The Cattle Business
R.O.P. Begins Third Year

Livestock Update, August 1996

Bill McKinnon, Animal & Poultry Sciences

Virginia will begin its third year of the Retained Ownership Program this fall. The Retained Ownership Program has provided Virginia cattle producers with insight into the feedlot and packing sectors of the industry while providing them with feedback on the feedlot and carcass performance of their cattle. The date of Saturday, September 28 is already scheduled to ship fall born calves or yearlings to Iowa. The September shipment of cattle will again be fed at the Van Meter Feedyard near Guthrie Center in southwestern Iowa. A November shipment will also be planned for producers with spring calving herds.

Virginia's Retained Ownership Program allows producers to consign as few as five head of feeder cattle to be finished in commercial feedyards in either Iowa or Kansas. The program is sponsored by the Virginia Cattle Feeders Association in cooperation with Virginia Cooperative Extension and the assistance of the Virginia Department of Agriculture and Consumer Services. The program allows cattle operators to gain insight into the industry acceptability of their cattle and to explore retained ownership as a marketing option.

Three major changes are planned for this year's R.O.P. shipments. This year will be the first year producers will have the opportunity to ship either heifer calves or yearling heifers given that there is at least a load consigned. The second change will be in how the finished cattle will be marketed. The cattle will be sold on a carcass value basis with discounts and premiums paid according to carcass weight, quality grade and yield grade and an additional premium paid for carcass qualifying for the Certified Angus Beef program. The third change will include the use of price risk management through the use of futures options if deemed appropriate.

The target weight for steer calves consigned to the R.O.P. is 700 pounds with an accepted weight range of 600 to 850 pounds. The target weight for heifer calves is 600 pounds with a 500 to 725 window. It is strongly recommended that calves be put through at least a 45 day backgrounding program on the farm during which time they can be vaccinated against routine respiratory diseases. A suggested vaccination and management regime is available through the local Extension office. The target weight for yearling steers will be 850 pounds with a 750 to 950 range. The window for yearling heifers will be 650 to 800 pounds. Due to the nature of yearlings, they will require no additional preshipment vaccinations.

Cattle producers considering consignment to the R.O.P. should do some pencil pushing of the situation. Following is a "Retained Ownership Break-even Analysis" as a guide. This analysis is available in a spreadsheet format by contacting Bill McKinnon. The analysis indicates a projected net income of $8 per head using price information available at press time. Many might ask why bother to feed cattle for only $8 in return. One would seldom expect to be able to project a very large return from custom feeding using current price projections. The whole industry has access to the same information. If projections indicated a substantial profit from feeding cattle, the feeder cattle market would soon rise as cattle feeders rush to take advantage of the situation.

Cattle producers wishing to consign cattle to the September R.O.P. shipment should use the enclosed consignment form. Further information regarding the late November shipment to Kansas will be in upcoming issues of The Virginia Cattlemen. Additional information on the Retained Ownership Program can be obtained by contacting Bill McKinnon (540/231-9160) or Jim Johnson(540/992-1009).

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