Dairy alternatives ~ Possibilities and pitfalls

by Elizabeth A. Tomlin

Thinking of transitioning out of your dairy business into the beef industry?

In a well-timed presentation, Central NY Cornell Cooperative Extension (CNY CCE) regional specialists provided information on current trends and economic statistics to large crowds of attendees in two CNY locations.

“I hope we don’t disappoint you, if you think you’re going to get rich raising replacements or raising beef cattle,” said David Balbian, CNYDLFC Area Dairy Management Specialist.

Balbian spoke about the possibility of raising dairy replacements as an added venture, but cautioned folks that if they were interested in pursuing this, they should be sure to legally contract with a successful dairy.

Balbian said when farms have sold their milking cows, they frequently hang on to the heifers, raising them up to bagging and then selling them as springers. He emphasized that folks need to realize their costs in raising the heifers and shared in-depth reports from PRO-DAIRY’s Jason Karszes, showing dairy replacement programs costs and analysis.

One Fulton County attendee said he had just seen some springing heifers go for $500 each at auction.

“If you’re going to try to generate some positive cash flow in raising replacements, you’re going to have to not just rely on what the market is doing,” said Balbian, commenting that the current trend for fewer farms, but bigger farms, is accelerating. “We’re seeing that all over the country. Wisconsin can count the number of farms that go out of business per-week, not per-year or per-month; per-week.”

The northeast has experienced much of the same.

Balbian said there is some activity in raising replacement heifers for large, reputable farms, but this opportunity is not going to be available for everyone. “Those opportunities are there, but you have to really look for them. You need a relationship with a farm that is going to value the specific genetics that they want coming back to that farm.”

Balbian said these farms are also going to expect high-quality animals returning to their farm, so care and management for those replacements will have to incorporate best management practices.

“They also value a real high-quality animal. An animal that’s going to hit the ground running is going to make 90 lbs. or maybe 100 lbs. of milk as a first calf heifer. It takes a heck of a heifer to do that. But, it can be achieved.”

Balbian looked at housing, feed and growth benchmarks in this venture — and costs involved and shared reports from studies with Dr. Mike Van Amburgh, Cornell, showed optimal nutrition and management practices influencing calves and heifers for lifelong productivity.

To make a profit at raising replacement heifers as a full-time venture would involve raising about a thousand heifers or more. Anything less would likely be only a part-time venture.

“You’ll need some other income,” Balbian remarked.

“Most traditional dairymen, when they’re thinking about selling their cows, are always focused on livestock,” explained Nicole Tommell, CNYDLFC Farm Business Management Specialist.

“We have to have a plan,” Tommell said. This applies to all farming ventures, whether transitioning from dairy cows to raising heifers or transitioning to beef — or any farming venture. “You have to look at the numbers! Have you sat down and pushed a pencil?”

Having a plan written down should include goals, cash flow and expectations.

“What’s your plan? Are you going to raise calves to maybe 500 lbs. and then ship them somewhere? Or do you want to take those calves to breeding, or keep them to pre-fresh, or do you want to freshen them and then sell those fresh cows back to a dairy? You have to have some thought. Where do you want to go with this new enterprise that you’re looking at?”

Tommell showed figures of what it would cost to raise heifers to various life stages before selling them. Where do you plan to market these heifers?

“Are you going to sell your heifers at the sale barn? Heifers at the sale barn are bringing $500. You don’t want to do that if you’re raising these heifers and it’s costing you $2,000 to raise your heifer!”

Planning is everything when considering these new ventures.

Raising beef cattle as an option was discussed and transitioning to a beef cattle operation was introduced by Ashley McFarland, CNYDLFC Area, Non-dairy Livestock specialist.

McFarland named some of the areas folks need to consider before shifting into the beef industry.

Facilities, handling equipment, management practices, herd health, feed, marketing and acreage were discussed.

“The renovation cost of a current facility is usually less than the cost of a new structure,” reported McFarland. “Manure removal is a major piece of this renovation plan.”

Tie-stall barn gutters need to be filled in. However, free-stall barns make ideal facilities for beef cattle.

You can start up a cow/calf operation by purchasing heifers at weaning or breeding age, purchase an entire cow herd, or purchase individual cows from established herds.

Whatever way you enter the industry, purchased cattle should be come from reputable sources that practice Beef Quality Assurance (BQA) methods. Look at genetics.

McFarland said beef cows are currently averaging between $750 and $1,200. Figuring on a 50 cow herd, this can be daunting. Purchasing bulls, chutes, gates, fencing and other necessary handling devices also must be figured in. One bull is usually considered mandatory per 25 cows.  Current bull prices average about $1,500.

Because of the difference in temperament between dairy cows and beef cattle, handling methods require different management equipment and skills. “You really need to get a chute.”

Investing in beef if you are already losing money with your dairy, is not an easy decision, and Tommell, who has many years of experience with the beef industry, discussed the economics of current beef statistics and the impact this is having on decisions farmers need to make.

Three different types of beef cattle operations include, cow/calf, stocker and feed-yard.

“Stocker/ backgrounding is really not very big in New York State,” commented Tommell. “Stocker/ backgrounding is where you’re getting the most gain. And you can’t get a lot of gain when it’s 20 below and the snow is blowing on dry lot cattle.”

Tommell showed charts with requirements of land, labor, level of skill and investment characteristic of each operation.

Extremely narrow margins and mostly losses were typical of feed-yard operations. “From April through November, feed-yards were losing $150 to $250 for every animal walking out the door and onto a trailer to go the packing plant. Multiply that out when one trailer load is 36 head of cattle. Think about the dollars that are being lost.”

Tommell also reported that cow/ calf enterprises could only be considered as part-time operations with questionable profit. “You sell that calf for $600, as a one-time deal, in October, with no other money coming in for the rest of the year. You need to maintain that cow, you need to pay your taxes, you need to pay yourself, you need to live. Only 4 percent of farms and ranches in the entire United States derive their sole income from cow/ calf operations.”

Tommell reminded folks that once you leave the dairy industry, there won’t be another monthly milk check.

Documented cycles show highs and lows in prices for beef, just as with dairy.

National average figures for 2017 show about a $70/ per/ cow profit after costs. 2018 profits are estimated to be $50/ animal.

Finding a market is key for your venture, and should be lined up during the planning stage of your venture. “If there’s no market, there is no sense in getting into the business,” Balbian remarked.

The Central NY CCE Dairy, Livestock, Field Crops team now covers Chenango, Fulton, Herkimer, Madison, Montgomery, Otsego, Saratoga and Schoharie Counties. For more information contact Ashley McFarland at am2876@cornell.edu.

2019-02-18T16:55:59-05:00February 18, 2019|Eastern Edition|0 Comments

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