Dynamic Marketing and Retention Decisions for Cow‐Calf Producers

Abstract

AbstractOptimal calf retention and marketing activities for cow‐calf producers are examined using a expected utility‐maximizing discrete stochastic programming model. Steer, heifer, and corn prices are modeled as stochastic variables. The mathematical model is used to consider retention at weaning and yearling stages and marketing alternatives of cash, hedging, and options. Results show how calf retention decisions depend upon current profit, expected future profit distributions, pricing alternatives available, and the cow‐calf producer's aversion to risk.