Retained Ownership Profitability of Beef Cattle Originating in Tennessee

Retained ownership is a marketing strategy that can be used by cow-calf operators to benefit from the potential increase in fed cattle prices. We analyze the profitability of retained cattle ownership from 2005 to 2015 for cow-calf producers in Tennessee. We also determine the impact of steer/heifer characteristics (e.g., average daily gain, feed conversion) and producer choice decisions (e.g., placement weight, placement season, days on feed) on retained ownership profitability. Data on 2,953 head of cattle originating in Tennessee and finished in Iowa using a retained ownership strategy were collected. A mixed regression model explaining profitability was estimated with fixed effects for animal characteristics and producer choice variables and random effects for feedlots, farm origin, and the year cattle were harvested. Retained ownership placement season decision alternatives were also distinguished using mean-variance and stochastic dominance methods. Mixed model results indicate that placement weight, placement season, days on feed, animal health and animal sex impacted retained ownership profitability. Winter was the most preferred placement season generating the highest expected retained ownership profits, while summer was the least preferred placement season generating the lowest expected retained ownership profits. These findings could be useful for cow-calf producers to develop more profitable production and marketing strategies.