Therefore, the change in asset value over the life of the cow represents either a loss or gain in net worth to the beef operation.ģ) Dollar change for each 1% change in replacement rate Table 1Ĥ) Dollar change for each $1 change in production costs Table 2ĥ) Probability of cow paying off her purchase price above $1,100įigure 1. It was assumed replacements were purchased with cash. Results are reported in the following ways:ġ) As forecast average breakeven value (Figure 1)Ģ) Change in Asset/Replacement (Figure 2) Changes in (current assets) where replacements on average cost $1,100. Outcomes will vary by producer depending on unique circumstances, level of productivity, genetic differences, management styles and available resources. The resulting nine forecasts are the product of 1000 possible outcomes from probable price and production variations. Since it is difficult to anticipate and quantify all the possible conditions, types and choices that might occur, three levels of cost of production and three herd cost types were used to create a total of nine different breakeven value forecasts. As indicated, these costs were used to create an index to adjust the three initial cost levels to the appropriate year in the forecasting model. Cost levels relate directly to reported summer pasture rental rates of the region (North Central Nebraska), ranging from a low of $51.51/cow-calf pair to a high of $69.31/cow-calf pair with an average rental fee of $61.45/cow-calf pair (2020 Nebraska Ag Real Estate Report).įAPRI forecasts both production costs and prices for cattle for each of the ten years listed in their report. The three annual costs of production per cow used in this forecast were $716.16 (LO), $780.50 (AVE), and $831.20 (HI). Three annual production costs per animal were identified for the initial 2020-2021 calving season and adjusted to reflect the forecasts made by FAPRI. This the number of heifers needed each year to replace culled cows.Īnnual cost of production in this forecast does not include replacement costs, depreciation, or death loss and does not represent cost per calf. UNL’s Cow Cost CowQLator can help calculate this. This forecast assumes producers know two things about their operation: Genetic and phenotypical compatibility with herd mates.Costs vs Value – both current and future expected difference between costs and revenues (calf price and costs differences over the heifer’s productive life).Longevity - the replacement heifer’s ability to stay in the herd as a productive unit.
Selecting replacement heifers differs from ranch to ranch, but four factors affect the value for both retained and purchased replacements: The FAPRI scenarios are then modified to better fit Nebraska producers. The replacement heifer forecast uses forecasted price and costs scenarios created by the University of Missouri Food and Agriculture Policy Research Institute (FAPRI) 10-year projections as a starting point. This is the fourth year the authors have forecasted replacement heifer values to provide producers with more information regarding this decision. What is a respectable beef replacement heifer value for the coming 2020-2021 production season? The weather and COVID-19 gave the beef industry a wild ride this past year and may affect the decision to buy or sell replacement animals for the upcoming year.
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