First, by determining the NPV for differing ages of cattle, producers are better informed as to the investment value of each age group. Producers who sell bred females can also determine an opportunity cost for selling females of different ages. By analyzing the value of changing production parameters, producers can better determine optimum investment in developing heifers. It is important to determine the value of an improvement before additional costs are incurred to reach higher levels of production. By estimating the economic sensitivity to changes in production and price, producers can identify appropriate levels of production, which will allow maximum return on investment.
Shadow prices provide the producer the value of increasing production.
Producers can then estimate the cost of increasing production. Based on these values an informed decision can be made concerning additional investment and the ability of the heifers to recapture this value, thus providing the producer with the information needed to optimize production and maximize profit. Literature Cited Colorado Agricultural Statistics. 1996. Corah, L.R., T.G. Dunn and C.C. Kaltenbach. 1975. Influence of Prepartum Nutrition on the Reproductive Performance of Beef Females and the Performance of Their Progeny.