Date of Graduation
Bachelor of Science in Agricultural, Food and Life Sciences
Agricultural Economics and Agribusiness
The third most consumed meat around the world is beef. Despite global growth in demand, cattle markets experience price cycles related to biological production lags causing variability in cash flow and profitability for producers. Price-driven herd size management strategies thus have received attention. This study adds to that literature by analyzing both price and production risk using three herd size management strategies: i) steady state – holding herd size constant; ii) dollar cost averaging – keeping reinvestment constant by varying the number of replacement heifers retained at a constant long run average dollar total; and iii) moving average – using an uptrend/downtrend price signal to lower/increase production in anticipation of future price declines/increases. These strategies are evaluated over the most recent 2004-2014 cattle cycle based on their relative profitability and risk with and without forage variability as a result of weather simulation on forage yields. This analysis is useful for decision makers of medium- to large-scale cow-calf operations. Results suggest that price signal-based strategies can enhance profitability but the managerial cost required for this type of herd size management is deemed larger than its benefit.
Cow-calf production, cattle price cycle, cattle herd management, dollar cost averaging
Tester, Colson, "Profitability analysis of varying herd sizes based on price signals in cow-calf operations" (2017). Agricultural Economics and Agribusiness Undergraduate Honors Theses. 7.