Risks and Rewards

February 23, 2022

Minimizing risks is imperative to the producers bottom line.

Backgrounding can give cow-calf producers greater market flexibility and additional revenue through heavier marketing weight. By running the raised calves to yearlings, producers can also capitalize on the investments they have made in their herds genetic selection. On the inverse, producers will have higher input cost through additional feed and labour, as well as higher price and performance risks. Minimizing risks is imperative to the producers bottom line.

Price risk comes from a change in the general price level and slide related to weight gain. A price slide is a phenomenon where cattle prices, tend to decrease as an animal’s weight increases. The level of the price drop is affected by feed grain prices. When feed grains are relatively inexpensive, cattle feeders see more incentives to turn lower cost feed into beef and are willing to pay more for light-weight cattle. However when feed grains are expensive, it is more cost-effective to put as many pounds as possible on the cattle before they reach the feedlot, which supports heavier-feeder prices and encourages backgrounding.

Performance risk comes from the uncertainty of how calves will perform. The daily gain, total pounds gained, feeding effectiveness, and death loss can have a large impact on the cost of gain during the backgrounding period. If the expected performance of calves is unknown, backgrounding can be disappointing with a much higher cost of production than planned. Having the facilities, labour, herd genetics and knowledge to address the production risk is critical to being successful.

Backgrounding Calves. (2021b, June 25). American Cattlemen.


NDSU Extension and Ag Research News. (2021). Consider Backgrounding Calves Based on Market Conditions. NDSU Extension and Ag Research News.

https://www.ag.ndsu.edu/news/newsreleases/2021/november/consider-backgroundi ng-calves-based-on-market-conditions