Manitoba Agriculture, Food and Rural Initiatives

Custom Raising Dairy Heifers Part A: Introduction, Advantages and Disadvantages
 

Introduction

Custom raising dairy heifers remains uncommon in Manitoba despite numerous enquiries concerning the costs and benefits of contracting a custom grower or establishing a custom heifer rearing operation. This reflects the status of custom heifer raising in most Provinces; however, this will likely change as more grower operations become established and recognized as providing a valuable service to dairy clients.

This factsheet is the first of three parts on the topic of custom raising dairy replacements. Part A provides a general introduction including advantages and disadvantages. Part B details economic considerations. Part C covers the importance of having a written agreement that is in duplicate, dated and signed by both the heifer owner and grower before they enter a business relationship.

Raising Dairy Heifers

Most dairies have made great advances in the past 15-20 years in terms of milk and component yields, genetics and improved production efficiencies; however, the same cannot be said about heifer rearing. Published growth standards for dairy heifers in Canada and recommendations to calve at 24 months of age have not changed in nearly 25 years. Raising dairy replacements represents the third largest operating expense, following feed and labour, in a dairy operation. A typical large breed dairy heifer under proper management and nutrition that calves at 23-24 months at a postcalving body weight of 540-560 kgs (or 1,190-1,235 lbs) will cost $1,450 to $1,700 when all operating, fixed and labour costs are included.

Dairy Herd Improvement (DHI) records for Western Canada reveal that the average age at first calving is 27.0 months but ranges from 23 to 32 months. If we assume a total rearing cost of $2.00/day, dairies that calve heifers at 27.0 verses 23.5 months are incurring $210 of additional expenses per head. For a 50-cow dairy that calves 24 replacements per year, that amounts to $5,040. This does not include the loss of potential milk sales by calving at a younger age or the decreased rate of herd genetic improvement.

Heifer rearing costs have a huge impact on the profitability of a dairy operation. Dairies that practice high herd culling rates and calve heifers at older ages require more management, housing space, feed and labour to look after a greater number of heifers just to maintain milking herd size. Example: Assume two 100-cow dairies. Farm A has a 30% herd cull rate and a 24-month age at first calving while Farm B has a 34% cull rate and a 27-month age at first calving. To maintain a 100-cow milking herd, Farm A requires 19 fewer heifers (or 66 head) compared to Farm B that must house 85 head (see Table 1).

Table 1. Heifer herd size for a 100-cow dairy herd and a 10% heifer cull rate

In addition, high milking herd cull rates mean that a greater proportion of an animal's life as a lactating cow will be spent generating revenues to pay for her rearing costs. Over her lifetime an average cow that milks 3.5 lactations before being culled could conceivably generate 2.0kg to 2.5kg milk more milk per day of life than a genetically equivalent animal that is prematurely culled after only 2.5 lactations.

Factors Influencing Heifer Performance

Dairy heifers receive less than their fair share of management attention on many dairies. This is having a negative impact on heifer growth and health as well as the number available as herd replacements and to sell. The following factors are common reasons why heifer performance is below potential on many farms.

Inadequate Facilities

This is one of the foremost problems identified when health and growth concerns exist. A common problem with young calves, particularly preweaned ones, is that they are housed with older stock and exposed to disease organisms as well as having to endure wide variations in humidity, temperatures and drafts. Most smaller dairies are not inclined to invest the necessary dollars to renovate or design and construct appropriate facilities that allow them to properly group and manage heifers by age and size.

Improper Nutrition

Replacements that cannot consume adequate levels of energy, protein, minerals and vitamins or who do not have free-choice access to quality water will never realize their genetic potential for growth. This is a primary reason heifers are too small to breed at 13 to 15 months or that calve at light weights below 520kg (or 1150lb). Getting calves off to a quick start, weaning early then feeding high quality forages in combination with a well-balanced concentrate mix are critical to achieving high dry matter intakes, desired growth and body conditioning. Feeding poor quality forages to heifers less than 12 months of age, sweepings from the milking herd, inadequate concentrate or protein levels, poor pasture management or incorrectly sized groups are all nutrition faults that lead to poor growth performance.

