7909 / What is a cattle breeding program?

Cattle breeding is an intermediate to long-term investment (typically lasting at least five years) made with the primary objective of developing capital assets (e.g., increasing the herd size). Receiving capital gain treatment upon sale of the herd is a significant objective of cattle breeding programs.

Traditional breeding programs involve the purchase of a herd of breeding cattle (either beef or dairy cattle) that is managed by a firm specializing in breeding. Male offspring (steer calves) are generally sold for ordinary income each year, but female calves (heifers) are usually kept (unless they are unsuitable) in order to expand the herd.

Embryo transplant technology has resulted in a form of breeding program called a “Super Cow” program. These ventures involve the purchase of several prize breeding cows (each may cost in excess of $150,000) along with a herd of “recipient” cows that have inferior bloodlines. The donor (or “super”) cows are artificially inseminated and the resulting embryos are transplanted into the recipient cows. Donor cows are superovulated so that they produce more eggs for fertilization than they would normally. A donor cow can thus produce multiple offspring in one year rather than the one that would be produced naturally. Recipient cows usually have little value aside from the embryo they carry. Some programs lease recipient cows from another party until the resulting calves are weaned. Embryo transplant operations are much more expensive to manage than the traditional form of breeding program.