Backgrounding Calves:
Opportunities and Risks
Maintaining ownership through backgrounding and finishing can lessen some risk, especially if byproducts are available.
Some producers background their own calves, retaining ownership until and sometimes through the finishing phase, and some purchase light calves to background. Terry Klopfenstein, professor emeritus at the University of Nebraska, has done several research studies on backgrounding calves and says there are lots of opportunities for backgrounding, especially if a producer has some niches with certain feedstuffs they can utilize.
Food byproducts in California or winter grazing in the Gulf States offer opportunities, he provides as examples. On the other hand, there are risks on both ends if you are buying and selling cattle.
“The market could be going up while you own those cattle and then go the other way before you sell them,” he says. “I think risk management is more difficult with backgrounding cattle than for feedlot cattle because the market for finished cattle is a lot more stable than our feeder markets. It’s a matter of risks and rewards.”
The rewards can be great if a person is doing it right, but everyone in this business is a gambler and an optimist.
Klopfenstein says some of the best backgrounders are cow-calf people who maintain ownership of their cattle. In some cases they also retain ownership in custom feedyards.
“Segmentation in our industry is an issue and in some ways makes us less competitive as an industry because we are constantly negotiating price between cow-calf and backgrounder, between backgrounder and feedlot, and between feedlot and packer,” he says. “We are always trying to take advantage of someone else in the industry.”
Ranchers who background cattle and have them custom-fed are integrating the segments, getting away from that aspect, he says.
“I like the combination of cow-calf and backgrounding because it spreads some price risk,” Klopfenstein says. “You know your supply, and you get the benefit of quality and their health.”
For the cow-calf man, it is also a hedge against drought. Backgrounding calves can always be sold if feed will be short.
“This gives more flexibility, and you may not have to sell cows — which is always a challenge if faced with drought and having to cut numbers,” says Klopfenstein.
“We know several successful ranches that do backgrounding as well as cow-calf, but there are also successful people who buy calves at weaning time and background them,” he adds. “Some sell to feedlots and some retain ownership.” There is a niche for everyone if they can find what works well for their own situation.
Backgrounding purchased calves requires good management, as the buyer assumes the health risk, he says. “Many calves go through a sale barn at weaning, and that’s the riskiest way to manage them.”
Calves that are preconditioned and/or backgrounded on the ranch experience less of the stress that creates some of the health issues, Klopfenstein says. “Many Florida calves, for instance, are shipped at weaning to Texas to graze wheat pastures. The weaning and shipping stress can be a factor when the backgrounder receives those cattle.”
The backgrounder needs to be prepared to handle this and put some extra effort into managing those calves to ease them through that transition.
Editor’s Note: Heather Smith Thomas is a freelance writer and cattlewoman from Salmon, Idaho.