What is a bull worth

[gizmom]

I read this article, it was worth the read love to hear your thoughts.

http://www.cattlenetwork.com/advice-and ... d-pay-bull

Gizmom

 

[turning grass into beef]

The reasoning brought forward in this article is the same reasoning we have used for years. It makes perfect sense to me. Either great minds think alike or fools seldom differ. :?

 

[cow pollinater]

Yep... I don't do it anymore because I don't want the business but I used to love it when people would tell me that AI was to expensive because it gave me a reason to show them on paper what genetics are worth.

 

[Son of Butch]

Using his numbers, 10 lbs extra per calf weaned = $2400 GROSS lifetime added value.
But you won't realize the full $2,400 for 5 years! 6.25% interest on 2400 = $150 x 5 = $750 2400-750 = $1650
Using 70% accuracy for the 10 extra lbs 70% x 1650 = $1155
28% tax on the $1155 added value = $323 1155-323 = $832
$832 + 4000 [average] = $4,832 as the break even cost vs $4,000
since you the buyer are the one assuming the risk...shouldn't you be rewarded?... say $332 of the $832
832-332 = $500

So rather than the bull being worth $6,400 vs the $4,000 as the author would lead you to believe.
$4500 in my opinion would be the fair market value for the extra 10 lbs vs the $4,000 average bull according to my math.

 

[branguscowgirl]

Very interesting. Thanks for sharing. I liked the network also.

 

[cow pollinater]

Using his numbers, 10 lbs extra per calf weaned = $2400 GROSS lifetime added value.
But you won't realize the full $2,400 for 5 years! 6.25% interest on 2400 = $150 x 5 = $750 2400-750 = $1650
Using 70% accuracy for the 10 extra lbs 70% x 1650 = $1155
28% tax on the $1155 added value = $323 1155-323 = $832
$832 + 4000 [average] = $4,832 as the break even cost vs $4,000
since you the buyer are the one assuming the risk...shouldn't you be rewarded?... say $332 of the $832
832-332 = $500

So rather than the bull being worth $6,400 vs the $4,000 as the author would lead you to believe.
$4500 in my opinion would be the fair market value for the extra 10 lbs vs the $4,000 average bull according to my math.

You touched on my original thought that I didn't get into with the lifetime part.
I consider a bull purchase to be similar to a land purchase. I can't mortgage a place for fifteen years based on current prices without expecting to be upside down on my investment at some point.
Bulls are a shorter term investment but I still average it out over five years. This year I considered to be a high point and made due with what I have on hand.

 

[gizmom]

Branguscowgirl

Let me preface this comment with I was put to sleep today for a minor surgery so I may be missing something. I thought based on stockers and feeders the author was estimating the average price per bull between 4400 and 4800 where did the 4000 come from. Again I am stll a bit out of it so type real slow lol.

Gizmom

 

[Son of Butch]

2.1 times fat steer price = $4,368 old timers use 2 fat steers 2080 x 2 = $4,160
But it doesn't matter if the average is $3,000 or $6,000
What needs to be measured is the added value difference to me the buyer of the $2400 added gross lifetime value.
Nobody should pay a $2400 premium today for a return of $2400 doled out over 5 years.

My point is my math says 10 lbs added per calf to me = is worth a premium of 20-25% of the gross increase
Not 100% as the author implies.
I am conservative with my money, other producers should use whatever numbers work for them.
Great article for Bull Sellers....for Bull Buyers....not so much.
But if it gets you thinking, then it certainly is a very worthwhile article.
To me:
5 lbs added difference = $250 premium I can afford to pay for the bull.
20 lbs difference = $1000 premium + whatever average price you use.... be it 4,000 or 6,000

 

[WalnutCrest]

A great bull is worth more to a guy with great cows than it is to a guy with so-so cows.

Why?

The guy with the great cows will have a more difficult time improving in the next generation without a great bull. The guy with so-so cows could improve with anything that is better than a so-so bull.

And, then, among the guys with great cows, the more of them he plans on exposing to the bull, the more he should be willing to pay. So, all else being equal, an operation of 10 great cows will pay less for the same bull than an operation of 30 great cows should be willing to pay.

 

[Son of Butch]

A great bull is worth more to a guy with great cows than it is to a guy with so-so cows.

Why?
The guy with the great cows will have a more difficult time improving in the next generation without a great bull.

Back up your statement... Show your Math

To a guy selling all his calves as feeders it wouldn't make a difference... would it?
Or would the expected increase in calf $ weaned be greater by a great bull on a so-so cow more than the same bull would
increase calf $ weaned when used on a great cow?
Or would a bull with +26 lbs weaned difference from the breed average epd be expected to increase both cows
calf weaning weight 26 lbs?

