How Do Current Market Incentives Affect Genetic Selection Decisions?
BILOXI, Miss. (June 10, 2015) — Current market signals strongly support expansion of the cow herd. That’s obvious to anyone who has been paying attention to calf and feeder-cattle prices. After receiving some relief from drought and high feed costs, a good many cow-calf producers are heeding the signals and shifting into expansion mode.
“Genetic selection should be based on long-term profitability, but we live in a short-term world where prices and profitability vary widely from year to year,” said Lee Schulz.
USDA survey data suggest 83% of U.S. cow-calf producers will expand their breeding herds by retaining home-raised females. However, Iowa State University Extension Livestock Economist Lee Schulz suggested producers should consider whether buying replacement females is a more economical alternative.
Speaking at the 2015 Beef Improvement Federation (BIF) Annual Convention June 9-13 in Biloxi, Miss., Schulz said choosing between raising replacements or purchasing bred females can be a complex issue. Each has its advantages and disadvantages.
“Genetic selection should be based on long-term profitability, but we live in a short-term world where prices and profitability vary widely from year to year,” said Schulz. “Producers need to look long-term, but current situations do influence decision-making.”
Many producers feel they can better achieve genetic improvement through heifer retention. However, Schulz urged them to think about the opportunity cost. Saving heifers means less income when fewer marketable calves are sold. Also to be considered is whether the resources that would be devoted to heifer retention and development could be used for an alternative purpose.
To assist producers in making the ‘raise vs. buy’ decision, Schulz recommended the use of the Excel spreadsheets Buying Heifers for Beef Cow Replacement and Raising Heifers for Beef Cow Replacement to determine which management strategy is best in any given year.
“Current market incentives should provide an economic compass rather than a road map,” stated Schulz.
The 2015 BIF Annual Convention was hosted by Mississippi State University and the Mississippi Extension Service June 9-12 at the Beau Rivage Casino and Hotel in Biloxi. The Angus Journal and LiveAuctions.tv provide comprehensive online coverage of the event at www.BIFconference.com. Visit the Newsroom for summaries, proceedings, PowerPoints and audio of the sessions; the Awards page for announcements of award winners; and the Photos page for photo galleries of the tour stops.
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