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

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

Journal of the ASFMRA, 2016, vol. 2015, 22

Abstract: 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.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jasfmr:236654

DOI: 10.22004/ag.econ.236654

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