 

[B&M Farms]

A bull is one of my least expensive purchases in my opinion. Don't forget today you can take that bull to the sale barn after 5 years and get $2000 back. If I spend $6000 for a bull, and then figure $350 a year up keep on him minus the $2000 salvage I get for him after 5 years, I got $5750 in the bull. If I breed him to 30 cows and have a 2% death loss, I end up with around $40 bull cost per calf. About $25 more per calf then using a $2500 bull. I could have saved the extra $3500 and bought the $2500 bull but the interest wouldn't have improved my herd and we have not added higher wean weights or better replacements yet. I may be wrong but I think with $1200+ calves right now most folks can afford to pay more for a decent bull.

 

[highgrit]

I feel bull prices are a little weak, and it's not going to get any better. To me it's a supply and demand thing. With all the information that's out there it's easy for people to breed good bulls. Seems like with the use of embryos, and AI, anybody can raise good bulls. Everybody is producing the same animals, at least by the numbers and names. Knowing how to feed a bull out so that he can past the eye test is the hardest part of raising good bulls anymore. I was at a sale Saturday and the bulls sold good, but the 3 in 1's sold as good or better. And to me that's a bad sign for the folks that raise bulls.

 

[ANAZAZI]

A great bull is worth more to a guy with great cows than it is to a guy with so-so cows.

Why?
The guy with the great cows will have a more difficult time improving in the next generation without a great bull.

Back up your statement... Show your Math

To a guy selling all his calves as feeders it wouldn't make a difference... would it?
Or would the expected increase in calf $ weaned be greater by a great bull on a so-so cow more than the same bull would
increase calf $ weaned when used on a great cow?


Or would a bull with +26 lbs weaned difference from the breed average epd be expected to increase both cows
calf weaning weight 26 lbs?

If weaning weights are the same and all calves sold are feeder calves, there is still the thing that a great bull is better to keep replacements from than a so-so bull. Greatness can be many things, for a terminal bull it is decent calvings, godd muscle and growth. if replacements is an issue, things get more complicated.

 

[Son of Butch]

A bull is one of my least expensive purchases in my opinion. I may be wrong but I think with $1200+ calves right now most folks can afford to pay more for a decent bull.

Decent bulls can be bought for $6000 or less.
A penny saved is a penny earned
Even if you think $1200 calves [$864 calves after income tax] are here to stay for the next 5 yrs, it is no reason to pound money down a rat hole. It's human nature to love hearing 'easy money.' That's what bull sellers do, whispering a siren's sound of
"easiest money you'll ever make, just spend more money on a new bull."
No bull seller will like hearing it, but the more I go through the numbers the more convinced I am that anyone running less than a 26:1 cow to bull ratio and selling all of their weaned calves are pounding money down a rat hole if they paid more than $6,000 for any bull in their pasture with less than +6 ced and 61 ww with less than 60% genetic accuracy. AAA sire evaluation search lists only 100 meeting the criteria and darn hard to come by outside of A.I. studs. There are better places for the majority of commercial ranchers to invest their money; than in what amounts to an over priced low accuracy unproven bull.
For a bull to be worth more than $6000 he needs to be not only proven geneticly superior, but he needs to be contributing to the herd genetics through replacements.
"A penny saved is a penny earned" is the song of common sense.
"You've got to spend money to make money" is the song of someone trying to get their hand in your pocket.

 

[highgrit]

$6,000. For a bull around these parts is unheard of. I've seen close to 200 registered bulls sold since the first of the year. And maybe 7% sold for $6k or more and Zero sold for more than 7k. And buddy, buddy sales are included in my estimate. As a cow calf operation the most important thing is a live calf, rate of gain and color. All the other numbers don't mean much come sale time.

 

[mwj]

A bull is one of my least expensive purchases in my opinion. I may be wrong but I think with $1200+ calves right now most folks can afford to pay more for a decent bull.

