Category: Farm Management

As we open the final month of the year, most spring-calving cow-calf operations have weaned calves and have an opportunity to assess the productivity and profitability of their herds. To that end, I wanted to quickly review two measures that I feel are of utmost importance to a cow-calf operator. Neither measure carries a dollar sign, but both have serious implications for the revenue side of the profit equation. There is no shortage of measures and indices that can be helpful for cow-calf operators, but weaning rate and pounds of weaned calf per cow are two that I think are very important, but also relatively simple to understand and calculate.

Weaning rate is the percentage of cows exposed to a bull that wean a calf in a given year. If a farmer exposed 50 cows and weaned 45 calves, the weaning rate for that operation would be 90% (45 calves divided by 50 cows). There is a cost to maintaining and breeding cows whether they wean a calf or not, so limiting the number of cows that incur costs and fail to wean a calf is crucial. Holding all other things constant, herds with higher weaning rates will be more profitable than those with lower weaning rates. If weaning rate is an issue, farmers should work to determine if the issue is cows failing to breed, cows losing calves, or calf survival.

An easy way to think about weaning rate is that it converts revenue per calf to revenue per cow. Table 1 below provides a simple way to illustrate this concept. If one assumes that the average calf is weaned at 550 lbs and is worth $2.30 per lb (for simplicity think steer-heifer average), then the value of each calf is $1,265 at weaning. However, when discounted for cows that were maintained but did not wean a calf, the revenue picture on a per cow basis is very different. Each 5% change in weaning rate impacts revenue per cow by more than $60. That difference expands in strong calf markets and contracts in weaker calf markets, but the fact that weaning rate significantly impacts profit is undeniable.

The second measure that I wanted to briefly discuss is pounds of weaned calf per cow. This measure builds upon weaning rate by also including weaning weights. Pounds of weaned calf per cow can be calculated by dividing the total number of weaned lbs by the number of cows exposed to a bull or by multiplying the average weaning weight for the operation by the weaning rate. I like to think of pounds of weaned calf per cow much like a yield measure for a crop operation – production per unit. Weaned lbs are the production level, and cows are the unit. So this measures the lbs of weaned calf a cow-calf producer can potentially sell for every cow he or she maintains.

Table 2 shows pounds of weaned calf per cow for a range of weaning rates and weaning weights. Increasing the percentage of cows that wean a calf each year and / or increasing the weaning weight of calves are two of the primary ways that cow-calf operations can see increased revenues, with calf price being an important third factor. The wide range across the table speaks to how much this measure can vary across operations. This is not to say that a higher level of lbs of weaned calf per cow is always desirable because this measure does not incorporate any additional costs associated with higher weaning weights or other considerations of the operation. But, tracking and managing that number will have profit implications for the operation over time.

Table 1: Revenue per Cow as Weaning Rate Changes

Assuming 550 lb calves @ $2.30: $1,265 per calf weaned
Weaning Rate	Revenue per Cow
95%	$1,202.75
90%	$1,138.50
85%	$1,075.25
80%	$1,012.00
75%	$948.75

Table 2: Pounds of Weaned Calf per Cow by Weaning Weight and Weaning Rate

	Average Weaning Weight
Weaning Rate	400 lbs	450 lbs	500 lbs	550 lbs	600 lbs
95%	380	427.5	475	522.5	570
90%	360	405	450	495	540
85%	340	382.5	425	467.5	510
80%	320	360	400	440	480
75%	300	337.5	375	412.5	450

The Mid-South region (eastern Arkansas, northeast Louisiana, Mississippi, and southeast Missouri) experienced a significant expansion in irrigated soybean acres since the beginning of the 1980s (Watkins, 2023). Irrigated agriculture in this region is highly dependent on groundwater from the Mississippi River Valley alluvial aquifer. Eastern Arkansas is the largest soybean producer in the Mid-South. From Census year 1982 to Census year 2017, Arkansas irrigated soybean area expanded by +2.108 million acres (USDA, NASS, 2023a). Every county in eastern Arkansas experienced an increase in irrigated soybean acres during this time, but counties experiencing the greatest expansion were those bordering the Mississippi River. Are irrigated soybean acres still expanding or are they beginning to level off in eastern Arkansas? Will irrigated soybean area expansion continue across the region?

Area trend analysis was conducted to answer these questions. Irrigated soybean harvested acres data were collected for all 26 counties in eastern Arkansas for the period 1980 – 2018 from the USDA, National Agricultural Statistics Service (USDA, NASS, 2023b). Missing observations in the NASS data and additional acre observations for the period 2019 – 2023 were obtained from the USDA Farm Service Agency (USDA, FSA, 2023). 

