Where The Dollars Are

Implants Can be Free Money or a Lost Opportunity

Implants add pounds. Natural beef programs add premiums. Knowing your markets is the secret to making the right choice. (Progressive Farmer photo by Becky Mills)

Brothers Johnny and Thomas McCarthy are convinced they get a whopping return on their investment by implanting nursing calves with a growth stimulant. Eric Elsner, on the other hand, is completely convinced his cattle bring top dollar when he markets them as natural beef. What's great is that all three men are right.

The McCarthys implant commercial calves (Charolais, Red Angus and Beefmaster genetics) when they work them for the first time, usually mid-April. The Ralgro implants they use cost only $1 per head, and Johnny said they're used when calves are already in the chute to vaccinate, deworm and castrate. They implant all steer calves, as well as terminal cross heifers, at this time.

For that little bit of added time and $1, the Dade City, Florida, cattlemen figure they add 30 pounds per head. "That's free money to me," Johnny said.

The spring working is the only time the brothers implant calves, all of which are born during the first three months of the year. Johnny said their buyers don't want calves implanted a second time.

PROFITABLE RETURN

The McCarthys sold calves through Superior Livestock Auction in April 2015 but didn't ship them until September 2015. At a sale price of $2.40 per pound, the extra 30 pounds they feel calves gained from the use of implants was worth about $72 per head. Johnny says their Charolais - -Red Angus steers weighed 609 pounds at shipping, and their Beefmaster cross steers weighed 650 pounds. Assuming 74 calves per truckload at 30 additional pounds each, that's another 2,220 pounds, or $5,328 per truckload lot -- all for a $74 investment.

Lawton Stewart, University of Georgia (UGA) Extension beef specialist, said implanting nursing steers is almost always a profitable practice.

"A summary of several research studies shows that implanting steer calves once improved daily gains by 0.10 pounds per day. Implanting twice, 70 to 100 days after the first, increased daily gains by 0.13 pounds per day compared to calves receiving no implants. This resulted in an average of a 5.3% increase in gain of calves at weaning for one implant and a 6.2% increase for two implants."

He gives a thumbs-up to the McCarthys' practice of implanting feedlot-bound terminal cross heifers too, since research shows a 20% greater gain response in heifers than steers. In addition, he agreed with their decision not to implant potential replacement heifers. He said research shows implanting heifers twice, at 2 and 6 months of age, lowers pregnancy rates.

He added it's usually safe to implant heifers once while they are nursing but stressed producers should read and follow implant labels carefully.

NATURAL MARKET

Eric Elsner opted to forgo implants on the Angus-based calves he manages because of timing and markets. He's superintendent of the University of Georgia (UGA) J. Phil Campbell Sr. Research and Education Center, at Watkinsville.

The center's 200 cows calve in January and February, with weaning in late fall or early winter. Those are bad times to try to sell a calf.

"That's when everybody else weans, and the market is flooded with calves," he noted. "That certainly has an impact on the market."

Elsner got some advice in fall 2014 from Curt Lacy, former UGA ag economist. Lacy told him to background those calves for 90 to 100 days. He'd have heavier calves to sell at a time when they are scarce, and the market becomes more favorable. He also skipped the implant, knowing they had time to put on weight and the feed and forages available to do the job.

"We normally wean at 530 pounds," Elsner said. "We set a target of 2 pounds of gain a day. We wanted to market at 800 pounds."

By choosing to forgo the implant, Elsner opened a new marketing door. It meant the calves were eligible to be marketed as natural beef.

The designation "natural" can mean different things for different programs. At the USDA level, it only means a product is minimally processed, does not contain artificial ingredients and contains no preservatives.

In the case of many natural-beef programs, the term "natural" would mean no use of antibiotics, ionophores or implants, and no use of feed containing mammalian protein or byproducts. Producers sign affidavits to attest they meet the requirements of the branded program to which they are selling.

GOOD DECISION

By late-winter 2015, it was clear Elsner had made an excellent choice. He said there is typically a $12 to $15 per cwt negative basis for calves from the Southeast, a trend generally associated with transportation costs.

"This past February, an 800-pound steer was selling for $203 per cwt in Chicago. We expected $190 per cwt here because of the basis. Our 830-pound steers sold for $218 per cwt. That is about $28 per cwt over what we were expecting. That is a $12,600 difference on 45,000 pounds."

He added steers gained 2.1 pounds at a cost of gain of 45 cents per pound. "I would have had to put on 28,000 pounds more with implants and ionophores to make up that difference," he said.

The center's calves are marketed through Superior Livestock. The night before the sale, two potential buyers called looking for natural calves.

"They both wanted to know if we were Global Animal Partnership [GAP] certified. We weren't, but both buyers took a chance we could become certified and bid on the calves."

After the sale, the successful buyer asked Elsner to get GAP certified for natural beef.

"We were already doing the things that make us GAP and natural anyway," he said. That includes having a written farm plan, having an attending veterinarian, training workers in safe handling practices, not implanting and not using ionophores.

Elsner said if they do need a coccidiostat, they use Corid, which is GAP approved. He also said having more than a truckload lot worked to his advantage. If a calf needs a sulfa drug, for example, they can take him out of the program and treat him.

HAVE A MARKET IN MIND

Stewart agreed with the importance of having a truckload lot of calves to sell, and not just in case an animal or two has to be treated with antibiotics.

"If you aren't going to implant, you've got to be sure you have a market ready for those animals. It isn't like Certified Angus Beef [CAB], it isn't a direct premium. You've got to find somebody needing and wanting those calves. If you sell them one at a time through an auction market, you're not going to get a premium for natural."

Elsner said using Superior Livestock or a similar marketing service helps connect the seller with buyers nationwide wanting calves that meet a certain set of parameters.

PRICE TREND

University of Nebraska researcher Joe Buntyn agreed. He looked at the prices received for implanted versus nonimplanted calves through Superior Livestock auctions from 2010 to 2013.

"There really wasn't a price reduction for the implanted calves. If you're not getting a premium for nonimplanted calves, you're leaving 20 to 25 pounds on the table," he said.

After looking at feeder calf futures from April through November, Buntyn used the average price of $1.50 per pound for those extra pounds. "That's $30 to $35 or more per calf."

For now, at least, Elsner said that forgoing implants is the right decision for the UGA calves.

"It doesn't matter what I think about natural or GAP. The guy who finished the steers in Iowa said he could sell as many as he could find, but he can't find them. We're doing the exact same thing we've been doing, but we get to sell for more because of the label we put on them."

(VM/CZ)