A feeder stocker or backgrounding operation pastures or feeds calves until they reach 750 to 800 pounds. Then they are sold to a feedlot for finishing.
Purchasing feeder stocker calves in spring and selling them in the fall as feeder cattle may be a way to convert pasture to profit for those with a surplus of grass but not a lot of facilities. But managing pasture, animals, costs, and markets plays a key role in determining the level of profit producers can expect.
The enterprise budget must take into consideration costs of labor, pasture, minerals, implants, marketing, veterinary, pumping water, interest, and miscellaneous needs. Farmers or producers who wish to wish to evaluate a stocker enterprise’s profitability need to know how much they can pay for calves in the spring and still make a profit in the fall. For example, a producer who is buying beef stockers with expectations of selling them in the fall for $0.65 per pound with a daily rate of gain of 2.2 pounds per day can pay up to $0.93 per pound for calves and usually break even.
The financial success of a stocker operation will depend on some factors which are largely outside of the producer’s control, like weather and price spread. Some producers use hedging instruments in the form of forward, futures, or options contracts to protect their prices. Others follow market reports closely or rely on many years of marketing knowledge to decide how and when to sell their cattle to receive the best prices. But by having some control over costs, rates of gain, and type of stockers, producers can estimate their profits based on spring calf prices and fall feeder prices.
Some excellent enterprises are solely pasture operations. Weaned calves or yearlings are purchased in early spring, go on pasture when the grass is ready, and are sold when the pasture season is over. On the other hand, calves cost less in the fall; therefore, depending on the cost of winter feed, fall may be the best time to purchase cattle for the next pasture season.
In these calf and yearling enterprises, purchase price and selling price greatly influence profitability. It is recommended that you ask an experienced cattle buyer to assist in purchasing animals that best suit your type of operation, land, and resources.
Managing newly purchased calves
When you purchase calves for a growing or feeding operation, keep them in an area that allows you to observe them for 2 weeks. This enables you to prevent the spread of disease.
Calves should have access to plenty of water and feed. Working the calves requires a lot of patience, as they are easily excited and stressed. Your veterinarian or Extension agent can help you develop a health program that lowers the risk of disease for newly received calves.