Poor Herd Health

An effective herd health program must include all replacements and not just the milking herd. Unless management, housing and biosecurity measures are included as part of a complete herd health program, calves and heifers will be at risk of exposure to a wide range of digestive and respiratory diseases as well as internal and external parasites. Dry and fresh cow management, vaccination, hoof trimming, colostrum, feed-mixing and delivery, nutrition, housing, animal identification (ID), parasite control, record-keeping, close scrutiny and temporary isolation of new purchases, and rapid identification, segregation and treatment of sick animals are all practices that are often neglected to the detriment of animal health.

No Growth Monitoring

Many producers place a low priority on monitoring heifer growth other than eye-balling them from time to time. Although highly recommended that height and weight readings be collected on all heifers twice a year and the results plotted against breed standard heifer growth charts, this is rarely done. Without using such a gauge to monitor heifer growth across all ages, producers often discover their heifers are not performing as well as thought when it is too late (ie, at breeding time or at calving).

Improper Handling Facilities

On many dairies handling facilities are inadequate and do not allow the producer to easily restrain animals for treatment(s) and/or herd health work. This factor may be less obvious than the aforementioned factors; however, it is no less important.

Poor Pasture Management

The risk of managing heifers on pasture, which usually coincides with the busiest time of year when producers are involved in fieldwork, is that "when they are out of sight they are out of mind". High stocking rates, continuous grazing with no rotation, lack of or no supplementary feed, lack of effective fly and parasite control programs, high mosquito populations, wet, muddy conditions, cold or heat stress, and a poor or inadequate water supply are all factors that negatively impact heifer performance.

Lack of Animal ID and a Record-Keeping System

The implementation of our National Livestock Identification Program (NLID) will increase the number of heifers with positive ID; however, without a practical record-keeping system in place that allows action lists to be generated (ie, breeding), delays and missed treatments will continue to occur. Most herds have no electronic heifer database and are without a system to generate a list of "virgin heifers over 12 months". Although positive ID at birth is preferred, the present NLID Program requires an animal to have positive ID ONLY when it leaves the farm. Furthermore, many farms are not sensitive to the appropriate breeding size and have no benchmarks in place to determine that time.

Poor Heat Detection

A common reason for delayed age at first calving is that many heifer management systems make heat detection and artificial insemination of heifers inconvenient. Inconvenient activities are the first to be neglected when more pressing tasks interfere. In a 1990 Ontario study, 54 of 298 herds that pastured heifers did not breed heifers during the pasture season. Heat detection in the heifer barn is a "chance event" in many cases since producers and employees spend very little time there. Good handling facilities combined with either heat detection aids or, better yet, a programmed breeding approach could address what appears to be primarily a labour and management issue.

Delayed Breeding to Increase Type Classification Score

Some breeders make a management decision to delay breeding to end up with more mature looking, larger first calf heifers in the milking string. Although some breeders may be highly motivated by type classification scores, there is no indication that earlier calving harms lifetime production, longevity or expression of type traits. The following Ontario summary of 356,000 Holstein first classifications by age indicated that younger animals scored only 1.5 points lower than older first calf heifers.

Table 2. Age at classification (356,000 Ontario Holsteins between 1990-1999)

Management Attitude

Poor producer attitudes in terms of how they manage heifers is a mindset that is difficult to change. Many producers do not have a strong handle on what their rearing costs are. When costs are unknown producers tend to underestimate the true cost of raising replacements, which in turn leads to the belief that they can raise their heifers more economically than anyone else.

Long-held beliefs that heifers should never calve less than 24 months, that heifers should never be bred before 15 months, and that growth rates exceeding 0.7kg (or 1.5lb) per day could lead to fat heifers at calving have all been proven false. Today, many top herds throughout North America are safely calving heifers at 23-24 months of age at pre-calving body weights of 600kg to 625kg (or 1325lb to 1375lb), which results in postcalving weights of 540kg to 560kg (or 1190lb to 1235lb), from achieving average daily gains of 0.80kg to 0.85kg (or 1.76lb to 1.88lb) per day.

Custom Raising Dairy Heifers

Advantages

The following list summarizes the primary advantages to a dairy producer who is considering contracting the services of a custom heifer grower.

