By: Cody Ringer, Mac Young, Joe Paschal and Steven Klose
South Texas cow-calf operations may increase their profitability by artificially inseminating their cows, according to research by the Texas AgriLife Extension Service. The analysis found that, compared to ranches that do not use artificial insemination (AI), South Texas ranchers may increase:
- Net cash farm income by about $108.95 per cow per year, for a net increase of about $22.35 per cow per year
- Liquidity, or average cash reserves, by almost $160 per cow over 10 years
The study used the Financial and Risk Management (FARM) Assistance strategic planning model to evaluate the financial effects of these three practices. It analyzed a simulated 2,000-acre ranch with 200 cows (one animal unit to 10-acre stocking rate) and eight bulls (one bull to 25 cows).
Artificial insemination offers several benefits to ranchers:
- The genetics of a cow herd is improved through the use of semen from sires that have the desired traits.
- The number of bulls needed is reduced. In this study, the number of bulls was decreased, from eight to four.
- When combined with estrus synchronization, the calving season is shortened. All of the cows will come into heat within a short period, usually 48 to 72 hours. AI will enable 50 percent of the calves to be born within the first week of the calving season. All calves will be born within 60 days.
- Weaning weights will increase if both procedures are used. Even though half of the calves will be born after the first week, they will still average more weight gain than calves from cows not subjected to estrus synchronization. In a shorter calving season, calves have more time to gain weight and be heavier on average at weaning.
In this study, it was assumed that average weaning weights would increase by 50 pounds (Table 1).
The procedure entails three steps that can be performed by an AI technician or a trained rancher:
- A synchronization product is administered. A vaginal insert is placed into the cow’s reproductive tract, and a gonadotropin-releasing hormone is injected.
- Seven days later, the insert is removed and prostaglandin is injected.
- The cow is inseminated with a single dose of semen between 66 and 72 hours after the removal of the vaginal insert.
Assumptions in the study
The general assumptions and characteristics are given in Table 1. Specific assumptions were made in each scenario. A typical ranch was assumed to have a 95 percent calving rate. Cows were assumed to be pregnancy-tested and bulls tested for breeding soundness.
The average cost of pregnancy testing was $6.20 per cow, or $1,240 per year, which includes veterinarian ranch visit expenses and per-head charges. The average cost of breeding soundness examination was $57.63 per bull, or $461 per year.
In this analysis, the synchronization cost was estimated at $15 per cow, or $3,000 total. The average artificial insemination cost was $26 per cow, or $5,200 total, including the technician’s costs. It was assumed that 50 percent (100 cows) of the cows would be bred through AI; the remaining cows would be covered by the four clean-up bulls.
The analysis allotted $2,400 for assorted day labor costs. The use of AI increases day labor because the cattle must be handled more often. It was assumed that four people would be needed for the artificial insemination process: the veterinarian or technician, the owner of the cattle, and two extra day laborers at $75 per hand per day, or $450. Some ranchers may be able to use less day labor and reduce their costs.
The base year for the 10-year analysis of the ranch was 2009; projections were carried through 2018. The commodity and livestock price trends followed projections by the Food and Agricultural Policy Research Institute (University of Missouri), with costs adjusted for inflation.
The study used typical rates for the region to calculate production inputs, yields, costs, and estimates for overhead charges. The ranch was assumed to have only intermediate term debt. Local cattle prices were obtained from the Live Oak Livestock Commission Company auction report in Three Rivers for May 4, 2009.
To assess the financial implications of AI, the study calculated the ranch’s profitability and liquidity. Profitability measures the extent that a ranch generates income from its resources. Net cash farm income is one measure of profitability.
Liquidity measures the ability of a ranch to meet its short-term financial obligations without disrupting normal operations. The liquidity of the operation may be measured by the ending cash balance.
The analysis provides insight into the risk and return expectations of the ranch under each management practice.
Comprehensive financial projections, including price and weaning weight risk with and without artificial insemination, are illustrated in Table 2 and Figures 1 and 2. Table 2 shows the average outcomes for selected financial projections, while the graphics illustrate the range of possibilities for the selected variable.
Artificial insemination can impact profitability and financial performance of a cow-calf operation (Table 2 and Fig. 1). Without this process, net cash farm income averages $17,320 per year for the operation, or about $86.60 per cow per year. With artificial insemination, net cash farm income averages $21,780, or about $108.95 per cow per year, for a net increase of about $22.35 per cow per year.
Liquidity, or average cash reserves, at the end of the 10-year projection improves by almost $160 per cow with artificial insemination (Table 2 and Fig. 2). Off-farm income contributes to the cash flow of the ranching business; however, it affects both scenarios.
Although actual results will vary by producer, artificial insemination may improve a ranch’s bottom line and financial position by improving genetics, reducing the calving period, and increasing calf weaning weights. Prudent managers will implement the practices that best fit their operations and management styles.
Download a printer-friendly version of this publication: Economic Impact of Beef Cattle Best Management Practices in South Texas: Artificial Insemination
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