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- [00:05]
A
Hi, welcome to BCI Cattle Chat. I'm Brad White. Happy to have you with us and happy to have our crew here in the studio. Morning, Philip.
- [00:10]
B
Good morning, guys.
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A
Dustin.
- [00:12]
C
Good morning.
- [00:12]
A
Bob.
- [00:13]
D
Good morning, everybody.
- [00:14]
A
It's a happy spring morning and we're glad to be able to visit with you. We've got a couple great topics to discuss. Today. We're gonna talk about one of the things we need to address is we had a student and Philip, you had a student do a fantastic job looking at some of the contributors to liver abscesses. And what do we know? What do we not know based on the literature? We're going to talk a little bit about that because that's been a hot topic in the industry. We're also going to address and Dustin, we've talked about supply, demand, the decreasing cow herd size. We may talk a little bit about thinking about the fall and pricing our cattle. What are some of the things that we might consider and are we considering retaining some heifers at this point? Before we get into those topics, guys, it is garden planting season and everything is getting out there. And we may just do a whole topic on gardening because I need lots of input here. But I wanted to ask you your veggie that you're looking forward to that has the biggest difference in garden grown and start store bought. And you cannot say tomato because tomato is the obvious choice. Right. I mean garden grown tomatoes is the obvious choice, but something other than tomato that you're really looking forward to.
- [01:33]
B
I don't know usually, I mean, I don't have a garden where I'm at now, but in the past we used to do a lot zucchini. Yeah.
- [01:44]
A
You think the biggest difference between store because the store bought and grown pretty much zucchini. The main difference is quantity.
- [01:50]
D
Quantity.
- [01:53]
B
You didn't say what you just said. The biggest difference.
- [01:56]
A
Biggest difference between store. Yeah, Bob.
- [02:00]
D
You know, there's several. I, I really like garden fresh corn, but I've got a couple of people like at the farmer's market that I know I can get good corn from. The other one is, is green beans. I kind of like my garden green beans. And they're kind of different than store bought.
- [02:16]
A
Yeah. Because there's no work associated with those.
- [02:18]
B
Yeah.
- [02:19]
A
That's why you like them better, is because you put the effort in.
- [02:22]
D
That's right. If you put that much effort into it, you better like them.
- [02:25]
A
Yes, Dustin.
- [02:26]
C
Oh, for me it's sweet corn. I mean, you my buy sweet corn. The seed. I think last time I bought it Came out of North Dakota. But certain varieties where the extra kind of sweet and just can't get that, I think out of the stores.
- [02:40]
A
Yeah, hot peppers are one too because we've got several pepper plants that are. Sometimes they're hot, sometimes they're. So it's kind of pepper roulette.
- [02:51]
D
Yeah, there you go.
- [02:52]
A
So you never know exactly what you're going to get. So shift from that to talking a little bit about liver abscesses. And liver abscesses in fed cattle have had a lot of discussion, especially with the increased proportion of cattle that we're feeding that are beef, dairy, cross. And as ballpark figures, some of the numbers I've seen and Philip, you can correct, you may have 15 to 20% of cattle that are beef based that would have a liver abscess. And sometimes with a dairy influence, you'll see that jump to 40%, 35% somewhere in there. But a lot of variability surrounding those groups. So those averages are actually not very descriptive because you have some lots with zero and some lots with darn near 100%. And you've had a couple students doing research on this the last couple years. Before we dive into their research, maybe give me the rationale. What's the importance of those liver abscesses to the industry, big picture wise?
- [03:54]
B
Well, so from the industry's perspective, it's a loss of revenue because, well, one, the liver is condemned. But then also if you get severe abscesses, you have issues when they're eviscerating the animal that the liver abscess ruptures and then you have to stop the chain, you have to trim a lot, you lose part of the diaphragm and some red meat yield there and things like that. So there can be a pretty large impact on the revenue side at the plant. But then also we've learned that these animals with severe liver abscesses also have reduced performance in a group. They'll typically have lower than average carcass weights and lower than average rates of gain.
- [04:44]
A
So we try to combat those with preventative measures. But it's also challenging because we don't know all the causes associated with why they form liver abscesses. The old model, what's the model that we've thought for years?
- [04:58]
D
Well, and I'm not sure that it's completely wrong. It just probably isn't completely explain everything. And that is when you have acidosis. So a high grain diet, the PH in the rumen drops, if you have acidosis, you can have some damage to that rumen wall, making it basically more permeable. So some of the bacteria that are the rumen is full of bacteria and they're good bacteria for the most part. But if the rumen wall becomes thin, basically exposed to the blood system, those bacteria can get into the blood system. And the liver's job is to filter. So the blood goes through the liver, the liver does its job, it filters out those bacteria, but now the bacteria are housed in the liver and that's not really where they belong. And so they can, if the situation is right, they can set up little abscesses in the liver based on, you know, the liver doing its job of clearing bacteria out of the blood. And so that's the. And like I said, I think that's probably what happens sometimes. But what we're wondering is, are there other mechanisms or other locations that are leaking bacteria into the bloodstream that then the liver filters out? Maybe it's not just coming from a damaged rumen wall.
