Bull Valuation: What Is a Bull Worth to Your Operation?
If you are buying a bull this year, estimating the return on your investment should be one of the primary factors that goes into your decision. Herd bulls represent half of your future calf crop and will significantly influence the profitability of your calves. Several of the key factors that influence the profitability of a cow-calf operation include total weight of calves weaned and feed efficiency, both of which can be significantly impacted by the genetics brought in when buying a bull.
A bull will contribute more to the genetics of your herd after a single breeding season than a cow will contribute over her entire lifespan. It is critical to consider your production goals before making a purchase. Think about your future calf crop: will you develop your own replacement heifers or are they all destined for a feedlot? Are you intending to finish your own animals on grass? Each scenario requires different genetics to best suit the needs of your operation. Just how much you can justify spending on those genetics is a separate matter.
“You want to make sure it’s not just looking in your bank account and saying, ‘Well this is how much I have to spend today’.”
– Kathy Larson, University of Saskatchewan
The BCRC’s Bull Valuation Calculator is a practical decision-making tool to help you estimate the breakeven price of a bull: the point at which a bull will have paid for itself. From there, you can use this information to decide what you can afford to pay for an animal—it will provide a benchmark value to serve as a guide when purchasing the best possible bull within that price range.
Bull prices vary significantly which can make it difficult to determine value without factoring in details related to performance and management. The calculator does not account for genetic evaluation of individual animals, but rather factors related to management, input costs and future markets that can be estimated on-farm.
As an example, consider a herd bull on a farm in Eastern Canada. Smaller average herd and pasture sizes likely mean predicted death loss may be smaller and years of service may be greater than for a bull who travels greater distances and has more chance of injury.
New Brunswick beef producer Trevor Welch says, “The thing I liked about the Tool was that it brought it down to an actual dollar value per calf. I found that really useful.”(Listen to more of what Trevor had to say about the Bull Valuation Calculator.)
Cattle market reports:
- B.C. Livestock Producers Market Information
- Alberta Beef Producers Cattle Report
- Saskatchewan Cattle Market Weekly Update
- Manitoba Livestock Market Prices
- Beef Farmers of Ontario – Weekly Market Report
- Les Producteurs de bovins du Québec Market Report
- Atlantic Stockyards Weekly Market Report
- Historical Price Reports – Statistics Canada
The Bull Valuation Calculator allows producers to enter in their own information to get a customized bull value breakeven price. As an example, data from a recent feeder sale in Atlantic Canada and the Atlantic Cow Calf Survey provided the calf sale information included in Table 1.
Table 1: Calf Information – Bull Valuation Calculator
Next, the annual bull maintenance costs and salvage value are calculated. These values can be adjusted for each operation, as shown in Table 2.
These maintenance costs and salvage value are factored into the final bull value.
Table 2: Bull Annual Maintenance Cost – Bull Valuation Calculator
Finally, information for cow-to-bull ratio and years of service is entered, as shown in Table 3.
In this example, the breakeven price for one bull servicing 25 cows over six years is $7,802.01 or $68.98 per calf.
However, the potentially increased management costs will also factor into the lifetime costs and profitability, and there may actually be fewer years of service if his daughters are being kept as replacements, requiring new genetics more often. In this scenario, changing the years of service to three years alters the bull value breakeven price to $5,208.74.
Table 3: Bull Information – Bull Valuation Calculator
Buying a less expensive bull does not necessarily mean that he is inferior if his genetics help advance the goals of your operation. Key points to consider are your breeding goals and your budget. However, since the herd bull has so much influence on your calf crop, it very often is the case that you should be buying the best animal you can afford. The Bull Valuation Calculator is one tool available to help obtain a better understanding of what that value may be before purchasing your next herd sire.
This post was developed in collaboration and with the expertise of staff at Perennia Food and Agriculture, based in Nova Scotia.
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