Estimation of Net Present Value of Beef Females of Various Ages and the Economic Sensitivity of Net Present Value to Changes in Production

The objective of this study was to economically evaluate the value of future production and the economic sensitivity to changes in production throughout the life of the beef female in a cow-calf production system. Production and cost data were obtained from an existing ranching operation during the 1996 production year. A Net Present Value (NPV) analysis was used to determine the value of future production. Present values for 1-, 2-, 3-, 4-, 5-, 6-, and 7-yr-old beef cows were $786, $1027, $1146, $1210, $1171, $1088, and $1068, respectively, with the highest residual value occurring in 4-yr-old cows. The economic sensitivity of NPV to changes in production was measured in the yearling and bred heifer analysis. This was obtained by estimating the change in NPV resulting from a 1% change in a production parameter. The change in the NPV is called a shadow price and represents the breakeven cost of changing the production parameter. The shadow prices for the yearling analysis were: $4.30 for yearling pregnancy (YP); $2.68, 2-yr-old pregnancy (2P); $3.55, spring cull sales in 2-yr-old heifers (2SC); $2.79, calf death loss in 2-yr-old dams (2CD); and $2.50, weaning weight in 2-yr-old dams (2WW). Shadow prices in the bred heifer analysis were: $5.67 (2P); $6.51 (2SC); $3.75 (2CD) and $3.36 (2WW).