Feedlot versus veld finishing: Horses for courses

Estimated reading time: 8 minutes

Steers can be finished in one of two ways, namely in an extensive system (veld or pasture) or in an intensive system (feedlot).
Factors affecting the profit margin of a feedlot operation include items such as the price margin, feed margin, management and the selling price.
The price margin includes the difference between the purchase price and selling price resulting from beef price fluctuations, as well as improvement in carcass quality due to feeding.
Feedlot profit margin is a function of the price margin, feed margin and other expenses.
The South African meat classification system does not favour cattle older than two years.

There are different ways to get steers market ready. However, regardless of how this is achieved, they all have the same aim: steers that reach target weight, are well-muscled and possess appropriate fat deposition.

Steers can be finished in one of two ways, namely in an extensive system (veld or pasture) or in an intensive system (feedlot). Each of these present their own advantages and disadvantages.

In an information piece by Molatek, the following pros and cons of both systems are listed:

Much more land is needed for extensive farming than for feedlotting.
More labour is required for feedlotting than for extensive farming.
Cattle grazing on veld and pastures ingest more fibre and roughage than cattle in feedlots, which ingest more grain and high-energy feed.
Over a short-term period, cattle grazing in extensive systems will have a much lower weight, muscle and fat gain than cattle fed in feedlots.
It is more difficult to control grazing cattle on veld and cultivated pastures than it is to feed them in feedlots.

Feedlot profit margins

According to an article titled “Beef Production: The Basics” by the KwaZulu-Natal (KZN) Department of Agriculture and Rural Development, the factors affecting the profit margin of a feedlot operation include the price margin, feed margin, management, cost of feed, buying price of feeders and the selling price (usually quoted as a carcass price).

Price margin

The profit or loss the feedlotter makes because of an increase or decrease in price from the time the animal is bought (cost price) to the time the animal is sold (sale price), is called the price margin and is calculated as follows: Price margin = initial live weight x (sale price/kg – cost price/kg).

The price margin includes the difference between the purchase price and selling price resulting from beef price fluctuations, as well as improvement in carcass quality due to feeding.

When buying livestock, most feedlotters utilise the price per kilogram live mass for their calculations. They must therefore know the dressing percentage of the animal. Dressing percentage varies and feedlotters base the value they use on experience and knowledge of the type of animal and its body condition. Lean animals have a dressing percentage of 49%, which increases to as much as 60% at a high level of finishing. However, at a fat score of two to three, the mean dressing percentage varies from 54 to 56%.

Feed margin

The profit or loss a feedlotter makes because of live weight gain in relation to cost of feed consumed, is called the feed margin and is calculated as follows: Feed margin = live weight gain x (sale price/kg – cost/kg gained).

A feedlotter can influence the feed margin by ensuring, through good management, that optimal growth rates are achieved and by taking steps to obtain the best feed at the best price.

Other expenses

Other expenses incurred by feedlotting include agents commission, slaughter costs, carcass condemnations, transport, interest on capital, salaries of management and labour, machinery costs, mortalities and veterinary costs (disease control, medicines, vaccinations, veterinarian) and pre-treatment (growth stimulants, dipping, dosing, vaccination).

Feedlot profit

Feedlot profit margin is a function of the price margin, feed margin and other expenses. Adding these three together indicates profit or loss for the period over which the calculation is made. Feedlot managers must keep a close watch on feedlot profit, which is a very sensitive measure of management efficiency.

Veld finishing

There is a growing demand for veld- reared red meat due, inter alia, to health and animal welfare perceptions. In fact, finishing animals on veld used to be the standard in previous centuries. It was only in the mid-20th century that feedlot finishing became the norm.

So, how do you determine the profitability of rearing steers? The easiest rule of thumb is determining the potential income you can generate from renting out your land, and compare it to the profit you make from rearing steers.

Many farmers keep steers for two important reasons:

The first is the risk of biosecurity breaches, with the neighbour’s bulls getting in among their cows and transferring sexually transmitted diseases (keeping steers eliminates this risk).
The other is ease of management – no breeding season and no calves that need to be pulled. Veterinary costs are therefore relatively low.

Finishing steers on veld, however, takes time. If you do not breed your own steers, the system works as follows: You buy in a group of steers just after weaning in autumn at weights of between 180 and 250kg. When they arrive on your farm, you process them by dipping them against ticks, giving the necessary inoculations against lung and clostridial diseases, and castrating them.

After a ten- to 14-day adaptation period, they are off to the veld where they need to be looked after during the first winter by providing natural protein licks and good hay. Steers must not lose weight during this time.

Management will differ, depending on whether you are in a sweet- or sourveld area. The first limiting factor for beef production in the sourveld areas, according to another article titled “Beef Cattle on Veld” by the KZN Department of Agriculture and Rural Development, is overwintering.

In winter, the protein content of grass is low, and the lignin content high. Cattle lose condition when the quality of the natural pastures can no longer provide in the nutritional needs of their bodies, partly because they ingest less grass due to the high lignin content, and partly because the protein content of the grass they ingest is relatively low.

Several strategies are followed to prevent winter live weight losses, including:

Conserved feeds, usually hay or silage, are fed in winter.
Crop residues are grazed or processed for winter feeding.
Winter fodder crops are established which can be grazed or foggaged for winter feed.
Supplementary feeding is practised (i.e. winter licks are provided).

Feed requirements

The amount of feed, expressed as kilogram of dry matter intake (DMI) per day, is calculated based on the thumb rule of a DMI of 2,5% of bodyweight per day. For a 450kg ox, this comes to 11,25kg. This does not include supplementary feed or licks, which should be at least 0,5% of bodyweight.

Depending on your target weight, the steers remain on the veld for two or three years, or even longer in exceptional cases. One can, under normal circumstances, expect those steers to gain around 100kg of bodyweight during the first wet season, then 125kg during the second and 150kg plus during the third.

By the autumn of their third year on the farm, they should weigh around 575 to 650kg. This is when you start finishing them on a balanced finishing ration. When they are market ready, they should weigh around 700 to 825kg, depending on breed and growth during previous seasons. At this point they respond very well to finishing meal and should be market ready within a few weeks.

The best time to market these steers is from the end of September to mid-November, as prices are traditionally high during that period. It is a good idea to market steers in batches on a weekly basis.

The South African meat classification system does not favour cattle older than two years. There is a saying, however, that weight beats price every time. This is very true in this case. Although you only receive C-grade prices for your steers (with a few B-grades in between), the weight gained more than makes up for the lower price per kilogram. When should you consider finishing steers on the veld, rather than a low-calf operation? The late Hendrik van Pletzen once said that if you are not achieving weaning percentages of more than 90%, it would stand you in good stead to rather consider farming steers, or at least hold back 20% of your best bull calves to rear as oxen. – Izak Hofmeyr, Stockfarm