SYMPOSIUM PAPER: Economic and Tax Implications for Managing Beef Replacement Heifers1,2

Professional Animal Scientist, Jun 2005 by Clark, R T, Creighton, K W, Patterson, H H, Barrett, T N

Abstract

Sustainable cowherds require replacement of cull cows either internally via raised heifers or externally with purchased females. Managing raised replacements begins with a weaned heifer calf and continues on through her second pregnancy and calving. Replacement costs were estimated from research conducted in Nebraska for spring-calving cowherds and included the opportunity cost of the heifer calf. The analysis, based on research data, showed that heifer development programs targeted to 50 to 55% of mature BW (MBW) at first breeding can be successful, challenging the traditional target of 65% of MBW at first breeding. The lower BW programs achieved first-calf pregnancy rates near 90% of heifers exposed and resulted in development costs that were $25 to $30 per head lower than the higher BW programs. Finishing or selling open first-calf heifers was shown to be an economically viable enterprise given development costs were not too large. Numbers of open first-calf heifers were shown not to greatly affect total development costs. The primiparous heifer can increase the overall heifer development costs if not managed properly. Research showed that strategic nutritional programs for primiparous heifers resulted in successful reproduction without large increases in costs (

(Key Words: Heifers, Economics, Prices, Taxes, Primiparous.)

Introduction

Beef-cow replacement is necessary to sustain an operation. The costs of managing the replacement female are influenced first by the development costs (or purchase price) of the yearling heifer. To understand the options related to managing the 2-yr old, it is necessary to understand her management as a weaned calf through breeding and calving. The replacement heifer can also be purchased as a pregnant, first-calf heifer.

Based on various research projects over a number of years, the concept that heifers should be at or near 65% of their expected mature BW (MBW) when exposed for breeding the first time has evolved (Patterson et al., 1991). The research has implied that the size is necessary for successful breeding and eventual delivery of the calf. Breed differences in success of breeding the first time have also been observed (Patterson et al., 1991). Recent research questions whether or not the 65% level is necessary (Creighton, 2004; Deutscher et al., 2001) for successful development of replacement females, especially when cost factors are considered.

Successful first breeding and calving of the heifer is only part of a successful replacement strategy. The challenge is to get the heifer pregnant with the second calf. Research related to reproductive performance of the primiparous (first parity experienced) heifer has shown that nutrition is one of the keys (Patterson et al., 2003). Proper nutrition has economic consequences.

This paper examines economic issues related to raising the heifer, ineluding developing her to become pregnant with her second calf. In addition, we discuss differences in tax consequences of raising the heifer vs purchasing a pregnant heifer. We will look specifically at research conducted at the University of Nebraska's Gudmundsen Sandhills Laboratory near Whitman, Nebraska over the past several years. The costs of heifer development will be examined using the actual feed inputs of this research over a range of input prices and prices for the heifer calf.

Review and Discussion

Procedures of Reviewed Heifer Development Studies. A 3-yr (1998-2000) study (Experiment 1) of heifer development for spring-calving MARC II (� each of Angus, Hereford, Simmental, and Gelbvieh) cows at Gudmundsen Sandhills Laboratory was conducted (Deutscher et al., 2001; Funston and Deutscher, 2003). Each yr, 80 heifer calves were randomly allotted within age and BW to two treatment groups in mid December. (Calves had been weaned in late September.) The two treatments, low gain or high gain, were intended to achieve pre-breeding target BW of 299 kg (55% MBW) or 327 kg (60% of MBW), respectively, by May 15. Each year heifers were placed into dry-lot pens by treatment group for the winter feeding phase. The winter diet consisted of meadow hay fed for ad libitum intake. Supplements were based on wheat middlings and soybean hulls and contained 40% CP plus Rumensin� (Elanco Animal Health, Greenfield, IN). Cracked corn was fed as needed to achieve a balanced diet so that the two treatment groups would gain to achieve their target BW. The heifers were managed together during the breeding season, which began on May 20 and lasted 45 d. Heifers were exposed to four Angus bulls. The heifers were pregnancy tested about 60 d after the end of the breeding season.

After breeding, heifers from both treatments grazed subirrigated meadow. During the winter, heifers were fed meadow hay, grazed dormant range, and received 0.68 kg/d of a 40% CP supplement. Calving began about March 1. After calving, the heifers were fed good quality meadow hay plus 0.68 kg/d of 40% CP supplement until mid May when they were moved to summer pasture. The heifers were exposed to MARC II bulls beginning June 5 of each year. Calves were weaned in early September of each year. After weaning, all pregnant 2-yr-old cows were placed and managed with the mature cowherd.