Tuesday, May 11, 2010

The Cost of Home-Raised Replacements

We were discussing the value of replacement females in the market place the other day and I got to thinking, I should have posted the eastern South Dakota average cost of production of replacement heifers before posting that analysis. Well, maybe it doesn't make that much difference.

Anyway, I am the Director of the South Dakota Integrated Resource Management Program for at SDSU. Every year our team holds workshops where producers can come and learn the fundamentals of analyzing records they keep in their business. The results are then formulated into a database and published as the SDSU Cow Calf Business Report every year, usually in June.

The only thing a person has to be aware of when viewing this database is that 1) These are merely averages over a wide variety of producers and 2) The database is composed of largely eastern South Dakota operations.

Nonetheless, it is still interesting and useful to know where your operations falls in relation to averages. So let's take a look at the average cost of replacement heifers for 2008 (the 2009 Cow Calf Business Report won't be published until June of 2010).

Considering our analysis of heifer values in the market place last week, I think this data is very disturbing and actually quite frightening when the average cost of developing a commercial replacement heifer is not too much less than values we indicated weren't very profitable in the NPV analysis.

I think there is a tremendous need to look at new, lower-cost strategies for developing these replacements as the investment into a new replacement is nearly more than the return she can generate in her lifetime. Now that's not to say that it costs everybody $1023 to develop a heifer. There certainly are some outfits that are doing it for substantially less, however there are a large number that are developing replacements for substantialy more than $1023.

I think one of the biggest concerns managers face in terms of heifer development but rarely address is fertility. Especially fertility indicators when heifers are selected and bred for the first time. I have theory on the predictability of a young heifers productive economic efficiency based on estrus cycling during her first breeding season. My theories aren't as earth shattering as E=mc2 or the laws of thermodynamics, but they are interesting and I think are worth researching. I'll explain in more detail in the next few days.

No comments:

Post a Comment