- [06:15]
A
Yeah.
- [06:16]
B
And so the big, one of the big questions has been for years is it's diet related? You know, we thought we see it in feedlot cattle. That's where we think about it the most and worry about it the most. And so that acidosis and things like that, so it's diet related. And so Rachel put Together data from 121 publications and tried to pull all the diet information from those publications and look at associations of diet characteristics with liver abscess prevalence. She did see some associations, she saw some associations with sex of the animals and some other things like that. And so when she got into the looking at the diet characteristics, she did see a relationship with grain levels in the diet. As the grain levels increased from 25 to almost 100% in the diet, liver abscesses increased from about 2 or 3% up to about 15%, which, which still is not what we see lots of times in some of those groups. One of the things we looked at, we tried to evaluate was the digestibility of the starch. So what was the rate of digestion, was it not just. And that was based basically on the processing type of the grain in the diet, whether it was steam flakes, dry rolled or whole grains or things like that. And again, a positive relationship, the increase in starch digestibility. We saw an increase in liver abscess prevalence. Another interesting one was the type of fibrous byproducts that were in the diet. And this was a little bit counterintuitive because as the digestibility of that fibrous byproduct so like distillers grains, corn gluten feed, other things like that increased. So did the prevalence of liver abscess. And quite dramatically that digestibility increased. We saw an increase in liver abscess prevalence from about 10% up to about 40%. So that made a large change there in the liver abscess prevalence.
- [08:37]
A
So maybe give me some examples of what would be some feedstuffs that would fall on the high liver abscess side and what would be some that would fall on the low liver abscess side.
- [08:47]
B
Well, that's tough. We. So in the, the study increased grain processing. So you steam flake, steam flaking corn. Yeah, things like that are going to increase it. The, the one, the increase in fibrous byproduct digestibility. So I'm trying to think of a low digestibility. So like cottonseed holes would be a fibrous byproduct. It's very low digestibility compared to like corn gluten feed and distillers grains that would, they're fibrous byproducts, but they're very high digestibility. I mean they have the energy value, an energy value very similar to corn, even though there's not hardly any starch in those products. And so, so that makes a difference. You know the one, the one thing that didn't pop up in here that we thought would be important is roughage level. And that and starch or grain inclusion is kind of inverse of roughage level, but not necessarily if you're also got those roughage byproducts in there. But so that, that was not highly correlated or highly related to the prevalence of liver abscess across all these studies.
- [09:58]
A
Yeah. And one of the, one of the questions has been relative to how long cattle are on feed, which has changed over the last several years. I don't know that we have a firm answer, but we do know that a lot of times the beef dairy cross calves will be on feed for a longer period of time in addition to they get some supplementation early in life.
- [10:21]
B
Yeah, they do. And so in other studies that we've done, Rebecca's got an analysis of data she's working on and days on feed was related to the prevalence of liver abscess. In Rachel's meta analysis here, days on feed was not related to the prevalence of liver abscess of any type of abscess, but it was related to the proportion of severe liver abscesses. And so increased days on feed had increased prevalence of severe liver abscesses, which
- [10:57]
A
really Make a bigger economic difference. Because when we look at the, the harvest time period, if they have a liver abscess, you may lose the value of that liver. If they have a severe liver abscess, which can be ruptured or adhered to some of the other tissue, you can actually start to lose meat from the cutout. You can have further carcass condemnations. That's one of the issues that we face with those liver abscesses. And so what types of preventive tools are available based on the research that we know today, or what do we do to try to manage these liver abscesses?
- [11:33]
B
Only tool we've got is antimicrobials. So most fed cattle have tylosin phosphate included in their diet all the way through the feeding period, which has some potentially negative implications of it in itself. But really that's the only tool we've got right now to try to control liver abscesses. And even with feeding tylastin, those numbers you mentioned at the beginning, 20% in native cattle and 40% in beef on that is with feeding tylosen in the diet, if we don't do that, add about 10 or 15% to those numbers.
- [12:11]
C
Yeah.
- [12:12]
A
And I think it is a challenge that we need to figure out what can we do to prevent it, what can we do to manage it, and when are they occurring? Right. And Bob alluded to are they coming from the rumen or other parts of the intestine? I think that's part of the understanding we need to have.
