Cow Herd Inventory Management By Wally Olson
The need of inventory management in the cow herd is that not all cows have the same value. What is the market telling me today?
Three-year-old cows 1300# 8 months bred @ $1700 Hi-Quality 4-5-year-old cows 1000-1100# 6 months bred @$1200 Avg-Quality 6-8-year-old cows 1000-1100# 6 months bred @$750 Avg -Quality 1300# 1100# True Value of a Cow- Her Cull Price @ $60 $780 $660 The calf Value 500# @$150 $750 $750 < Carry Costs> $40 per month $320 $400 Base value of a Cow $1210 $1010
What this tells me is the 3-year-old cow will have $920 in depreciation coming in her life. It could be the next preg check or many calves down the road. What the market is telling me that the 4-5-year-old cow could have $450 next year. If calves are selling for $750 the calf that this cow produces has a value of only $300 after paying the loss in the cow value. If it costs $480 to carry a cow you are down $180. The cow that I’m buying is the 6-8 year old cow .If she has made it to six the odds are she will make 10 or 12
She is will only have $90 in depreciation to be covered by 5 calves or $18 She has a base value of $1010 and cost of $750 .Her value to me is $1010 – $750(Her Cost)-$18 (Depreciation)=$260. This is a 32% return on my investment, which I can live with.
The market may be telling you to keep the heifer calf and sell the 3-year-old cow In the 6-8-year-old cow, it is telling me to keep the cow and sell the heifer calf. Look at the relationships of the classes and adjust your inventory. Only deal with today.