Terrain’s Take: Is Now the Right Time to Expand My Cow Herd?

You asked, we answered. In Terrain’s Take videos, Terrain analysts take on Farm Credit producers’ most popular questions from events around the country.

Is Now the Right Time to Expand My Cow Herd?

February 2024

It’s important for producers to continue to focus on managing cost, emphasizes Dave Weaber, Terrain’s senior animal protein analyst. Especially during times in the cattle cycle when revenue is rising, because historically cow costs increase during those times as well.

“We still, for the most part, work in a commodity business where prices move in and around breakevens,” Dave says. “If our break-even cost accelerates faster than our competition, when the cycle turns over, we’re going to be in trouble.”

He adds, “In that vein, I want folks to really evaluate what they can afford to pay, not what cattle are costing.”

Dave suggests running some numbers when considering cow herd expansion.

First, find out what the cow is going to be worth and ask:

1. Am I better off buying a bred heifer? A 2- to 4-year-old cow?
   Or,
2. Am I in the part of the cycle where I can live with a cow that’s a solid-mouth, 6- to 8-year-old cow, and run her for a couple of years until prices start to decline?

Then determine what it will cost to build a replacement heifer, including the time it takes to run her. Before seeing any calf revenue, producers will also need to spend money on bulls. To keep a replacement heifer around, producers will have to reduce revenue.

“Go through all the math on all those options,” Dave says, “and pick the one that financially fits you best and your long-term operational goals.”