We've all heard the age-old wisdom of buying a profit. Bryan
McMurry, PhD and a beef economist with Cargill Animal Nutrition,
explains the specifics of accomplishing that by purchasing a
wider margin up front. He uses the example of buying four-weight
calves vs. those 100 lbs. heavier, and putting 200 lbs. of gain
on them. At the outset, there is $50 more margin to work with --
buy price vs. expected sell price. In this case, a 400-lb. calf
at $1.50 costs $600. Figuring $1.20 at 600 lbs. that's $720, or
a gross margin of $120. Compare that to a five-weight steer calf
purchased at $1.40 or $700; and a selling price of $1.10 on a
seven-weight, or $770. So, there's an additional $50 margin
advantage in favor of buying and selling lighter in this
scenario. Spun another way, McMurry points in this example the
breakeven cost of gain on the lighter weight calf is 60¢ vs. 35¢
for the heavier one. Using the margin above and applying the
costs in Table 1, McMurry calculates the profit advantage of the
lighter animal to