My thought has been that I would retain my heifers. I'm in the process of building my herd. My goal is to get the greatest value (get the best females at the best cost).
Though there are many scenarios here, I'll give another. The assumption is a herd of 20 cows. The owner/operater is seeking to expand. The scenario will be simple and not include cow/calf death loss or culled cows. The scenario assumes a 1:1 ratio of bull calves to heifer calves.
2008: 20 calves, 10 are would-be replacement heifers. Instead of retaining them, the owner sells them at $700 ea for a total of $7000. The owner saves $40/mo/heifer in feed expenses through the yearling stage (subsequently the start of the next calving season). That's approximately 5 months and $200 per heifer for a total of $2000.
2009: The owner purchases 4 springing heifers/cows at a cost of $1500 ea for a total of $6000. The owner now has 24 calves instead of 20, for a total of 12 would-be replacement heifers instead of 10. The owner also has $3000 more than he would have if he retained his heifers ($1000 in the bank from the sale of his replacement heifers, $2000 not spent in feed expenses). Instead of raising 10 bred replacements at a cost of $500/yr (total $5000), he maintained 4 cows at a cost of $500/yr (total $2000). Therefore, the owner has saved yet another $3000, bringing his total of $ saved to $5000. The owner sells the 12 2009 weaned heifers at $700 for a total of $8400. The owner saves $200 for each 2009 heifer that he didn't retain through yearling age, saving him $2400. The owner has now saved $7400 to date.
2010: Using the $1000 from the sale of the 2008 heifers and the $8400 from the sale of the 2009 heifers, the owner purchases 6 springing heifers/cows at a price of $1500 for a total of $9000. This leaves the owner with $400. At this point, the owner now has 30 head calving just as he would if he had retained ownership of his replacement heifers. The owner has saved $7400 in feed expenses. BUT, the owner has less in total assets. Though he has saved in feed expenses, he has no replacement heifers being developed.
The owner who retained heifers now has 2008 model heifers in production, giving him 30 head that are producing. He also has 10 2009 model heifers that are yearlings and nearing breeding age that are worth $900 ea ($700 at weaning age + $200 in feed expenses) for a total of $9000. The buying owner saved $7400, the retaining owner has $9500 more in assets. If the buying owner is buying BETTER heifers than he is producing, he has paid $2100 for the upgrade in quality. The retaining owner has to ask himself if $1050/yr for his labor is worth it. The buying owner has 4 more head with a significantly reduced chance of dystocia. If the retaining owner is growing his heifers on grass (very possible if he is trying to increase the size of his herd...likely has plenty of room to do this, just needs the fencing or a place to remove the bull), his expenses will feel like less than $500 per yearling as part of his feed expense will be in grass. The retaining owner is very likely to have plenty of excess grass if he is attempting to grow his herd. Thus, he may feel that he has gained more/paid less.
Taking a look from that perspective, let's assume the retaining owner is growing replacements on grass. He pays $25/hd/mo in supplemental feed over a 4 month winter ($100). For the weaned heifers, he stores 2 large round bales at $30 each ($60). He provides the same supplemental feeding for the bred heifers but stores 3 large round bales ($90). So in actual out-of-pocket feed expenses, the retaining owner has $160 per weaned heifer and $190 per bred heifer. In 2008, the retaining owner would have had $1600 in out-of-pocket feed expenses. In 2009, it would have been $1900 for the 10 bred heifers and $1600 for the 10 weaned heifers. The total out-of-pocket expenses for 2008 and 2009 would total $5100. The buying owner will have to feed 4 cows, reducing the out-of-pocket amount saved to $4620 (4 large round bales per cow @ $30 ea). This doesn't really factor the added expense for more vaccine doses and more mineral consumption. What this does tell me, however, is that either way can work. I believe that an owner with high quality cattle can retain ownership more efficiently than purchasing if he has the land to grow the heifers out on grass. If the heifers will spend most of their time in a lot, you'd probably be better off purchasing your replacements.
And regarding earlier arguments, you're only waiting 2 years one time. Every year after that, you'll have a group of heifers calving. And while you're waiting two years, your assets will still have grown. The difference is that your assets will be in the pasture grazing instead of being in a bank account.
Man, if I keep this up, my posts will be longer than Doc's (no offense intended, Doc). Mine probably just aren't as insightful, and my vocabulary is far less complex.
:compute: :cboy:
EC
Read back through the pages I specifically pointed it out in there, when it happened, what I am talking about. ;-)
