Marketing Opportunities for AI Bred Heifers
Academic approach to bred heifer valuation for long-term investment.
STILLWATER, Okla. (Oct. 8, 2014) — Now is the time to build a risk-management strategy for long-term growth, Scott Brown, assistant research professor for agriculture and applied economics at the University of Missouri (MU), told attendees of the 2014 Applied Reproductive Strategies in Beef Cattle (ARSBC) symposium hosted in Stillwater, Okla., Oct. 8-9. We won’t have record cattle prices forever, and feed costs will fluctuate, he reasoned.
Scott Brown predicted current record-low U.S. cattle numbers will continue.
Brown predicted current record-low U.S. cattle numbers would not change soon. Cattle producers are experiencing prices and demand not previously observed. Brown said he wished the record prices were because of record demand, not because of record-low numbers. Looking ahead is more important than ever, he warned.
For effective risk management when looking at herd investments, Brown advised the best way to determine net present value of bred heifers is to start with projected prices, not historical prices. Using assumption models for future input and output prices, projected calving success, and loan assumptions for bred heifers, producers can more accurately predict future breakevens.
In today’s unprecedented cattle market, genetic improvements gained through use of synchronized artificial insemination (AI) have more impact and need to be a part of risk mitigation, said Brown. Data from the Missouri Show-Me-Select Replacement Heifer Program show an average premium of $407 for Tier 2 heifers sold bred to high-accuracy sires used via AI compared to heifers sold bred natural service to low-accuracy sires.
The use of AI may provide cow-calf producers with a greater long-term risk-mitigation strategy. Brown suggested producers should be mindful that quality affects profitability. Real-world data show selling calves above the average market value adds up to $591 to the valuation of bred heifers.
“Better genetics could be one risk-reducing alternative, and now is the time to invest for long-term growth,” said Brown.
MU offers decision-making tools and calculators for free download at http://beef.missouri.edu/tools/index.htm to help producers determine the best return on investment.
Brown spoke during Wednesday's ARSBC session focused on the economic impact of reproductive technologies. For more information, visit the Newsroom at www.appliedreprostrategies.com to view his PowerPoint, read the proceedings or listen to his presentation.
Comprehensive coverage of the symposium is available online at www.appliedreprostrategies.com. Compiled by the Angus Journal editorial team, the site is made possible through sponsorship by the Beef Reproduction Task Force.
Editor's Note: This article was written under contract or by staff of the Angus Journal. To request reprint permission and guidelines, contact Shauna Rose Hermel, editor, at 816-383-5270.