The Cattle Business -- Buying vs. Raising Heifers

Livestock Update, December 1997

Bill R. McKinnon, Animal and Poultry Sciences, Virginia Tech

The question often arises, "Should I buy my beef replacement females instead of raising my own?' The question does not have a simple answer and is dependent upon a number of issues. The question does have some economic consequences, but many of the factors in the answer to whether to raise or buy replacements are not purely economic. Even the option of purchased replacements has at least three alternatives: bred heifers, bred cows, or cow/calf pairs. Below is a list of some of the factors to be addressed in deciding upon the replacement female route.

Factors Influencing the Source of Replacement Females (raised, purchased bred heifers, bred cows, or cow/calf pairs)

Herd size
Breeding program (genetics)
Relative costs of heifer calves, bred heifers, bred cows, and cow/calf pairs
Feeder calf price trends
Relative production levels
Owner management level
Facilities
Feed resources
Tax implications
Cull rate

Owners of one bull breeding units (the most common herd size in Virginia) have a more difficult time in effectively generating their own replacements. To start with, a herd of 30 cows or less may only need to keep back 4 to 6 heifers per year. Maintaining this small group of heifers separately so that they are managed appropriately can be a difficult problem on some farms. With a one bull unit it is extremely difficult to implement any crossbreeding program to take advantage of heterosis. In fact, the one bull unit generating its own replacement heifers is pushed in the direction of using British genetics almost exclusively. Unless a commitment to using artificial insemination on the first calf heifers is made, the herd owner is coerced into using breeds with relatively light birth weights to minimize calving difficulty in the heifers. The operator that must use the same bull on first calf heifers as is used on the mature cowherd will likely be forced to give up some genetic potential for growth in his bull as he must also select for light birth weights. Though the light birth weight - high growth bulls are available, they do tend to be higher priced. To avoid sire:daughter matings the length of time a bull can be used in a one bull herd keeping replacements is also shortened.

Smaller herds can solve many difficult issues by purchasing their replacement females. Without having to be concerned about both generating and breeding replacement heifers, the smaller herd can make use of a systematic crossbreeding program. The one bull owner with purchased replacements can also shift toward more growth oriented genetics without as a severe limit on calf birth weight.

The type of breeding program within a commercial herd may also influence the decision of raised vs. purchased females. An operation utilizing crossbred cows and a terminal sire breed of bull may wish to maintain that program through the purchase of females with specific genetic makeup. Conversely, a straightbreeding program easily generates its own replacements.

The relationship between the costs of heifer calves, bred heifers, bred cows, and cow/calf pairs can play in huge role in the decision whether to raise or buy replacements. The relative prices of the four classes of females will change with the season of the year and phase within the cattle cycle. Evaluating the true economic worth of one class of female can be a challenging task. The true economic picture will vary from operation to operation.

The time period with the particular cattle price cycle will also influence the relative advantage of each method of female replacement. In a period with the short term forecast for higher calf prices, the bred female or cow/calf pairs allow for immediate production during a higher price phase of the cycle. Prices at what appear to be near the bottom of a price trough signal the use of cheaper heifer feeder calves for replacement and possible expansion.

One commonly espoused advantage of using home raised heifers for replacements has been the owner's confidence in the above average productivity of his females. There is no doubt that females with above average performance are worth more and tilt the advantage to home raised replacements. Heifers that will raise calves 50 pounds heavier than their contemporaries are worth approximately $100 per head more over a five year period. Some producers need to be reminded that not everyone's females are of above average performance. Somebody has to be below average.

Conversely, the purchased female may offer a superior genetic package to some producers. The purchased female may allow the small to medium sized herd to stabilize a crossbreeding program and avoid mongrelization. On the other hand, larger, well managed herds operations can develop a genetic package adapted to the environment and well suited to the farm's particular set of resources.

Cow/calf managers need to seriously evaluate their resources as they make their replacement female decisions. To do an excellent job at heifer development requires sufficient levels of management ability, proper facilities, and feed resources. Doing a marginal job at raising heifers on the farm may ultimately result in the most expensive source of productive cows.

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