The Changing Impact of Economics on Managing Bovine Respiratory Disease Complex in Feedlot Cattle

Transcription

1 The Changing Impact of Economics on Managing Bovine Respiratory Disease Complex in Feedlot Cattle AABP Conference - BRDC Symposium Shannon Neibergs Associate Professor Extension Economist School of Economic Sciences, WSU sneibergs@wsu.edu Funded by: NIFA National Research Initiative Competitive Grant no

2 Work on BRDC Management For Feedlots Dates Back to the Early1960s

3 BRDC Prevalence Points The National Animal Health Monitoring System (NAHMS) conducted the Feedlot 2011 study, and found an estimated 21.2 percent of beef cattle placed in feedlots are affected with respiratory disease. BRDC is the most common cause of mortality and morbidity in U.S. cattle feedlots (NAHMS, 2011). The high prevalence of BRDC in feedlot cattle has not fallen in spite of best management practices and vaccination programs One objective of the BRDC CAP is to evaluate genetic selection technologies as an additional tool to reduce BRDC prevalence.

4 Feedlot Management Risks 1. Price Risk variation in sale prices and input purchase costs Managing price risk: Futures market hedges, Forward contracts USDA price insurance products Increasing use of partnership agreements In a recent survey of WA feedlots about 60% of the cattle on feed were in some form of partnership.

5 Recently price risk has been mostly positive Data Source: USDA-AMS, Compiled and Analysis by LMIC Livestock Marketing Information Center

6 Washington Calf Value

7 Feedlot Management Risks 2. Financial Risk variation in cash flow that effects profitability The purchase price of feeder steers and the value of fed steers has reached year over year record high prices This tremendously increases the value at risk from disease losses This commensurately increases the economic returns to disease management

8 High Financial Risk and Low Margin $3,000 Fed Steer Value versus Estimated Margin $/head $2,500 $2,000 $1,500 $1,000 $500 $- $(500) $(1,000) Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Steer Value Margin Compounding the financial risk is the low margin in feeding cattle and increasing fixed cost per head due to declining COF inventories

9 Feedlot Management Risks 3. Production Risk variation in yields and quality ADG and feed efficiency are critical profitability factors but over time and large numbers and fixed rations may have lower risk management variation Disease risk may be the most uncontrolled/ unexpected risk facing feedlot managers Disease impacts on mortality, morbidity and carcass quality Weather stress affecting BRDC incidence Source risk disease risk of placements

10 Source Risk Low versus High Risk Source Risk Mortality Sorted by Mortality Percent n=46 high risk lots and n=954 low risk lots n=5,614 head high risk and n=177,304 head low risk Percent Lots 1 to 1,000

11 Source Risk Considering Operation Size Table 2. Washington Number of Operations by Size of Operation Inventory of Beef Cows Number of Operations Percent of Operations Percent of Inventory 1 TO 9 Head 5, % 3% 10 TO 19 Head 1, % 2% 20 TO 49 Head 1, % 6% 50 TO 99 Head % 5% 100 TO 499 Head % 21% 500 TO 999 Head % 14% 1,000 Or More Head % 49% Total 9, % 100% Source: USDA Quick Stats, 2012 Census of Agriculture

12 Source Risk Considering Method of Sale Table 4. Cow-calf Survey - Method of Sale and Calves Staying in Washington Percent of Number of Number of Percent of Calves Staying Method of Sale Ranches Calves Total in WA Sold at Live Auction 73 2,691 29% 44% Sold on Video Auction % 0% Sold by Private Treaty 46 4,658 49% 77% Retained Ownership Stocker % 70% Retained Ownership Feedlot % 100% Kept for ranch beef % 100% Death Loss % Sold as Bulls % 62% Sold as Heifers % 92% Total 276 9, % 67%

13 Managing Source Risk Preconditioning programs Lots of variance in preconditioning programs Days on feed Vaccination protocol Returns to preconditioning programs Additional economic research needed on determining the value of preconditioning programs to feedlots Feedlot value price premiums Changing market values dynamic premiums Do preconditioned lots maintain low risk status throughout What is the economic cost of disease prevalence

