Economics of beef cow culling and replacement decisions under genetic progress

Beef cow managers annually face the question of which animals to cull from the herd and replace. The results of this decision affect not only current revenues, but, by altering the genetic composition of the herd, also affect the future profitability of the herd. These genetic changes of the herd may, therefore, be represented as a form of endogenous technological progress to the cow calf producer. This article derives general asset replacement criteria for assets undergoing either exogenous or endogenous progress and illustrates their application with a Florida cow herd example. Probably no single aspect of modern beef herd management is as complicated, or has as potentially great an economic impact, as the cow culling and replacement decision. Cat-tlemen must annually face the problem of deciding at what age a cow should be culled from the herd and replaced. Not only are substantial revenues involved in the deci-sion, but if the genetic ability of replace-ments exceeds that of the animals culled then genetic technological progress occurs in the breeding herd. Thus, unlike most mic-roeconomic analyses in which technology is assumed to be exogenous, the level of genet-ic technology and its rate of progress are directly affected by culling and replacement strategies and must, therefore, be considered endogenous to the cattlemen's management decisions [Ladd and Gibson]. The general principles of asset replace-ment have been well developed in the litera-