 Again, cost-to-gain in background in cattle in 2013. A lot of things are affected by cost-to-gain. We've got the animal side and we've got the feed side. You can't really talk about cost-to-gain and come down until you kind of understand those things. Let me just reflect over them a little bit. The size and age of the animal can affect cost-to-gain. Usually, really young calves, young animals, have really high feed efficiencies. In other words, they don't take much feed to put on a pound of gain, so they can have some really good gain abilities. And usually with gain ability, you might decrease your cost-to-gain. But on the other hand, the cost-to-feed for young animals is pretty high. The price of milk is pretty expensive. So cost-to-gain is determined by the price of the feed as well as how the animal responds. As an animal gets older, usually they get bigger, and as they get bigger and older, their cost-to-gain usually increases, just because it takes more to stay alive in response to how much gain they get. Some previous feeding history, you know, if you buy green calves, you put them on a background, they're going to be fed. They usually have a lot of performance left in them. They're kind of green, not have enough nutrients in them, so consequently their cost-to-gain usually decreases. Especially cattle, situations that show their cost-to-grain is high. Stunted cattle, their cost-to-gain is high. Sickness affects cost-to-gain. It increases it. Implants, those hormonal compounds that'll increase rate of gain, that usually decreases your cost-to-gain. Of course, if you have wind, snow, mud, bedding, we all know that those affect cattle. Vern Anderson's done research here at the RE Center at Carrington that has put numbers on how a quarter-pound of gain can be affected by wind or snow or mud, or the effect of bedding, because it really does make a difference on how cattle perform. Obviously with bedding, there's a cost that goes along with that, too. Now, let's just talk about feed. That's what I like to usually talk about, and that's what the bulk of this talk will be, is the feed things. Cost-to-gain is affected by feed, because usually as you increase the energy density of the feed and you can put more feed into the calf, he'll gain more. So grains usually have a cheaper cost-to-gain than what hay would. That's not always the case, but that's kind of the thing. Additives like rumensin or bovatec can improve feed conversions just because of the way they improve the digestibility within the rumen. If you process and mix, also known as totally mixed rations, using a mixer wagon, that'll improve feed efficiency in cattle. And of course, if you buy 1,000 bushels of grain and you only end up putting 950 bushels in the feed bunk because there's waste and loss, that cost has to go somewhere, and that goes against the cost of feeding cattle. So if you increase your waste and feed loss, that increases your rate of gain as well. There's a lot of differences in cattle performance out there. That first calf that I look at really hasn't missed a meal yet, and the two cattle in back, they're kind of hanging back from the feed bunks. So when you actually looked at individuals, there are differences out there amongst our individuals. They're just not all the same. So obviously when you look at cost of gain, history, how cattle perform, kind of explains why some cattle are bid up higher at a cell ring than others, because they know how they will perform on certain rations later on. We do a project out here at the RE Center where we feed cattle out to finish. They come from the Dakota Feeder Calf Show, put a plug in for it, it actually starts this Friday-day Saturday out at Turtle Lake. And I think last year there was 40-some guys that consigned calves this particular project, groups of three or four. And I include this as an example here. We've got the top pen of calves. They did really well. They made some money if you can see the slide there. Now the top five didn't make that much. It was quite a bit less, but I do this for a point. The bottom pen of calves gained okay, not as good as the top ones, of course, but they had quite a bit of a loss. If you look at all pens, they gained an average of three pounds a day. And last year was not a good year for buying high-priced calves and feed high-priced corn through them and then sell them at a lower price. So now all the time just finishing work out, last year there was a loss. We just paid a lot for them at the beginning because these guys still owned them. But my point here is it didn't take much of an average daily gain increase to affect profit in these cattle. And that keeps showing up year after year after year. So this issue that Karl talked about daily gain, I'll talk about two, really does show up. So little changes in average daily gain seem to follow through. Well, I have to admit I'm not an economist. We'll let Tim Petrie talk about that, but I'm talking about feed cost of gains. So I'll talk about these cost of gains based from kind of a nutritionist viewpoint. Feed is the biggest expense in feed and cattle other than the cost of cattle, of course. It determines the gain, as you increase the energy density of the gain, grain of the feed, you'll get more gain out of the cattle. If you increase their feed