Will strong feeder heifer prices tempt producers to keep sending more heifers to feedlots rather than retain them for replacements (Figure 1)? Will they be able to buy replacements back? And, at what price? Would producers be better off retaining?
Most cow-calf producers retain heifers for beef cow replacement. Analyzing the raise versus buy decision may reveal opportunities. Or, it may confirm they already have a herd replacement strategy that best fits their resources and goals.
Raising and buying replacements both have advantages
Producers may be able to raise replacement heifers at lower cost than buy them. They may already have desirable genetics. Maintaining genetic control has value. Raising avoids environmental stress of bringing heifers into the herd. Raising replacements helps squash concerns about open market availability of replacements, and prices.
Buying replacements also has potential advantages. Buying preserves resources that would be used to raise replacements. Someone else may have lower cost inputs. Producers may value alternative uses of their time and money. Buying may reduce bull needs, access genetically superior heifers and may facilitate faster herd growth.
Aids for deciding whether to raise or buy
Iowa State University Extension and Outreach has two partial budget spreadsheets, available on Ag Decision Maker, to evaluate management strategies. One considers the returns and costs that will change if replacement heifers are purchased rather than raised from within the herd. The other considers the returns and costs that will change if replacement heifers are raised from within the herd rather than purchased.
The most benefit producers gain from the analysis may come from thinking through how sensitive results are to the sale price of heifer calves, interest rates, prices to purchase bred heifers, feed costs and production performance of purchased heifers relative to raised heifers.
Although most producers raise their own herd replacements, purchasing replacements sometimes can be an attractive alternative. Let’s use the Buying Heifers for Beef Cow Replacement Decision Tool spreadsheet to analyze whether to continue raising replacements or purchase them.
Model input assumptions for the analysis
A cow-calf producer is considering selling raised heifer calves at weaning this year and buying pregnant heifers at 22 months of age (two months prior to calving in spring 2026). Weaned heifer calves averaging 525 pounds at 6 months of age can be sold for $2.80 per pound this fall. The interest rate is 8.5%, which is based on the returns realized from the investment of returns, or reduction in borrowing, from the sale of the heifer calves. The feed, non-feed and fixed costs assumed for a heifer raised during the 16-month period between weaning and the arrival of a purchased heifer on the farm are $576.30, $377.12 and $309.98 per head, respectively. It is assumed that a bred heifer at 22 months of age can be purchased for $2,900 per head.
Using these inputs, the spreadsheet will calculate if the buying instead of raising strategy will boost net income.
For added returns, the example cow-calf producer expects to realize $1,636.60 if the heifer calf is sold and a replacement heifer is purchased 16 months later. Those returns stem from the sale of the heifer calf at weaning ($1,470) and interest earned or saved on that amount ($166.60). The producer estimates buying heifers will capture no genetic improvement. Any multi-year gain in genetics, such as increased weaning weights, would boost added returns.
For reduced costs, the producer eliminates the cost of raising a replacement heifer during the 16-month development period. These cost reductions sum to $1,263.40. The total added returns from buying rather than raising replacements is the sum of the added returns and reduced costs, which is $2,900 per head.
The only added cost is the $2,900 to buy the bred heifer. Also, no reduced returns like less genetic control and less control over disease are expected to occur.
Subtracting total added costs ($2,900) from total added returns ($2,900) shows no change in net income if the producer switches from raising to buying replacement heifers.
Comparing benefits versus costs
You may think we rigged the example to come out a wash. We did. We want you to think about factors that could push the decision one way or the other. For example, net income would fall if the purchased replacement cost more than $2,900, which is a possibility, given we are talking about prices in 2026. But if a bred heifer purchased for $2,900 improves genetics, buying would increase net income in this scenario.
Our analysis assumes a market return on surplus home-grown forages, operating capital and operator labor and management. It also assumes no return on buildings and equipment made available for use when heifers are no longer raised on the farm. To the extent these resources can be diverted to an alternative use, with returns exceeding these assumed levels, the analysis would understate the economic benefits of buying heifers.
