Business Aspects Of Livestock Production

Livestock are raised on a wide variety of terrains, climates, and management systems. However, concentrations of livestock raising often border on regions of grain raising (cattle and pigs are heavily concentrated in the Midwestern states of Iowa, Kansas, Nebraska, and Texas) or located near population centers (dairy cattle are concentrated in the Northeastern states, Wisconsin, Idaho, and California) (1). Fifty percent of the land area of the United States is classified as grazing or range area that cannot be used to cultivate crops (2). Ruminant livestock (cattle and sheep) are efficient utilizers of the millions of acres of land in the United States too rough or dry to grow crops.

Agriculture is the largest industry in the United States, accounting for 15% of the gross national product. About 2 million people are directly involved in production agriculture with ca 1.37 million agricultural operations involving beef or dairy cattle (2).

Beef Cattle

The beef cattle industry is the largest segment of American agriculture, accounting for almost 25% of all farm marketings (3). Indeed, nearly 26 billion lb of beef were produced in 1997 (4). Cattle are raised in every state, including Hawaii and Alaska. Commercial cattle operations tend to be large and diverse enterprises that involve many types and breeds of cattle. The beef cattle industry in the United States is distinctly segmented into three production schemes: cow-calf (both commercial and purebred), stocker (intensive grazing), and feedlot. The term feeders is sometimes used to describe cattle, pigs, and lambs going into intensive feeding programs. Feeder cattle production is the goal of commercial (nonpurebred) cow-calf and stocker operations. Feeder cattle may be either steers or heifers and are the animals of highest value in terms of beef production. The singular goal of purebred cattle production is the selective breeding and selection of superior offspring to attain distinguishable characteristics of the breed, such as carcass merit, production efficiency, or reproductive traits.

Stocker cattle are weaned calves grazed on grass for inexpensive growth. This period is characterized by growth of lean tissues and frame size. In the Midwest, stocker cattle may be grazed on small grain pastures, grain stubble, or legume pastures before being placed in feedlots for fattening. Stocker cattle are usually owned for less than 1 year.

Fattening steers and heifers in feedlots involves feeding nearly market-sized cattle moderately high to high energy rations (grain) until they have reached a sufficient finish (fattening) to produce a carcass that will grade USDA choice. Large feedlots predominate in the Western states and account for a large percentage of fed-beef marketings. Midwestern feedlots tend to be more plentiful, but are generally smaller and produce a smaller percentage of fed-beef marketings. Most fat steers and heifers are slaughtered at 15-24 months of age.

Bulls are sometimes fed for slaughter and are usually referred to as bullocks. Bulls generally gain weight more rapidly and are more feed efficient than steers or heifers. Bulls also tend to be leaner. Older cows culled from beef or dairy cow herds are also sometimes fed grain for short periods of time before slaughter to increase the palatability (juiciness and tenderness) characteristics of the meat.

Dairy Cattle

Dairy farms are highly specialized agricultural enterprises, with considerable financial and labor input and returns. Dairying as a secondary enterprise on farms and ranches is uncommon. The number of dairy farms and dairy cattle in the United States has steadily declined dur ing the past 20 years. The number of farms with dairy cattle decreased about 92% from 2 million in 1950 to 164,000 in 1992 (1,5,6). However, the decrease has been offset by a significant increase in milk production (Fig. 1). Modern dairy cattle produce an average of 16,400 lb of milk per lactation (7).

The price dairy farmers receive for whole (fluid) milk has been, historically, on hundred weight basis according to the percentage of butterfat. However, as the value of butterfat has declined as the most valuable component of whole milk, the price differential has increased less than the price per pound. The decrease in demand for butterfat is directly attributable to the introduction of margarine (containing plant oils), increased consumption of cheeses (made from whole milk), and processed food containing nonfat dry milk. Also, there has been a strong trend for health-conscious people to eat and drink only low fat and non-fat dairy products such as low fat cottage cheese, low fat yogurt and skim milk.

Locations of dairy farms have traditionally been close to major markets. This is because of the high cost of transporting whole milk, which contains a high proportion of water, and because milk is relatively perishable. However, in recent years location of dairies near consumers has been a less important consideration than the high cost of real estate near major markets. Also, conflicts between large dairies and home owners over water quality, dust, flies, and odors have forced dairy farms to relocate to less populated areas. Improved processing techniques and more rapid transportation networks also have contributed to decreased costs in moving milk to markets.

Swine

Swine production units are located in every state of the United States, but are generally concentrated in or near feed-grain-growing regions of the central United States. The corn belt states of Iowa, Illinois, Minnesota, Indiana, and Nebraska are leaders in market hog production (1,9). Swine farrowing was traditionally a spring and fall operation, but with the development of improved housing and nutrition, production of swine is a year-round business. This has tended to equalize the monthly marketings of pigs and reduced the seasonal fluctuations in market price.

Figure 1. Index of milk production, milk per cow, and cow numbers in the United States. Source: Refs. 5, 6, and 8.

The trend in pork production, as in other agricultural operations, has been toward larger and more specialized operations. There is also a trend toward more confinement units in the production of pigs. Swine production systems usually can be described by one of three basic systems: farrowing to finishing, feeder pig production, and finishing feeder pigs.

Finished pigs are usually sold directly to the processor by the producer. Selecting the market and timing the presentation of pigs for slaughter are two of the most important decisions made by the swine producer. Most pigs are sold on a live-weight basis, but some are sold based on carcass yield and grade. Computerized hog-marketing systems are also being used in some parts in the United States.

Sheep

The products of sheep production businesses are primarily lambs and mutton for meat and wool. Most of the sheep in the United States are raised in the Western states. Texas, California, Colorado, South Dakota, Wyoming, and Utah account for more than 50% of the sheep produced (10). Sheep production systems are generally classified as farm flocks or range flocks. Predators, such as coyotes and wild dogs, and disease are some of the common problems associated with raising sheep. Lamb mortality rates as high as 20% are not uncommon. Most feeder lambs are sold to feed-lots weighing between 65-80 lb. Ewes culled from flocks are also marketed for slaughter. The seasonality of breeding for sheep unfortunately causes a shortage of fresh lamb during certain times of the year.

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