How Much Is That Heifer Worth?

Abstract

My decade of analyzing Integrated Resource Management (IRM) cooperator beef cow herds suggests that heifer retention and replacement strategies have a large impact on long-run profits. What seems to separate profitable beef cow herds from less profitable herds is what is done with the females in the herd and when it is done. Financial problems are frequently exacerbated when replacement heifers are retained at an improper time during the cattle cycle.

The beef cattle cycle typically leads to cash flow "booms" during high-priced times and cash flow "busts' during low-priced times. The beef cattle cycle, its resulting beef price cycle, and resource costs are the three most important factors affecting the long-run profitability and sustainability of today's beef cow producers. The timing of herd expansion, and the buying and selling of females, seem to be particularly critical to the long-run profitability of a beef cow herd. This paper presents a procedure for determining the economic value of a bred heifer at any point in the cattle cycle.