- [12:29]
D
Yeah, exactly. We understand some aspects of what causes liver abscesses kind of when it, when the cattle follow the textbook. But we've been talking about feedlot cattle and that's really where most of the problem is. But the interesting thing is we do find liver abscesses in cull cows, you know, so beef, cows that have been out on pasture, those types of things. So obviously in some situations we're not getting that high grain diet. We're not having some of the known risk factors. So basically what I'm, I'm saying is there are other risk factors that we really don't know. And so for particularly for other classes of cattle, our strategies that work for feedlot cattle probably won't work for cull cows or other classes of cattle. And so there's still some more to be learned.
- [13:19]
A
And ruminants are different than other species in the regard that a lot of bacteria, a lot of protozoa, lots of
- [13:26]
D
other stuff, the rumen, the digestive tract is just absolutely filled with back well, all monogastrics as well. But the rumen is a special place because of it requires these bacteria to be there. And again, in the rumen, that's okay for them to be. They're just not supposed to be other places. So my assumption is with, you know, adult cows and stuff that have liver abscesses, it still goes back to the function of the liver, which is to filter blood. So for some reason, those cows had bacteria in their bloodstream that could set up liver abscesses. And when the liver does its job. And so there are. It doesn't surprise me that our typical model of acidosis leading to liver abscesses. Yes, that's true many times. But that's not the only way the bacteria get into the bloodstream and then could set up some liver abscesses. So we probably need to take a multi pronged approach to really figuring out how to kind of decrease the risk as much as we can.
- [14:23]
A
Absolutely. And Phillips had a couple of graduate students working on this area. So we look forward to more updates as more of that research comes to fruition. I want to shift gears and Dustin, I wanted to ask you, I want to give you a scenario, lots of things from a cow calf perspective that as we're about talking, thinking about this upcoming fall. So if I'm a cow calf producer, a calf in the spring, I'm hearing really high prices right now for feeder calves. That sounds good. From a profitability standpoint, I'm not going to sell my calves till fall, so I have some worries there. I'm also starting to think about. I've heard record low cow numbers across the country. So do I need to think about saving heifers? But do I want to save heifers this year when I have really high calf prices, is there anything I can do to protect. I know you've done a lot of risk management stuff. Maybe give me some thoughts that I should. How I should work through this.
- [15:18]
C
So thoughts on working through. Just make sure I understand. Thoughts on working through. Do you keep peppers or are you talking about just.
- [15:27]
A
Yes, all the above. How do. I'm just telling you, I'm just giving you my thought.
- [15:31]
D
Money.
- [15:31]
A
Yeah.
- [15:32]
D
Both now and in the future, I'm.
- [15:34]
A
I'm concerned about. I want to lock in some of the prices I have now, but do I consider keeping heifers? And really there's two separate issues there, right?
- [15:44]
C
Yeah. I mean, there's a lot of things going on there. One we can just talk about. You know, there's a drought going a lot of parts of the US right now. So do you have the grass? Do you have the land to grow? I guess that's one thing and maybe that's a. Maybe it's a separate decision. If you're thinking about selling calves, let's say next fall, and you're afraid the prices might fall between now and then. So we can talk risk management, right? There's all kinds of risk management tools available to producers anywhere from futures prices to options to insurance programs that people have access to. We can talk through some of that, I guess as an option. But I think especially if you're thinking about the risk management, you got to know what, you got to keep your records. We talk records all the time. But you know, what's your break even price? So you can kind of set that floor or what you're trying to, you need to make, you know, a profit. And so a lot of things going on, I guess in your question there nothing's really straightforward and simple.
- [16:54]
D
Well, it seems to me that among the different sectors, and correct me if I'm wrong, probably cow calf utilizes some of these price risk management tools less than stocker operators or feedlot operators. So they may not have as much experience with it. But say I'm a pretty large cow calf operator, so I've got some, some ability to, you know, really possibly lock in some prices. And when we say lock in the prices, in my optimistic mind it's like, oh, I'm going to lock in high prices. But in reality, if I lock in a price now for delivery in the fall, I could be locking in a price that's lower than I would get in the fall. So all I'm really doing is I can decide today pretty closely what my, what my sale price is going to be. So is that, I mean, so why, why do you think cow calf producers haven't used these tools as much as it. A lot of times herd size and delivery volume, is it just. Yeah. So you're the.
- [17:58]
C
There has been some research that I've seen. It's been years ago. But livestock, we'll call livestock versus crops. Well, crop producers tend to use a lot more futures contracts, stuff like that. And you're right. Cow calf producers in particular, I don't think tend to use these kinds of options. Part of it is knowledge. I mean, it's especially if you think futures and options fees.
- [18:26]
D
It's a little complicated.
