Economics of Transitioning from a Cow-Calf-Yearling Operation to a Stocker Operation

Ruff, Shane P.; Peck, Dannele E.; Bastian, Christopher T.; Cook, Walter E.

Economics of Transitioning from a Cow-Calf-Yearling Operation to a Stocker Operation

Autores

Ruff, Shane P.

Peck, Dannele E.

Bastian, Christopher T.

Cook, Walter E.

Descripción

One alternative to a cow-calf-yearling operation is a stocker operation. Relative profitability of cow-calf-yearling versus stockers is well documented. Little is known, however, about the economics of the transition process itself. We analyze benefits, costs, and risks of switching from cow-calf-yearling to stockers over a one-year versus seven-year transition period. Results show a gradual transition is superior to an abrupt transition. A gradual transition to stockers generates more net present value than cowcalf-yearlings, given a sufficiently high discount rate or short planning horizon. Farm managers and consultants should include transition-period benefits and costs when analyzing alternative enterprises.