to?  We inform… you decide.

 

We Got Ya Covered….Don’t track it in the house.

 

**No representation of profitability is hereby made.  The statements and figures shown here are based performance and records from Grand Meadow Feeders.  Neither Hoop Beef Systems, LLC nor it’s employees, agents or assigns make any warranty of any kind including the merchantability or results, relative to the information contained herein.  Actual results will be affected by ability to gain, health of animals, management and previous treatment etc.

 

Categories
News

Say buddy can ya spare a few hundred Thousand?

Say Buddy, can ya spare a few hundred Thousand?

We all know that the title of this article should not be the opening line of your visit with your lender.   However, if you aren’t prepared to show him what he needs to see to be able lend to your operation the capital it needs, that line is about what he hears.

As cattle feeders we are used to and fairly adept at, handling large amounts of capital.   The challenge in today’s business climate is that our lenders have to play by a whole new set of rules brought on by the shenanigans (good Irish word for a March article) in the mortgage industry.   The topic of access to capital has been a reoccurring one over the past couple of years and seemingly more so in the past 6 months.  This prompted us to visit with our contacts within the Ag lending industry and ask them point blank, “What are you looking for in a business proposal?”

We will be using the addition of 640 head of capacity of the Hoop Beef System to an existing feeding operation as our target discussion.  This will be approximately a $300,000.00 project.   The goal of the project is to be able to provide enough income producing capacity to bring Junior and his new wife into the farming operation.

  1. Knowledge and Passion for the project:  Your lender wants you to sell him on why YOU believe this is the best avenue for your operation.  There is marked difference between the statement to the lender, “Well we were thinking that this might be a good deal and we are hoping that you…..”  And “We are going to build 640 head capacity of the Hoop Beef System and here is how we believe the project will work…. and we want you as our lending partner….”

Can you hear the difference? If not read it aloud. Your lender wants you to show him your passion for this project.  It shows you did your homework.  In this presentation you will need to show your lender: Project Cost Estimates, Closeouts current and projected, Outline your current challenges and why you BELIEVE this is the best solution i.e., Consistency of performance and profitability, Regulation compliance, Reducing Market Risk, Efficiency of Labor etc.

  1. 2.     Records of past performance:  Your lender does not want to see just 3 years of tax records, but records from your feeding operation.  What is your current feed efficiency?  How much improvement can we expect in the new feeding system?  How does this system pay for itself over what period of time?   In this arena actuals trump projections every time.  We are happy to provide to our prospective customers closeouts from our feeding operation as a basis of comparison for your current operation.

 

  1. 3.   Equity:  You can’t borrow every dime for a project.  Your lender wants you “to have some skin in the game”.   20-25% equity in the project is fairly standard in today’s world.  More or less equity may be required depending on our current financial situation.  In our discussion scenario, Junior most likely does not have adequate equity and will rely on the more well-heeled partners to bring that to the table.  This is potentially a great way to transfer assets to the next generation, without a whole mess of tax implications.

 

  1. 4.   Sensitivity Analysis:  In laymen’s terms this is laying out the risk factors that can affect the outcome of a scenario and determining which factor has the greatest influence on the outcome.   For instance in cattle feeding, the major risk factors are; Feeder Cattle or replacement prices, Feed prices, Sales or market prices, which are all under the broad category Market risks.  Another broad category is Production risks including: Death loss, Morbidity or treatments, Weather events, Average daily gain and Feed efficiency.  There are also Operational risks which cover: Life Transitions like Death, Divorce, Disability or Departure from the operation.   In the sensitivity analysis we layout all these risks and determine which will have the greatest impact on the outcome.   Identifying the risks is one step; the next step is laying out the plan to mitigate these risks.

 

Feeding cattle in the Hoop Beef System mitigates many of these risk factors already.  When you put a consistent type of cattle, in a consistent environment, you get consistent predictable results, which allows for better business modeling and planning which reduces Market risks.   The System takes care of weather extremes and their corresponding impact on performance, which narrows the production risks to just our management ability to feed cattle well.    The only impact the Hoop Beef System has on Operational Risk is that when life happens, know that the learning curve to manage cattle successfully in the Hoop Beef System is relatively short and the next man up can step in and do a great job in short order.

As always, we are open to helping our prospective customers prepare for this conversation and we have the tools and experience to make this as painless as possible.   Contact us to schedule a time to lay out your plan and we will help you position your operation for the future.

 

We Got Ya Covered…Don’t track it in the house.