Economic returns and market risk of extending days on feed for beef × dairy cross heifers

Objective

Our objective was to estimate economic net returns and return risk for beef × dairy cross heifers as days on feed (DOF) are extended.

Materials and Methods

Cattle production information and carcass performance data were obtained from a recent publication detailing a beef × dairy heifer cross serial slaughter study. Before final implant date heifers were treated the same through the first 265 DOF. At terminal implant, heifers were randomized into 4 treatment groups. Treatment 1 was fed for 58 d after randomization; treatment 2 for 79 d; treatment 3 for 97 d; and treatment 4 for 120 d. Baseline budgets were constructed using 5-yr average prices. Scenarios varying prices and costs and risk analysis of price changes over extended DOF were analyzed.

Results and Discussion

Net returns varied in economically important ways as DOF were extended. In baseline scenario, treatment 1 had highest net return of $99.84/head (hd) and treatment 4 lowest return of $57.13/ hd. Changing feed cost, carcass base price, and QG adjustments generally did not alter ordering of net returns across DOF. With low feed prices or high carcass prices, extending DOF increased net returns in some scenarios. Sensitivity analysis changing prices revealed base carcass price was the dominant risk determinant representing >90% of return risk. Return standard deviations ranged $69.06/hd for 3 wk extended DOF to $114.52/hd for 9 wk.

Implications and Applications

Extending DOF reduced net returns in the baseline. With different market conditions from baseline, extending DOF could increase returns. Market risk, especially carcass base price changes, was prevalent when extending DOF.