Analyses of retained ownership and value-added management practices by cow-calf producers

Abstract

Scope and Method of Study: This research is composed of three essays about value-added management practices by cow-calf producers. The first essay estimates the real option value of retaining ownership of beef calves past weaning using a discrete stochastic dynamic programming model. The second essay estimates premiums received at auction by cow-calf producers for implementing value-added management practices using a matched-pairs method. The third essay determines the probability of an individual producer receiving a positive net return for implementing various value-added management practices. Each essay implements methods that have not been previously utilized in the beef economics literature.

Findings and Conclusions: Results in this research provides valuable insight for beef producers. The first essay finds that a value exists for retaining the option to sell calves at later stages of production. The second essay finds that producers who do not current participate in a program certifying that their calves have been weaned a minimum of 45 days, vaccinated, dehorned, and dewormed would have realized the highest premium for a certification program if they had chosen to participate. The third essay finds high probabilities of receiving positive net returns for bundles of value-added management practices with the highest net returns being for calves with lower sale weights.