Raising vs. Buying Heifers for Herd Replacements Back »

Determining the goals of a heifer development program starts with breeding of the heifer’s dam. If maternal genetics like low birthweight and adequate milk make up her pedigree, there may be a place for her to become a replacement heifer to maintain or expand the cowherd. However, utilization of terminal sires to increase growth rates and improve carcass traits may result in the female calves being implanted along with their male herd mates to enter the finishing yard. Both types of heifers can be utilized for herd replacement as long as they fit in with herd goals.

However, given the current market situation, some extra homework needs to be done this year to ensure profitability.

So what does this mean for heifer development? Depending on the operation and number of heifers needed as replacements, there may be more benefit to an operation this year to purchase bred heifers instead of raising their own. 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.

Factors to consider when making your 2016-2017 replacement heifer plans:

1. Make a Budget

In the previous article Adding Up the Costs, we determined 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 vs. raising. 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.

2. Are you raising enough heifers?

Compare the costs related to raising 15 vs. 100 head of replacement heifers. Utilizing a budget can help identify the costs per head. Costs per head decrease when a greater number of heifers are raised (Table 1). If it is not economical to raise heifers, producers could consider: a) purchasing bred heifers or b) finding a custom heifer development operation to grow and breed their heifers in a larger group.

Table 1. Example budget of raising replacement heifers from weaning (2015) to fall pregnancy check (2016) with group size variation.

Description Raise 15 Heifers
80% Conception Rate
1 Bull
Raise 100 heifers
80% Conception Rate
2 Bulls
Feed Costs $448.19 $448.19
Veterinary & Supplies $51.00 $51.00
Marketing & Shipping $2.15 $2.15
Breeding Fees
(AI + bull value)*
$128.89 $70
Indirect Costs $49.08 $45.55
Replacement charge per cow - Value of cull heifer (830# @ $1.44) $72.84 $72.84
Total Heifer Costs Per Year $752.15 $689.73
Value of Heifer calf
(500# @ $1.90)
$950 $950
Total Investment per Heifer $1,702.15 $1639.73
*Bull maintenance costs are not included in this budget, but expect greater economic incidence of these costs in the 15 vs. 100 heifer herd.
 

3. Outsourcing: Time, Resources & 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.

Answering the following questions may 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?

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. Table 2 reviews those considerations.

Table 2. Operation considerations affecting raising vs. buying decision

When to Consider Raising Heifers When to Consider Buying Heifers
Better control of genetics, background and disease Lack of resources and experience selecting and raising heifers
Quality cannot be outsourced for the cost New genetics/quality can be outsourced for less
Confident that heifers will be productive in your environment Prefer to expand herd with mature cows and use terminal sires to maximize pounds of calf
Large quantity of heifers needed Few head of heifers needed
High quality and quantity of resources (pen space, feed, equipment) available Reduce bull power and maintenance costs- don’t need calving-ease bulls
 

4. Raising vs. Buying

Table 1 showed 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. However, Table 3 shows that this changes if the number of replacement heifers needed is relatively small. 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. Also, 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.

Table 3. Comparison of raising vs. buying heifers for herd replacements.

Units Price per Head Total Difference
Raise 15 heifers $1702.15 $25,532.25 +$6,032.25
Buy 15 heifers ~$1,300 $19,500 24%
 
Raise 100 $1,639.73 $163,973 +$33,973
Buy 100 heifers ~$1,300 $130,000 21%
*Indirect costs = $45 - $75 per head
 

More Information

When making these management decisions always consult with a support team comprised of family, friends, financial advisors, herd advisors, veterinarian, nutritionist or extension specialists. For more information on heifer development, contact Taylor Grussing 605.995.7378. For assistance with a budget, contact a SDSU Extension Livestock Business Management Field Specialist.


Disclaimer: The information in this article is believed to be reliable and correct. However, no guarantee or warranty is provided for its accuracy or completeness. This information is provided exclusively for educational purposes and any action or inaction or decisions made as the result of reading this material is solely the responsibility of readers. The author(s) and South Dakota State University disclaim any responsibility for loss associated with the use of this information.

blog comments powered by Disqus

Sign Up For Email!