4.05 - Bull earning capacity calculator
The bull earning capacity calculator will help you predict the estimated earning capacity of each bull based on the dollar index value and estimated number of cows to be mated.
This tool will help and should assist you to avoid two common pitfalls when buying bulls:
- Paying too much for the 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’.
Use the index values as an initial screening tool and then it is strongly recommended that you scrutinise the individual EBVs to refine selections for the needs of your enterprise.
In the calculations that follow, a price needs to be nominated that you consider 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.
Worked example: a bull with an 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 of $4,000 will be worth:
= (80 – 40) × 0.5 × 100 + $4,000 = $6,000
[= (index value less the average) divided by 2* × the no. of cows + average price]
*Why divide the index value by 2? Because as with all EBVs when valuing a bull you are only accounting for half the genetics; the other half comes from the cow.
Note that the indicative values so derived are break even purchase prices and as such are the upper limit of what you 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 you, the chosen index needs to be based on costs and returns similar to those in your enterprise. While it is unlikely to be the same actual value if you use a ‘generalised’ index, such as those developed by breed societies, the ranking of bulls should be very similar by both methods.