June 26, 2017

(Dr. Dan Thomson) Hey folks, welcome to DocTalk. Thanks for joining us today. We’re going to have a great show. My guest today, Dr. Mark Hilton. He is a technical consultant with Elanco Animal Health. He’s got 33 plus years in practice, whether it was in DeWitt, Iowa or Purdue University. We’re going to talk about preconditioning and about how the profitability of preconditioning can be for you and your herd. Thanks for joining us today. More to come.

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(Dan) Welcome to the show, Dr. Hilton. (Dr. Mark Hilton) Thank you very much, Dan. (Dan) Folks, this is a friend and colleague, Dr. Mark Hilton. He is someone I’ve wanted to have on the show for a long time and we finally get him here. Dr. Hilton has been one of the top bovine practitioners in the country. He had 15 years in DeWitt, Iowa. He then went to the University of Purdue where he was on faculty there at their Veterinary School. And really set the stage for a lot of things in preconditioning, cow/calf production medicine, beef cattle systems medicine and has been a national and international leader here for people like me to follow in his career. He now works at Elanco Animal Health and is a technical consultant. We’re so thankful to have you here. (Mark) Thanks, Dan, pleased to be here. I was really honored when you asked me to come and talk and we were reminiscing before and I said, “I met you before you even got to Vet School.” Your dad, the Dean at the Vet School at Iowa State, brought a bunch of students to my production medicine meeting in DeWitt. I got to meet you then and so we’ve had a long friendship. That’s great. (Dan) Been very blessed. We’re going to talk about preconditioning today. Some of the things that you said that when we were getting ready for this is that feedlots have a pretty good idea of the value of a preconditioned calf and maybe some of the producers that own those calves prior to sale don’t. (Mark) Right. And I’ve spent most of my career working with the cow/calf producer and that producer works really hard. They deserve to have more profit in a lot of situations. One of the ways they can do that and I believe was that preconditioning calves could be very profitable for the cow/calf producer. I actually had` a producer in Indiana that said, “Hey, I want to do this program.” And he kept track of every bit of his expenses and his revenues from preconditioning calves to help prove to himself and prove to me, prove to other people that this was a profitable situation. The bottom line is, we had 11 years worth of data on this herd. Every penny that he spent on this herd and I’m a bottom line guy so I’m going to give you the answer right off the bat. Over the 11 years, his average profit return to labor and management was $80.70 per calf. He preconditioned those calves 63 days, was his average over the time period. Very significant to his farm. Over the course of the time, it was $90,000 extra returns to his labor and management for doing this procedure. (Dan) And when you start to think about ways to build value into the cattle which then builds value into your herd, builds a reputation of your herd. There’s some things that maybe don’t show up as direct marks to the bottom line that obviously there are some huge opportunities for producers to recoup. (Mark) Right, and we sat there and said, “Where is this money coming from? Where did he make his money?” Because so many things you read, “Oh, I took my preconditioned calves to the sale and I didn’t get any more money than the neighbor that his were not preconditioned, etc.” I get tired of hearing those stories because are we comparing apples to apples? Do we have the whole story? We found, in this herd, that of the $80.70, $50.70 of the profit was from weight gain. (Dan) [Laughs] (Mark) Only $30 was due to the, I don’t like to use the term precondition bonus, I call it the health price advantage. (Dan) [Laughs] (Mark) Because that’s why those producers are paying more for preconditioned calves because he’s less likely to get sick. 50 of the $80 were things under his control. (Dan) Perfect. Folks, when we come back, we’re going to dig into some of the data. Learn what happened over those 11 years. Understand the costs; understand where the money is made. We have Dr. Mark Hilton here from Elanco Animal Health. More after these messages.

