Value of 1500 Pound Beef Cow

Last month, I suggested that a fall 2004 preg-checked bred heifer that will produce 7 consecutive calves has a calculated economic value of $1,560. A rancher paying $1,560 for that bred heifer this autumn should expect to earn a 6% return on his investment.

The aforementioned economic assay can be applied to bred cows of all ages. For example, a autumn 2004 bred moo-cow that produces six sequent calves has an economic value of $1,489. Her economic value with five sequent calves is $1,398; 4 consecutive calves it is $1,290; three consecutive calves is $one,159; and ii consecutive calves is $1,049. Each economical value is calculated utilizing each female's lifetime annual internet income values plus her cull cow income discounted back to today's dollars.

And then what's a bred female worth today? I distinguish betwixt the sale barn value of bred female person and the economic value of a bred female in a rancher's herd.

The auction barn value is what a bred female person would bring at the local auction barn where the driving factor is the gross value of today's feeder calves. Every bit gross value goes upward, the auction befouled value of a bred female goes upwardly. Now that feeder calf prices are quite high, the sale barn cost of bred females is rising.

The economic value of a bred female person, meanwhile, is the sum of futurity annual internet incomes generated by all the calves she produces, plus her salve value as a choose moo-cow. These time to come incomes must be discounted back to today'due south dollars. Annotation this is net income, non gross income as I frequently hear ranchers use.

I suggest ranchers bring females into their herds when the economic value exceeds the sale befouled toll. The higher the economic value relative to the sale barn toll, the more than profit potential.

The beef cattle bicycle, its resulting beefiness cost bike, and ranch resource costs are three cardinal factors affecting the economic value of a bred female — regardless of her age. Finally, the economical value of bred females is ranch specific.

The cycle's "owning" phase

As is typical during the turn-around phase of the cattle cycle, I am currently receiving a lot of calls from folks who want to buy beef cows. Increasingly, more of these calls are from potential first-time cow owners. It seems anybody wants to own beef cows when calf prices get high in the cattle cycle.

I believe the last two years of high calf prices take now triggered the current cattle cycle'southward "everyone wants to own beefiness cows" phase. By 2005, that stage will change to "I have got to own some of these assisting beef cows!" Generally, this phase abruptly ends when calf prices interruption downward.

I projection calf prices will stay strong for the next ii, and possibly three, calf crops. Dogie prices volition go south toward the cease of the decade. Purchased females need to be paid for before calf prices turn due south.

Now that calf prices have increased is not the best time in the bike to buy beef cows. The all-time fourth dimension to buy cows is when no one wants them — like a couple of years ago.

Anyone intending to buy cows over the side by side two years should buy them now, and the sooner, the amend. Buy them now then newly purchased cows have more high-priced dogie years to pay for themselves. I fully expect bred cow prices to get stronger until current calf prices plow sharply downward — similar calf prices did in 1994. Bred cow prices peaked in the last cattle cycle in 1993.

Five calculation steps

Here are my 5 steps for computing the economic value of bred females:

1. Prepare a set up of long-run planning prices. Beef cow producers find the development of a fix of long-run planning prices one of the most difficult and complex tasks of the planning process. Kickoff with planning prices and modify them to fit your economic projections.
2. Prepare an economic budget for your herd. I used the five-year (1999-2003) average enterprise accounts for 769 Northern Plains beef cow herds as my base year. These enterprise accounts are posted by the University Of Minnesota.
3. Utilizing your long-run planning prices, annual enterprise upkeep projections must exist prepared for each of the vii-9 years a heifer might be in your cow herd. I utilized each yr's long-run planning price and constant five-year average production costs for my projections.
4. Project the salvage value of cull cows. Use the Academy of Missouri's FAPRI Baseline Conference Volume as your source of long-run cull moo-cow planning prices.
5. Determine the appropriate disbelieve rate. This should be your after-taxation interest rate for borrowed money. I use a 6% discount rate.
6. Calculate the net present value (NPV) of a bred heifer. The bottom line presents the calculated NPV of bred females under different numbers of lifetime calves produced.

Harlan Hughes is a North Dakota Country Academy professor emeritus. He lives in Laramie, WY. Attain him at 701/238-9607 or [e-mail protected].

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Source: https://www.beefmagazine.com/ar/beef_whats_beef_cow