Case study: to replace or not to replace: determining optimal replacement rates in beef cattle operations
2004
Mackay, W. | Whittier, J. | Field, T. | Umberger, W. | Teichert, R. | Feuz, D.
Data from a Nebraska cattle ranch in the USA were used to compare 3 female replacement strategies to determine optimal replacement and marketing strategies of females for maximizing the long term profit potential of that operation. The income statement model (ISM) maximized 10-year net income by altering the number of females marketed from different age categories depending on price changes influenced by the cattle cycle. The net present value (NPV) model maximized 5-year herd NPV by adjusting the number of marketed females. The NPV vs. the net market value (NMV) model maximized the 5-year difference between herd NPV and herd NMV. The ISM strategy consistently returned the highest average net income per animal annually for the operation and also had the most distinct sales and herd composition pattern of the 3 strategies. The ISM strategy suggested that the operation market mostly weaned heifers in lower-priced years and mostly bred yearlings in higher-priced years, resulting in an older herd in lower-priced years and a younger herd in higher-priced years. This marketing strategy was influenced by the cattle cycle and by changes in the relative prices of the different female categories. Additionally, altering the cost structure and decreasing calf crop percentages impacted the replacement strategy. The ISM favored a practice by which more cows were sold as bred cows in the fall than as pairs in the spring. The replacement strategy for different ranches will vary with various circumstances; therefore, this decision should be repeatedly addressed to ensure the future success of an operation.
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