IDEAS home Printed from https://ideas.repec.org/a/ags/jloagb/14695.html
   My bibliography  Save this article

The Beef Cow Replacement Decision

Author

Listed:
  • Mathews, Kenneth H., Jr.
  • Short, Sara D.

Abstract

This analysis examines effects of several common assumptions on net present values (NPVs) of beef cows. While effects on NPVs vary over a price cycle or successive price cycles, several generalities manifest themselves. A cow is not likely to recover the lost revenue from not having just one calf. Incorporating genetic improvement into the herd increases the probability of an older cow being culled. Variable net replacement/culling rates make sense in the context of cattle inventory and price cycles because of the effects cyclical series of prices have on NPV.

Suggested Citation

  • Mathews, Kenneth H., Jr. & Short, Sara D., 2001. "The Beef Cow Replacement Decision," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 19(2), pages 1-21.
    • Handle: RePEc:ags:jloagb:14695
    DOI: 10.22004/ag.econ.14695
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/14695/files/19020191.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.14695?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Holt, Matthew T. & Moschini, GianCarlo, 1992. "Alternative Measures Of Risk In Commodity Supply Models: An Analysis Of Sow Farrowing Decisions In The United States," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(1), pages 1-12, July.
    2. Jarvis, Lovell S, 1974. "Cattle as Capital Goods and Ranchers as Portfolio Managers: An Application to the Argentine Cattle Sector," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 489-520, May/June.
    3. Oscar R. Burt, 1965. "Optimal Replacement under Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(2), pages 324-346.
    4. Randal R. Rucker & Oscar R. Burt & Jeffrey T. LaFrance, 1984. "An Econometric Model of Cattle Inventories," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(2), pages 131-144.
    5. Bentley, Ernest & Shumway, C. Richard, 1981. "Adaptive Planning Over The Cattle Price Cycle," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 13(1), pages 1-10, July.
    6. Jean-Paul Chavas & Richard M. Klemme, 1986. "Aggregate Milk Supply Response and Investment Behavior on U.S. Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 55-66.
    7. James N. Trapp, 1986. "Investment and Disinvestment Principles with Nonconstant Prices and Varying Firm Size Applied to Beef-Breeding Herds," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 691-703.
    8. Foster, Kenneth A & Burt, Oscar R, 1992. "A Dynamic Model of Investment in the U.S. Beef-Cattle Industry," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(4), pages 419-426, October.
    9. Russell Tronstad & Russell Gum, 1994. "Cow Culling Decisions Adapted for Management with CART," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 237-249.
    10. Rosen, Sherwin & Murphy, Kevin M & Scheinkman, Jose A, 1994. "Cattle Cycles," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 468-492, June.
    11. Frances Antonovitz & Richard Green, 1990. "Alternative Estimates of Fed Beef Supply Response to Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 475-487.
    12. Melton, Bryan E., 1980. "Economics Of Beef Cow Culling And Replacement Decisions Under Genetic Progress," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 5(2), pages 1-12, December.
    13. John Haltiwanger & Russell Cooper & Laura Power, 1999. "Machine Replacement and the Business Cycle: Lumps and Bumps," American Economic Review, American Economic Association, vol. 89(4), pages 921-946, September.
    14. Yair Mundlak & He Huang, 1996. "International Comparisons of Cattle Cycles," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 855-868.
    15. Enrique R. Arzac & Maurice Wilkinson, 1979. "A Quarterly Econometric Model of United States Livestock and Feed Grain Markets and Some of Its Policy Implications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 297-308.
    16. Bentley, Ernest & Waters, James R. & Shumway, C. Richard, 1976. "Determining Optimal Replacement Age Of Beef Cows In The Presence Of Stochastic Elements," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 8(2), pages 1-6, December.
    17. R. K. Perrin, 1972. "Asset Replacement Principles," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(1), pages 60-67.
    18. Sherwin Rosen, 1987. "Dynamic Animal Economics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(3), pages 547-557.
    19. John M. Marsh, 1999. "The Effects of Breeding Stock Productivity on the U.S. Beef Cattle Cycle," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 335-346.
    20. Nelson, Kenneth E., 1984. "The Cattle-Beef Subsector In The United States: A Brief Overview," Staff Reports 276837, United States Department of Agriculture, Economic Research Service.
    21. W. Marshall Frasier & George H. Pfeiffer, 1994. "Optimal Replacement and Management Policies for Beef Cows," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 847-858.
    22. Blake, Martin J. & Gray, James R., 1981. "A Method For Determining Ranch Profit Probabilities When Livestock Yields Are Normally Distributed," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 6(1), pages 1-10, July.
    23. Nerlove, Marc & Fornari, Ilaria, 1998. "Quasi-rational expectations, an alternative to fully rational expectations: An application to US beef cattle supply," Journal of Econometrics, Elsevier, vol. 83(1-2), pages 129-161.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xu, Yecheng & Zhang, Yaoqi & Chen, Jiquan & John, Ranjeet, 2019. "Livestock dynamics under changing economy and climate in Mongolia," Land Use Policy, Elsevier, vol. 88(C).
    2. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Comparison of the investment behavior of Kazakhstani and German farmers: An experimental approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124650, Agricultural and Applied Economics Association.
