Death Loss in Feedlot Cattle:  How Much Does it Really Cost?

Dr. Pete Anderson, VetLife Technical Services

We all know that death loss in feedlot cattle has a severe negative economic impact.  It is easy to calculate the cost of an individual feeder calf, add the cost of medicine that we pumped into him before he died, and see a loss of $600 or $700 per dead animal.  With numbers like these it is pretty easy to estimate the cost of death loss when making feeder cattle purchase decisions. 

It is easy, but it may not be correct.  A dead animal is often a sign that something is wrong with the health of many or all of the cattle in the pen.  When pricing feeder cattle, the relationship between death loss and performance, medicine cost and carcass quality should be considered.

Below are Benchmark data sorted by percentage death loss.  These data are from 700 to 799 lb steers fed in Kansas, placed in the fourth quarter (Oct, Nov, Dec) over the past four years.  ADG, F/G, Days on feed, death loss and Vet med cost shown are the averages of the data in each death loss group.  Other numbers were calculated by applying these values to a hypothetical 750 lb feeder steer.  Carcass numbers are estimates based on averages that were smoothed due to small numbers of carcass data in some categories.

Table 1. Performance of Kansas 700-799 lb steers,

placed in Oct, Nov or Dec, grouped by percentage death loss

 Note that ADG and F/G become poorer as death loss increases.  These numbers are calculated with deads in but the difference between the numbers exceeds the effects of death loss only.  ADFI decreases and days on feed increase as death loss increases.

 The numbers in Table 1 were used to calculate hypothetical profitability and purchase breakevens.  Input costs used include feed at $120/t (dry basis), interest at 8%, a Choice:Select spread of $8/cwt and a penalty carcass cost of $12/cwt.  Penalty carcasses include yield grade 4 or 5, light, heavy, dark cutters or discounted quality grades such as Standard.

 Table 2. Relative profitability and breakeven purchase price of Kansas 700-799 lb steers, placed in Oct, Nov or Dec, grouped by percentage death loss

 In this exercise, costs and prices were selected so that the cattle that had no death loss broke even.  Note that as death loss increased relative profitability decreased. For example, those pens that had between 1.01 and 2.00% death loss averaged $25.49 per head less profitable.

 This example used the same purchase price for all cattle, which could be misleading.  Any cattle feeder would expect to be able to tell feeders that they will experience high death loss from those that will have very little death loss, at least most of the time. Because of this, feeder cattle expected to have high death loss should be cheaper.  Table 2 indicates breakeven purchase prices for the different death loss categories.  Cattle that experienced less than 1% death loss (but not zero) were worth $1.86/cwt less than those that had no death loss.  As death loss increased, the differences increased as well.

 About one-third of the reduction in value is due to the death of the cattle.  For example, in the 1.01 to 2% group, the average death loss was 1.44%.  If feeders cost $615 each (750 lb @ $0.82), 1.44% would mean a loss of $885.60 per 100 head purchased, much less than the $2549 of reduced profitability.  That means that even if all the cattle had lived, they would have performed poorer than those in the no death loss group.  The death loss is just one symptom of the conditions that made the cattle less valuable.  The one-third ratio holds pretty constant across all groups whether death loss was high or low.  A simple rule of thumb for pricing feeder cattle might be to estimate the number of deads expected, multiply the cost of those cattle by three.  The cattle in question need to be that much cheaper than the top of the market to be of equal value.

 So what?

 This exercise suggests that expected death loss needs to be priced into feeder cattle in two ways; one is to consider the cost of the dead cattle, the other is to consider that the entire group will not perform as well as a group with zero death loss.

 Are we suggesting that zero is the right number in the dead pile?  Not at all.  Some cattle are going to die and some feeders with high death loss could be the best buy in the market, as long as the price is right.  The goal of this exercise is to make cattle feeders think about death loss as one symptom of a complex of things that reduce performance and carcass value. 

 The guidelines herein are not perfect.  For example, a steer that dies because the guy scraping the pens leaves the cattle in the pen and drives over him is not an indicator of a widespread viral outbreak that will kill other cattle in the pen (it is probably a Holstein with a terminal combination of curiosity and stupidity).

 What we are not able to take into effect here is the toll that dead cattle may take on the morale of the crew, the costs of labor and facilities, relationships with customers, etc. High death loss across the yard affects these things differently than an isolated pen with lots of deads. 

 We do know of a number of cases in which the majority of the headaches are caused by cattle sent by a minority of customers.  That needs to be considered.  In one Benchmark yard, a single customer feeds 15% of the cattle but accounts for almost 80% of the deads.  Cattle that cause that many problems may be hazardous to the profitability of the feedyard just because of the extra effort and labor that they require.

 Tech Talk, September 9, 2002

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