Are there profits to be made in backgrounding heifers?

Gary Sliworsky

Some producers are considering backgrounding heifer calves this winter. These heifers will be turned out on pasture with a bull next summer and sold as bred heifers in December of 2003. Are there profits to be made? The following is adapted from an article by Tim Highmoor, Beef Economist at the Western Beef Development Centre.
Assume in November 2002, a producer pays $1.15 per pound for 40, 550 lb. quality heifers delivered to his yard with trucking and commission included. These heifers will gain 315 lb. over the winter at a cost of $1.10 per lb. for feed and yardage or about $346.50 per head. A cost of $155 per head for grazing, breeding, labour and overhead to run these heifers with a bull on pasture and aftermath grazing from June 1 to November 1, 2003 will also be factored in.
The heifers will be pregnancy checked on November 1, 2003 and the result will be a conception rate of 90 per cent, therefore 36 of the 40 are bred. The four open heifers will be sold two weeks later at an auction mart. The bred heifers will be sold December 1, 2003 at a local bred cow sale.
The marketing costs associated with selling the bred heifers are $35 per head plus an additional charge of $10 a head for transportation. The four open heifers have a combined trucking and marketing charge of $30 a head.
Feeding the open and bred heifers from November 1, 203 until the time they are sold will cost $1.85 a day, all feed and yardage included.
When sold, assume the four open heifers weigh 1,100 lb. each and bring
92 cents per lb. Assume the 36 bred heifers will go for $1,150 each.
In this scenario, it appears buying bred heifers in the fall of 2003 will be cheaper than raising heifer calves purchased in the fall of 2002. This example is only an estimate of the actual costs and returns. The analysis does not take into account interest on the value of the heifers, feed and fixed assets that could have been earned if these assets were converted to cash.