Don’t lose money with too many replacements

Posted on January 4, 2013 in Dairy Performance
By Randy Greenfield Is your heifer-raising operation a profitable one?  How many heifers do you need to support your dairy herd’s turnover rate?  Should you consider culling some of your youngstock? If you are a Midwestern dairy producer, you’ve probably asked these questions recently. Historically, dairy producers have striven to maximize the number of heifer calves born on their farms, the number of heifers kept alive, and the number of heifers with a successful breeding outcome. In general, these characteristics haven’t really changed – it’s still a good thing to have low death losses and get heifers pregnant efficiently. What has changed is the cost to raise a heifer. In recent years, we’ve seen a significant increase in this cost without an appreciable increase in the value of a springing heifer. Add in the relatively recent effects of sexed semen use on many dairies and the scarcity of forages due to 2012’s drought and you’re looking at a potentially significant replacement cost issue. I estimated costs to raise heifers from birth to calving using current market value on all feedstuffs and estimates on all other costs from the University of Wisconsin Extension 2007 survey on heifer-raising costs. My total for all costs came to approximately $2,100 per head. If we add just another $100 for the opportunity cost of selling the calf at birth, the total cost for raising a heifer calf to 720 days today is a whopping $2,200. While some top-end genetics may command values higher than $2,200 for a springing heifer, the market for springers in my area is currently running about $1,500 to $1,600. Growing extra heifers to sell as springers is not a profitable enterprise given today’s economics. What about keeping them in the herd instead of selling them as springers? In a non-expanding herd, any heifers kept to replace cows beyond what is needed will simply increase the share of first-lactation heifers that make up the milk cow herd. This will decrease average production, reduce parlor efficiency and reduce profits. What does this mean for your dairy? Simply put, you probably shouldn’t grow any more heifers than you need to supply replacements for your dairy herd. Of course, this assumes that the current economic conditions will apply in the future as well. How many replacements do you need for your herd? Let’s use 500 cows for an example herd size. The next thing you need to predict is your turnover rate.  This is difficult to predict and will be different for every herd. I’ve seen annual turnover rates drop to 20 percent or slightly lower during times of expansion, so rates this low are attainable. However, I recommend estimating this number a bit on the high side as not having enough replacements and having to buy them may still be the bigger of two evils when considering genetics, biosecurity and other risks that come with bringing new animals into a closed herd. For our example, let’s use 30 percent for our predicted turnover rate. That means we will need 150 heifers to replace our culled cows in the next year. We can then look at our inventory of calves and heifers and start culling accordingly, remembering that earlier culling will save the most cost. Culling decisions can be made using many different criteria. The number of health treatments, genetics/pedigree, genomics, and weight gain data can all be used to sort the animals that will likely be the poorest performers if all were calved. Longer term, even more options are available through your reproductive and calving programs to yield the number of heifer calves that you want to meet your replacement needs. Strategic culling of the youngstock herd is one option to control replacement costs. Another could be to breed the bottom share of your heifers and/or cows to beef bulls to get calves that could be sold for a premium, guaranteeing that these animals won’t be kept and grown. Sexed semen could be used along with this strategy to increase the number of heifer calves from the top portion of the herd and allowing even more of the bottom to be bred to beef semen. Even if you don’t think you are raising more replacements than you need, an analysis of your program can make good economic sense. This article was originally included in the December 2012 edition of the Vita Plus Starting Strong calf-care e-news.  Click here to subscribe to Starting Strong. About the author: Randy Greenfield is a Vita Plus dairy specialist.  For the past 14 years, he has worked with dairy producers to help them strengthen their nutrition and management programs.  Greenfield grew up on his family’s dairy farm near Waupun, Wis. and attended the University of Wisconsin-River Falls to earn his bachelor’s degree.  He went on to receive his master’s degree from Purdue University.  In addition to nutrition, Greenfield has taken a special interest in dairy records and business consulting.

Category: Business and economics
Dairy Performance