Preconditioning –Does it Pay? · –Lalman and Mourer (2005) –Pritchard and Mendez (1990) Literature Review –Health Benefits •Cole (1985) “preconditioned calves had an approximately

12-Feb-2020

2020 Western Canada Feedlot

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Preconditioning – Does

it Pay?

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Outline

• Introduction

• Literature Review of the Benefits

• Discussion

• Economic Modeling

• Summary

Introduction

• Originated from a meeting held at Oklahoma

State University in September of 1967

attended by approximately 200 animal

scientists and veterinarians.

– Discuss and encourage standardized

management of calves prior to weaning and

shipment.

• Concept of “preconditioning” beef calves has

been discussed, debated, tried, and tested

since the late 1960’s.

Introduction

• Management strategies prior to and around

the time of weaning to improve the calf’s

immune system and to minimize stress.

– Decrease morbidity and mortality associated

with BRD

– Improve feedlot performance

– Reduce treatment costs

– Improve beef quality

– Add value to the entire beef production system

Introduction

• Preconditioning may involve:

– Vaccination against known viral and bacterial

pathogens associated with BRD

– Temporal separation of stressful events (weaning,

castration, dehorning, etc.)

– Acclimatization to feedlot conditions (bunks,

water troughs, feedlot diets)

• Specific definition varies and is not well

defined.

Egosurfing

Egosurfing

Egosurfing - Preconditioning

Preconditioning on the Web



Literature Review - Economics

• Estimates of the potential positive economic

benefits of preconditioning:– Cravey (1996) $55.93 to $60.72 net benefit

– Roeber and Umberger (2002) $46.83 to $49.54 net return

– Dhuyvetter et al. (2005) $40.00 to $60.00 benefit and

premiums likely to increase as the quality and integrity of

programs increase

– Feuz (2007) $23.50 per animal advantage

– Thrift and Thrift (2011) net profit to cow-calf producers ranging

from -$89.92 to $53.71 per preconditioned calf

– Hilton (2015) summarizing a 11 year Indiana study –

preconditioning generally produced $80.17 profit

Literature Review - Adoption

• With these positive estimates of net returns,

why is it then that the adoption of

preconditioning by the beef industry has

been so painfully slow?


• Accurate estimates of the percentage calves

preconditioned in the US and Canada are

difficult to find.

– Superior Livestock estimated that in 2007 25% to

50% of their sales were preconditioned calves.

– USDA NAHMS in 2007-08 reported that 49.8% of

cow calf producers sold calves immediately at

weaning.

• Does this mean that 50.2% are preconditioned?


• Accurate estimates of the percentage calves

preconditioned in the US and Canada are

difficult to find.

– Canfax reported that in 2014 – 9% of cow-calf

producers in Western Canada preconditioned

their calves.

– Taken together, the best available estimates

indicate that the majority of calves in North

America are not preconditioned.

– WHY ??

Literature Review – Health Benefits

• Many reports of the subsequent health

benefits of preconditioned calves:

– Cole (1985)

– Cravey (1996)

– Roeber and Umberger (2001)

– Macartney et al.(2003)

– Lalman and Mourer (2005)

– Pritchard and Mendez (1990)


• Cole (1985)

“preconditioned calves had an approximately 6

percentage point reduction in morbidity associated

with BRD (20.4% vs. 26.5%) and a 0.7% percentage

point reduction in mortality (0.74% vs.1.44%) as

compared to non-preconditioned calves”


• Cravey (1996)

“preconditioned calves had a lower treatment cost

($13.74 vs $30.66) and a lower death rate (0.5% vs.