- [18:26]
C
It's complicated. You got broker fees, you got margin calls, things like that. So that's another. But more recently and more recently, I mean Last, I don't know, five, ten years there's been like USDA's and introduce some insurance products. And so the insurance products may be a little easier, a little easier. And it's also I think like the lrp, it's, you can do one head
- [18:50]
A
if you want, it's down to the per head.
- [18:52]
C
Whereas the futures contract, if I recall correctly, it's like 50,000 pound contracts. And so that also is another reason is the size of the opera or size. Yeah, the operation can be another. But, but basically what you're trying to do, like you said, you're trying to lock in some kind of floor price is what you're trying to do. And yes, if prices go up, you might be missing out on some of that. But it goes back to the, you're trying to reduce the price, you're trying to reduce the, the markets go against you. And that's why you kind of try to get to know what your break even price is so you can kind of lock in that price.
- [19:29]
A
When you're saying price risk, you're saying price variability. Right. So I'm more certain that I'm gonna get this price, I'm not gonna go, I'm not gonna get the upside, I'm not gonna get the downside. So I have, I can predict well,
- [19:42]
B
so I backtrack just a little bit between like grain and livestock you talked about, the size of the contract matters. We don't have very many cow calf operations that can meet or match a 50,000 pound feeder calf contract. But also the feeder calf contract specifies like seven to eight weight cattle and things like that where you know, I'm weaning a 500 pound calf. So somehow I've got to be able to make a math adjustment there. Whereas from a grain perspective, you know, yellow corn is yellow corn. And so it's, there's that price slide on the cattle side is again another factor you got to make an adjustment for that you don't have on the grain side.
- [20:25]
A
And sometimes hard to predict the price slide. And then sometimes people talk about the basis. Dustin, what does that mean?
- [20:32]
C
So basis, when you think about futures and options, it all comes back to basis. Right. And basis is just the difference. It's a cash price minus the futures price. So your cash is going to be your local. So that could be, let's say Manhattan, Kansas. Futures price is going to be out of Chicago. And so you've got that difference in those two prices. And that's what you know, you got to know what your basis is. You got to try to predict, know what your expected basis is going to be when you're trying to enter into these futures contracts.
- [21:00]
A
Well, it sounds like that's one of the reasons, Bob, is you kind of have to predict the basis, then you have to predict the price slide and then I have to have enough if I'm going to do a futures contract. But some of the insurance policies or the livestock risk protection or program, that could be an option.
- [21:16]
C
Oh no, it absolutely is an option. And again, one of the coming back to futures contracts, right, you got margin calls, and if it's working against you, you could be getting a margin call frequently. Frequently. Whereas if you maybe participate in insurance like an lrp, which is kind of like an options program where you're, you pay a premium and then if the prices move against you, then you would, you know, exercise that. Otherwise, if prices move for you, then you wouldn't. Would need to use that product.
- [21:45]
D
Yeah. It seems to me I hear about more cow calf producers exploring the risk management insurance just because of some of the simplicity and the size of contracts and things like that. But I also hear, you know, they may not purchase for all of the cattle they intend to sell and in other words, you know, buy enough to cover half of the herd. Something like that. And again, it's all about risk management, risk tolerance, because it does have a cost associated with buying some downside risk protection. So do I want to be completely protected from downside risk protection or I just want to reduce the potential loss less than it would be if prices moved against?
- [22:30]
C
And I would argue that comes back to each individual producer's got different risk tolerances. Some people might like to gamble, you don't know. And maybe they want to take a little bit of a gamble and they're willing to not hedge 100%. It's. Maybe we're only gonna hedge half of it.
- [22:46]
D
Yeah. So who do they talk to to get. Is this, is this something that they're the local.
- [22:51]
C
You know, that's a great question. So if you're thinking more than the futures or options, I believe you just try to find a broker, like a local kind of broker more for, let's say the insurance products. You know, if you go out to the USDA's website, they're probably gonna have a list of all the different insurance agents maybe in your area that sell those particular products.
- [23:11]
D
So there's some local help. If I'm, if I'm saying, you know, this, this still sounds kind of complicated, but I might want to learn a little bit more and talk to some of the local people that can help me.
- [23:21]
C
I would yeah I didn't pull I didn't look at all this right before the podcast but I would assume that there is and it might not be necessarily in your particular town. I mean you might have to go a little ways out but it would be just a. Yeah local insurance agent or broker.
- [23:36]
A
Yeah absolutely and no harm in exploring these options especially when prices are where they are. Go out and explore, talk to a couple people and figure out what's best for your operation. And I appreciate Dustin your comment there. Everybody's a little bit different so there's no singular recommendation but have the information and know that there are tools out there that can help you through that process. So appreciate you guys thoughts on those topics and glad you could join us today and listen in. If you have questions or topics you'd like us to discuss, send us an email at BCISU Eduardo.