Modeling the Cattle Replacement Decisions

Carlos Arnade and Keithly Jones

No 21960, 2003 Annual meeting, July 27-30, Montreal, Canada from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: In this paper we evaluate the performance of a dynamic model of cattle replacement and culling decisions. We derive the price of cattle when it is treated as a unit of capital and evaluate various rates of adjustment of the cattle herd to determine the length of the cattle cycle. Replacement decision is modeled as the solution to a dynamic optimization problem where the breeding herd is viewed as a capital asset that is capable of producing two outputs: calves and culled cows. The own-price, replacement and interest rate elasticities calculated for both the short-run and long-run time-frames suggest fairly rapid adjustment rates. Tests of cycle length revealed a 14-year cattle cycle.

Keywords: Livestock; Production/Industries (search for similar items in EconPapers)
Pages: 25
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea03:21960

DOI: 10.22004/ag.econ.21960

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