Page 7 - MWC 02-25-2021s

Factors affecting replacement heifer values
The Midwest Cattleman · February 25, 2021 · P7

Longevity or replacement rates within the herd are crucial in deciding what you can afford to pay. By Curt Arens

One of the biggest decisions replacement heifers, and they ment rate.
you can make that affects your can replace capital faster in They also studied three
bottom line for the cow-calf herd those operations. “Find some- different cost of produc-
is deciding what you can pay for thing to match your forage base, tion ranges, with $716.16
replacement heifers. If you pay feed resources and goals with as a low cost of produc-
too much, you are setting your- your operation,” Saner said. tion, $780.50 as an aver-
self up for a situation where In 10 years of economics stud- age, and $831.20 as the
those heifers cannot possibly ies at the University of Nebras- high end of cost of produc-
pay for themselves over time. ka-Lincoln Gudmundsen Sand- tion. These numbers will
At a recent University of hills Laboratory near Whitman, vary according to opera-
Nebraska BeefWatch webinar, researchers looked at three dif- tion. The information from
Randy Saner, Nebraska Exten- ferent replacement rates of 14% the studies helped develop
sion educator, told participants on the low end, 20% as aver- continued on page 17
that longevity or replacement age, and 28% as a high replace-
rates within the herd are crucial
in deciding what you can afford
to pay — and if a heifer made
money for the operation, or cost
money.
4 factors
There are four basic factors
that affect the price a producer
can afford to pay for replace-
ments.
1. Longevity. This simply
means a replacement heifer’s
ability to stay in the herd as a
productive unit. “If we have to
sell her early on, she costs us
money,” Saner said, “because
she didn’t raise enough calves
to pay for herself.” For instance,
a 12-year-old cow that has a
healthy calf every year could
easily bring $3,000 into the herd.
2. Costs vs. value. This factor
takes into account both current
and future expected differences
between costs and revenue. “If
you pay a lot for the heifer, and
the calf prices are very low and
costs are high over her produc-
tive life, this impacts how much
the cow eventually brings into
the herd,” Saner said.
3. Genetic and phenotypi-
cal compatibility. This factor
asks if the heifer is genetically
compatible with the rest of the
cow herd and fits into the geno-
type of the herd.
4. Operator goals and man-
agement style. Producer goals
and resources are different for
every unique geographic region.
In some regions, corn is often
available to feed to cows, but in
others, that may not be the case.
No matter where the operation
is located, the heifers purchased
or retained must fit with the
goals and resources available to
the operation.
Low-cost and low-replacement
rates
Saner said that, ultimately,
low-cost, low-replacement-rate
herds can afford higher-valued