Date of this Version
Journal of Applied Farm Economics: Vol. 2 : Iss. 2 , Article 1
We estimate the profitability of developing heifers on one stockpiled cool-season grass and two stockpiled warm-season grasses during the winter months by comparing distributions of net present value (NPV) over an 11-year useful life. Furthermore, distributions of payback period and the break-even price for each calf over the heifer’s production life were generated for each forage species. These results are compared across forages as well as to a simulated drylot system for heifer development. Data comes from a grazing experiment in Tennessee, where heifers grazed big bluestem and Indian grass combination (BBIG), switchgrass (SW), or endophyte-infected tall fescue (TF) pastures. Total cost of producing the first calf from a heifer using the three forage-based systems was $1,079/ head to $1,149/head, with TF being the most expensive forage-based heifer development system, and the total cost to produce a calf from heifers developed in a drylot system ranged from $574 to $644/head higher than the forage-based systems. The NPV of heifers developed on forage ranged from $264 to $468/head, while heifers developed in a drylot system had an NPV of –$876/head. Payback period was estimated in years of age, and heifers in forage-based systems became profitable at 3–4 years of age, whereas heifers developed in a drylot were 9–10 years of age before they covered their investment cost. The results indicate that SW was the lowest risk and the most profitable forage species relative to TF. These findings suggest that low-input forage-based systems may be more profitable than drylot heifer development systems in the southeastern United States.