    3. Boyer, Christopher & Burdine, Kenny & Rhinehart, Justin & Martinez, Charley, 2020. "Replacing Late Calving Beef Cows to Shorten Calving Season," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(2), August.
    4. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Comparison of the Investment Behavior of German and Kazakhstani Farmers: an Experimental Approach," GlobalFood Discussion Papers 122422, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    5. Boyer, Christopher M. & McFarlane, Zach McFarlane & Mulliniks, Travis & Griffith, Andrew P., 2018. "Investment into Developing Heifers: When Does She Become Profitable?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274108, Agricultural and Applied Economics Association.
    6. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Experimental examination of land investment decisions with volatile returns A comparison between Kazakhstani and German farmers," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122454, European Association of Agricultural Economists.
    7. Griffith, Andrew P. & Boyer, Christopher N. & Thompson, Jada M. & Rhinehart, Justin & Burdine, Kenny & Laurent, Kevin, 2021. "Factors Influencing Bred Heifer Price," Extension Reports 309834, University of Tennessee, Department of Agricultural and Resource Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aadland, David, 2004. "Cattle cycles, heterogeneous expectations and the age distribution of capital," Journal of Economic Dynamics and Control, Elsevier, vol. 28(10), pages 1977-2002, September.
    2. Aadland, David, 2002. "Cattle Cycles, Expectations And The Age Distribution Of Capital," 2002 Annual meeting, July 28-31, Long Beach, CA 19795, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. David Aadland, "undated". "The economics of cattle supply," Working Papers 2000-11, Utah State University, Department of Economics.
    4. Mbaga, Msafiri Daudi & Coyle, Barry T., 2003. "Beef Supply Response Under Uncertainty: An Autoregressive Distributed Lag Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(3), pages 1-21, December.
    5. Webber, C. A. & Graham, J. D. & MacGregor, R. J., 1988. "A Regional Analysis of Direct Government Assistance Programs in Canada and their Impacts on the Beef and Hogs Sectors," Working Papers 244071, Agriculture and Agri-Food Canada.
    6. Chavas, Jean-Paul, 2000. "On information and market dynamics: The case of the U.S. beef market," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 833-853, June.
    7. David Aadland & DeeVon Bailey & S. Feng, "undated". "A theoretical and empirical investigation of the supply response in the U.S. beef-cattle industry," Working Papers 2000-12, Utah State University, Department of Economics.
    8. Ge, Wei & Kinnucan, Henry, 2016. "Dynamic analysis of the livestock inventory in Inner Mongolia," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252723, Southern Agricultural Economics Association.
    9. Marsh, John M., 2001. "U.S. Feeder Cattle Prices: Effects Of Finance And Risk, Cow-Calf And Feedlot Technologies, And Mexican Feeder Imports," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(2), pages 1-15, December.
    10. Rezitis, Anthony N. & Stavropoulos, Konstantinos S., 2010. "Modeling beef supply response and price volatility under CAP reforms: The case of Greece," Food Policy, Elsevier, vol. 35(2), pages 163-174, April.
    11. Lynn Hunnicutt & David Aadland, 2002. "Market Power with Dynamic Invertory Constraints: The Bias in Standard Measures," Working Papers 2002-15, Utah State University, Department of Economics.
    12. Li, Yunhan & Shonkwiler, Scott, 2016. "A Dynamic Model of U. S. Beef Cow Inventories," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235385, Agricultural and Applied Economics Association.
    13. Boyer, Christopher M. & McFarlane, Zach McFarlane & Mulliniks, Travis & Griffith, Andrew P., 2018. "Investment into Developing Heifers: When Does She Become Profitable?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274108, Agricultural and Applied Economics Association.
    14. Xu, Yecheng & Zhang, Yaoqi & Chen, Jiquan & John, Ranjeet, 2019. "Livestock dynamics under changing economy and climate in Mongolia," Land Use Policy, Elsevier, vol. 88(C).
    15. Matthew T. Holt & Andrew M. McKenzie, 2003. "Quasi-rational and ex ante price expectations in commodity supply models: an empirical analysis of the US broiler market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(4), pages 407-426.
    16. Skold, Karl Durwood, 1989. "The integration of alternative information systems: an application to the Hogs and Pigs report," ISU General Staff Papers 1989010108000010239, Iowa State University, Department of Economics.
    17. Yeboah, Osei-Agyeman & Ofori-Boadu, Victor & Salifou, Samaila, 2009. "A Foot and Mouth Disease Induced Model of US Excess Supply of Beef," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46053, Southern Agricultural Economics Association.
    18. Zhao, Huan, 2011. "Four Market Studies for the Beef and Electric Power Industries," ISU General Staff Papers 201101010800001360, Iowa State University, Department of Economics.
    19. SaangJoon Baak, 2000. "Heterogeneous Expectations, Volatility and Welfare," Working Papers EMS_2000_01, Research Institute, International University of Japan.
    20. Feuz, Dillion, 1991. "The Optimal Prebreeding Target Weight for Replacement Beef Heifers," WAEA/ WFEA Conference Archive (1929-1995) 321483, Western Agricultural Economics Association.

    More about this item

    Keywords

    Livestock Production/Industries;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:jloagb:14695. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aeaggea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.