SWIFT CURRENT, Sask. — Most cattle producers choose to raise their own replacement heifers, but that decision should be based on costs, says an economist with the Western Beef Development Centre.
Kathy Larson said American surveys have shown that 83 percent of producers raise their replacements, and a survey last year found that 84 percent planned to expand by keeping heifers.
She said there are good reasons to keep females: they maintain the genetic make-up of a herd, producers know the temperament of the dams and they are raised to thrive in a particular environment.
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As well, there is a perceived lower cash outlay. Bringing in replacements can result in quicker expansion, new genetics and could be cheaper, she told the Saskatchewan Stock Growers Association annual meeting.
Producers should consider two costs when raising replacements:
- Cash costs are the dollars required to take the heifer from weaning to a confirmed pregnancy.
- Opportunity costs are the revenue foregone by choosing one opportunity over another. For example, the alternative opportunity for a producer who makes hay on his land for his own cattle is to bale the hay and sell it.
Larson said that’s why it’s important to charge the market value of feed against the herd.
Weaned calf sales are the foregone opportunity when heifers are retained if pasture is grazed. The other opportunity is to rent it out to someone else.
“That’s the opportunity costs you need to consider right off the bat when you consider what it costs you to raise a replacement,” she said.
Larson showed producers how to calculate the true cash costs, but reminded them to plug in their own numbers.
Using a 550 pound heifer in Sask-atchewan, the average 2014 fall run price was $2.60 per lb. for an initial cost of $1,430. Larson said the cost was about $700 a couple of years ago.
The cost of taking that heifer through the winter — feed, mineral, bedding and yardage — worked out to about $260 in her example.
The next thing to do is to add the cost of summer grazing of about 65 cents per day for 150 days, or about $100.
Breeding costs include the price of the bull, maintenance, depreciation and potential loss.
Larson used a bull cost of $4,500, with four years of use, and a cull value of 80 cents per lb. The cull value is low, she conceded, but there is no way to know what it will be four years down the road.
Depreciation is $700 per year, maintenance is $790 and the risk of loss is $450 for a total of $1,940. That works out to $80 each for 25 heifers.
Adding the initial heifer cost, winter costs, summer grazing and breeding costs results in a total of $1,870.
Larson said the next factor to consider is whether the heifer conceives.She used an 85 percent conception rate, which adds $330 to each bred heifer.
“You have to make the bred heifers pay for all the ones that didn’t conceive,” she said.
Assuming the open heifers are sold, $285 comes off each bred heifer cost and results in a final development cost of $1,915 each.
Larson said producers then have to calculate how many calves the heifer will have to wean to recoup the costs. That depends on calf prices, but the costs could be re-turned in as little as three years if steers are worth $1,500.
However, the heifer would need to produce seven calves if steers are worth only $1,000, she added.
A calculator on the WBDC website helps producers determine that figure using their own numbers.
