Bull earning capacity calculator helps buyers avoid common pitfalls

Beef Central, 14/03/2023

COMMERCIAL beef producers now have access to a bull earning capacity calculator tool to help predict the estimated earning capacity of a given bull, based on his dollar index value and estimated number of cows to be mated.

The tool is designed to help bull buyers avoid two common pitfalls when buying bulls:

  • Paying too much for an apparent ‘super bull’ when economically the second best bull is better value.
  • Paying too much for the worst bull in the catalogue because he was ‘cheap’.

Users can apply a bull’s index values as an initial screening tool, after which it is strongly recommended to scrutinise the individual EBVs to refine selections for the needs of their enterprise.

In the calculations that follow below, a price needs to be nominated that the user considers reasonable to pay for an ‘average bull’ of the particular breed, which is then equated to the average index value for the breed.

The indicative value of any bull of that breed is then derived from this average price, taking into account the difference between the bull’s index value and the average index value, which is then multiplied by the number of cows he will be mated to in his working life.

Here’s a worked example:

A bull with a BreedPlan index value of 80 in a breed where the average index value is 40, mated to 100 cows in his working life with an average bull price for the breed of $8000 will be worth:

(80 – 40) × 0.5 × 100 + $8000 = $10,000

This represents (index value* less the average) divided by 2, × the number of cows + average price

* Why divide the index value by 2? Because as with all EBVs, when valuing a bull, he accounts for half the genetics; the other half comes from the cow.

Note that the indicative values so derived are breakeven purchase prices, and as such are the upper limit of what the buyer should pay for the marginal genetic worth of the bull over and above breed average.

Also note that for the values to be relevant for each operation, the chosen index needs to be based on costs and returns similar to those in the enterprise. While it is unlikely to be the same actual value if a ‘generalised’ index is used, such as those developed by breed societies, the ranking of bulls should be very similar by both methods.

To download the full module, click here


What to measure and when

Predicting the value of bulls for improving enterprise profitability

When a new bull purchase is being considered, and before mating each year:

  • Assess the genetic merit of prospective bull purchases
  • Estimate the earning capacity of bulls based on the index value and the projected pattern of use (see tool above)
  • Assess structural soundness of the bull battery
  • Assess the accuracy of information given by your bull breeder (find information that is recorded on sale bulls and the subsequent accuracies associated with the EBVs).


Source: MLA More Beef from Pastures





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