Record high cattle prices have led to questions about additional revenue-generating options in the market, one of them being the possibility of buying bred cows, then selling both the cow and the calf later.
When looking at this option, South Dakota State University Extension Livestock Business Management Field Specialist Shannon Sand says it's important for producers to evaluate what comparative advantages they have.
In a recent SDSU iGrow entry, Sand says producers should ask several questions:
• Is there enough feed supply (raised vs. bought) to support extra livestock?
• Is there available labor to calve the extra cows?
• Is there adequate space available for cow-calf pairs in spring/summer?
• Do producers need to rent more pasture?
• What does the futures market look like for calves?
• Should we consider Livestock Risk Protection (LRP)?
• What is the potential health risk to my herd from buying a late bred cow?
• What is the potential of losing the cow and/or calf?
After answering these questions and determining their cost structure, a producer will have a better understanding of whether or not their operation can support extra cattle, Sand says.
An enterprise budget for this endeavor will provide answers to the financial components of these questions. A labor and resource analysis can answer the labor and space requirement issues.
"If all of these components are favorable then this could be a way for the operation to make additional revenue in 2015," Sand says.
See an example Cow-Calf Enterprise Budget on the SDSU iGrow article, Buying Late Bred Cows and Their Potential for Additional Revenue.