Buying versus Raising Replacement Heifers.

 By Heather Smith Thomas.

 Some commercial cattlemen always keep replacement heifers and others never do—just purchasing bred heifers or young cows.  There are many factors to consider when deciding to raise or buy replacements: feed costs, labor costs and availability, environmental factors, genetics, cattle prices, tax issues, etc.  It’s not always easy to determine what might be best for your ranch—and it may change from year to year.

Lee Schulz, Assistant Professor, Economics, Iowa State University, says one survey showed 83% of producers hold back heifers, and about 37% buy heifers.  “Many ranchers retain some heifers as well as buy some.  Many people raise their own but still take advantage of opportunities to buy a few heifers if they are expanding their herd.  It’s not always a clear-cut decision.  You have to figure out whether it really costs you less to raise them than buy them.  There are significant costs and some risks in developing heifers.  There’s a lot of time between when you decide to retain them and when you can sell a calf from them.”
 
Advantages Of Raising Your Own
Many commercial cattlemen raise their own heifers because they are acclimated/adapted to the ranch environment.  Purchased heifers are often too fat because some people who develop heifers overfeed, and they get too big or have other problems from being overweight.  Heifers need to be fed with the goal of soundness, fertility, and a long productive life and shouldn’t be carrying as much weight as a feedlot heifer. Their genetics may also have a different focus than what you’d want in your cow herd.  Some breeders concentrate on growth and not maternal traits; purchased heifers may end up being bigger than you want, and are less efficient cows in your environment.

Disposition is another important trait in the cow herd.  An advantage to raising your own is that you know what they are and if they are safe to handle.  If you buy bred heifers and spend much money on them, you tend to keep them even if they are not quite what you wanted.  

If you raise them, you know what you’ve got, and they know how to cope with their environment.  Cattle raised on your place know where to go to get out of a storm, and how to use the pastures.  If you buy cattle from somebody else and bring them home, they don’t always mingle into your herd; they tend to separate out with their buddies. There’s usually a higher success rate among heifers you raise; they don’t fall out of the program as often—since they are already adapted to your environment and feeds.

Many ranchers’ breeding programs involve several generations of cattle selected for maternal traits, fertility, longevity, disposition, and other traits that would be difficult to replicate in purchased animals.  On-farm replacements are already adapted to their environment and your handling methods.  Health risks for the herd can also be minimized by not bringing in new cattle.  Raising your own gives better opportunity to evaluate their growth, phenotype, and temperament.

Advantages Of Buying Bred Heifers
Rick Funston, University of Nebraska, says there are some good arguments against raising heifers, and for buying bred heifers instead.  “In economic analyses, sample budgets compare raising them versus purchase.  There’s more opportunity to use a terminal sire system, for instance, if you purchase your heifers,” he says.
If you raise your own, you need two different herds in order to utilize a terminal cross and still keep heifers.  “Otherwise you give up a lot of productivity, selecting for calving ease instead of production,” says Funston.  

Some ranches don’t keep any heifers.  It’s all terminal crosses and they outsource their replacements.  “They don’t want to put in the time, money and labor for two years before those heifers have calves.  Many ranchers have either not considered or not understood the performance they are giving up by raising replacement heifers, along with the opportunity of using a terminal sire,” he says.

Other advantages include less need for “heifer bulls” and a chance to reduce bull numbers.  Herd size can also be increased quicker if you have the opportunity to expand. Producers may be able to purchase replacement heifers from someone who specializes in producing heifers or a breeder who has annual production sales that include bred heifers.   Commercial developers often utilize estrous synchronization in conjunction with artificial insemination, which can increase genetic merit of progeny and eliminate the potential for reproductive disease transmission. This also allows producers to obtain heifers that conceived over a short time frame, and have a shorter calving window—with more chance to breed back quickly.
Some large ranchers with challenging range conditions think they should keep their home-raised genetics.  Yet many operations find it makes sense economically to buy from a known breeder who can provide proven genetics.  

When heifer calves have good value at weaning, it is often best to sell them, and then reinvest some of that income in a bred heifer, or better yet, a bred two-year-old or three-year-old from a reputation ranch. Then you can readily see if they have a sound udder, sound feet and legs, and have been reproductively sound to have a calf and then breed back.  This takes the gamble and lots of the work and expense out of heifer production, and often a rancher can improve on genetics by going to a successful breeder for replacement heifers.

