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The Top 5 factors that drive feedlot profitability… that feedlots can control

by James Nason, 26 March 2015
2
Dr Rob Lawrence.

Dr Rob Lawrence.

Any feedlot operator knows that, try as they might, some things are just beyond their control.

The price of cattle in, the price of cattle out, the cost of feed and the vagaries of the weather are among those factors that are either partly or fully in the lap of the Gods.

So what factors can a feedlot actually control that have a direct influence over their profitability?

Well-known IAP cattle nutritionist Rob Lawrence both posed and answered this question in an informative address to the Riverina Australia Beef 4 U seminar at Warwick on Queensland’s Darling Downs last week.

Dr Lawrence outlined the top five factors that he believes have a direct influence on feedlot profitability or efficiency, and which feedlot operators can control:

 #1: Feed the highest energy ration you can

In a feedlot, energy primarily comes from grain, Dr Lawrence points out.

However, not all grains are the same.

Compare, for example, the net energy values on a dry rolled basis of sorghum, barley, wheat and corn.

Sorghum in a dry rolled form has the lowest energy value of all four, and is actually 25pc lower in energy than wheat and 15pc lower than barley.

Feedlots should value grains on a net energy basis to determine which grains are the cheapest or most cost-effective, as opposed to simply buying whatever grain is available at the cheapest price.

It was important to concentrate on grain because it was the only nutrient in the feedlot ration that had “no limitations”.

For example, there is no point oversupplying fibre, because it suppresses energy density and also increases feed intake. Too much fat also inhibits feed intake, and over supplying minerals provides no advantage.

“Of all those components, starch makes up the largest portion of the diet, more than 55pc,” Dr Lawrence said.

“So anything you can do to enhance that availability of that starch is going to improve your bottom line.”

Various factors within grain also affect the availability of starch, including the ratio of hard corneus endosperm to soft floury endosperm and the ratio of straight chains to branched chains in the starch structure.

Energy availability can also be improved through processing methods which disrupt the interaction between starch and protein in grain, such as steam flaking.

“When sorghum is steam flaked you basically convert it to dry rolled wheat,

you gain that 25pc improvement in energy.”

Dr Lawrence stressed the point that energy drives efficiency right through a feedlot.

When cattle are fed a high energy diet, they eat less for the same or better weight gain.

“That is important, because if cattle are eating less, then you don’t have to buy so many commodities, you don’t have to pay interest on it, you don’t have to store it, you don’t have to process it, you don’t have to load so much, you don’t have deliver so much, and if they’re eating less they’re not pooing as much.”

Feeding the highest energy ration is a proven way for a feedlot to directly reduce its two largest operating costs on a daily basis – feed delivery and manure production.

#2: Bunk Management

If you are treating your feed bunk like a self-feeder, you are not getting the full benefit the feed bunk can give you, Dr Lawrence advises.

A well-managed feed bunk can increase feed intake by 10-15pc compared to a self feeder.

Cattle have evolved to match their diurnal (daily) feeding activity with the life cycle and photosynthesis of plants. “Your capacity to recognise that animals have this diurnal feeding activity will promote feed intake,” Dr Lawrence said.

Research comparing the amount of time individual cattle spend with their heads down in feed bunks to their average daily weight gain, has produced some seemingly counter-intuitive results.

It shows that cattle with the highest daily gain are spending the least time at the bunk.

How is that possible?

“Because they spend more time lying and ruminating,” Dr Lawrence explained.

“And those two activities reduce the animal’s maintenance energy requirement.”

A structured bunk management program also drives operational efficiency.

While studying for his Masters degree in the early 1990s Dr Lawrence did research comparing ad lib feeding treatments (where multiple daily feeds are delivered to ensure feed is available all the time) with clean bunk treatments (where cattle are encouraged to clean feed out of the bunk at least once a day).

“There was no difference in performance or feed intake between those treatments, but the key was the amount of feed you had to put out for the ad lib treatments, and also the cleaning frequency,” Dr Lawrence said.

Even at the time of the trial 20 years ago, when fuel and labour prices were much lower than today, the total costs of the ad lib treatments added up to 14c/head/day or $14/head for 100 days of feeding.

“So if you have 10,000 head on feed, you can do the sums.”

#3: Maximise feed intake

The more cattle eat above their maintenance level, the higher their potential weight gain.

By way of illustration, cattle with a maintenance requirement of 4kg per day have to eat that amount just to maintain their current body weight and not to lose or gain weight.

Increasing their feed intake beyond that level – say to 8kg per day, 4kg above their maintenance requirement – means they will start to gain weight.

But to reach the higher weight gain levels of 2kg per day or more, they would need to eat 8kg above maintenance, or 12kg in total.

The “killer” is maintenance, Dr Lawrence points out.

As cattle gain weight, their maintenance requirement also goes up.

