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Raising Versus Buying Replacement Heifers

February 28, 2014
Texas Heifers
  

By: Patrick Gunn, Iowa State Univeristy Extension cow-calf specialist and Lee Schulz, ISU Extension livestock economist

A major cost for cow-calf producers is obtaining an adequate supply of acceptable heifers for replacements in the herd. Although most producers raise their own, purchasing replacements sometimes can be an attractive alternative.

Selecting the most economical source of replacement heifers has major implications for effectively using resources, controlling costs, and sustaining business vitality.

Determining an optimal herd replacement strategy is a complex decision driven by several factors including:

  • Interest rates on savings or other alternative uses of capital
  • Interest rates on borrowed capital
  • Cash flow needs
  • Feed costs
  • Labor availability and costs
  • Relative price difference between cull cows and heifer calves
  • Reproductive rates
  • Forced (or involuntary) culling rates
  • Environmental restrictions on growth to weaning
  • Genetic improvement potential and/or maintaining a desired genetic base
  • Ensuring the heifer population will thrive in the given environment
  • Price and availability of bred replacement heifers
  • Tax implications

Considering these factors can determine the difference between profit and loss in any given year. So it's imperative that producers be flexible and capable of modifying herd replacement strategies as needed to take advantage of changing conditions.

To assist producers in determining which management strategy is best in any given year, we have developed a factsheet and two decision support calculators. These calculators are Excel spreadsheets that can be downloaded and used on any computer with the Microsoft Excel program.

The first spreadsheet, Buying Heifers for Beef Cow Replacement, considers the returns and costs that will change if replacement heifers are purchased rather than raised from within the herd.

The second spreadsheet, Raising Heifers for Beef Cow Replacement, considers the returns and costs that will change if replacement heifers are raised from within the herd rather than purchased.

All three resources are available on the Ag Decision Maker website.

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