Shane Ruff
Graduate Student
Department of Agricultural and Applied Economics
University of Wyoming
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400 cow/calf pair
280 yearlings
All calves are retained in operation
All 180 steers in yearling operation
100 heifers in yearling, 80 in cow/calf as
replacements
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Calves are received in yearling operation in
fall, 550 lbs. for steers and 500 lbs. for
heifers
Sold the following September at 977 lbs. for
steers and 927 lbs. for heifers
Deeded land, BLM and Forest land are used
for grazing
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I assume in the ranch model that the
cow/calf/yearling enterprise produces
enough hay to feed all animals
As the enterprise transitions, and there are
less cows, there is extra hay to sell
Pure stocker steer budget sells all hay
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3 ranch models
Cow/Calf/Long-Yearling Enterprise
◦ Base model to transition from
◦ 400 cow/calf pair and 280 yearlings
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Transition to:
◦ long-yearling enterprise
 Nov. 1 to Sep.1
◦ pure stocker steer enterprise (2 types)
 May 1 to Sep. 1
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Yearlings run Nov. 1 to Sep. 1
Cull 15% of the cows each year
Translate that 15% back into yearling
operation (Total AU’s)
7 year transition period
Heifers in yearling operation are spayed
End with 841 yearlings
All hay for feeding is produced by enterprise
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All cattle are sold up front
Revenue from cattle sales accounted for in
year one of transition
Pure stocker steer operation
Purchased in spring, sold following fall (Sep)
Steers are purchased at 600/700lbs in spring
Sold at 846/946 lbs. in fall (Sep)
End with 919/833 stocker steers
All hay from hay enterprise is sold
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All models are estimated out to 7 years
Culling 15% of cow/calf herd each year takes
7 years to fully transition
This way they can be compared accurately
over the long-run
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Historical calf prices and native hay prices
◦ Calf Prices 99-10
◦ Hay Prices 83-12
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@Risk simulation
◦ Simulates likelihood of these historical prices
occurring
◦ Shows a range of expected profit
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No ownership costs are factored in
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Paying yourself (owner labor)
Depreciation
Operating Loan (interest)
Taxes
All enterprises include haying operation
No risk of contracting brucellosis in herd
Enterprise has low chance of losing money.
Enterprise has a low chance of losing money (3%).
Wider range of profit and lower average compared
to base herd (cow/calf/yearling)
Potential for higher profits, also larger loses. Lower average
than base. Enterprise loses money 22% of the time (2 out of 10
years). Producer has to plan for years where there is a loss.
Higher profit potential, higher loss potential. Lower average
than base herd.
Enterprise
Cow/Calf/Yearling
Yearling
600-846 lb. Steers
700-946 lb. Steers
NPV
$756,104.48
$640,965.54
$378,104.14
$607,126.95
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Stocker Steer enterprise has potential to earn
larger profit but also larger loss
May have to survive one or more years of
negative profit
Depends on risk attitude of producer
◦ How much risk are you willing to take?
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High risk of brucellosis vs. low risk of
brucellosis infection
Preliminary results have shown early years of
transition are most profitable
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Tax implications
◦ Raised breeding livestock
 Taxed as ordinary income
 Has potential to raise tax bracket
◦ Purchased livestock
 Capital gains taxes apply
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Tax implications of whole herd liquidation vs.
culling 15% of herd each year
Completed Thesis
Excel document allowing producers to enter
their own values in comparison to mine
Extension Bulletin