Economic response of the cow-calf system under variations in livestock sale prices and changes in reproductive efficiency

Abstract

This paper analyses the economic response of the cow-calf system under different weaning rates (%) and cattle sale prices. Two systems, defined theoretically from existing knowledge for southern Chile beef herds, were: one of high stocking rate (system-1) with 1.36 livestock units/hectare/year, with fertilization and another without fertilization and low stocking rate (system-2), with 0.61 livestock units/hectare/year. Livestock sale prices for April auctions, were used to define three price scenarios; probable (average price), optimistic (average price + 10%) and pesimistic (average price - 10%). Details of output and direct production costs for the Chilean cow-calf systems, are herein provided. Gross Margins (GM), GM/ha, GM/cow and Gross profit defined as GM/capital invested in breeding stock for systems 1 and 2 were calculated. Variations in weaning rate under a probable price scenario, ceteris paribus, showed that system 1 presented higher GM at higher weaning rates. In this scenario, the weaning rate at which GM of system 1 and 2 equate, was 68%. Both systems presented similar tendencies when weaning rate were changed within each scenario. However the point at which GM equate, changed to a wearing rate of 61% and 77% for the optimistic and pesimistic scenario. In the three scenarios, System 1 presented a more elastic response in GM when reproductive eficiency was changed. Budgeted results for the different scenarios and reproductive efficiencies lead to conclude that these systems, under actual price conditions, present a low profitability.