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1999 Beef & Bison Production Field Day


Costs Associated With Raising Beef Replacement Heifers

Steve Metzger

Carrington Area Farm Business Management Program

Carrington Public Schools and Carrington Research Extension Center, NDSU

Introduction

One of the major costs associated with maintaining a quality beef herd is that of raising replacement females. In attempting to maximize profits, producers need to know the cost of raising a beef replacement heifer and how that cost will impact the potential for future profits. As in so many enterprises, there is a wide gap between the high and low cost producers when it comes to raising replacement heifers. Producers will be in a better position to enhance future profits if they know the true cost of production associated with raising replacement heifers.

Procedure

Data for this study was compiled through the Carrington Area Farm Business Management Program. The replacement heifer enterprise data summarized in this report was generated from beef enterprises located in the counties of Eddy, Foster, Griggs, Kidder, Sheridan, Stutsman, and Wells. The data was collected over a four year period from 1995 through 1998. The minimum number of replacement heifers involved in any one year was 255 with a maximum of 486 and a total of 1,309 involved over the four-year period. The minimum number of farms and ranches involved in any one year was 13 with a maximum of 18. This study represents a summation of 60 individual beef replacement heifer enterprises over a four-year period.

The beginning point of each individual enterprise analysis is that point in time when the heifers are selected out to be kept for replacements. For those heifers purchased in the fall, as seven or eight month old calves, the beginning point is January first of the following year. For heifers that are raised on the same farm or ranch, the beginning point is that date in time when they are selected and physically separated from the rest of the calves being fed or backgrounded. For example, in 1998 the average number of days for all eighteen replacement heifer enterprises was 322, which translated into an average startup date or beginning point of February 12. The ending point for each enterprise was either December 31. of the corresponding year or the date on which the heifers were sold and thus transferred out. The vast majority of the replacement heifer enterprises concluded at the end of December as these heifers were then transferred into the total cow herd, effective the first of January.

Whenever possible, actual scale weights of heifers being transferred in or out were used. Because so many producers do not weigh heifers kept back when the balance of the feeder group is sold, producers were asked to estimate the beginning weight of the remaining heifers based on the weights, after adjusting for shrinkage, of the animals sold or transferred out. The ending December weights were estimated by producers and were related to their beef cow weights whenever applicable.

All expenses including feed, pasture costs, supplies, overhead expenses, etc. were calculated for each individual replacement heifer enterprise. The breeding charge for the various heifer enterprises is in most cases, part of the total feed and expense allocation for that particular enterprise. A limited amount of artificial breeding was done and that cost is reflected in table 1.

Results and Discussion

The average gross return per heifer, as shown in table 1, was $608.81. This gross return included actual sales, the value of heifers transferred out prior to the end of the enterprise, and the value of heifers as recorded at the end of the enterprise before they were transferred into the beef cow herd. The average weight per heifer purchased or transferred in was 706 pounds, with a range of 642 to 752 pounds. The lighter average weight in 1998 was partially due to more young heifer calves being purchased and raised for resale as bred replacement heifers. With 1998 excluded, the three-year average weight of purchased and transferred heifer calves was 728 pounds.

The average daily gain per head was .98 pounds with a total feed cost, including pasture or range, of $126.05 per heifer. Feed and other direct costs averaged $149.88 per year while overhead contributed an average of $8.02 annually for a total cost of $157.90 per year. Total pounds gained per heifer, table 2, varied from an average low of 251 pounds to an average high of 306 pounds with a four-year average of 285 pounds. The annual feed cost per cwt. of gain, including pasture or range, varied from an annual average of $42.18 to $50.36. In three of the four years, the cost of gain varied from a low of $42.18 to a high of $42.95. Death loss was fairly low, averaging .73% over the four year period. Including the beginning value of the heifer calf, $467.02, the average four year total cost per heifer from the time of transfer in to being placed in the cow herd, effective January 1, was $624.92 and covered a time frame of approximately 10.6 months.

