Profitability of Producers Who Purchase Beef Cows vs. Those Who Raise Replacements

Abstract

Because the cow-calf sector of the beef industry is mature, average sale price (including high profit and low profit years) hovers around the average cost of production. For cow-calf operations to maintain profitability, producers must either command a higher price or produce calves at below average cost. With the exception of the seed stock sector, calves are usually considered a commodity product; consequently, focusing on producing calves at below average cost is generally more profitable. Comments are often made that it is cheaper to purchase replacements rather than raise heifers. Our objective was to evaluate the profitability and overall production cost of producers who purchase cows compared to producers raising replacement females.