Managing Outliers in Stocker Herds
By Lorie Woodward Cantu
Editor's Note: This is the seventh installment in a 12-part series on stocker cattle management. This series has been created in partnership with Chris McClure, Gold Standard Labs (bvd-pi.com), a lab services company based in Hereford, that specializes in BVD-PI testing and blood pregnancy tests; and Danna Schwenk and Karla Whitmore, CattleXpert Management Software (cattlexpert.com), a software company based in Elkhorn, Neb., that specializes in feedlot and stocker management applications.
In the cow-calf business, outliers are the cattle whose weights and performance are significantly above or significantly below the herd average. In the stocker business, those same outliers represent opportunity on the hoof.
"In its broadest definition, a stocker is a beef animal that you can add value to," says Missy Bonds, who works alongside her father, Pete, running Bonds Ranch, which is headquartered in Saginaw. Missy serves as a director of the Texas and Southwestern Cattle Raisers Association (TSCRA) and Pete is TSCRA second vice president.
"Stocker operators utilize the outliers from cow-calf operations," she says. For instance, it is a fairly common scenario for stocker operators to put 450-pound calves on grass to grow them to 750 pounds. If cow-calf operators are doing their jobs, they're weaning calves that weigh more than 450 pounds, so stocker operators are looking for those calves that don't measure up to the herd's standards, she says.
"Successful stocker operators find opportunities in outliers that underperform as compared to their herd mates," Bonds says. "Because we concentrate on the ones that fall outside the standards of any given cow-calf program, it's difficult to buy a full calf crop from an individual to move into a stocker operation. More often than not, we find ourselves at the auction market looking for cattle with potential to gain."
She continues, "Just because a calf is small doesn't mean that it isn't going to perform." It's important to figure out, if possible, why an animal is an outlier. Perhaps its mother is a first-calf heifer, or maybe it is just younger than its herd mates, she says.
In the marketplace, stocker cattle can range from 200-pound peewees to 650-pound calves that are almost feedlot ready. When deciding what to buy, the Bonds family considers which weight class has
the most value at that time.
"When we buy cattle, we look for value, not breed type," Bonds says. "Our experience has taught us that we have to make our profit on the buy side, which means that we can't pay too much on the front end."
They also consider input costs and length of time they're going to graze, and use the futures market to get a handle on the sale price when they are determining what they can afford to pay for calves, she says.
Once the family has purchased the cattle, the primary concern is making sure that each animal performs optimally by aggressively preventing underperformance.
"Because in the stocker business we're not necessarily dealing with genetically related cattle; [therefore], we don't have outliers in the same sense that cow-calf operators do," Bonds says. "If we're not careful, though, we can have underperformers. We work hard to prevent underperformance."
The most common underperformers are chronically ill yearlings, she says.
"To succeed in the stocker industry, it is critical to have a good health program in place," Bonds says.
"You have to prevent disease and you have to watch cattle closely enough to spot an illness before it becomes serious." Many chronically ill calves sustain lung damage that inhibits their long-term performance, she says.
"Chronics take a lot of time, labor, and medicine," she says. "Plus, they don't gain like they should and they affect the bottom line of the entire load. The best way to manage chronics is to keep from having any."
Despite their best efforts, there is a small percentage of cattle that underperforms. The Bonds family doesn't try to hide them from buyers or pass them off for the feedlots to handle. They give the buyer a choice.
"We deal in load lots, not in individual animals, but we want the buyers to have a degree of control over what they are delivering to their customers," Bonds says. "Often, if there are 100 head in a pen, we'll have the buyer choose the top 95, so he has some options about which cattle go on the trailer." The 5 underperformers will be marketed through other channels, she says.
for realistic performance
Another way the family prevents underperformance is by matching cattle to the geographic region where the calves are most likely to achieve their highest potential weight gain.
The Bonds family runs cattle from Veracruz, Mexico, to Alberta and Saskatchewan, Canada. In between, they manage cattle in 26 Texas counties as well as in Oklahoma, Kansas, New Mexico, Nebraska, Iowa, South Dakota and Montana, so a discussion of geography is not an idle conversation.
"In the stocker business, geography is an important consideration," Bonds says. Factors like the nutritional strength of the grass and the weather conditions impact how much weight cattle gain and how quickly they gain it, she says.
"For example, if you put calves out on grass near Fort Worth in the summertime, they're not going to perform like you might expect because the hot weather will take its toll," Bonds says. "They certainly won't gain the same way as if you are putting those cattle out on winter wheat in that same area. That's not to say that summer grazing can't be done in Texas, but you have to have reasonable expectations."
One of the best ways to keep expectations reasonable is to talk to people in the area where you're going to be growing out your cattle, she says.
"Don't hesitate to ask other area operators how you can expect calves of a certain weight and a certain quality to perform in that specific location," Bonds says. "Will they gain 1.5 pounds per day on grass or 2 pounds per day on wheat? You have to have a good idea about what the country will allow a calf to do."
Talking to other people in a given area will also give a feel for local customs and preferences. For instance, in New Mexico, southeastern Colorado or Kansas, the people who oversee summer grass programs prefer cattle weighing at least 550 pounds because the country is bigger, and often brushy, making it much more difficult to spot sick animals, she says. Heavier calves generally have fewer health problems and require less attention.
Regardless of local preferences, the Bonds family always keeps its end market in mind. They strive to do 1 of 2 things: raise a calf that is 750 pounds and ready to enter a feedlot, or raise a calf that is ideally positioned to enter the next phase of a grow-out program, Bonds says.
For instance, if the family puts a 350-pound calf out on wheat in the late fall, it probably won't be ready to enter the feedlot by the time the wheat is gone, but it could hit 550 pounds, which is the ideal weight for someone who is looking for cattle to put on a summer grass program in the northern states.
"From a marketing perspective, you have to be flexible and recognize opportunities," she says.
"Sometimes, though, you have to plan ahead and make your own opportunities."
"Stocker Cattle: Managing Outliers in Stocker Herds" is from the July 2012 issue of The Cattlemen magazine.