Feeding cattle to maximize economic return is a constant game of antagonistic tradeoffs, such as grid premiums for quality grade versus grid discounts for yield grade and too-heavy carcasses, cost of gain versus total pounds gained and all the rest.
Along the way, Lee Mayo, partner and general manager of HRC Feed Yards LLC, Scott City, KS, says feedlots typically want to maximize economic returns while finishing cattle as quickly as possible to minimize the cost of gain, which is a key driver of cattle feeding returns.
Generally speaking, the longer cattle are fed past an optimum point, the more feed efficiency suffers and the more the cost of gain increases. This reality garnered more focus last year as cheaper feed prices, high fed cattle prices, declining cattle numbers, historically high purchase prices of feeder cattle and economics surrounding feedlot capacity utilization encouraged feeding cattle for significantly more days.
Extended efficiency magnifies returns
“Understanding differences in feed efficiency as days on feed increase is probably something we’ve not paid as much attention to as needed, as an industry” Mayo says. He shares Central Plains benchmarks and data from a pen of commingled steers from the American Hereford Association Feedout Programs to illustrate his point.
Mayo looked at a pen of commingled steers HRC fed through the winter of 2024 (H24), which included 161 steers from 13 different owners. The pen was mainly straightbred Hereford steers sprinkled with Hereford-sired red and black baldies. They were harvested late last summer.
Compared to a similar pen fed and harvested during the same period a year earlier, the H24 group was fed 41 more days (223 days), yet pounds of feed per pound gain increased by only 0.09 pounds to 5.59 lbs., which was still 0.76 lbs. more efficient than the Central Plains average (see Table 1).
Table 1 – Comingled Steers
2023 2024 Head 161 161 In Weight 720 666 Terminal Re-implant Wt. 1,239 1,174 Out Weight 1,423 1,476 Dressing % 64.94% 63.90% DOF 182 223 ADG 3.88 3.66 % Deads 1.86% 0.62% % Choice 78% 77% % Prime 0% 6% % PR/CH 78% 83% % YG 1/2 37% 19% % YG 4/5 22% 46% HCW 924 943 Yield Grade 2.8 3.3 BF 0.72 0.80 REA 15.1 14.2 MARB 455 493 $/Head $2,626.71 $2,831.81 $/CWT $284.10 $300.27 F:G (DM) 5.50 5.59 F:G (DM) – Central Plains Avg. 6.32 6.35 Difference 0.82 0.76
“We’ve always known Hereford cattle are more feed efficient than other breeds, but I never dreamed in a million years that if we fed them another 41 days, we would only impact feed efficiency by .09 pounds of gain,” Mayo says.
Besides its impact on the bottom line, Mayo explains customers use cost of gain as a key comparative metric between cattle feeding organizations.
“Ninety percent of the people I feed cattle for feed cattle every day and receive closeouts every week. The one thing they complain most about is cost of gain,” Mayo says. “I’m in competition with every other feedyard in the country on cost of gain.”
Efficiently adding more total pounds drove revenue significantly higher.
Compared to the similar pen in 2023, HRC added an average of 107 lbs. per head to the H24 pen for a total added feed cost of $99.21 per head, which resulted in an additional $197.95 more per head in carcass value. The net added value due to carcass weight was $98.74 per head (added carcass weight value minus added feed cost).
The comparison reflects averaging feed costs on a dry matter basis across the two years. Cost of gain for the H24 pen was 83.9 cents per pound, only 1.4 cents per pound more than the pen fed in 2023.
“Increased feed efficiency makes money for cattle feeders,” Mayo says. “And I’m not a fan of buzzwords, but when you look at it, feed efficiency is sustainability. There are fewer acres and more people every day. If cattle can gain a pound with 5.5 lbs. of feed instead of 6.5 lbs., it’s huge.”
Plus, 5% more of the H24 pen graded Choice and Prime, resulting in an additional $16.49 per head across the entire pen. As with feed cost, Mayo averaged the fed cattle price, along with carcass premiums and discounts across both years to calculate the difference. All told, the H24 pen generated $115.23 per head more than similar steers the previous year. — Wes Ishmael, Hereford World executive editor
