slide1
Download
Skip this Video
Download Presentation
What Are They Worth??

Loading in 2 Seconds...

play fullscreen
1 / 29

Current Situation - PowerPoint PPT Presentation


  • 241 Views
  • Uploaded on

What Are They Worth??. Determining the Economic Value of a Heifer. Curt Lacy Extension Economist. Current Situation. Relatively high prices Positive expected profits for the next few years Producers looking to recoup some of last few years losses

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Current Situation' - Jimmy


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide1

What Are They Worth??

Determining the Economic Value of a Heifer

Curt Lacy

Extension Economist

current situation
Current Situation
  • Relatively high prices
  • Positive expected profits for the next few years
  • Producers looking to recoup some of last few years losses
  • Weather and other events still a major concern
outlook cow calf producers
Outlook – Cow-Calf Producers
  • 2001-2004 – profits
  • 2005-2008 – losses
  • 2009 – profits/losses
three alternatives to expand cow herd
Three Alternatives to Expand Cow-Herd
  • Retain heifers from your own herd
  • Buy heifers (bred or open)
  • Buy cows (often either bred or as “3-in-1”)
replacement female economic considerations
Replacement Female Economic Considerations
  • Production
    • Percentage calf crop
    • Weaning weight
    • Frame size/Muscle score
  • Economic
    • Development costs
    • Market value of female
  • Price-Position in Cattle Cycle
    • Expected prices
    • Effect of Frame/Muscle score on price (read discounts)
possible outcomes
Base

90% L/M-1/2

10% #3 muscling

Alternative 1

80% L/M-1/2

10% L/M-3

10% S1/2

Alternative 2

70% L/M-1/2

15% L/M-3

15% S1/2

Alternative 3

60% L/M-1/2

20% L/M-3

20% S1/2

Possible Outcomes
comparison of most likely scenario for fall calving herd
Comparison of Most Likely Scenario for Fall Calving Herd
  • Retain heifer and breed in December for fall calving
  • Buy bred heifer next summer for fall calving
tale of the tape
Retaining Your Own

Advantages

Known genetics

Capability to build on past genetic decisions

Price??

Disadvantages

Inferior genetics

Foregoing of current sales

Additional management required to develop and breed heifers

Buying Bred Heifers

Advantages

Improve genetics

Saves time and trouble of managing and breeding replacements

Disadvantages

Unknown genetics

Sources??

Price!!

Tale of the Tape
doing the math steps to follow to estimate the economic value of a heifer
Doing the Math – Steps to Follow to Estimate the Economic Value of a Heifer
  • Develop a budget
  • Prepare a schedule of expenses and income (cash flow projection) of development phase
  • Estimate annual returns
  • Estimate the useful life of the heifer
  • Estimate the cull value
items you will need
Items You Will Need
  • Prices
    • Expected calf prices
    • Adjustments for quality grades
    • Cull prices
    • Price for the heifer???
  • Production
    • Expected production
      • Weaning weights
      • Conception rates
items you will need12
Items You Will Need
  • Budgets
    • Winter pasture
    • Summer pasture
    • Vet & Medicine
      • Shots
      • Eartags
      • Minerals
  • Expected Cull Rate
doing the math prices discounts
Doing the Math - Prices & Discounts
  • Base Price - $90/cwt. for Steers
  • Discounts
    • Heifers $5.00/cwt.
    • #3 muscling $18.00/cwt.
    • Short-frame $25.00/cwt.
results buying bred heifer expected profits
Results - Buying Bred HeiferExpected Profits

Pay $700 for heifer in June

Retaining Own Heifer – $188.54

results buying bred heifer economic value what can you afford to pay
Results - Buying Bred HeiferEconomic Value – What can you afford to pay?

Retaining own heifer = $685.23

conclusions
Conclusions
  • Producers should carefully consider their source of replacement heifers
  • Purchasing heifers can be a profitable alternative
  • Key considerations:
    • Price of the replacement animal
    • Expected profits from the asset
      • Price
      • Production
    • Longevity
conclusions19
Conclusions
  • Considerations
    • Retaining your own heifers allows you to take advantage of past breeding decisions
    • Retaining your own heifers reduces the variability of the calf crop and makes it easier to group calves in more uniform lots
    • Purchasing females of unknown genetics increases variability of calf crop and returns
    • Purchasing females of known genetics can improve profits
conclusions20
Conclusions
  • Bottom Line-Retaining and developing your own replacement females or females of known genetics gives you:
    • Better control – reduced variability in genetics
    • Predictable production
    • Greater uniformity in calf crop
    • Increased ability to sell in larger lots  higher price
u s cattle inventory and prices
U.S. Cattle Inventory and Prices

Total U.S. Cattle Inventory and April prices for 400-500 m1 steers

u s cattle inventory and prices23
U.S. Cattle Inventory and Prices

Total U.S. Cattle Inventory and April prices for 400-500 m1 steers

results retain heifer
Results – Retain Heifer
  • Expected profits - $68.65
overview
Overview
  • Current Situation
  • Outlook
  • Replacement Economics
  • Results
what is the economic value of a heifer

What is the Economic Value of a Heifer?

Curt Lacy

University of Georgia

Extension Economist - Livestock

ad