Figure 1 presents irrigated soybean acreage trends for the 1980 – 2023 period. Three basic patterns of acreage trends are identified:

• Reached Plateau:

Counties shaded orange represent counties that achieved a plateau at some point during 1980 – 2023 period. Irrigated soybean acres for these counties increased and then leveled off during the 44-year period. 

• Declining:

Counties shaded red represent counties where irrigated soybean acres initially increased until an acre maximum was reached. After the acre maximum was reached, irrigated soybean acres began to decline. 

• Growing:

Finally, counties shaded either light blue or dark blue represent counties where acres continue to grow and do not appear to have reached a plateau. The counties shaded light blue are counties with acres growing at a constant rate over time. The constant rate of growth ranged from +0.65 acres per year (Drew County) to +3.79 acres per year (Phillips County). The dark blue counties (Chicot and Mississippi) represent counties where the rate of growth is not constant but expanding over time, with the most recent rate of growth reaching +5.26 acres per year for Chicot County and +7.23 acres per year for Mississippi County.

What information can be gleaned from these trends? Irrigated soybean acres in counties shaded red or orange are either declining (the red counties) or leveling off (the orange counties), implying irrigated area expansion in these counties has likely ended. Most of these counties are located in Critical Groundwater Areas where groundwater is being depleted faster than the rate of recharge (Arkansas Department of Agriculture, NRD, 2023). In addition, many of these counties have converted nearly all available non-irrigated soybean acres to irrigated acres. Counties shaded either light blue or dark blue are still expanding in soybean irrigated area. Most of these counties are located either alongside or within close proximity to the Mississippi River, where groundwater is more plentiful. Also, most of these counties still have a considerable amount of non-irrigated soybean area left for future irrigation conversion. These results highlight the importance of both groundwater availability and land availability to continued future sustainability of soybean production in eastern Arkansas and by implication the Mid-South region.    

References and Resources

Arkansas Department of Agriculture, Natural Resources Division (2023). 2022 Arkansas Groundwater Protection and Management Report. https://www.agriculture.arkansas.gov/natural-resources/divisions/water-management/groundwater-protection-and-management-program/

USDA-FSA (2023). United States Department of Agriculture, Farm Service Agency, Crop Acreage Data. https://www.fsa.usda.gov/news-room/efoia/electronic-reading-room/frequently-requested-information/crop-acreage-data/index

USDA-NASS (2023a). United States Department of Agriculture, National Agricultural Statistics Service, Census of Agriculture. https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Census_by_State/Arkansas/index.php

USDA-NASS (2023b). United States Department of Agriculture, Quick-Stats. https://quickstats.nass.usda.gov/

Watkins, B. (2023). The Rise of Irrigated Soybeans in Arkansas. Southern Ag Today 3(32.3). August 9, 2023. Southern Ag Today

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Watkins, Brad. “Will Irrigated Soybean Area Continue to Expand in Eastern Arkansas?” Southern Ag Today 3(49.3). December 6, 2023. Permalink

As winter approaches the broiler belt, it brings with it increased heating fuel bills for poultry growers. Most modern poultry houses in the southeast use liquified propane (LP) or natural gas (NG) to keep birds warm during the winter months, as well as during brood phases year-round. In many areas of the southeast, growers can choose one fuel over the other. However, this is a long-term choice requiring equipment conversions and plumbing changes. The cost of heating their poultry houses is usually a primary driver of this choice. LP and NG prices have proven to be volatile at times. Historically, LP price lags but roughly follows crude oil price changes, as it is a by-product of crude oil production. NG prices also have a crude oil production component but react more to international events and trading. The development of domestic gas fracking has made it more available and advanced NG as a competitor to LP in the U.S. However, access to NG pipelines is a limiting factor for many poultry producers. Also, NG customers generally do not have the ability to lower costs via pre-purchase agreements, volume purchases, or other negotiated price strategies that LP users have. Natural gas users simply pay the provider’s price at the time of billing. LP users must monitor fuel stocks and schedule deliveries to maintain adequate supplies at the farm. NG users do not have this worry as they always have pipeline access to gas. Hence, there is also no storage cost to consider when using NG. Farm trials have shown that, if NG is readily available, and prices are at their normal comparative levels, it is generally less costly to heat a poultry house with NG. But with recent NG price volatility, this could vary. 