intake, you'll get more gain out of the cattle. If you keep them on feed longer, you'll get more gain out of the cattle. That may affect the cost of gain. Veterinary, of course, it's usually a small cost per head. But I remember the conversation I had a few years ago with a fellow that was always doing closeouts and he finally went for 2% to 3% deads to 5% deads. And he wondered why his cost of gain just went right through the roof. Well, it did because just a few deads would profoundly affect your costs. We all know that. Dead animals cost a lot. But when you do the measurements of cost of gain, those are animals that you paid for that you don't get to sell. Yardage, that's a cost that goes into cost of gain as well. You usually done it on a per head basis because an animal's in the feed yard every day. But you can dilute it out over into total feed costs on a per ton basis. It's a wide range. Some people might have it at $0.10. Other people might have it at $1. I did some numbers with the Farm Business Management Group a couple of years ago and we looked at yardage costs for cowards. I was surprised it came up to be $0.50 just to keep a cow around the farm place to cover the costs of water, feeding, machinery, insurance, labor, et cetera. That didn't include feed. So back when we thought $0.25 yardage was kind of a high price, us ranchers were paying $0.50 to think about it because it wasn't something we actually paid for, only if we tracked. Interest, you know, it's usually a relatively small cost in these budgets. Price protection actually is also a small cost. When you look at, you're only spending $20 or $30 for price protection, but when it comes to feed costs, that's in the hundreds of dollars. So a lot of things come together when you calculate cost of gain. I'm really focusing on feed cost initially. We do have a website that has a break-even calculator just type or Google CAF web and you can go in and put all these numbers into this calculator and it calculates the cost of gain or feed cost of gain for you. It's pretty effective. Well, let's switch over and talk about feed cost. Well, I don't know if we all like feed and cattle, but I like feed and cattle and it's rewarding to see them gain and put on weight. So, here's a concept we all got to remember and sometimes we tend to forget it because it's kind of a delusion thing. Just like me, you, animals we all require a certain amount of energy, protein, vitamins, minerals, water, air just to stay alive and healthy and to maintain our weight. Now some of us like me should lose weight but on the other hand it costs us so much to just keep breathing every day. That requires food, requires feed and needs to maintain its cost. So I got some numbers down below here that I'm trying to drive this home with. So you got a 600 pound calf you feed him 11 pounds of feed. Tomorrow he weighs 600 pounds he didn't gain anything because he used all 11 pounds to keep him going. Now at 9 cents a pound that's 180 dollars a ton that's just not a grass hay diet that's got a little bit of corn and everything else mixed in with it so we're actually limit feeding him about 11 pounds of 9 cents cost him almost a dollar a day just to breathe just for the value of keeping him alive. So you got your feed cost for no gain at 99 cents. The only way that could get worse is if he died. Okay, now here's another comment that comes in with this concept called energy for gain. It costs so much to keep you alive every day but it also costs to put on weight. The neat part about this is that the energy for maintenance actually takes more energy per pound than it does for energy of gain. We're actually more efficient at putting gain on than we are maintaining the body. It's the way things, you do the math and you do the research that way and that's what it comes out to be. So that's actually to our favor when we're background in cattle. Now if you wanted a cow herd that was efficient you'd like to see that not top number but lower and do research to try to figure out how we can get a lower energy content a lower energy maintenance for cows. But this is how relatively how it speaks. So as I said the animal is more efficient at putting on weight than just maintaining it. So if we take that same ration same cast, 600 pounds each 15 pounds a feed tomorrow weighs 602 pounds and a half he gained 2.5 pounds a gain. It took 15 pounds a feed and a 30 to gain 2.5. His feed cost per gain was 54 cents. Straightforward. Not bad. What happens if we increase the cost of gain from 9 cents to 12 cents? Well actually though I'm going to impose something else because usually when we increase the cost of feed we've increased the amount of energy in the ration and we went from a 67 TDN ration up to an 81 we just increased the grain portion quite a bit because we want him to gain more than 2.5 pounds. So remember we were at 2.5 pounds cost gains of 52 cents. Now we got a 600 pound calf. He's eating 15 pounds a feed but it's a higher energy feed ration and he's gaining 3.75 pounds a day and Jerry somehow you change the screen for my computer to you. And now I've got Carl Dolan's talk. I don't know if I need to go back to to mine or not now. We're going to try this. Show content. There we go. We're back. So we got a Your slides were not advancing. Your slides