Economics at your fingertips  

Price Determinants of Performance-tested Bulls Over Time in Tennessee

Andrew P. Griffith, Christopher N. Boyer, Kelsey Campbell, Karen DeLong, Justin Rhinehart and David Kirkpatrick

No 302744, Extension Reports from University of Tennessee, Department of Agricultural and Resource Economics

Abstract: Bull purchasing decisions for a cow-calf producer can be complex for several reasons, but the primary reason is because it impacts both short- and long-run profitability. The bull contributes half of the genetic makeup of every calf he sires, which influences the bull’s calves sold from a herd and the heifers retained as replacement breeding stock. These two factors lend credence to the importance of selecting bulls that produce cost-competitive, high-quality calves for the feedlot and females whose genetic makeup will influence the breeding herd for many years. Most feedlot managers look to purchase cattle they expect to have a high average daily gain, low feed-to-gain ratio, high dressing percentage and superior carcass quality because these characteristics improve the likelihood of profitability. Similarly, cowcalf producers select replacement females based on maternal characteristics and the expectation of calf performance. When purchasing a bull through an auction, bull buyers generally determine thevalue of the bull by evaluating phenotypic traits (age, structure, frame, birthweight, breed, etc.), performance measurements (average daily gain, weaning weight, yearling weight), and expected progeny differences (EPDs) (birth weight, calving ease, weaning weight, yearling weight, carcass quality, etc.), which are estimates of how future progeny will perform, on average, for a given trait. A producer’s willingness to pay for a bull will vary based on these value-determining factors and how the bull fits the producer’s breeding program. Several studies have evaluated the impact of EPDs on the price of bulls (Dhuyvetter et al. 1996; Chvosta, Rucker, and Watts 2001; Jones et al. 2008; Vestal et al. 2013; Brimlow and Doyle 2014). However, none of these studies evaluated the value that cow-calf producers in Tennessee or the southeastern United States place on certain bull characteristics. Thus, evaluating the value Tennessee cow-calf producers place on certain traits could provide insight into regional differences in bull trait values and assist seedstock producers in meeting the demands of bull buyers in the region. Additionally, Tennessee and Kentucky have implemented cost-share programs that reimburse producers for the purchase of breeding livestock meeting a specific EPD profile. The Tennessee Department of Agriculture (TDA) offers partial cost reimbursement for bulls through the Tennessee Agricultural Enhancement Program (TAEP) (TDA, 2017). A producer can qualify for up to $1,200 annually in cost share for bull genetics but cannot exceed 50 percent of the bull value. For TAEP reimbursement, bulls are categorized as balanced, calving ease or terminal. All three bull categories must meet minimum standards for calving ease and growth EPDs, while balanced and calving ease bulls must also meet minimum maternal EPD characteristics. These programs were structured to assist producers in improving the genetics of their herds and increase the value of the calves. However, it is unclear if the cost-share program has truly acted as a cost-share program or if it has simply inflated bull prices. Thus, it is important to evaluate if cost-share dollars are being retained by the bull purchaser or if those dollars are being passed on to the bull seller. The objective of this study was to estimate Tennessee cow-calf producers’ value of phenotypic traits, performance measurements and EPDs over time, while also evaluating how a partial-cost reimbursement program for bulls sold in Tennessee impacts sale prices. These findings provide purebred seedstock producers with information on the value of individual bull selection criteria, as well as provide information to state policy makers as to how the reimbursement program influences bull prices.

Keywords: Demand and Price Analysis; Farm Management; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 9
Date: 2020-02-03
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.22004/ag.econ.302744

Access Statistics for this paper

More papers in Extension Reports from University of Tennessee, Department of Agricultural and Resource Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().

Page updated 2023-09-10
Handle: RePEc:ags:utaeer:302744