When comparing the costs of these two fuels, it is important to compare them on an equal basis in terms of heat energy output per unit. For this, British Thermal Units, or btu’s per unit is used. (One btu is roughly equivalent to the heat of a single matchstick flame.) LP is traded and sold to growers by the liquefied gallon and contains approximately 91,452 btu’s per gallon, with slight variations in actual product delivered. NG is traded and reported in one thousand cubic feet (MCF) units, which equals one million btu’s. It is often sold to retail customers by the “therm” or CCF (one hundred cubic feet), which is 100,000 btu’s of energy. For a quick comparison, you can take the LP price, multiply that by 1.093 and get the rough equivalent price of NG on a per btu basis. For example, if NG is priced at $1.17/CCF or $11.70/MCF (current trend price in Fig 1a), LP would need to be priced at approximately $1.07 per gallon to be equal in cost per btu. LP has not been at that low of a price in the southeast in recent history. Conversely, $1.20/gallon LP (trend forecast price in Fig 2b) is roughly equal to $1.31/CCF natural gas. Recent history has shown that NG prices are trending below that level, but from the spring of 2022 to the spring of 2023, prices were well above the trend, with commercial rates hitting a high of $1.45/CCF in September ‘23. LP prices at that time were approximately $1.52/gal ($1.66/CCF equivalent). These were the national averages; some users may have paid higher local rates for either fuel. Some local providers have varying rates for farms versus residential or commercial for LP or NG. Although NG has generally stayed on the less expensive side of this relationship, it may not always be the case for a specific farm or specific providers. 

When looking at these variations, it is important to note that LP prices tend to react more to locally occurring events like weather and the short-term impacts of those events on supply than NG. However, the overall U.S. supply of propane does affect the market prices nationwide, as seen in figures 2a and 2b below. Luckily for poultry growers using LP, the current U.S. supply is strong and suggests lower winter prices are possible this year. NG is widely traded internationally, and prices are more reactive to international events like the war in Ukraine or Chinese economic strength and purchasing of the commodity. Even so, NG prices are forecast to remain soft for the coming winter as U.S. production looks strong and growing (fig 1b). Overall, with propane stocks high and natural gas production strong, U.S. poultry growers may be getting a welcome relief this winter from the high fuel costs of recent years, no matter which fuel source they choose. 

NOTE: Any poultry grower considering making a switch from one heating fuel source to another needs to consider all costs, both short and long term, like equipment changes, plumbing upgrades, and pricing flexibility. Click HERE  for detailed information on NG conversion in poultry houses.

Fig. 1a & b: Natural gas prices have been volatile recently in response to international events and trading. However, long-term forecasts are lower than the high prices of 2022. U.S. production looks to be strong and increasing over time.

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Brothers, Dennis. “Comparing Liquified Propane to Natural Gas for Heating Fuel Cost Management in Poultry.” Southern Ag Today 3(48.3). November 29, 2023. Permalink

The Land Grant University System has a historic tradition of the combined missions of teaching, research, and extension.  In fact, Southern Ag Today was born out of a collaboration of Extension Economists across the Southern region.  The Old Rotation at Auburn, is a great example of Land Grant history and continued relevance.  As cited from the National Register of Historic Places, January 14, 1988:

 The Old Rotation. 

Established in 1896 by Professor J.F. Duggar, the Old Rotation at Auburn University is: 

• The oldest, continuous cotton experiment in the U.S.
• The 3^rd oldest continuous field crop experiment in the U.S.
• The 1^st experiment to demonstrate the benefits of rotating cotton with other crops to improve yields and utilize nitrogen-restoring legumes in a cotton-production system. It continues to document the long-term effect of these rotations in the same soil.

The Old Rotation has had 128 years of cotton planted in the same soil and provides valuable insight into cover crops and crop rotation, and one of the original objectives of utilizing legume cover crops is significant today.

Table 1 shows yields from 1896 through 2023 from plot # 6 and plot # 8  (there are a total of 13 plots with different treatments). Plot # 6 has been planted to continuous cotton with no additional Nitrogen (N) fertilizer and no cover crop.  Plot # 8 was also planted in continuous cotton with no added N, but included a winter legume cover crop consisting of crimson clover and hairy vetch.  The plots have otherwise been treated the same over the research period.  It is also important to note that these are non-irrigated plots; there are years with very low or no yields; and the yields have increased significantly due to improved management practices and genetics. 