The real cost of weaning, growing and breeding a heifer can easily be overlooked in the two years you own her before she produces any income.  You have two years of feed, labor, vaccines, etc. in a group of replacement heifers you raised, plus any cull and death loss.  There may be a certain percent that don’t breed, or breed late--to start their production career late, thus weaning a smaller calf, and possibly coming up open the next year or calving late again.

Small operations often do not have the facilities or separate pastures to feed and grow weanling heifers, and keeping them requires investment in a “heifer-bull” to breed them.  The end result is often a lower pregnancy rate, a higher rate of calving problems, plus lower weaning weight and less income to show for all the time and work dedicated to keeping those replacement heifers.  It may be more profitable to sell them at weaning and reinvest in proven producers.

Things To Keep In Mind When Raising Replacements
“If you do keep replacement heifers, consider using AI and not giving up so much performance.  Today there are an abundance of AI terminal sires with calving ease, but pay attention on this, because generally those calves are not something you’d want to keep as replacement females,” Funston says.  

“If you are breeding by natural service, growth traits and calving ease are generally antagonistic, and we tend to give up a lot of performance for calving ease.  The calves from first calf heifers won’t be your bigger calves at weaning time,” he says    “A ranch needs adequate numbers to consider keeping replacement females.  In many small operations cattle are not the primary income source.  Some of the smaller operations that keep replacement heifers may only have one or two bulls, so they focus on calving ease, which is not needed as much in mature cows,” he says.

A person keeping heifers must keep a few more than needed, because they may not all conceive in a timely fashion during their first breeding season.  “If you are going to keep heifers, ideally you should keep them all and treat it as a yearling operation.”  Then you can keep the very best that breed early and sell the rest and make money on them as open yearling heifers.
    
Do Your Homework
Patrick Gunn, PhD, PAS, Cow-Calf Specialist, Iowa State University says that from a management perspective there are several things that help in the decision on buying versus raising.  “It often comes down to infrastructure, and also how much control you want of your genetics.  First and foremost you want to make sure you will be able to feed heifers separate from the mature cow herd,” he says.
“In some parts of the U.S. where cow herds are a lot smaller, we don’t have the number of animals to justify the additional space, feed, and labor required to do an adequate job of developing females,” says Gunn.

There are tools to help ranchers in these decisions, such as looking at the net present value of those heifers.  This investment decision, either raising your own or purchasing them on the open market, is a long-term investment, anticipating at least five or more calves out of that replacement animal.  You have to consider economic conditions today, but also the longer term regarding what the prices and costs are going to be.

It’s important to budget out that decision, into the future.  When purchasing heifers, look at that multi-year gain potential in genetics, and realize it’s not just a one-year investment.  The genetic potential will exist over the life of that female.  Sometimes a person can buy genetics that are better in certain aspects than what you have.  On the flip side, sometimes the genetics you’ve worked many years to create are better suited for your purposes, on your own ranch, than what you can go out and buy.

Regarding feed, we look at its value being sold, but maybe there’s potential for retaining more females and decreasing culling rate and perhaps that return would be higher, putting that feed through cattle.  There are many factors to consider and each producer must make his/her own decision.  It’s difficult to give any good rule of thumb because there is a lot of variability in expectations of price and costs.

“No one recommendation fits all, when it comes to replacement heifers,” says Gunn.  “There are many different ranch sizes, management practices and goals for various operations.  The decision may change from year to year, for some producers, based purely on economics.  If you are truly running it as a profit-based enterprise, there are some critical evaluations that need to be done each year, in terms of which the best option might be.”  What might be better one year might not be better in another.      

The Genetic Question
“Genetics is a major factor, and how much control you want over the genetics of your herd,” says Gunn.  “If you want to control every aspect of the genetics you are working with, developing your own females has advantages,” he says.  This is especially true if you’ve worked for many years to develop the type of animal that works well in your particular environment and ranch situation.  If you have a rugged range operation rather than irrigated pasture, for instance, cattle that grow up on your ranch usually do a better job than anything you can buy.
If you buy heifers, buy some that come from a similar background.  “Sometimes you can form a relationship with a breeder who produces the kind of cattle that you know will work in your environment,” says Gunn.

Advantages Of Buying Cows Instead Of Heifers
Funston says ranchers need to think in terms of the most appropriate replacement female.  It might be more feasible and productive to purchase young cows that are already producing, rather than bred heifers.
“There are some advantages to purchasing (or making arrangements with another ranch) as your source for something other than a heifer.  Bred heifers are the most expensive to buy and the least productive; it takes a couple years before they reach peak production.  Our data shows that females are not as productive until they get to be at least three to five years of age.  The best alternative might be a young cow rather than a heifer.”