14 BRDC Economic Costs - Feedlots Two large feedlot collaborators provided disease prevalence, diagnostic and economic cost data: Colorado feedlot Washington feedlot Study Feedlot First Arrival Date Last Case Pull Date Number of Days Last Harvest Date Colorado 9/13/2012 7/8/ /10/2013 Washington 9/5/2013 1/7/ Data Pending From Packer

15 BRDC Seasonality - Colorado Number of Cases by Arrival Date Colorado Jul Aug Sep Oct Nov Dec Jan Feb Apr May Jun Number of Cases by Pull Date Colorado Oct Nov Dec Jan Feb Mar Apr Jun Jul

16 BRDC Seasonality - Colorado Colorado Feed Lot Daily Temperature Feb 2013 Temperature (F) Precipitation: Trace amounts on the 9 th and 11 th..01 on the 14 th and.02 on the 15 th.22 on the 21 st.61 on the 24 th

17 BRDC Seasonality - Washington Number of Cases by Arrival Date Washington Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Number of Cases by Pull Date Washington Oct Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

18 BRDC Days to Case Histogram of Days to Case Pull Date 102 Number of Cases >175 # Days from Arrival to Case Pull Date CO Feedlot n=407 WA Feedlot n=508 Colorado 45% of cases >= 51 Days post arrival Washington 39% of cases >= 51 days post arrival

19 BRDC Economic Costs Colorado Treatment Cost Treated once when pulled with Draxxin 1.1 ml per 100 pounds $4.35 / ml Average treatment cost per head $41.32 Histogram of Treatment Cost Frequency $30 $35 $40 $45 $50 $55 $60 Draxxin Treatment Cost $/head 1x

20 BRDC Economic Costs Colorado Days on Feed Days on Feed min max avg std dev count Case Contr ol

21 BRDC Economic Costs Colorado Estimated Finished Weight Finished Weight min max avg std dev count Case 884 1,908 1, Control 1,052 1,844 1,

22 BRDC Economic Costs Colorado Quality Grade Prime Choice Select No Rolls Condemned Deads Railers Total Cases Control X na p value

23 BRDC Economic Costs Colorado Case vs Control per Head Value Loss 140 Loss in Quality Value and Death Loss $ per Head

24 Economic Benefits of using Genetic Selection to Reduce the Prevalence of Bovine Respiratory Disease Complex in Beef Feedlot Cattle Susceptibility to BRDC was evaluated in 995 head of cattle The heritability estimate for the case-control phenotype was 17.7% and was 29.2% for the clinical score phenotypes. The cost of BRDC in this study was estimated to be $ per affected animal (2013).

25 Rate of genetic change - Results Rate of Genetic Change in Reducing BRDC Susceptibility Factors Case-Control Phenotype Clinical Score Phenotype BRDC prevalence (USDA 2011) Estimated heritability Accuracy of selection Selection intensity Additive genetic variance Generation interval (years) Rate of Genetic Change in BRDC susceptibility 16.2% 16.2% 17.7% 29.2% % 2.08%

26 Economic value of rate of genetic gain In 2013, 25,134,900 cattle were harvested from U.S. feedlots containing 1,000 or more head. With a BRDC national prevalence rate of 16.2%, and a loss of $ per head, a conservative estimate of BRDC loss to the industry is $1,034,128,710. With the estimates of the rate of genetic gain of 1 to 2% that could be achieved through selection of cattle less susceptible to BRDC the feedlot industry could realize gains between $13,030,022 to $28,995,604 annually.

27 BRDC Economics Concluding Points 1. Market price risk can be managed through hedging, forward contracts and insurance programs. 2. Feed efficiency is largely managed through a feedlot s nutrition program. 3. Managing disease risk has dramatically increased in importance due to the increase in (value) financial risk of feeding cattle. 4. Preconditioning is a primary tool in managing cattle placement source risk. Additional work is needed to better identify disease risk in lots considered to be low risk. 5. Genetic selection of cattle with reduced susceptibility to BRDC offers an additional tool to reduce BRDC economic losses.

28 Acknowledgements and Contact Information Bovine Respiratory Disease Complex Coordinated Agricultural Project Funded by: National Research Initiative competitive Grant no from the USDA National Institute of Food and Agriculture Shannon Neibergs