2.6%) as compared to non-preconditioned calves”


• Roeber and Umberger (2001)

“Reductions in morbidity (35% vs. 77%) and

mortality (1.1% vs. 11.4%) in preconditioned calves

versus non-preconditioned calves”


• Macartney et al. (2003)

“Subsequent feedlot morbidity in preconditioned

calves, vaccinated calves, and conventional calves

was 3.9%, 13.7%, and 20.2%, respectively”


• Lalman and Mourer (2005)

“Reductions in morbidity (7% vs. 29%) and

mortality (0.1% vs. 3.0%) in preconditioned calves

versus non-preconditioned calves”


• Pritchard and Mendez (1990)

“Reported very little differences in morbidity

between treatment groups in their study where

calves from the same ranch were randomly

assigned to preconditioned or non-preconditioned

(21% vs 19% Exp.1 and 45% vs. 47% Exp.2)”


• Interpretation of studies reporting on the

benefits of preconditioning are difficult due

to confounding factors:

– Source

– “Definition” of preconditioning

– Lack/inappropriate statistical analyses

– Lack of blinding or masking

– Differences in marketing (direct vs. auction)

– Morbidity and mortality on the cow-calf

operation is often not reported

Literature Review –Performance Benefits

• Mixed reports of the subsequent feedlot

performance benefits of preconditioned

calves:

– Karren et al. (1986)

– Cravey (1996)

– Roeber et al. (2001)

– Pritchard and Mendez (1990)

Literature Review – Performance Benefits

• Karren et al. (1986)

ADG of preconditioned calves was

• 1.10 lb/d on Farm 1 and 0.18 lb/d on Farm 2 in year

one

• similar on Farm 1 in year two,

• 0.46 lb/d to 0.57 lb/d on Farm 2 greater in year two

than “regular calves” during the preconditioning

period


• Cravey (1996)

“ADG of preconditioned calves was 2.88 lb/d vs.

2.59 lb/d for non-preconditioned calves”


• Roeber et al. (2001)

“Inferior subsequent feedlot ADG in

preconditioned calves (3.55 lb/d vs. 3.73 lb/d) as

compared to non-preconditioned calves”


• Pritchard and Mendez (1990)

“similar ADG of (3.02 lb/d vs. 3.06 lb/d) but inferior

Feed:Gain (6.44 vs. 6.24) for preconditioned calves

vs. non-preconditioned calves”


• What effect do differences in weighing

conditions or shrink have on these reported

feedlot performance numbers?

• How do veterinarians and producers

interpret these mixed results?

Literature Review – Preconditioning Premiums

• Reported premiums paid for preconditioned calves vary as well.

– Superior Livestock reported a increase in premiums from $0.25/cwt in 1994 to $12.06/cwt in 2012.

– Schippner et al. (1989) reported preconditioning premiums in Canada of $0.53/cwt to $6.88/cwt between the years 1980 to 1987.

– Carlberg et al. (2013) reported a $5.88/cwt to $7.97cwt premium for preconditioned calves at two aution markets in Alberta

Literature Review – Preconditioning Premiums

• How are confounding factors accounted for in

the determination of preconditioning

premiums?

– Source

– Group size

– “Definition” of preconditioning

– Perceived “quality” of calves

Discussion

• What can veterinarians and producers

conclude about preconditioning from

reviewing the literature?

– It works?

– It doesn’t work?

– It pays?

– It doesn’t pay?

Economic Modelling

• Ultimate decision to precondition calves

needs to be modelled for each operation

– Price risk variables

• market price at weaning, market price at the time of

sale, preconditioning premiums, price slide,

seasonality of market prices, overall trend in the

market

– Production risk variables

• cost of feed, bedding, yardage (labour), induction,

treatment, and mortality

• ADG, DM:G, length of preconditioning period

Variables

Weaning Weight lb. 500

Market Price at Weaning $/lb. $2.20

Calf Value at Weaning $1,100.00

End of Preconditioning Weight lb. 620

Market Price at Sale $/lb. $2.08

Preconditioning Premium $/lb. $0.05

Market Decline $/lb. -$0.05

Price Slide $/lb. -$0.0010

Value of Preconditioned Calf $1,289.60

Variables










Variables










Variables










Variables










Variables










*Assumed DM: Hay = 87%;

Barley = 87%

Variables

ADG lb./d 2.00

Preconditioning Period (days) 60

Hay lb./d (as fed) 10.8

Barley lb./day (as fed) 5.10

Hay Price $/ton (as fed) $150.00

Barley Price $/ton (as fed) $200.00

Dry Matter Intake:Gain 6.92

Total Feed Costs $79.20

Feed Cost of Gain (COG) $0.66

$0.0862/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









9.4/lb/d (DM)

$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









9.4/lb/d (DM) $0.81/d

$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









9.4/lb/d (DM)

