Industry At A Glance: What’s a bred heifer worth?

Cow costs loom large in figuring the value of bred heifers.

Nevil Speer

September 10, 2015

2 Min Read
Industry At A Glance: What’s a bred heifer worth?

Profitability is an enduring challenge, even in the best of markets. Meanwhile, the cow-calf sector appears poised for a second straight year of rebuilding following higher feeder cattle prices and better feed conditions across most of the country during the past several years. The primary question now concerns the duration and extent of the rebuilding effort in the years to come. 

For the meantime, though, it appears that producers are fairly confident about the future. Rebuilding signals are coming from both reduced cow culling and increased heifer retention. Keeping or purchasing heifers represents a very different risk decision because of the longer payoff from the investment.  

replacement heifer valueAccordingly, this week’s illustration features varying net present value (NPV) for a replacement heifer based on different cow costs and the number of calves marketed over the heifer’s lifetime. Several other considerations, not shown here, also impact NPV including projected market value of both calves and cull cows.  

Nevertheless, the figure underscores the importance of knowing and managing cow costs when it comes to raising or purchasing replacement heifers and avoiding an unfavorable decision. The difference across the various cost categories is substantial! Where would your operation be in terms of annual costs?  Subsequently, are you valuing replacement heifers correctly?  What do you perceive as the largest challenge in making replacement heifers profitable over their lifetime? 

Leave your thoughts in the comments section below. 

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About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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