(Dan) Hey, folks. Welcome back to DocTalk. I’m Dr. Dan Thomson here with Dr. Mark Hilton. We’re at Kansas State University where we’re shooting DocTalk. Dr. Hilton is one of those people that has been in practice for 15 years, been in the university for 15, is now a technical consultant at Elanco Animal Health. He is taking that information to get him here on the show. We’re talking about preconditioning. You’re work in preconditioning and weaning calves has been something that all of us has used in teaching and we’re very appreciative of the work and the collaboration you’ve had with the producers in Indiana. Talk to me a little bit about this 11-year study and let’s get into some of the specifics on preconditioning. (Mark) When this producer started this, Indiana started a program called Indiana Quality Plus Beef. I’ve been in practice in Iowa, the Green Tag Program was super — everybody used it. It was just unusual if a person didn’t use that program. In Indiana, I thought, “Hey, we need a program like that.” We started this program and I got hooked up with this producer in Southern Indiana and he said to me, he said, “I’m not making enough money with my cattle. This’s a lot of work and I want to see a way to make more money.” We talked to him about this program and he said, ” I want to try it. I want to see how this goes.” He actually made some money the very first year. About $30 per calf. That got his attention on the thing. But as we delved into it, his nutrition wasn’t good enough on those weaned calves. We came in and had him work with a nutritionist to put a really good ration together. The first year on the program, his calves gained 1.21 pounds a day. That’s terrible. With a little bit of change in genetics but a lot of change in nutrition, using an implant, using some ionophore, the calves were gaining 2.87 to three pounds a day, five/six years later, when we were on this program. And that’s where we realized some of the keys to him making money on this preconditioning program; number one was average daily gain. The more the calves gained, the more money he made. (Dan) And see, I think that some people will have that – they are concerned about pushing those calves too hard because they’re afraid of getting them to fleshy or – (Mark) Yes, I’ve heard that hundreds of times. (Dan) [Laughs] (Mark) He sold over 1,100 calves so a little over 100 cowherds, he sold 1,100 calves. Never got a single calf for the fleshy discount. They had the right genetics to do this. We weren’t pushing a bunch of starch to him. We were using a lot of byproduct feed, distiller’s grain, soy hulls, high-fiber feeds that added growth and not fat. The feedlots that bought these calves bought them year after year after year because they loved them, they did. Super for him. I read about all the health issues and things like that. In the 11 years, 1,100 calves, he had one calf he treated for sickness, a bloat. He had three calves that he lost to death. A chronic pneumonia calf, a bloat calf, and a calf that died because of an accident. Death loss and sickness rate in this backgrounding lot was a non-issue. I see publications about this and they’re scaring the cow/calf producer about these things. And then, “Oh, I better not do that.” We just did not see that. It was not a problem. (Dan) Well, it’s just outstanding information. First of all folks, genetics, nutrition, steroid implant, getting the proper amount of average daily gain. When we come back, we’ll discuss more about some of the costs and some of the things that are offset by weight gain. Preconditioned herds. Dr. Mark Hilton’s here. Thanks for joining us.

(Dan) Hey, folks. Welcome back to DocTalk. Dr. Dan Thomson here with Dr. Mark Hilton. We’re here at Kansas State University. Dr. Hilton has spent his career in bovine practice and at the University of Purdue and we’re so thankful to have him here to talk to us about the lessons learned in preconditioning. I know this was a special topic for you because of not only the working with the cattle but the producers that, and specifically, one family that work with you. But, in this study, talk to us a little bit about – well, I hear some people say, “I’m not going to make any money.” Or, “It’s not worth it to me.” What have we learned about some of the economics? (Mark) Like I said, we were really surprised in this 11-year study because there was one of the years that the market actually turned south when he was preconditioning his calves and he was really concerned. I think you found a year that I’m going to – have lost money preconditioning and he didn’t because the feed cost was so low that year he actually made it. All 11 years, he made money preconditioning the calves. The average of the entire 11 years was $80.70. And again, I emphasize the big deal was weight gain. You don’t know what the calves are going to bring at the auction. You don’t have control over that. You have control over what the calves gain. I also, the last three years on the program, I said, “I want you to keep track of every minute that you spend on these calves and we want to figure an hourly wage. What was your hourly wage for preconditioning these calves?” It was between — I’m going to look at my notes because I can’t remember exactly, $55 and $130 an hour. (Dan) [Laughs] (Mark) I always say to my students, I said, “I can’t think of much legal you can do to make $130 an hour”. (Dan) [Laughs]. (Mark) The other thing that he did that I thought was really neat; he had a whole herd financial analysis done of his beef herd, a SPA analysis. Everything kept track of all of his finances for a year. That year, I don’t remember. It was in them mid-’90s, made $20 per cow per year for owning those beef cows, which was pretty typical. And so he called me after he got the financial analysis done. He goes, “Let me get this straight. I own the cow for 12 months and I make 20 bucks. I own the calf for an additional two months and I make $80 so I make four times more money for owning the calf for two months than the cow for 12?” He said, “Why is everybody not doing this?” And I say, “Well, people get bad information that it isn’t cost effective or they don’t understand that it’s really possible to do this.” And he says, “Well, I want you to use my data everywhere to teach the cow/calf producer to do this.” I’ve always said in my career, these guys work way too hard to not make enough money. People will say, “Who should precondition?” If you have above average health and above average genetics, you should precondition your calves. If you have below average of both those then you shouldn’t. Take us home. (Dan) Tell us a little bit about why we would or why we wouldn’t if we don’t have the right genetics or health. (Mark) Because the health, if you have a bunch of sickness in those calves in the preconditioning period, that’s going to hurt your average daily gain on these calves, you’re going to loose calves. If your genetics are not good enough, you’re not going to have calves gaining two and a half to three pounds a day. They need to have the genetic ability to gain that kind of weight. If the calves only have the ability to gain about a pound, pound and a half a day, you’re not going to, I’ve done the math, and you’re not going to make it. I just did the cost analysis for this fall and cost of gain, some rations we put together, were 40 cents per pound a gain. (Dan) You can back them up. (Mark) Calves are selling for a dollar, fifty. When you figure the price slide in there, every additional pound you put on the calves is gaining you a dollar so let’s see, I’m gonna hand you 40 cents and you’re going to hand me a dollar. I’d do that as long as we could do it. (Dan) I’ve been involved in a few deals like that on the wrong end [Laughs]. (Mark) That’s the way it – 40 cents to make a dollar is just amazing to me that – why isn’t everybody doing this? That’s my question. (Dan) Great. Folks when we come back, we’ll do a wrap-up on preconditioning economics and profitability here with Dr. Mark Hilton.