were not advancing so we were playing with it but Oh, maybe it was me. Well we'll find out here. Keep working. Here we got a 603 pound calf 3.75 is going to gain 15 pounds a feed but the feed cost 12 cents a pound. Now it cost $1.80 to put that 3.75 pounds a gain on. The total feed cost is now 48 cents. So in this example as we increase the feed cost to gain as we increase the gain we also increase the dollars put in the calf but the net result was it was cheaper per pound a gain using that logic we got to be careful of this. Well let's go ahead and buy a creep feed that's got to, I shouldn't have said that let's buy a feed that uses a lot of energy that has a lot of energy but it's going to be 15 cents a pound rather than 12 where it was and let's see here hopefully we're still calling and following with there Jerry maybe maybe not. Anyway in this example we still maintain the 3.75 gain but the cost the feed was up higher at $0.15 or $300 $300 a ton and our feed cost is now 60 cents so in reality we might have had more pounds to sell but it cost us more to put on the weight you got to do the math to find out whether that was a good deal or not. Last year our feed costs were really high corn was at $6.50 a bushel back in October 2012 and it got worse grass hay you couldn't find for $80 a ton this year we're at $4.20 a bushel at the ethanol plants that's what they're offering alfalfa hay it sounds like that's a rapidly disintegrating market right now if you go over to Minnesota and check out what the sulk center hay markets are you'll see that they're actually almost for really good quality hay it would be higher than that for this type of hay it might be $40 a ton more than what we have here in other words the freight costs from here over to there wheat mids at Carrington or $145 $145 a ton right now barley malt squalts are at $160 distiller's grains are at $165 the market's a lot lower than it was last year so every year you got to do this math on feed value cost per pound of nutrient Carl Dolan was doing some of this work that I look through first one's canola mill then wheat mids corn grain distillers if you're looking for a cheap energy source you look over under cost per pound of TDN the right hand column you find out that DDGs is winning the game right now at $160 a ton corn is $150 a ton not far behind and wheat mids are right in there too canola mill that's not a energy source it's a protein source it's cheap energy but when you look at the cost per pound of protein it's reasonable but like Carl said earlier distiller's grains is a really cheap source of crude protein as well so you basically get the energy for the cost and the protein's free which makes it a competitive feed to haul home okay that's how you calculate feed costs I've got a handset of rations here to look through here we got a ration 10 pounds of grass hay pretty easy only gains 2 pounds a day our feed efficiencies are 10 pounds of feed per 1 pound to gain TDN value is 63% or if you're talking net energy for gain value it's .37 some of us think in the cow world of TDN others think of the feedlot world of NEG so if you're looking for NEGs the 37 would be a 37 big ration feed costs 60 cents per pound of gain let's just switch to a different ration grass hay at 6 pounds alfalfa hay at 4 wheat mids at 10 we're going to 2.7 pound gain feed per pound of gain improved to 7.4 TDN 70% NEG out of a 45 feed cost went down to 43 that's given those prices so looking at this deal roughen them at 2 pounds a day deserves to be rethought a little bit and look at 2.75 not only do you have more weight to sell but you got cheaper feed costs okay let's go to grass hay, wheat mids and limestone you'll end up at calcium carbonate or calcium by the limestone because wheat mids are really high in phosphorus and if you don't do that you'll end up with urinary calculi and that's a bad deal stones and cattle so but your gain now increases to 2.88 feed conversions are 7 to 1 TDN is up to 71 and 46 NEG ration 42 cents a lot of different ways to feed a calf using different feeds just do the math to find out where they're at okay that's 3 let's go to a few more ration that's got a little bit of grass hay a little bit alfalfa hay corn grain wheat mids average daily gain 2.68 feed conversions 7.5 to 1 cost of gain was 43 cents alfalfa hay and corn size and I think I used a corn size of $40 a ton of course your feed to gain is 16.8 because you're feeding wet feed this is an as-fed type deal gains 2.3 your forward feed into 42 43 cents 44 cents grass hay, alfalfa hay, wheat mids corn grain 4 and 4 of the hay and 6 and 6 of the corn grain end up with 3 pounds a day gain, better feed conversions 50 megacal ration 40 cents so far that was our cheapest one let's keep moving through here here's a simple one alfalfa hay and corn grain if you lived in Iowa that's probably your choice well you got distillers grains too but 2.5 pounds a day gain 47 cent feed cost it's not bad but it's not as cheap as the other ones alfalfa hay and corn grain a 30% supplement just because you're wanting a 3.5 or 3.3 pound gain that's at 46 cents hmm so to buy a supplement feed a little bit more grain you're going to end up with more gain than the calves cost of gains is the same as if you just went with a high roughage type ration of the alfalfa