So that 4kg daily maintenance requirement quickly becomes 4.2kg, then 4.4kg, then 4.6kg and so on.

“We want cattle to eat well above their maintenance level to maximise weight gain.

“The killer is that 30-40pc of what you deliver on a daily basis goes to maintenance.

“So that 30-40pc of your daily feed costs is consumed just in maintaining the animal’s body weight, with no weight gain or no weight loss.

“The capacity to feed a high energy diet and get those cattle to eat as much as possible by implementing bunk management strategies reduces that overall cost.”

Dr Lawrence encourages his lot feeding clients to monitor feed intake very closely in the first 20 to 30 days on feed by recording data and using a feed consumption sheet which sets out specific weight gain targets that they should be able to achieve on different energy rations.

“This allows the feedlot pretty quickly to identify pens that are eating well and those that are not.”

#4: Clean Pens

Manure production is related to feed intake and feed digestibility, and the stocking density of cattle.

Manure can hold large volumes of water and can change in volume by as much as five to seven times from a completely dry state to a saturated state.

Changes in depth and moisture content of manure can completely change the “micro-climate” of a pen, where the environment inside the pen is completely different to the environment outside in the feed lane.

These factors also have direct implications on cattle health and production. Very dry conditions can create a lot of pen dust and respiratory issues for cattle, very moist conditions can allow flies to breed.

You only need flies to be at a level where there are five per front leg per minute to cause a reduction in daily weight gains of 5pc.

Blood sucking stable flies are the equivalent of “Zumba” for cattle Dr Lawrence said – they cause cattle to expend energy by constantly moving, stamping feet and flicking their tail etc, which effectively doubles their maintenance requirement.

Increases in manure moisture above 100mm increases the maintenance energy requirement for cattle increases and also raises the risk of lameness from hoof softening and higher bacteria levels.

Similarly, increases in mud levels to 100mm or more push up the maintenance requirement of cattle by 10pc and also depress feed intake.

Another reason to keep pens clean is to avoid dags. Abattoirs hate daggy cattle because of the increased risk they pose to faecal contamination of the carcase and the extra costs and issues associated with dealing with them.

# Number 5: Time

Time is the most valuable commodity in the feedlot. In the words of IAP’s John Doyle: “once lost it can never be replaced”.

IAP uses a benchmarking program called Senergy to analyse specific aspects of a feedlot client’s operation such as labour, machinery and power use, and to then compare that usage to a range of production areas to identify where potential improvements in operational efficiency can be achieved.

This process typically leads to a simple message: ‘Bigger is better’.

“Everything needs to be big,” Dr Lawrence said.

“The roller mill needs to be big, the loader bucket needs to be big, and the mixer needs to be big.

“Because the more you can do with that labour unit and that litre of fuel, the lower your operation cost is.”

Dr Lawrence said once comparison conducted with a client recently highlighted the difference between the use of 4t mixer and a 10t mixer. The amount of time and labour saved by using the big mixer equated to a $122 per day improvement in operational efficiency for the feedlot.

Another feedlot recently benchmarked the time taken to complete each individual task required to load its finisher ration.

On average it took the feedlot about one minute to load the straw, another minute to load the limestone, and a similar amount of time to load the whole cotton seed.

However, while it took only a minute to load the silage, it also took the loader about three minutes to travel to the silage pit to collect and return with the silage. Travel time to collect supplement and water also added up to more than half of the total loading time.

“To reduce that total loading time, all they have to do is to transfer the silage to the commodity shed on a daily basis, just bring the whole lot there, and then increase pumping capacity of supplement and water to cut that loading time back by half.”

 

 



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Reader's Comments


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  • Alexander Cameron July 15, 2015

    WE are setting up a large feedlot 25,000 head capacity above Julia Creek onj a property called Etta Plains the main ration will be Sorghum as the grain and Corn as Grain and Silage along with Cotton seed . I appreciate the article and will keep in touch closer to the operation

  • Felipe Antelme May 24, 2017

    Hello
    I’m from Argentina.
    We are buying a Feed lot operation 15.000 head capacity, it is located in Buenos Aires Province.
    The Feed lot is 20 years old, it went though different managing operations, it is located in an area where soil conditions and weather are not the best, but the location is ideal.
    After 20 years of different improvements it has some good operation facilities that make the opportunity come good.
    Still old facilities need a lot of refurbishing work. And machinery replacement.
    I’m very interested in hearing from you and your daily reports and comments, as well as give you our experience and advances,
    Also want to invite you to come over to Argentina and show you our country around.
    We are getting associated with one of the biggest slowing plants of Argentina consuming 45.000 head a month.
    We are planning to operate 3 Feed lot operations by next year about 15.000 head each in different areas of Argentina so to diversify risks.
    I will keep you updated as we advance.
    My best regards

    Felipe Antelme

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