Decent bulls can be bought for $6000 or less.
A penny saved is a penny earned
Even if you think $1200 calves [$864 calves after income tax] are here to stay for the next 5 yrs, it is no reason to pound money down a rat hole. It's human nature to love hearing 'easy money.' That's what bull sellers do, whispering a siren's sound of
"easiest money you'll ever make, just spend more money on a new bull."
No bull seller will like hearing it, but the more I go through the numbers the more convinced I am that anyone running less than a 26:1 cow to bull ratio and selling all of their weaned calves are pounding money down a rat hole if they paid more than $6,000 for any bull in their pasture with less than +6 ced and 61 ww with less than 60% genetic accuracy. AAA sire evaluation search lists only 100 meeting the criteria and darn hard to come by outside of A.I. studs. There are better places for the majority of commercial ranchers to invest their money; than in what amounts to an over priced low accuracy unproven bull.
For a bull to be worth more than $6000 he needs to be not only proven geneticly superior, but he needs to be contributing to the herd genetics through replacements.
"A penny saved is a penny earned" is the song of common sense.
"You've got to spend money to make money" is the song of someone trying to get their hand in your pocket.

If your per calf tax cost is $356 you have a lot bigger problem than bulls! That makes me wonder about some of the figures people use to justify or support there side of a discussion. :cowboy:

 

[Supa Dexta]

Another thing I notice is people that have been grinding away for years, doing the best they can, trying to get better every year. They pay close attention to their animals health and breeding, They dont over do the land, they don't let the animals suffer at all. And then someone comes along and buys up a bunch of junk cows, loads a rented farm to the hills, and goes and makes a bunch of money in the short term and thinks they're a big cattleman now. They must know better, they have more cows. Meanwhile, they have a terrible death loss, the animals that do live to sale as sub par.. But if they end goal is money. I guess they win since they made more overall.

Bringing that back to bulls, as long as they can throw a few ok bulls in to get the job done, and the calves aren't total losers, they still brought good dollars last fall. Three 2000 dollar bulls to your 1 6k bull.

One of my bulls (simang) was actually saved from slaughter coming off test because of a wart on his pecker, he was bought as a spare to cover some animals on another pasture after we treated the wart. He's actually proved himself and outlasted my higher dollar purebreds. He cost me 1300 dollars. But had he made that sale, he would have easily been several thousand a few years ago

And you're actually seeing discounts now for calves that grow too good.. If you've got them too fleshy the buyers are hitting you with a penalty because you raised TOO good of animals.

I had some just ok calves this year that weaned early and at just over 600lbs brought 2.85. Around $1740 a piece! Turns out some other guys held their calves since that time, fed well all winter and are now 900lbs and are now getting about 1.80 - just over $1600 for an animal 300lbs heavier. Show me where it pays to get real heavy calves. Could I have eeked out a touch more on slightly heavier calves back at weaning time? Yes, but just barely and not nearly enough to cover high end bulls or pay for creep or anything.

 

[WalnutCrest]

A great bull is worth more to a guy with great cows than it is to a guy with so-so cows.

Why?
The guy with the great cows will have a more difficult time improving in the next generation without a great bull.

Back up your statement... Show your Math

To a guy selling all his calves as feeders it wouldn't make a difference... would it?
Or would the expected increase in calf $ weaned be greater by a great bull on a so-so cow more than the same bull would
increase calf $ weaned when used on a great cow?


Or would a bull with +26 lbs weaned difference from the breed average epd be expected to increase both cows
calf weaning weight 26 lbs?

If weaning weights are the same and all calves sold are feeder calves, there is still the thing that a great bull is better to keep replacements from than a so-so bull. Greatness can be many things, for a terminal bull it is decent calvings, godd muscle and growth. if replacements is an issue, things get more complicated.

I should have clarified. My comments were for the guy who's raising his own replacements and/or raising someone elses replacements as both of them are in the seedstock business.

The purely terminal operator can, more often than not, do ok w/ a so-so bull. The seedstock guy? Not so much.

 

[bigbull338]

a bull is worth what the buyers will give for him.and thats the bottomline.right now where i am the bull market is hot.but you can still find good deals if your in no hurry.when i go to replace my bull im looking at $6000 depending on what sale i go to.some of the sales i know the $6000 might not touch a bull.

 

[bulldurham]

I've seen this article a few times as well and I think it's awfully presumptuous. It implies there's a direct correlation between a bulls epds profile, the validity of the profile, and the sale price the bull is sold for. This couldn't be farther from the truth.

I take a lot of pride in my bulls and generally spend more than what pencils out in the short run. As a purebred breeder, I justify spending more than I can pencil out as it is nearly impossible to quantity the added value a bull brings to the table in terms of increasing the quality of replacements. Not to mention, I get a great deal of satisfaction knowing I have quality animals.

For the commercial guy with 30-40 cows, I think it is outrageous to be spending 5k+ on a herd sire. Not because perhaps he won't pencil out,,, but because you just don't have to pay that much in order to buy a sufficient quality bull.