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Herd Replacements: Raise or Buy?

That question is back on the radar with much lower prices.

The raise-or-buy question for replacement heifers is not new, but it’s worth a new look.

Market prices for purchased heifers have come back down to earth in the last year, along with most other segments of the business. In some cases, per-head prices for quality bred heifers have declined from roughly $3,000 (or more) down to $2,000 (or less) now.

That should get your attention, says Iowa State University (ISU) Extension cow-calf specialist Patrick Gunn, but it’s certainly not the whole story.

“How many replacements do you need every year?” he asks. “If it’s only a handful, it may not be a priority of your time to develop heifers. If you have a bigger herd, maybe that’s different.”

Gunn, who is neutral on the question, lists these major pros to raising your own.

  • You can raise them to your specifications and follow your best-management practices.
  • You know they are adapted to your environment. “A good example could be the forages on your farm,” says Gunn. “When you raise your own heifers, they’re adapted.”
  • In most instances, you can raise them for less money than you can buy them – even in today’s market.

Gunn makes three points for purchased replacements:

  1. “Genetic gain,” he says quickly. “Sometimes you can buy dramatic advancements in genetics much faster than you can breed for them.”
  2. You don’t have the subenterprise of heifer development to manage. “It’s one less group of animals to feed, pasture to maintain, pen to sort,” says Gunn.
  3. You no longer need that calving-ease bull exclusive for heifers. 

ISU has an online Ag Decision Maker calculator to help estimate the cost to grow and develop heifers, using your own farm costs (extension.iastate.edu/agdm, file B1-73). It was designed by Gunn and Extension economist Lee Schulz. 

They recently ran an estimate using projected prices for calves, feed, and other costs in the coming year. The truncated version in the box below says that if all genetics are considered equal, 485-pound heifer calves are $1.53 per pound this fall, and replacement-bred heifers are $1,750 per head in 2018, then the economics are close. 

“It slightly favors purchased replacements, and that’s the first time in four years it has projected that way,” says Schulz.   

“This shift emphasizes that this decision should be reevaluated annually,” adds Gunn. “Plus, if we place any intrinsic value on not managing another group of cattle or not needing a calving-ease bull, it further leans toward buying replacements.

“Selecting replacement females will influence the future direction and growth of your herd – and the entire beef industry,” Gunn predicts. “It deserves a lot of thought and consultation with your team of experts, including your Extension beef specialist, herd health veterinarian, and nutritionist,” he says. 

HerdReplacementBudgetBreakdown

the heifer market

The bred heifer market, like all cattle markets, has gone soft. Find a good price tracker in the auction results from Missouri’s Show-Me Select bred heifer program, where top-quality heifers have to meet high health and reproductive standards to qualify. The Joplin, Missouri, Show-Me Select auctions over the last three years offer a good illustration. Bred heifers averaged $2,889 per head in 2014, $2,477 in 2015, and $2,054 in December 2016

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