NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
August 19, 1999
Harlan Hughes, Extension Livestock Economist
NDSU Extension Service
A leading rancher came up to me recently and said, "Once I solved my heifer replacement problems, it seemed like my whole herd performed to my expectations."
I have heard this from other ranchers. Management of replacement heifers, whether raised or purchased, can have a major impact on the overall profit of the beef cow herd. Apparently, executing a well-thought-out heifer development program is key to running a profitable beef cow herd.
University of Missouri's Beef Focus Team members Vern Pierce and Dave Patterson also point out the importance of a heifer development program. They say, "The selection of the best female replacement strategy has arguably one of the greatest long-term effects on profits as any other decision made by the cow-calf producer. Selection and development of cow herd replacements is extremely important to the overall management of the cow herd. A decision on replacements this fall will have an impact on the profitability of the cow herd for at least the next 10 years."
Apparently, the general beef cow industry does not agree with these assessments on the importance of heifer development programs to overall profits. For example, while research clearly points out that heifers have some special nutritional needs, a recent National Animal Health Management Survey (NAHMS) survey concluded that only 32.8 percent of U.S. beef cow producers feed their heifers separately. Apparently, the other two-thirds of the nation's beef cow producers don't appreciate the difference in nutritional needs between heifers and mature cows.
Ranchers frequently tell me they don't have any separate feeding facilities for heifers. Feeding replacement heifers along with the mature cows is a sure recipe for nutritionally stressed replacement heifers. Nutritional stress is a sure recipe for 3-year-olds that don't breed back or breed back late.
The females most difficult to breed back are the growing, milking 2-year-old females. Even when the nutritionally stressed heifers do get pregnant, this stress can easily lead to a calving interval extending beyond 365 days. This is the primary reason why management consultants recommend that heifers be bred to calve ahead of mature cows. That way they can have a calving interval that is greater than 365 days in producing their second calf and still calve in the first 60 days of the mature herd's calving period. Yet, according to the NAHMS survey, only 12.7 percent of the nation's cow calf producers breed heifers prior to the mature cow herd.
The primary result of not breeding heifers ahead of the mature cows is that more young cows are culled early in their productive lives for being late breeders. North Dakota's CHAPS herd performance data confirms that a high percentage of cull cows are 3-, 4-, and 5-year-olds. Once a cow gets to be 6 years old, the late breeders are gone and the remaining 6-year-olds generally stay in the herd for several years.
As an economist, I can assure you that one of the quickest ways to increase the unit cost of producing a hundredweight of calf in a beef cow herd is to cull 3-, 4-, and 5-year-old cows and replace them with expensive replacement heifers. As a general guideline, my data suggest that it costs $600 to $700 to bring in a raised replacement heifer.
Longevity is an absolute must for replacement heifers to generate a profit. My current economics analysis suggest that it takes the net income from the first six calves to pay for the initial cost of a replacement heifer. The only profit that would be generated for producing six calves would be the salvage value of the cull cow. Profit from a replacement heifer comes from the net income generated after her first six calves plus her cull cow value.
One can not help but wonder what the profits in the beef industry would be if recommended heifer development practices were adopted by U.S. producers. According to the recent NAHMS survey, only 3 percent of U.S. producers pelvic check heifers. Even fewer (1.2 percent) calculate reproductive tract scores. Only 3 percent synchronize estrus, and only 3.3 percent use artificial insemination. Only 4.6 percent assign body condition scores to their heifers. Only 7.9 percent weigh heifers, and only 15.9 pregnancy check or palpate heifers. Clearly, most producers do not follow the recommended heifer development practices.
I think it would be appropriate at this time to make some general comments on the cost of producing a replacement heifer in the fall of 1999. First we have to start with the market value of a weaned 1998 heifer calf. A 500-pound 1998 heifer calf that could have been sold for $69 per hundredweight has a beginning opportunity cost of $345. My budgets suggest that it will take $150 to go from weaning to breeding. Wintering costs include feed costs ($83), lot cost ($18), interest ($23), vet and medicine ($3) and death loss ($6) for a total cost of $133 per head. Costs from pasture turnout to breeding are pasture ($8), feed grain ($3), and interest on previous investment ($6), for a total winter to breeding cost of $150. Costs from breeding to pregnancy check include pasture costs ($41), breeding costs ($20), and interest on investment ($28). The total costs of producing a bred heifer in November 1999 is projected to be $584.
Not all heifers will be pregnant. Adjusting this $584 cost for an 80 percent pregnancy rate brings the cost of producing a pregnant replacement heifer to $730 per head. After adjusting for the value of cull open heifers sales (one out of every five heifers weighing 950 pounds and sold at $60 per hundredweight) each bred heifer has an open-heifer credit of $114. This reduces the cost of a bred heifer to $616 per head. Let me summarize all of this by suggesting that it costs from $600 to $700 to produce a replacement heifer.
My last several Market Advisor columns presented a procedure for determining the economic value of a bred heifer checked pregnant this fall and demonstrated the impact that the current beef price cycle has on today's economic value of a bred heifer. My projected economic value for a bred heifer was a little more than $800 for a pregnancy checked heifer in November 1999. This projected $100 to $200 value added to 1998 heifer calves converted to pregnancy checked heifers is the highest projected value added for any heifers born during the current beef price cycle.
The economic value of bred heifers was prepared annually for the years 1979 through 2004 and charted. Two points standout on this chart. First, the highest calculated value of a bred heifer was for a heifer calf born in 1985 that was checked pregnant with her first calf in 1987. This heifer produced her seven consecutive calves during the six high-priced years of 1988 through 1993 with her final calf produced in the lower prices of 1994.
The second key point in the chart is the projected peak in the economic value of a heifer in the 1990s is lower than the peak in the 1980s. Clearly, my data on the economic values of bred heifers suggests that the cost-price squeeze of the 1990s will continue for beef cow producers.
My IRM herd analyses indicate that high-profit herds distinguish themselves by what they do with the females in their herds. Heifer development seems to make a big difference.
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Source: Harlan Hughes (701) 231-7380
Editor: Tom Jirik (701) 231-9629
Click here for a pdf version of this graphic. (13KB b&w graph)