A structural change in the cattle industry over the last few years shows a slow evolution away from the conventional grazing of young cattle to putting them in grow yards on a fast-track for development, according to a new report from Rabobank.
Grow yards offer a much higher degree of certainty on cost of gain, daily performance and out weights, Don Close, senior protein analyst with Rabobank, said in a podcast on the increasing role of grow yards.
That certainty provides a benefit to commercial feedlots because the cattle are conditioned for bunk feeding, they know where water is located and their health status is better assured to go on feed on day one, he said.
“The ultimate driver for the change in the industry is the drive for efficiency,” he said.
As feedlots have gotten larger, it’s becoming increasingly difficult for them to handle cattle that require special needs — lighter weight calves and high-stress cattle, he said.
As a rule, grow yards are smaller facilities with more staff per cow, he said.
“It just provides a service for the feed yards that they could do but aren’t really set up to do,” he said.
Lack of available skilled labor makes it difficult for feedlots to provide care for special needs cattle, and the size of the feed bunks and neck rails are designed for bigger cattle, he said.
Grow yards not only offer consistency of care but consistency and uniformity of type to produce similar carcasses, he said.
“The ultimate goal for everybody is better quality product,” he said.
Providing consumers with a quality eating experience, every time they eat beef is key, he said.
“That’s such a critical point in the domestic market and the international market,” he said.
Feedlots clearly benefit from having someone provide a service to condition cattle to perform in the feedlot from day one, he said. But grow yards also provide efficiency in the industry due to economy of scale, allowing alliances that use the same nutritionist and veterinarian and providing health and feeding protocols for a seamless transition to the feedlot, he said.
The report, Growth in the Background, also points to other factors in the increasing role of grow yards in the cattle industry, including the need for risk management in procuring feeder cattle and selling fed cattle.
The demand for efficiency has most commercial feedlots targeting placement weights in a range of 750 to 900 pound feeder cattle. The increased use of grow yards allows for substantially broader purchase weights, bringing a number of benefits.
Expanding the weight class eases the competition that typically exists for targeted placement weights. It also enables feedlots to take advantage of seasonal movement of cattle and to capitalize on price weakness when supplies of a given class overrun the market, the report notes.
Having cattle of various weights in the pipeline also eases the pressure on buyers to buy a determined number of cattle every week. And earlier ownership of cattle enables feedlots to better determine cost and projected dates for finished cattle to better identify hedge opportunities and plan around limitations in slaughter capacity, the report said.