The yield difference over the last 100 years is clear and substantial.  However, the yields between 1896 and 1921 were virtually the same, so it took some time for the net benefit of the practice to accumulate.  Much has changed about cotton production in 128 years, but the history of The Old Rotation suggests the reasonable conclusion that good soil and fertility management (or the lack of) is a long term game.    

With more emphasis on improving soil health and reducing fertilizer costs in the Southern region, looking at long term research helps to provide solutions.

More information about the Old Rotation can be found at: https://agriculture.auburn.edu/research/cses/the-old-rotation/

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Runge, Max. “Historic Research Yields Modern Solutions.” Southern Ag Today 3(47.3). November 22, 2023. Permalink

Artificial Insemination (AI) is a useful tool that cattle producers can use to help their operation. It offers many advantages to natural service that may benefit even small producers. One major advantage of this technology is that it allows access to superior genetics at a reduced cost compared to natural service. A producer can get access to top-of-the-line genetics without having to spend thousands of dollars on a top-of-the-line bull. AI also allows for more selective breeding where a producer can select for increased calving ease, milk production, heavier weaning weights, etc. This technology has been shown to improve conception rates and shorten the calving interval (Anderson & Deaton 2003; Rodgers et al., 2012). This means that AI can be used to increase a producer’s cow herd genetics through replacement heifers. They can also increase herd uniformity, which could lead to better group marketing opportunities and higher prices received.

Despite these benefits, adoption of AI has been relatively low, with only 11.6% of beef cattle operations using this technology. However, like with many technologies, larger producers were more likely to use this technology, with 29.4% of operations with 200 or more head using AI compared to 8.7% of operations with only 1-49 head (USDA APHIS 2017). The major barrier to adopting AI is the increased management and labor requirements. An AI program is going to take significantly more work than natural service. It also has added costs of drugs, semen, and requires additional handling facilities. Furthermore, there are some knowledge barriers that producers need to overcome to use AI effectively.

The question then is, does AI pay? In typical economist fashion, the answer is: it depends. The factors that impact the profitability of AI are:

1. Herd Size
   1. Larger herds tend to see more profit benefit from AI. 
2. Cow-to-bull ratio
   1. A lower cow-to-bull ratio will produce higher returns to switching to AI.
3. How are the calves marketed?
   1. The more premium for better genetics, performance, and uniformity you can capture, the better off you will be with AI.
4. How much is your time worth?
   1. The more valuable your time, the more expensive the increased management and labor costs become, and AI becomes less profitable.
   1. AI programs will vary in labor intensity. 

As with any farm decision, the most economical choice is not going to be the same for everyone. It is important to evaluate your options to determine what is best for your farm. One way to do this is to construct a partial budget. A partial budget is a way of evaluating two different decisions to determine which will be more profitable. It does this by comparing the associated costs and revenues of a choice with the associated costs and revenues of another choice. It only looks at the difference between the two options. For example, it can be used to compare the returns and costs of AI to that of natural service, as seen in Table 1. In this example, a herd with 115 head would increase net returns by $9.87/exposed cow by switching to AI. This is dependent on several factors, including the price received for the cattle, the costs of the drugs, semen, technician, and labor, and the price of the cull bull maintenance and sale. For a more detailed explanation of the numbers and assumptions used in Table 1 please see: http://extension.msstate.edu/publications/economic-impact-artificial-insemination-vs-natural-mating-for-beef-cattle-herds. Also, it should be noted that improved herd genetics is going to have benefits over time. This means that the value of AI likely increases when considering more years. But it is important to do these comparisons yourself to determine if AI is right for you. 

References

Anderson, L., & Deaton, P. (2003). Economics of estrus synchronization and artificial insemination. Proc., Beef Improvement Fed, 15-19.

Karisch, B. (2020). Economic Impact of Artificial Insemination vs. Natural Mating for Beef Cattle Herds. Mississippi State University Extension P2486. Available at: http://extension.msstate.edu/publications/economic-impact-artificial-insemination-vs-natural-mating-for-beef-cattle-herds

Rodgers, J. C., Bird, S. L., Larson, J. E., Dilorenzo, N., Dahlen, C. R., DiCostanzo, A., & Lamb, G.C. (2012). An economic evaluation of estrous synchronization and timed artificial insemination in suckled beef cows, Journal of Animal Science, Volume 90, Issue 11, 4055–4062, https://doi.org/10.2527/jas.2011-4836

USDA APHIS. (2017). Beef 2017. Available at: https://www.aphis.usda.gov/animal_health/nahms/beefcowcalf/downloads/beef2017/Beef2017_dr_PartI.pdf

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Picture by Tara Winstead. TN