How to maximise profits in cattle feedlot operations

By Ndumiso Tshuma
In todayโs competitive livestock market, managing a feedlot effectively goes beyond simply feeding cattle and waiting for them to fatten.
It requires a meticulous approach to calculating costs, weight gains, and overall profit margins. According to agriculture experts, understanding the various factors influencing feedlot operations can make a significant difference for farmers.
Nqobani Manyabi, an animal specialist at EL Ganado Consultancy, explained that the purchase cost of livestock varies seasonally and depends on factors such as breed, age, body condition, and, crucially, the Body Condition Score (BCS).
โLet us assume you bought a 400 kg steer at US$1.20 per kilogram. The lower the price per kilogram, the higher your profit potential. In this case, the purchase cost is US$480. Note that this price per kilogram is seasonal and depends on factors like breed, age, the condition of the teeth, and the BCS,โ said Manyabi.
Manyabi highlighted that the BCS plays a pivotal role in determining how much feed is required to raise the steer to a desirable market grade. On a scale of one to five or one to nineโwhere one indicates a very thin animal and five or nine denotes an overly fat animalโthe maximum improvement in BCS achievable over a 90-day period is just two points.
โIn 90 days, you can only improve an animal by a maximum of two BCS points. So, if you buy it at BCS one, the highest you can achieve is BCS three,โ Manyabi explained.
To maximise profits, Manyabi said both the BCS and the overall carcass grade are important, as they significantly impact the final sale price. He also noted that feed costs are a major expense in converting feed to weight gain, underscoring the need for a well-balanced diet.
โTo improve grades requires feed, which incurs costs. The higher the initial BCS, the cheaper it will be to achieve a better carcass grade. The final market BCS should ideally be four on the five-point scale or eight on the nine-point scale,โ he said.
Manyabi also detailed concepts such as Average Daily Weight Gain (ADWG) and Feed Conversion Ratio (FCR). He stated that to profit from an initial US$480 investment, a farmer must not only increase the BCS but also achieve a weight gain of at least 1.6 kg per day. Over 90 days, this translates to a total weight gain of 144 kg.
โBesides the cost of purchasing the animal, feed is the biggest expense in converting feed to weight gain. A steer consumes about 3% of its body weight in Dry Matter (DM) daily. For a 400 kg steer, thatโs approximately 12 kg of DM per day, amounting to 1,080 kg over 90 days,โ said Manyabi.
He cautioned that feed costs vary depending on the quality and sourcing of ingredients, estimating an expenditure of around US$260 per animal.
โThis cost must be deducted from the final sale price. The cost depends on the price of ingredients and their proportion in the mixed ration,โ Manyabi explained.
Apart from feed, Manyabi pointed out other variable production costs, including veterinary expenses, transportation, labour, deworming, and vaccinations, as well as fixed costs associated with feedlot infrastructure.
โOne must also account for production and market costs, such as veterinary clearance, transportation for purchase and sale, labour, dewormers, vaccines, and medication. Additionally, there are fixed costs for building pens, infrastructure, and equipment,โ he added.
When it comes time to sell, Manyabi noted that the market can be unpredictable. At the point of carcass grading, control over outcomes diminishes significantly. The price per kilogram offered is heavily influenced by the grade achieved at slaughter. Assuming the steer qualifies for a top-tier โsuper gradeโ valued at US$4.20 per kilogram, the potential earnings could be substantial.
โBy the time you reach carcass grading and sale, the outcome is largely out of your hands. The animal will be slaughtered, graded, and processed for economic or commercial purposes. The price per kilogram is seasonal,โ Manyabi said.
Using this scenario, Manyabi estimated the steerโs cold dressed mass (CDM) at 299.2 kg, yielding approximately US$1,256.64. After deducting the costs of purchasing the steer, feed, and other expenses, the gross profit would amount to approximately US$516.
โLet us assume the steer achieves a super grade at US$4.20 per kilogram. With a CDM of 54% of live weight, the calculation would be: (400 kg + 144 kg) ร 54% = 299.2 kg. At US$4.20 per kilogram, this amounts to US$1,256.64. After deducting US$480 for the purchase, US$260 for feed, and other costs, the gross profit is approximately US$516,โ Manyabi concluded.