Retaining Heifers?

[ASRG]

Does it pay to retain heifers?
Heifers retained this year will not see a return until the fall of 2013 (30 months/900 days).


My ? numbers:
June 1/11
800 lb. hfr @ $1.15/lb $ 920
total feed @ $1.25/day $1120
breeding cost @ $25 X 2 50
salt& min @ $1.66 mo X 30 50
vet @ $1/mo X 30 30
% on $920 @5%/yr 115
trucking/sales cost 20
TOTAL $2305

average calf weight 552 lb
avg calf sales@ $1.425 $786.60

cost of cow on Nov 1/2013 $1518.50

Explanation of costs:
feed-pasture costs in my area are around $1- $1.10 day for pairs (cheaper for yearlings). Winter feeding based on 35 lb/day X .03= $1.05?
The $1.25/day year round feed cost includes fencing/utilities/tractor feed costs/ checking & working cattle/land tax portion to cattle/miscellaneous/etc.
Interest on cow investment- I can do better than that on my bank stocks. Not sure on commercial loan?
Explanation on calf weights/cost:
600 lb steers
550 lb hfrs
575 lb avg X 96% (calf loss)
552 lb for sale?
steer calf @ $1.50 lb
hfr calf @$1.35
avg calf price $1.4250 ?
I think my numbers are fairly realistic based on feed costs posted on Alberta ag website? I could be low on vet/breeding/trucking...but these are my actual costs (note only 9 miles from the sales barn).

[smcgrath76]

I think some of your costs might be low,
and some are a bit high, but you are not
far off on average. As for pricing, I
would always put an error factor in.
My thoughts are that if you are going to
expand your herd through heifer
retention, then you better get after it
ASAP, as heifer born one or two years
from now will miss the upside of the
cycle with their production.
I am always interested to see how people
value heifers retained (opportunity cost
vs. actual cost).
I am actually impressed that you can run
for $1.25 per day year round when your
summer grazing is that much.

[grassfarmer]

Was that a trick question to see if we were paying attention? An 800lb heifer on June 1 2011 in your example would produce that first calf to sell in fall 2012 not fall 2013 - which shortens the cost period associated with it from 30 months to 18 which will help your economics greatly.
Goes to show you can prove anything with a piece of paper and a pencil - or in this case a keyboard and screen.

[kato]

Another way to cut the costs, assuming you're buying in replacements, is to buy a 500 lb heifer in the fall and put those three hundred pounds on her yourself. You can put them on her cheaper yourself than you can buy them in the spring. If someone can't put a pound on a heifer for less than 1.15, then they're doing something terribly wrong.

We bought a few heifers last fall, fed them until spring, sold enough of them to pay the loan,feed,etc, and kept the best ones. We used them to add to the heifers we kept from our own herd. The profit on heifers is never what steers will bring, but for a little extra effort, we got some nice replacements.

If you are keeping heifers to maintain the herd, rather than expand it, the value of the cull cow she's replacing should also be considered, IMHO. And that's pretty decent now, finally.

[SADIE]

ASRG--Good post--It caught my interest.

I have been on a program now for over 10 years buying the cross bred heifer (F1s) and sell both a good steer in the fall and the replacement heifer in the spring with the last cut selling yesterday in June after 5 weeks of grass. Basically I am trying to run an ALL IN ALL OUT PROGRAM.

I purchase from one producer that can runs this program that can provide me with the same product each year of quality quiet replacement females.

There is only a certain number available each year and there is a regualar customer base. Fall 2010 I purchased (Pen of 3 ) @ $1675.00 each and that got me 8 more at the farm for the farm price.

2011 could be interesting but I am planning on being there. In the past these pens of same animals from same breeder Pen of 10 at agribition have hit $1850.00 and during the BSE years I have taken the pen of 10 4 times now down as low as $1050.ea to $1700.00 Ea.

Open heifers this spring in April were $1150--$1200. Basically we look at twice the steer price is what the Bred Heifer is worth--& 2010 ave $1000-$1050.

It is just my program that I like and I am comfortable with it.

[burnt]

Kato, do you know the background on the heifers you bought in the fall? I have tried to turn random, commercial (western)heifers into cows and it didn't take long for some bad traits - poor udder structure, bad hooves - to show up in far too many of them. And they were real sweethearts when I bought them.

Knowing that your hfrs. come from good breeding is definitely worth something if it helps the longevity of your cow. At 7 or 8 calves from females born in spring of 2002, I've kept some of mine 2 years too long. I think a cow should last longer than that.

[ASRG]

grassfarmer: You are right I blew it on the year/months. That does change it a lot. It would be only over 18 months instead of 30! Cow closer to $1000 instead of over $1500!

[kato]

burnt, we don't really always know the background of them, but Hubby spends a lot of time at the auction mart buying feeders, and has a pretty good eye. Our order buyer also picks some up for us, and he makes a point of only buying from certain herds. Some years we have enough of our own heifers to use as replacements, but some years we don't. Every year is different.

We unloaded seven white heifers last fall, and I told Hubby that we'd better inspect them closely, because they didn't look like your average heifer. Put them through the headgate, and lo and behold, they had tattoos, and we recognized the letters. They were the offspring of some cow calf pairs that one of our bull suppliers had sold, and they are one fancy set of purebred heifers. Bingo! Keepers.

Back in 1996, when we had a big price collapse we bought a whole bunch of fancy white heifers for $320.00 each. Everyone said we were crazy at the time. That was fifteen years ago, and we still have a couple of them here. As long as they keep having calves, and don't get too late, we'll keep them. Any cow who can still be fertile and productive as a teenager is welcome to stay here, and theirs are the daughters we'd like to have in the herd.

I guess my point is that every year is different, and you've got to be flexible and grab an opportunity when you see it. Top of the market is probably not the best time for it, but when prices crash and everyone says you're an idiot, that's when it's time to make a move.

[Ruken]

Interesting comments Kato. I sold some steers for a dismal price during those tough years and have long forgetten how bad they were. I do remember buying a package of heifers back on that same sale that I resold in a stronger market or are now cows and doing well. I paid $327 each for them and that was more than anyone else wanted to pay!

[Ruken]

ASRG. When I've done economics on heifer replacement, I've found it hard to pencil profits on the heavier weights. Seems they are worth to much to the feedlots. Leaner growthy 650 weights or 700 weights will likely fulfill your needs compared to 800 heifers. I guess it also depends on when you expect to calve them the next spring. Frame and type play into this discussion as much or more than actual weight.