BCRC provides tools to calculate the value of a bull
Like many seasonal tasks on a cattle operation, purchasing bulls is an annual responsibility.
Since herd bulls make up half of the future calf crop and significantly influence the profitability of an operation, it is imperative producers calculate the return of their investment when making the decision about which bulls to buy.
A Feb. 23 article titled “Bull Valuation: What is a bull worth to your operation?” coauthored by the Beef Cattle Research Council (BCRC) and the Perennia Food and Agriculture Corporation (Perennia), offers advice and tools for calculating the value of a bull.
An important investment
BCRC and Perennia note there are several factors influencing the profitability of a cow/calf operation which are significantly impacted by the genetics added to an operation when a new bull is brought in. These include total pounds of calves weaned and feed efficiency.
“A bull will contribute more to the genetics of a herd after a single breeding season than a cow will contribute over her entire lifespan,” reads the article.
Therefore, it is critical producers keep their production goals in mind when buying a bull.
BCRC and Perennia encourage producers to consider their future calf crop and ask themselves if they plan on developing their own heifers and if they intend to finish their animals on grass or in a feedlot.
“Each scenario requires different genetics to best suit the needs of an operation,” they say. “Just how much a person can justify spending on those genetics is a separate matter.”
Bull Valuation Calculator
“Any person who has gone to a bull sale knows there is a lot of variation in what bulls will sell for in a given sale. Bull prices have been going up in recent years, so producers regularly have to make a fairly large capital investment,” states University of Saskatchewan Professional Research Associate Kathy Larson in a corresponding BCRC YouTube video.
Instead of simply basing these purchases off of what producers are willing to spend on the day of the sale, Larson says they should take advantage of tools and resources to help them make the best decision possible.
One such tool is BCRC’s Bull Valuation Calculator, a practical, decision-making tool to help producers estimate the breakeven price of a bull.
“From there, they can use this information to decide what they can afford to pay for an animal – it will provide a benchmark value to save as a guide when purchasing the best possible bull within this price range,” explains BCRC and Perennia.
The two organizations mention, since bull prices vary significantly, it can be difficult to determine a bull’s value without factoring in performance and management, and although the calculator does not account for genetic evaluation of individual animals, it does include details from these two factors.
Calculation example
In order to explain how the calculator works, BCRC and Perennia provide an example using data from a feeder sale in Atlantic, Canada and the Atlantic Cow/Calf Survey.
First, they plug in expected weight of the calves in pounds, expected prices of calves in dollars per pound and expected weaning rates. For this example they use 525 pounds, $2.72 and 90 percent.
Next, the annual bull maintenance costs and salvage value are calculated and factored into the final bull value. This step requires information for days on winter feed, winter feed cost per day, winter feed cost per year, veterinary cost per year, bull labor and yardage per year, pasture for bull per year and total cost.
Respective numbers in this example are 180 days, $1.50, $270, $100, $200, $250 and $820.
Lastly, information for cow-to-bull ratio and years of service is entered, including annual maintenance cost in dollars per year, cow-to-bull ratio, years of service, bull salvage value in dollars, percentage of death loss and percentage of calf value attributed to the bull.
For this example, BCRC and Perennia use $820, 25:1, six years, $2,375, 3.8 percent and 5.5 percent, respectively.
Calculations through BCRC’s Bull Valuation Calculator, in this example, show the breakeven price for a bull servicing 25 cows over six years is $7,802.01, or $68.98 per calf.
“However, potentially increased management costs will also factor into the lifetime costs and profitability, and there may actually be fewer years of service if his daughters are being kept as replacements, requiring new genetics more often,” mentions the article. “In this scenario, changing the years of service to three years alters the bull value breakeven price to $5,208.74.”
Key points to consider
In conclusion, BCRC and Perennia note buying a less expensive bull doesn’t necessarily mean he is inferior, especially if his genetics are helping a producer advance the goals of their operation.
“Key points to consider are breeding goals and budget,” the organizations say. “However, since the herd bull has so much influence on calf crop, it very often is the case producers should be buying the best animal they can afford.”
Hannah Bugas is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