Since many producers might choose to view these costs from an annual standpoint as opposed to the enterprise time frame of approximately 10.6 months, a calculated adjustment was made to reflect a full 12 month enterprise. The feed, direct, and overhead costs were adjusted upward for another 1.4 months. This resulted in an additional expense of $26.25 per head for a total annualized cost estimated at $651.17 per heifer.

It is important to note that the net return figure, however positive or negative, is tremendously influenced by the value the producer assigns to the bred heifer at the end of the enterprise period. This data would indicate that the average beef replacement heifer with the value and costs listed, should be valued at a minimum of approximately $651.00 as she enters the regular production herd on January 1.

It should also be noted that the cost of production does include depreciation for buildings or equipment used by this enterprise but it does not include any allotment for operator labor or for principal payments on existing chattel or real estate debt. These items would be in addition to the costs listed in tables 1 and 2.

Producers are also challenged to consider several other factors when making a decision whether to raise or purchase replacement heifers. Acquiring the type of heifers that physically match the existing herd is important to most producers. In addition, producers are also inclined to acquire those types of heifers that can contribute to the genetic makeup of the present day cow herd and that can adapt to the environment in which the present cow herd functions.

 


Table 1. Four year beef replacement heifer economics and production performance (per heifer basis)

Heifers purchased or transferred in                 (706 lbs.)             $467.02
Total production per head (285 lbs) $141.79                              
Gross Return $608.81
Direct Costs                                                                                                                              
Protein, vitamin, mineral                                  (23 lbs)                  4.39
Grain and concentrates 24.63                                 
Harvested forages 67.15
Pasture or range (3.56 AUM's) 29.88
Total Feed Cost $126.05
Veterinary 6.18
Breeding fees, supplies 3.77
Fuel and repairs 2.16
Other direct costsa 11.72
Total Direct Costs $149.88
Overhead Costs                                                                                                                          
Interest on buildings and chattel debt 2.12
Depreciation of buildings and equipment 2.24                                   
Other overhead (utilities, labor, insurance, etc.)                              3.66
Total Overhead Costs               $8.02              
Total of all listed costs $624.92
Net Return $ (16.11)
Cost adjustment from 10.6 to 12 months 26.25
Total adjusted 12 month cost 651.17
Death loss percentage .73%
Daily gain, lbs. .98 lbs
Pounds of feed per pound of gain, excluding pasture or range          16.36 lbs     
Feed Cost (including pasture or range cost), per cwt of gain $44.48

aoper interest, custom hire, marketing, etc


The importance of the multi-year cattle cycle, and our position within that cycle, should not be ignored when determining the costs of present day or future replacement heifers. Also to be considered is the position of the grain and feed markets. The last two years have provided us with some of the lowest cost rations for growing out beef cattle. By knowing and considering all these various facts and weighing them against the market price of other replacement stock, of similar type and quality, producers can make herd replacement decisions that should enhance their bottom lines and added to the productivity of their beef operations.

 


Table 2. Annual economic and production figures, 1995-1998 (per heifer)

Item 1995       1996       1997       1998        Average    
Number of lots 15 13 14 18 15
Number of heifers 255 260 308 486 327
Wt per hfr purchased or transferred in 705 726 752 642 706
Value of heifer purchased or transferred in $492.04 $398.83 $495.25 $481.96 $467.02
Value of production/hd 94.96 190.63 173.73 107.84 141.79
Pounds of production/hd 306 251 302 280 285
Gross return 587.00 589.46 668.98 589.80 608.81
Feed cost/head 120.20 127.44 126.57 129.91 126.05
Total direct costs 155.88 146.41 150.52 146.65 149.88
Total overhead costs 7.53 8.09 9.04 7.39 8.02
Total direct and overhead costs 163.27 155.45 158.61 154.18 157.90
Total costs including value of heifer calf 655.31 554.28 653.86 636.14 624.92
Net return (68.31) 35.18 15.12 (46.34) (16.11)
Death loss percentage .40 .70 .60 1.20 .73
Daily gain in pounds .99 .81 1.03 1.08 .98
Feed cost (including pasture) per cwt. of gain $42.41 $50.36 $42.18 $42.95 $44.48
Number sold or trans out per lot before herd placement     1 3 1 10 3.75

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