What Are They Worth??
Download
1 / 29

Current Situation - PowerPoint PPT Presentation


  • 240 Views
  • Updated 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 l.jpg

What Are They Worth??

Determining the Economic Value of a Heifer

Curt Lacy

Extension Economist


Current situation l.jpg
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 l.jpg
Outlook – Cow-Calf Producers

  • 2001-2004 – profits

  • 2005-2008 – losses

  • 2009 – profits/losses



Three alternatives to expand cow herd l.jpg
Three Alternatives to Expand Cow-Herd profits

  • 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 l.jpg
Replacement Female Economic Considerations profits

  • 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 l.jpg

Base profits

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 l.jpg
Comparison of Most Likely Scenario for Fall Calving Herd profits

  • Retain heifer and breed in December for fall calving

  • Buy bred heifer next summer for fall calving


Tale of the tape l.jpg

Retaining Your Own profits

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 l.jpg
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 l.jpg
Items You Will Need Value of a Heifer

  • 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 l.jpg
Items You Will Need Value of a Heifer

  • Budgets

    • Winter pasture

    • Summer pasture

    • Vet & Medicine

      • Shots

      • Eartags

      • Minerals

  • Expected Cull Rate


Doing the math prices discounts l.jpg
Doing the Math - Prices & Discounts Value of a Heifer

  • Base Price - $90/cwt. for Steers

  • Discounts

    • Heifers $5.00/cwt.

    • #3 muscling $18.00/cwt.

    • Short-frame $25.00/cwt.


Retain heifer l.jpg
Retain Heifer Value of a Heifer


Buying bred heifer l.jpg
Buying Bred Heifer Value of a Heifer


Results buying bred heifer expected profits l.jpg
Results - Buying Bred Heifer Value of a 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 l.jpg
Results - Buying Bred Heifer Value of a HeiferEconomic Value – What can you afford to pay?

Retaining own heifer = $685.23


Conclusions l.jpg
Conclusions Value of a Heifer

  • 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 l.jpg
Conclusions Value of a Heifer

  • 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 l.jpg
Conclusions Value of a Heifer

  • 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 l.jpg
U.S. Cattle Inventory and Prices Inventory

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


U s cattle inventory and prices23 l.jpg
U.S. Cattle Inventory and Prices Inventory

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


Recent prices l.jpg
Recent Prices Inventory


Results retain heifer l.jpg
Results – Retain Heifer Inventory

  • Expected profits - $68.65


Results buying 3 in 1 expected profits l.jpg
Results - Buying “3 in 1” InventoryExpected Profits

Pay $750 for combo in June


Results buying 3 in 1 what can you afford to pay l.jpg
Results - Buying “3 in 1” InventoryWhat Can You Afford to Pay?

Retaining own heifer = $565.34


Overview l.jpg
Overview Inventory

  • Current Situation

  • Outlook

  • Replacement Economics

  • Results


What is the economic value of a heifer l.jpg

What is the Economic Value of a Heifer? Inventory

Curt Lacy

University of Georgia

Extension Economist - Livestock


ad