Raising vs. buying heifers for herd replacements
BROOKINGS — Given the current cattle markets, cattle producers have a bit more to consider when deciding whether or not to raise or buy replacement heifers.
“Some extra homework needs to be done this year to ensure profitability, explains Taylor Grussing, SDSU Extension cow/calf field specialist. “With the forecast for low cattle and crop prices to continue for one year or more, taking time to compare the advantages and disadvantages of raising replacements vs. buying bred heifers might be extra valuable this year.”
Depending on the operation and number of heifers needed as replacements, Grussing said there may be more benefit to an operation this year to purchase bred heifers instead of raising their own.
Factors to consider when making your 2016-2017 replacement heifer plans:
Make a Budget: Determine the cost of raising replacement heifers from weaning, through first pregnancy check. “Total investment per heifer changes based on the inputs of individual operations, but this is a good place to start when contemplating buying versus raising,” Grussing said.
Begin by calculating the cost of raising heifer calves from birth to weaning and then estimate the costs for the duration of her development from weaning to pregnancy check.
Are you raising enough heifers? Compare the costs related to raising 15 versus 100 head of replacement heifers.
“Utilizing a budget can help identify the costs per head,” Grussing explained. “Costs per head decrease when a greater number of heifers are raised (Table 1).”
If it is not economical to raise heifers, Grussing said producers could consider:
a. Purchasing bred heifers or;
b. Finding a custom heifer development operation to grow and breed heifers in a larger group at less cost.
Outsourcing: Time, resources and quality considerations
Not only does group size change the cost of heifer development, but producers should also consider factors such as their current skill set, experience, resources, technology, time, farming schedule, etc.
Some of these factors are difficult to place value on, and thus are unaccounted for in a budget.
“Placing a value on time, resources and quality will change based on operational goals and ultimately needs to lead to a heifer that improves the cowherd,” she said.
Grussing outlined the following questions to aid in the decision-making process:
• Will the home raised heifer be of equal or greater quality as the purchased bred heifer?
• What would it cost and how much time would it take to implement new skills or resources to produce the same or better heifers in-house (i.e. AI, facilities, feed)?
• Could time and resources involved in developing heifers be reallocated to improve other enterprises in the operation?
• Table 2 reviews those considerations.
Raising vs. buying
Table 1 shows two different operation sizes, resulting in different total investment per heifer.
“By using current reported prices of bred heifers, both scenarios show it is more economical to purchase bred heifers in 2016 than raise them,” Grussing said.
Table 3 shows that this may be especially true if the number of replacement heifers needed is relatively small with 40 percent difference in total cost.
“Still, if feed resources are available, the opportunity may be there to purchase additional bred heifers at a relatively low cost and aid cowherd expansion of the operation,” Grussing said.
Grussing added. “Choosing to sell weaned heifers and buying bred heifers that will have returns from calves in 6 versus 24 months, would help if cash flow is needed sooner than later, especially given the narrow breakeven in the market right now.”
When making these management decisions always consult with a support team comprised of family, friends, financial advisors, herd advisors, veterinarian, and nutritionist or extension specialists.
For more information on heifer development, contact Taylor Grussing, SDSU Extension cow/calf field specialist, at email@example.com or 605-995-7378.
For assistance with a budget, contact a SDSU Extension livestock business management field specialist. A complete listing can be found at www.iGrow.org.