4.44/lb/d (DM)

$0.81/d

$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









9.4/lb/d (DM)

4.44/lb/d (DM)

$0.81/d

$0.51/d

$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









9.4/lb/d (DM)

4.44/lb/d (DM)

$0.81/d

$0.51/d

$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









9.4/lb/d (DM)

4.44/lb/d (DM)

$0.81/d

$0.51/d

$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









9.4/lb/d (DM)

4.44/lb/d (DM)

$0.81/d

$0.51/d

$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

Variables

ADG lb./d 2.00









9.4/lb/d (DM)

4.44/lb/d (DM)

$0.81/d

$0.51/d

$1.32/day

Variables

ADG lb./d 2.00









$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

9.4/lb/d (DM)

4.44/lb/d (DM)

$0.81/d

$0.51/d

$1.32/day

Variables

ADG lb./d 2.00









$0.0862/lb (DM)

$0.1149/lb (DM)


Barley = 87%

9.4/lb/d (DM)

4.44/lb/d (DM)

$0.81/d

$0.51/d

$1.32/day

Variables

ADG lb./d 2.00









Yardage $0.50/hd/d $30.00

Vaccinations, Implants, Deworming $10.00

Therapeutic Costs $3.00

Bedding $3.00

Mortality Cost (0.5% Death loss) $5.50

Total COG

Total Production Costs

Variables

ADG lb./d 2.00












Bedding $3.00


Total COG

Total Production Costs

Variables

ADG lb./d 2.00












Bedding $3.00


Total COG

Total Production Costs $130.70

Variables

ADG lb./d 2.00












Bedding $3.00


Total COG $1.09


Variables










ADG lb./d 2.00












Bedding $3.00


Total COG $1.09


Net Revenue of Preconditioning

Variables










ADG lb./d 2.00












Bedding $3.00


Total COG $1.09



Variables










ADG lb./d 2.00












Bedding $3.00


Total COG $1.09


Net Revenue of Preconditioning $58.90

Variables










ADG lb./d 2.00












Bedding $3.00


Total COG $1.09



Variables Scenario 1 Scenario 2 Scenario 3

Weaning Weight lb. 500 500 500

Market Price at Weaning $/lb. $2.20 $2.20 $2.20

Calf Value at Weaning $1,100.00 $1,100.00 $1,100.00

End of Preconditioning Weight lb. 560 620 680

Market Price at Sale $/lb. $2.14 $2.08 $2.02

Preconditioning Premium $/lb. $0.05 $0.05 $0.05

Market Decline $/lb. -$0.05 -$0.05 -$0.05

Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010

Value of Preconditioned Calf $1,198.40 $1,289.60 $1,373.60

ADG lb./d 1.00 2.00 3.00

Preconditioning Period (days) 60 60 60

Hay lb./d (as fed) 14.5 10.8 3.1

Barley lb./day (as fed) 0.00 5.10 12.40

Hay Price $/ton (as fed) $150.00 $150.00 $150.00

Barley Price $/ton (as fed) $200.00 $200.00 $200.00

Dry Matter Intake:Gain 12.62 6.92 4.50

Total Feed Costs $65.25 $79.20 $88.35

Feed Cost of Gain (COG) $1.09 $0.66 $0.49

Yardage $0.50/hd/d $30.00 $30.00 $30.00

Vaccinations, Implants, Deworming $10.00 $10.00 $10.00

Therapeutic Costs $3.00 $3.00 $3.00

Bedding $3.00 $3.00 $3.00

Mortality Cost (0.5% Death loss) $5.50 $5.50 $5.50

Total COG $1.95 $1.09 $0.78

Total Production Costs $116.75 $130.70 $139.85










Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010


ADG lb./d 1.00 2.00 3.00


Hay lb./d (as fed) 14.5 10.8 3.1





Total Feed Costs $65.25 $79.20 $88.35


Yardage $0.50/hd/d $30.00 $30.00 $30.00



Bedding $3.00 $3.00 $3.00


Total COG $1.95 $1.09 $0.78











Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010


ADG lb./d 1.00 2.00 3.00


Hay lb./d (as fed) 14.5 10.8 3.1





Total Feed Costs $65.25 $79.20 $88.35


Yardage $0.50/hd/d $30.00 $30.00 $30.00



Bedding $3.00 $3.00 $3.00


Total COG $1.95 $1.09 $0.78


Net Revenue of Preconditioning -$18.35 $58.90 $133.75

Average Daily Gain Sensitivity Analysis

-$50

$0

$50

$100

$150

$200

$250

0.00 1.00 2.00 3.00

Ne

t R

ev

en

ue

of

Pre

con

dit

ion

ing

($

/hd

)

