BS in Agricultural Business
This study was undertaken to determine if Walker Dairy could raise replacement heifers cheaper than the current market price.
The main objective of this report was to calculate how much it costs Walker Dairy to raise a heifer per head. Data collected went into the development of a heifer enterprise budget and determining an average market price. Transfer value in (drop calf price), feed, labor, operating and fixed costs were all factored into the total cost per animal. Also, the data was broken into four different sections of a heifers’ life to aid management in evaluating the cost of raising heifers.
There were two costs that were compared to the market price which were derived from what Walker Dairy pays for replacements. The first cost was based on all costs including opportunity costs and the second was all costs minus opportunity costs. Therefore allowing the dairy to realize the benefits of its opportunity costs, but also realizing how the dairy compared to the market at raising heifers.
It was found that Walker Dairy can indeed raise heifers cheaper than the market price when opportunity costs weren’t factored into the total cost per head. However, when comparing the market price of heifers with the dairies’ total cost of raising heifers, the market price was in fact lower. This information should be highly beneficial to the dairies’ management in order make necessary adjustments to lowering the cost of raising their heifers.