Do Heifers Have More Potential Value Than Steers?

When going out to tag calves, most cow-calf producers would prefer to find a new bull calf rather than a heifer. This is logical given that the bull calf, which in most cases will become a steer, will weigh more, and bring more money per pound when selling at weaning than his heifer herd mates born at the same time. In the feedyard, steer calves grow faster, are more efficient and finish at heavier weights, providing greater pounds to sell at harvest. Steer performance justifies the premiums paid for steers over heifers.

For the cow-calf producer though, could heifers have more potential value than a steer? Heifer calves provide more options and opportunities than a bull calf. To produce calves, you need heifers and relatively few bulls. While the bull is important genetically, he doesn’t contribute much to the environmental factors that influence success in the production of calves. The cow provides and delivers the vast majority of what a calf needs from conception to weaning.

Heifer calves give a cow-calf producer several marketing options: 

- They can be sold at weaning.
- They can be retained and exposed for breeding. 
- Non-pregnant heifers can be sold as feeders
- Pregnant heifers can be retained in the herd or sold as bred heifers. 
- Retained bred heifers enter the herd and generate income from the calves they produce.
- They can then also be sold as young to middle-aged bred cows when they are often at their peak value.

Tax Breaks of Raised Heifers

When raised heifers retained more than 24 months for breeding purposes are sold as bred females or as cull cows, they provide additional tax advantages, as their sale is taxed at a capital gains rate rather than as ordinary income. This is a significant benefit due to these dollars being taxed at a lower rate than ordinary income and capital gains income not being subject to self-employment tax.

The Big Picture of Heifer Profitability

Obviously, the cattle market and the long-term cattle cycle comes into play in this discussion when looking at the value of a bull calf versus a heifer calf.  The retained heifer calves that will generate the most value are the ones that produce calves when prices are high and then are sold themselves as a bred cow or for harvest when prices are near their cyclical peak. Market conditions and the long-term cattle cycle significantly impact the potential lifetime value that will be generated by a heifer calf.

So, which is preferable, a bull calf or a heifer calf? It really depends on if the cow-calf operation is structured to benefit from the value prospects that heifers provide. There can be tremendous opportunities to capture value from heifers when working with market conditions and capitalizing on the tax advantages. For cow-calf producers who understand and leverage a heifer’s value potential, steers are great for providing income, but heifers can be used to generate wealth.

_{Editor's Note: This article was originally published on the University of Nebraska-Lincoln beef website.}