On Tuesday Laura shared a video on the breakeven calculator we created to help you estimate the value of your high-quality feeder cattle. You can download it for free here, then follow along as I walk through it.

A breakeven calculator is not a new tool and every feedlot manager uses one. It takes expected selling price of finished cattle (as in Live Cattle futures) and the estimated cost of feeding them to calculate what the feedlot should pay to cover all costs or “break even.” These tools work great for cattle of “average” performance and carcass merit.

What’s unique to this calculator, developed by our own Paul Dykstra? It can apply expected carcass merit and grid pricing results to more precisely value any set of feeder cattle with an eye toward beef quality.

Here’s the key: If you produce above-average cattle, you must know what they’re worth to benefit from your extra effort. Continue reading “How to break even, Part II”

A cut above

Osborn Farms partners with CAB

by Miranda Reiman

Just being average doesn’t cut it in the feeding industry.

That’s a lesson Savannah, Mo., cattleman John Osborn learned quickly. He marketed his first set of fed cattle on a value-based grid 11 years ago with disappointing results. “We found out we weren’t any better than anybody else,” he recalls.

Business partner and neighbor Pete Mitts recollects coming to the same realization. “We were enough for average,” he says. “We were 60% Choice, which means 40% Select. And you just don’t put 40% Select animals on the grid.”

It’s a lesson both men took to heart.

Little more than a decade later, you’d be hard-pressed to find 4% of cattle grading Select from Osborn Farms. The first 236 head harvested at National Beef since joining the Certified Angus Beef^® (CAB^®) brand’s Feedlot Licensing Program this spring went 78% CAB brand or CAB Prime. That’s more than four times the national average.

Those are results that reflect Osborn and Mitts’ immediate action after “taking some pretty good hits” in the market on their first go-round. The two first focused on the genetics of the cattle they were feeding.

“Eleven years ago there was very little carcass information available to us,” Mitts says. “We started buying bulls and we started to amass some information as it was becoming available.”

The 600-head Osborn Farms feedlot is now filled with local producers’ cattle, including those from Mitts and Osborn, who also background 300 replacement heifers there. They sell some of the heifers and older cows to feedlot customers, so area herds keep improving. Each generation bred in the past decade has produced progeny with increasingly impressive carcass data.

As Osborn reached that higher quality level, he started looking for more ways to add value. That’s when he began to enroll all his calves in the AngusSource^® program. Osborn requires all cattle he purchases and feeds to be AngusSource^® enrolled as well. His next step was to partner with CAB, where Osborn Farms joins a network of nearly 70 feedlots across the nation that rely on CAB for information feedback, quality assurance training and marketing support.

With the added support, both men say they hope to continue to improve their herds and add value to the cattle being fed at Osborn Farms. “We’ve got a lot more information to work with than we did 20 years ago,” Mitts says. “I used to think I had pretty good cattle, but then there wasn’t that vast amount of information.”

The two track that information meticulously. Mitts keeps the books at the feedlot, monitoring individual cattle weights and performance lineage in the cattle. That’s all part of capturing the extra value they knew they needed from the get-go – because average never suited their ideas of feeding.

“If you’re going to raise something, raise the best quality you can raise. We’re getting paid for that quality now,” Mitts says.