Average Daily Gain (lbs/day)









Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010


ADG lb./d 2.00 2.00 2.00


Hay lb./d (as fed) 10.8 10.8 10.8





Total Feed Costs $19.80 $59.40 $79.20


Yardage $0.50/hd/d $7.50 $22.50 $30.00



Bedding $3.00 $3.00 $3.00


Total COG $1.63 $1.15 $1.09











Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010


ADG lb./d 2.00 2.00 2.00


Hay lb./d (as fed) 10.8 10.8 10.8





Total Feed Costs $19.80 $59.40 $79.20


Yardage $0.50/hd/d $7.50 $22.50 $30.00



Bedding $3.00 $3.00 $3.00


Total COG $1.63 $1.15 $1.09











Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010


ADG lb./d 2.00 2.00 2.00


Hay lb./d (as fed) 10.8 10.8 10.8





Total Feed Costs $19.80 $59.40 $79.20


Yardage $0.50/hd/d $7.50 $22.50 $30.00



Bedding $3.00 $3.00 $3.00


Total COG $1.63 $1.15 $1.09


Net Revenue of Preconditioning $1.30 $41.50 $58.90

Preconditioning DOF Sensitivity Analysis

-$50

$0

$50

$100

$150

$200

$250

0 15 30 45 60

Ne

t R

ev

en

ue

of

Pre

con

dit

ion

ing

($

/hd

)

Preconditioning DOF








Market Decline $/lb. -$0.20 $0.00 $0.20

Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010


ADG lb./d 2.00 2.00 2.00


Hay lb./d (as fed) 10.8 10.8 10.8





Total Feed Costs $79.20 $79.20 $79.20


Yardage $0.50/hd/d $30.00 $30.00 $30.00



Bedding $3.00 $3.00 $3.00


Total COG $1.09 $1.09 $1.09










Market Decline $/lb. -$0.20 $0.00 $0.20

Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010


ADG lb./d 2.00 2.00 2.00


Hay lb./d (as fed) 10.8 10.8 10.8





Total Feed Costs $79.20 $79.20 $79.20


Yardage $0.50/hd/d $30.00 $30.00 $30.00



Bedding $3.00 $3.00 $3.00


Total COG $1.09 $1.09 $1.09



Market Decline Sensitivity Analysis

-$50

$0

$50

$100

$150

$200

$250

-$0.20 -$0.10 $0.00 $0.10 $0.20

Ne

t R

ev

en

ue

of

Pre

con

dit

ion

ing

($

/hd

)

Market Decline ($/lb)


• Affected by many factors

– Average Daily Gain and Feed Conversion

– Days on Feed

– Market Change

– Others

• Dry Matter Costs

• Yardage

• Pharma Costs

• Mortality Costs

Egosurfing - Preconditioning









Price Slide $/lb. -$0.0010 -$0.0010 -$0.0010


ADG lb./d 1.00 2.00 3.00


Hay lb./d (as fed) 14.5 10.8 3.1





Total Feed Costs $65.25 $79.20 $88.35


Yardage $0.50/hd/d $30.00 $30.00 $30.00



Bedding $3.00 $3.00 $3.00


Total COG $1.95 $1.09 $0.78



Ultimate decision to precondition calves needs

to be modelled for each operation

Price risk variables

market price at weaning, market price at the time of

sale, preconditioning premiums, price slide,

seasonality of market prices, overall trend in the

market

Production risk variables

cost of feed, bedding, yardage (labour), induction,

treatment, and mortality

ADG, DM:G, length of preconditioning period

Documents

Preconditioning –Does it Pay? · –Lalman and Mourer (2005) –Pritchard and Mendez (1990) Literature Review –Health Benefits •Cole (1985) “preconditioned calves had an approximately