ECONOMICS OF ALTERNATIVE BEEF GENOTYPES AND CATTLE MANAGEMENT/MARKETING SYSTEMS

This dissertation used the Texas A&M Cattle Production Systems Model to answer the question of "What type of cattle is most profitable?" and "Can a cow-calf producer's profits be increased by maintaining ownership of calves through the stocker and feeding stages?" A budgeting analysis was conducted for a representative Central Texas cow-calf producer who faced no constraint (other than price) in acquiring rented small grain pasture and employing a custom feedlot to finish weaner calves produced by the cow-calf operations. The model was used to simulate a number of calves differentiated by sex, age, weight, and condition from each herd. The nine herds differed by mature cow size and potential milk production. Post-weaning production/marketing options included: (1) selling weaner calves; (2) placing weaner calves directly into a feedlot for finishing; (3) placing the calves on winter pasture for four months and then placing them into a feedlot for finishing; (4) placing the calves on winter pasture for seven months and then selling them; and (5) placing the calves on winter pasture for seven months and then placing them into a feedlot for finishing.;Each calf class was priced separately based on feeder or slaughter cattle pricing equations which accounted for sale month, year, weight, grade, sex, and condition. Costs were adjusted to reflect the cost level of each particular year under analysis. Net returns to land and management were computed for each calf crop of the 1972-1978 period for each production option. In addition, a decision model was developed to determine the expected net returns of retained ownership for each individual calf class based on using (1) the current slaughter cattle price as a forecast, (2) USDA slaughter cattle forecast, and (3) a positive hedging margin.;The findings were the post-weaning operations had lower cost per pound of gain than cow-calf operations. While none of the postweaning production systems were consistently most profitiable, the fixed system of always placing the weaner calves directly in the feedlot had the highest average returns. Using the USDA price forecast to determine the production/marketing ranked second in overall profitability and first in terms of a low standard deviation. Decisions based on hedging opportunities and forecasts based on current prices were not satisfactory alternatives. After comparing the returns of each of the management options, the option which produced the highest returns tended to have its sales concentrated around the peak price period of the year. The differences in monthly cattle prices were generally greater than the differences in cost of different production systems. In spite of the fact that using the USDA price forecast did not produce the highest average returns, it was concluded that producers who base their production and marketing decision on a recognized forecast service at time of weaning would have the highest average returns and the lowest net income variation.;The results indicated that larger cows with lower milking potential were the most profitable and had the lowest production cost, both in the pre-weaning and post-weaning production phase. These cows also had the lowest variance in returns. Results were generally consistent over genotypes in that, as frame size declined or milking ability increased, profits of weaned calves or finished slaughter cattle declined.;This study develops a variety of management and marketing decision guides and demonstrates that ranchers who are in a position to maintain ownership of calves beyond weaning can do so and increase profit opportunities without substantially increasing market risk.