Economics of Purchasing Genetically Superior Beef Bulls

G. M. Clary, J. W. Jordan and C. E. Thompson

Journal of Agricultural and Applied Economics, 1984, vol. 16, issue 2, 31-36

Abstract: Net present value analysis is used to derive the marginal bid price for a beef herd sire from after-tax net revenues and cash flow influenced by genetic improvements. Marginal bid price represents the additional amount a producer could pay, above the present value of the current beef herd sire, for a sire expected to exhibit superior performance as reflected by increased average weaning weights of offspring. An analysis of the profitability of purchasing a breeding bull for a commercial beef cow herd is presented as an application. Several alternative scenarios illustrate the impact of selected determinants on the marginal bid price of a bull.

Date: 1984
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