Economics of Transitioning from a Cow-Calf-Yearling Operation to a Stocker Operation

One alternative to a cow-calf-yearling operation is a stocker operation. Relative profitability of cow-calf-yearling versus stockers is well documented. Little is known, however, about the economics of the transition process itself. We analyze benefits, costs, and risks of switching from cow-calf-yearling to stockers over a one-year versus seven-year transition period. Results show a gradual transition is superior to an abrupt transition. A gradual transition to stockers generates more net present value than cowcalf-yearlings, given a sufficiently high discount rate or short planning horizon. Farm managers and consultants should include transition-period benefits and costs when analyzing alternative enterprises.


Issue Date:
2016
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/236654
Published in:
Journal of the ASFMRA (American Society of Farm Managers and Rural Appraisers), 2015
Page range:
55-76
Total Pages:
22




 Record created 2017-04-01, last modified 2017-08-29

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