Crunch the numbers before you buy those heifers

A Handbook for Ranch Managers  And you had best have a top of the line direct cost accounting system. — jtl, 419

By Heather Maude via Beef Magazine

Carefully analyze the cost of buying, selling and retaining replacement heifers.Planned Grazing: A Study Guide and Reference Manual  “The days of developing heifers from calves to breds for $300 are gone. But, so are $500 heifer calves in the fall. Is it worth it to develop and retain your own heifers? Can you afford not to?”

That’s the question John Ritten, University of Environmental & Natural Resource Economics: The Austrian ViewWyoming associate ag professor, asks of producers. Ritten thinks the fundamentals are in place for a strong market at least through 2015, and encourages producers who are trying to decide whether to keep their own replacement heifers this fall, or buy new genetics, to make an economic comparison to see how market swings and ever-changing input prices affect the value of bred heifers.

By the numbers

Combat Shooter's Handbook Reconnaissance Marine MCI 03.32f: Marine Corps Institute The Betrayed: On Warriors, Cowboys and Other Misfits“You still start with a weaned heifer calf, which used to be worth $550 in October. Then, in the fall of 2013, we saw the average heifer calf price in Wyoming go to $900, which was a bargain compared to the 2014 price average of $1,520,” says Ritten. By July 2015, those prices hovered around $1,800, he says.

The Essence of Liberty: Volume I: Liberty and History: The Rise and Fall of the Noble Experiment with Constitutionally Limited Government (Liberty and ... Limited Government) (Volume 1)  The Essence of Liberty: Volume II: The Economics of Liberty (Volume 2) The Essence of Liberty: Volume III: A Universal Philosophy of Political Economy (Liberty: A Universal Political Ethic) (Volume 3)That initial cost must be associated with heifer calves being developed, whether or not they were purchased or raised, because it provides a necessary starting value.

“We are going to assume we weaned or purchased heifers on Oct. 15, turned them out on grass, then began feeding on Dec. 1. We will breed them on May 15, and either turn them back out to pasture or sell in July,” says Ritten, paralleling a typical development timeline in the Northern Plains.

His assumptions result in 45 days on forage, or an equivalent of 15 pounds of hay per head per day. “Then we will put them on full feed for 165 days, with a ration consisting of 15 pounds of grass-alfalfa-mix hay and 4 pounds of protein per day. I’m going to spend $110 per ton on hay, and $320 per ton on protein. If I calculate that all out based on those parameters, I will have $363.58 per head in feed costs from October through July 1,” says Ritten.

In the spring, the decision of whether to AI or bull-breed the heifers will also provide some differences in development costs.

“If I AI, experts tell me I can count on a 65% conception rate. If I throw a bull in, it will be closer to a 90% conception rate. Either way, we have costs and open heifers,” says Ritten.

If AI-ing, Ritten calculates cost per head to be around $80, which includes any drugs used, semen purchased and hiring an AI tech.

“But what does a heifer bull cost? I am going to assume he costs me $4,000, that he breeds 25 head a year, and that I sell him for $1,800 after two years of service because he got too big to breed heifers. That comes to a $72 cost per head. If I pay $6,000 for him, that price goes up to $112 per head,” explains Ritten.

Lastly, to truly realize all costs involved in heifer development, Ritten encourages producers to consider charging themselves a fair interest rate during the time of developing heifers, and take into consideration labor, yardage and additional vet costs and supplies.

“Then there are the open heifers. They still have value, but not nearly as much as if they’re bred.”

A Handbook for Ranch ManagersA Handbook for Ranch Managers.  In keeping with the “holistic” idea that the land, the livestock, the people and the money should be viewed as a single integrated whole: Part I deals with the management of the natural resources. Part II covers livestock production and Part III deals with the people and the money. Not only would this book make an excellent basic text for a university program in Ranch Management, no professional ranch manager’s reference bookshelf should be without it. It is a comprehensive reference manual for managing the working ranch. The information in the appendices and extensive bibliography alone is worth the price of the book.

You might also be interested in the supplement to this Handbook: Planned Grazing: A Study Guide and Reference Manual.

About Land & Livestock Interntional, Inc.

Land and Livestock International, Inc. is a leading agribusiness management firm providing a complete line of services to the range livestock industry. We believe that private property is the foundation of America. Private property and free markets go hand in hand—without property there is no freedom. We also believe that free markets, not government intervention, hold the key to natural resource conservation and environmental preservation. No government bureaucrat can (or will) understand and treat the land with as much respect as its owner. The bureaucrat simply does not have the same motives as does the owner of a capital interest in the property. Our specialty is the working livestock ranch simply because there are so many very good reasons for owning such a property. We provide educational, management and consulting services with a focus on ecologically and financially sustainable land management that will enhance natural processes (water and mineral cycles, energy flow and community dynamics) while enhancing profits and steadily building wealth.
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