Beef cow producers should add bred heifers whenever bred heifers have a economic value that is greater than the cost of acquiring them. The greater the difference between the economic value and acquisition costs of bred heifers , the greater the herd's profit potential. As a result of the beef price cycle, the timing of adding bred heifers is critical to long-run profits. The economic value of a bred heifer is the sum of that heifer's future annual net cash incomes plus her final cull market value. More specifically, it is the discounted net present value of her future annual net cash incomes and cull value expressed in today's dollars.
Economic value is different than sale barn price.
Sale barn prices of bred heifers tend to be correlated with current calf prices. As we enter the price-increasing phase of the current beef price cycle, calf prices are projected to go up during the next few years, and the sale barn price of bred heifers are projected to follow. Waiting for a price increase to begin holding back heifer calves for expansion reduces long-run cash flow. Three economic principles need to be brought into play when determining the economic value of a bred heifer in your operation. First, a beef producer has to divide the ranch or farm business into profit centers.