Replacement Costs Reports

The Replacement Costs reports project the cost of raising female breeding replacements under the current management plan. Specifically, they identify the projected cost to produce an H1, E1, and/or D1 that is two months pregnant.

These projections include all real and opportunity costs, as well as applicable value offsets. This includes:

• the opportunity cost of not selling the female at weaning;
• the opportunity cost of the capital invested in the animal;
• grazing costs;
• the proportionate cost of maintaining a breeding male;
• expected losses from death, infertility, and culling;
• other cash and non-cash direct costs, such as feed, veterinary services, and supplies; and
• value offsets from the sale of cull and open animals and applicable byproducts such as wool and mohair.

Opportunity cost is the value of the best alternative use of a resource that is given up when a particular choice is made. For example, retaining a female at weaning means giving up the revenue that could have been received by selling her, while capital invested in that animal cannot earn a return elsewhere during development.

Together, these costs and offsets provide a more complete picture of what it actually costs the ranch to produce a pregnant breeding replacement—not simply the cash spent while raising her.

How to use it: Replacement Costs help answer the question, “Should I raise my own breeding replacements or purchase them?” Compare the projected Replacement Cost with the price of purchasing comparable replacement females. If comparable or better-bred females can be purchased below the projected Replacement Cost, purchasing them is the more economical option. If not, raising replacements is the more economical option under the assumptions in the current ranch plan.