An Empirical Investigation in to the Factors Influencing the Economic Incentive to Retain Ownership of Weaned Steer Calves

Marketing and production data collected from weaned calves (628 head) in a university sponsored retained ownership demonstration program are analyzed to identify factors affecting the annualized rate of return when retaining ownership versus selling the calves at weaning. Data were collected on the following characteristics associated with the calves: 1) ranch-of-origin production management practices; 2) feedlot performance; 3) carcass merit; 4) health history; and 5) market prices. Retained ownership until slaughter was more profitable, on average, when compared to selling calves at weaning. The calculated annualized rate of return to retained ownership versus selling calves at weaning averaged 11.5% per head. Regression analyses indicate that market prices paid for weaned calves and fed cattle have the greatest influence on the rate of return to retained ownership. The other five categories (ranch-of-origin, production management practices, feedlot performance, carcass merit, health history) also contributed to explaining the variability in the rate of return per head. Marketing and production risks were not incorporated into the regression model. However, summary statistics indicate that coefficient of variation associated with per-head retained ownership revenue is 50% higher than the estimated per-head revenue for weaned calves

Risk and the Economic Incentive to Retain Ownership of Steer Calves

Retained ownership of steer calves is an investment decision for cow/calf producers. Data collected over a three-year period on 845 steer calves reveals that retaining ownership of steer calves is, on average, profitable. Systematic and unsystematic risks associated with retaining ownership of steer calves are identified. Empirical results indicate that unsystematic risk account for 67% of the variability in the rate of return to retained ownership. Empirical evidence also suggests that retaining ownership is a riskier investment decision than assumed in the earlier literature. This suggests that the lack of enthusiasm for retaining ownership by cow/calf producers is the result of the level of risk associated with retaining ownership rather than producers being too risk averse

Farm and Home Research: 51-3

In this Issue: [Page] 1- Director’s comments [Page] 2- Diamond jubilee: Farm organization promotes superior crops for 75 years [Page] 8- Landmark partnership: SDSU, Monseto to produce Roundup Ready soybean seed [Page] 12- Should you pick another calving date? [Page] 16: Friends and foes in the seed pod: Survival of native legumes depends on tiny wasps [Page] 20- Math. English. Marriage Prep? [Page] 20- In for the long hau

Predicting the Value of Feeder Calves by Obtaining Performance and Carcass Data and by Reviewing Health and Management Factors at the Ranch of Origin

Data from 749 steers enrolled in South Dakota State University\u27s Calf Value Discovery (CVD) Program (1998, 1999, 2000) were used to investigate factors affecting health and value of feedlot steers. This analysis was conducted to evaluate how ranch of origin management (ROM) and feedlot health impact economic value and the occurrence of respiratory tract lesions (RTL) in feedlot steers at harvest. Preliminary observations from 1998 and 1999 data suggested ranch of origin management and health were associated with the occurrence of RTL in feedlot steers at harvest and net value. Groups of at least five steers from 82 owners entered the feedlots in November 1998, November 1999, and October 2000. Producers completed a survey at feedlot entry, which described health and management practices at the ranch of origin. Steers were fed in a single pen and were marketed on a grade and yield basis. At harvest, lungs were examined for evidence of RTL. Steers were classified based on the type and severity of lesions and then were categorized as having no lesions or having lesions. Logistic regression of SAS was employed to model factors affecting the occurrence of RTL at harvest. An ordinary least squares regression procedure was employed to analyze the data for the outcome net value. The dependent variable, net value was defined as: carcass revenue - feedlot cost. Overall fit of the regression model for net value was indicated by coefficient of determination R2 =0.7185. Analysis of results for health and ROM factors affecting RTL (Table 1) and net value (Table 2) are provided in the tables below. Factors in the table are defined as: a) creep - if the steer was creep fed prior to weaning at the ranch of origin; b) respiratory disease - if steer was treated for respiratory disease in the feedlot; c) prewean - days weaned prior to feedlot entry were categorized into seven categories: category 1=0 to 7 d, category 2=8 to 14 d, category 3=15 to 21 d, category 4=22 to 28 d, category 5=29 to 35 d, category 6=36 to 42 d, and category 7=\u3e43 d; and d) weaning viral - a viral vaccination administered at weaning at the ranch of origin. Owner was found to be significant (P\u3c.001) in both models. These data suggest ranch of origin management factors impact the occurrence of RTL, as well as net value of feedlot steers at harvest. A more thorough understanding of these factors could reduce the occurrence of RTL, improve feedlot performance and carcass quality, and may help producers increase the net value of their product.\u3e\u3c.001) in both models. These data suggest ranch of origin management factors impact the occurrence of RTL, as well as net value of feedlot steers at harvest. A more thorough understanding of these factors could reduce the occurrence of RTL, improve feedlot performance and carcass quality, and may help producers increase the net value of their product

Risk and the Economic Incentive to Retain Ownership of Steer Calves

Retained ownership of steer calves is an investment decision for cow/calf producers. Data collected over a three-year period on 845 steer calves reveals that retaining ownership of steer calves is, on average, profitable. Systematic and unsystematic risks associated with retaining ownership of steer calves are identified. Empirical results indicate that unsystematic risk account for 67% of the variability in the rate of return to retained ownership in this study. For seventy-five producers who entered weaned calves into a university sponsored ranch to rail program, the empirical evidence suggests that retaining ownership is a riskier investment decision than ascertained in the earlier literature. We conclude that the lack of enthusiasm for retaining ownership by cow/calf producers may be the result of the level of risk associated with retaining ownership rather than producers being too risk averse as asserted in the literature