Texas cattle producers looking to restock herds may choose to examine all options as financial dynamics have changed due to historic high cattle prices, according to Texas A&M AgriLife Extension Service economists.
A recent Financial and Risk Management Assistance report outlined several factors for South Texas cattle producers to consider when purchasing replacements. The publication was compiled by Corpus Christi AgriLife Extension economists Mac Young and Dr. Levi Russell; Dr. Joe Paschal, AgriLife Extension livestock specialist, Corpus Christi, and Dr. Steven Klose, AgriLife Extension economist, College Station, also served as co-author.
The Financial and Risk Management Assistance program, commonly referred to as FARM Assistance, is a computerized decision support system developed to perfect methods in risk and decisionmaking for farmers, according to AgriLife Extension economists.
The economists used a 200-head herd in South Texas as a case study. Costs and returns on management practices were typical of the area. These may and can vary by operators. Ten-year averages were used to analyze and compare net cash farm income. Open heifers, bred heifers, young pairs, old pairs and open cows were evaluated to see which types would generate the most net income.
“As we move forward, higher feeder and replacement cattle prices in 2014 will have a significant impact on the short- and long-term profitability of cattle operations in South Texas,” Young said.
Current cattle prices, including replacements, are averaging 20 percent more when compared to July 2013 prices, the report notes. Availability of young pairs and open cattle will continue to be a challenge for cattle producers looking to rebuild or expand herds, the economists noted.
“Depending on the availability and price of quality replacements, more than one stocking strategy may have to be used to rebuild a herd,” Young said. “In fact, it would be wise to revisit these and other options prior to purchase to re-evaluate them as conditions change in the future.”
Based on current 2014 market prices and conditions, restocking with older open cows may be the most profitable strategy at present time, according to the study. Prices for open cows in the past year have not increased in proportion to other replacement females, but availability may be an issue due to previous culling, Young said. Average 10-year cash farm income per cow was $377 for open cows, while olderpairs generated $341, young pairs $275, bred heifers $346 and open heifers $209.