(Dan) Hey, folks. Welcome back to DocTalk. Dr. Dan Thomson here with Dr. Mark Hilton who’s a veterinarian with Elanco Animal Health. Former practitioner in Dewitt Iowa, former faculty member at the University of Purdue. We’re thankful that they could get him here to be on the show. When we’re talking about preconditioning, you’ve got us to the point now of just a wrap-up in general. What are some of the bullet points for our people out there saying, “Well, I need a precondition this year.” What are some things you would do to get the ball rolling? (Mark) I’ve asked my producers that. I said, “What was successful for you on this program?” Almost to the client they said, “Team approach. You brought in the health aspect but we needed nutrition help.” We got our feed dealer involved. We got the nutritionist from that feed dealer involved. I called the local feeder auction and said, “Hey, we’re going to have these precondition calves. Are you going to have a special sale?” “Yes we’ve got this special sale and here it is.” And so that’s what they’ve told me is that if they can get two or three people to help them that are all on the same page helping them with the profitability of their calves, then it’s pretty easy to get there. (Dan) Get the vet on board, get the nutritionist on board. You get a hold of the person that’s marketing – (Mark) That’s right. (Dan) – the calves. Get a game plan together. It’s one of those things that folks, you’re leaving money sit on the table. I know that you sit there and you say, “Well, it’s easier to go out there, gather the calves, put them on the truck, hit the truck on the back and say, “It’s somebody else’s problem now.” (Mark) Right, and I think we should be past that. We didn’t talk at all about animal welfare and that’s a whole another leg of this stool of preconditioning. Most producers want to be proud of their calves when they leave that farmer ranch. If that calf’s fully preconditioned, weaned, vaccinated, bunk broke, ready to go, that next guy is going to have a success. I always told our cow/calf guys, I said, “You really should want the feedlot owner to get rich feeding your calves.” (Dan) Absolutely. (Mark) Because if he does, he’s going to come back and this herd, my test herd, he sold the calves through the auction market for their first three years and the buyers loved his calves and they said, “We’re going to be there to buy your calves. We know what your calves did for us.” (Dan) It’s no different than packers or anything. They’re keeping track of the information and information is knowledge if you have the information. They’ve got it and that’s the reason you’ve got repeat visits, you get premiums. Things to that nature. (Mark) You bet. These calves have a resume. (Dan) Is a great way to put it. Well, thanks a million for being on the show. (Mark) You bet. (Dan) Thank you for watching DocTalk. Remember, always work with your local veterinarian. If you want to know more about what we do here on DocTalk, you can find us on the web at www.DocTalkTv.com. I’m Dr. Dan Thomson here with Dr. Mark Hilton. Thank you so much for watching DocTalk and being great guests. I’ll see you down the road.

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