hay and corn grain and we've got another one down there at the 3.6 pounds a day gain where you're feeding a lot more grain and your feed cost of gain goes down even more okay here's a couple more using distillers grains grass hay at a pound, 15 pounds of grass hay and 5 pounds of distillers gives you 1.8 pounds a day gain now that's pretty poor grass hay guys that's not high quality grass hay that's kind of the CRP stuff 7 to 1 feed conversion the cost of gain is 56 cents if we go up there to 7 pounds of grass hay 7 pounds of corn and 6 pounds of distillers grains we're getting 3.5 pounds a day gain and our cost of gain reflects it it's less it's a 54 megacal ration a lot of differences out here on the type of rations we can feed your cost of gain goes down but you notice you got to look at these pretty close to find out what type of a ration you want or you can put a multitude of things together to get a target as to where you want to feed the calves at just because you're feeding one thing doesn't mean it's the cheapest thing to feed you might want to consider something else but if you raise it all, you got your feed cost fixed you got your inventory there's things to add to it like the protein supplement if you needed to increase your rate of gain and make a balanced ration to decrease your cost of gain in general as I increase the cost of gain we always got better feed efficiency and our cost of gains always went down well, here's four comparisons I'm looking at cost of gain, break even profit comparisons, I use the calf web break even calculator I took 575 pound calves and fed them to 750 pounds I backgrounded them four different average daily gains for this example you've seen the rations earlier first one you're using is 1.8 average daily gain with 15 pounds of grass hay and 5 pounds of distillers okay now the one's 2.23 for 8 pounds of alfalfa 1 alfalfa and 31 pounds of corn silage then you see 2.9 average daily gain with quite a bit of wheat mids and then the last one where we got quite a phenomenal rate of gain at 3.6 using grass hay corn distillers now in general all these rations need to trace mineral, vitamin, ionophoric Huxidio stat supplement added to them just to round it off but your major feed ingredients are what's described there so hopefully you can see this table there's a lot of numbers on here but there's a lot of things to look at remember they all came in at the same weight they all went out at the same weight they had different average daily gains now I priced them at $1.75 and I think I looked at Napoleon's market today and I think I might be a little bit shy after one day so this market keeps changing that's why we got to keep doing these numbers all the time I used an out price of $1.65 for $7.50 the future market's been up and down a little bit so use that number average daily gain increases as we go from left to right cost the ration increases as we go from left to right now the alfalfa corn silage ration is only $52 but remember it's mostly water there's a difference there feed to gain, you can see that yardage I put it $0.35 per head per day we had other expenses of $29 there's interest expense included near two in the break even price protection at $20 ahead pounds gained are all $180 so the first group's going to be there for three months the next group's going to be there for 78 days the next group for two months and the other ones barely just wow you put them on feed and sell them in the next five weeks barely getting over sickness these are some things to think about our feed cost went down as we increased the energy density of our ration our feed cost of feed and yardage per pound to gain went down correspondingly too our cost to gain went down as we increased our gain our break even went down as we increased our gain and our profit yeah there's a fine line here when you're looking all this where you want to maximize performance in your calves if you're selling them not for grass calves next summer but selling them this winter where you want to feed them at so you don't get them too fleshy, too fast, too soon but you can see by the math that putting on weight always supports it I find it interesting, I talk with my colleague here Steve Metzger in the farm business program and every year he's going for 20 years as we increase our rate of gain so he's got better and today this math pays out the same question, too in summary let me just say feed cost to gain depends upon the animal's ability to gain of course if he's healthy and growthy and then put on a good leg not sick he's got propensity to really grow for you look at the cost of the feed do the price calculations for everything and use the feeds that give you the most amount of energy at the maximum expense and obviously as you increase the energy content of the ration you increase your rate of gain like I said feed cost usually goes down as your rate of gain increases but I have to always put this in you gotta avoid cattle from getting too fatter fleshy, too over conditioned so in other words if you're feeding a higher rate of gain ration be sure to look the calves and make sure you didn't feed them two weeks too long and put them in a different scenario so with that I'll take any questions if there's any questions and if not we'll move on to our next speaker