Feed Is the Biggest Bill in the Feedlot: Managing Costs for Angus Producers

Anyone who finishes cattle knows that feed is the biggest check. Industry write-ups often put a number on its share of feedlot costs, but the exact share moves with grain prices, the price of cattle and how the budget is built, so this guide skips a headline percentage. The key point is simple: feed is the largest controllable cost, and small changes in how you buy, mix and feed it are worth more than almost anything else on the ledger. This guide covers how to think about it.

Start with cost of gain

Cost of gain is the feed cost to put one pound on an animal. It combines what you pay for the ration with how well the cattle convert it. Two things move it: the price of the ingredients and the rate of gain. NDSU Extension's analysis of cattle feeding profits shows example rations with feed cost of gain between about $0.62 and $0.81 per pound, and it points out that gain rate and ration cost interact in ways that are not obvious.

Faster gain is not always cheaper gain

The same analysis found that the highest rate of gain did not produce the lowest cost of gain. A 3.6-pound-per-day ration cost more than a 2.8-pound ration because it leaned on corn grain, and corn grain was relatively expensive compared with corn silage at the time. NDSU's rule of thumb is that a ton of corn silage is worth about 8 to 9 times the per-bushel price of corn grain. When silage is cheaper than that, a silage-heavy ration can win on cost. When it is dearer, grain looks better. Run the numbers each season rather than assuming.

Feed prices swing

Feed prices do not hold still. NDSU reported that the USDA index of livestock and poultry feed prices rose 26.6 percent from September 2020 to September 2022. The USDA Economic Research Service reported that beef cattle feed prices were up 16 percent in May 2022 over May 2021, and described drought and high fertilizer prices as drivers, in its chart of note. Those are different measures over different periods, so do not blend them. The lesson is that a budget built on last year's feed price can be wrong by a wide margin.

Levers you control

• Ration cost per unit of nutrient. Compare ingredients by cost per pound of energy and protein, not per ton. Cheap feed with low energy is often costly feed.
• Waste and shrink. Bunk management, covered storage and silage packing all matter. Feed you buy and do not eat is a loss.
• Days on feed. Cattle that stay on feed too long add pounds at rising cost. NDSU notes that overly fleshy cattle can also be discounted at sale.
• Cattle type and starting weight. Matching the animal to the ration and to your market affects both gain and grade.
• Buying time. Forward contracts and storage can lock in cost, at the price of tied-up cash and risk if prices fall.

Where genetics fit in

Angus cattle are usually chosen for carcass quality, and feed efficiency and gain also matter in sire selection. The Association's feedlot value index and programs such as AngusLink aim to describe expected feedlot performance. Those are estimates, not guarantees, but if two groups cost the same, picking the one with better expected gain and grade is a reasonable tie-breaker. For more, see farm.fm's page on optimizing feed formulation for Angus beef cattle.

Do not forget the cow-calf side

If you raise calves as well as feed them, feed is a major cost there too. The Angus Journal reported that feed often accounts for 40 to 70 percent of annual cow costs in cow-calf operations, and the USDA reported that feed was about three-quarters of cow-calf producers' costs in 2021. Treat these as ranges that depend on the operation. Our cow-calf budget guide shows how to build your own cost-per-cow figure.

A simple routine

1. Test your feeds. Rations built on guesses are costly.
2. Price each ingredient per pound of nutrient every month.
3. Track actual gain and days on feed by pen.
4. Compute cost of gain and compare it to your sale price.
5. Adjust the ration, the days on feed or the cattle type, one change at a time.

An example of thinking it through

Suppose you are choosing between two rations for a pen of cattle. One is heavy in corn grain and promises faster gain. The other uses more silage and gains a little slower. The tempting move is to pick the faster one. The better move is to price both per head per day, estimate gain for each, and divide. If the slower ration puts a pound on for fewer cents, it may win even though the cattle take a few more days to finish. Then ask what the extra days cost in yardage, interest and risk, because those belong in the comparison too. When the two come out close, factor in labor and storage, which the ration sheet never shows. This is exactly the sort of budgeting work that extension offices help with, and it is worth doing before each new pen is started rather than after it is sold.

Caveats

Every number above depends on date, region and ration. Check current USDA and extension sources for current prices, and talk with a nutritionist before changing a ration. Sources like the University of Nebraska beef program publish budgets and calculators that you can adapt, and agriculture.directory can help you find local help.