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Modeling the Cattle Replacement Decisions

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  • Arnade, Carlos Anthony
  • Jones, Keithly G.

Abstract

In this paper we evaluate the performance of a dynamic model of cattle replacement and culling decisions. We derive the price of cattle when it is treated as a unit of capital and evaluate various rates of adjustment of the cattle herd to determine the length of the cattle cycle. Replacement decision is modeled as the solution to a dynamic optimization problem where the breeding herd is viewed as a capital asset that is capable of producing two outputs: calves and culled cows. The own-price, replacement and interest rate elasticities calculated for both the short-run and long-run time-frames suggest fairly rapid adjustment rates. Tests of cycle length revealed a 14-year cattle cycle.

Suggested Citation

  • Arnade, Carlos Anthony & Jones, Keithly G., 2003. "Modeling the Cattle Replacement Decisions," 2003 Annual meeting, July 27-30, Montreal, Canada 21960, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea03:21960
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    File URL: http://purl.umn.edu/21960
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    Keywords

    Livestock Production/Industries;

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