• A good custom heifer grower can provide a cost effective service to any size of dairy. This is particularly true for smaller operations where calf and heifer housing is often inadequate, which in turn is restricting the owner's ability to properly group and manage animals by age and size. The heifer grower may benefit through "economies of scale" in such areas as housing, grouping, feeding and management and end up with heifers with improved growth and conditioning, that calve at a younger age and at lower total rearing costs than what the owner could achieve.
• Custom raising heifers is far more common in the U.S. undoubtedly because of the different structure of its dairy industry; however, a well-managed custom heifer operation could provide many advantages to a Canadian dairy producer. The most obvious advantage of having heifers raised on a custom basis involves freeing up resources for other uses. Moving heifers off the farm to a growing operation reduces the requirements on the dairy for feed, housing, feed and manure storage, labour, management, and land base for manure application. This may be particularly important in areas where the farm's land base is limiting further expansion in herd size.
• A dairy farm that raises its own replacements probably devotes about 30-35% of its barn space and forage, 25% of its management (i.e. health care; record-keeping; and ration formulation) and 20% of its labour on the heifers. If having heifers raised by a custom grower allows these resources to be redirected and focused on the dry cows and milking herd, then assets could be used more efficiently and greater attention to detail achieved in such areas as analyzing production records; heat detection; herd health; ration formulation; sire selection; breeding; and culling decisions.
• A custom heifer grower has opportunities to reduce expenses through economies of scale. For example, an important element in successful heifer raising is the ability to reduce stress and improve growth through grouping strategies based on age and size. Typical recommendations are to limit heifer groups to an age range of no more than three months and a body weight range of less than 70 kgs (or 150 lbs). This means at least seven heifer groups from weaning to calving, a requirement that adds dramatically to the labour needs for feeding and manure handling in smaller dairy operations with 35-50 heifers to raise in groups of 5-7 head each. The larger custom operator raising 4-5 times this many heifers has little difficulty with larger groups and providing facilities that support the desired number of age groupings.
• Large custom operators can justify better handling facilities and reduce the labour of specialized management practices such as parasite control, vaccination, hoof trimming, growth monitoring, programmed breeding, and pregnancy checking. Since many of these practices are unique to heifers they often do not get done at the right time or in the most profitable fashion on dairies where the milking herd gets top priority. The conscientious custom feeder who is specialized in heifer raising can get these things done, on time, with minimal labour, and at the lowest possible cost per head.
• With respect to nutrition, the specialized custom grower has the opportunity to devote the necessary time and effort to balancing rations specific to each heifer age group and using the forages available. A good custom operator will test the forages and feed a strategically balanced ration according to age and measured daily intakes. In recent years there has been tremendous progress in research defining the nutritional needs of heifers growing at rates as high as 0.9 kgs (or 2.0 lbs)/day. This includes a better understanding of the requirements for various protein fractions, carbohydrates, minerals and vitamins. Unfortunately, much of this knowledge goes to waste because many dairy herds lack the facilities and resources to implement good heifer feeding regimes. The custom feeder may also be better equipped to make strategic use of feed additives such as Rumensin or Bovatec or low cost non-protein nitrogen sources such as urea or anhydrous ammonia treated silage.
• The custom grower may own facilities that are uniquely suited to heifer raising or the grower might have access to an older facility such as a freestall barn with smaller stalls, which could be renovated to suit the various heifer age groups.

Disadvantages

There are also disadvantages that a dairy producer should consider before contracting the services of a custom heifer grower. This becomes much more critical when there are not a number of heifer growers around to compare each one's services or to check out references from past clients to see if they were satisfied with the service level provided.

Exposure to Diseases. One drawback to custom rearing arrangements is the increased risk of exposure to diseases from mixing animals from multiple farms at the custom feeding facility. Properly designed vaccination programs based on local needs and reflecting the health status of all herds contributing heifers to the operation are an absolute must and need to be designed in consultation with a veterinarian.

Despite precautions, health risks such as those posed by hairy heel warts, Johnes disease and BVD will be greater than if heifers are raised at home. Custom heifer raising in a facility that accepts animals from several herds will obviously contribute to the spread of such diseases and others like them unless strict controls are enforced to screen and refuse acceptance of infected animals.

Pickup and Return Schedules. Producers who cannot commit to a set schedule in preparing heifers for delivery to the custom heifer facility and in preparing for when heifers are scheduled to return, usually four to six weeks before calving, is a recipe for trouble. Although strong intentions may be expressed initially to abide to strict pickup and delivery schedules, any variance from this could result in a conflict and the eventual dissolution of an agreement between the owner and the grower.

Reduced Options for Feeding Poor Quality Forages. Traditionally, heifers have provided producers with a means to dispose of poorer quality forages unacceptable to the milking herd as well as manger sweepings from the milking herd. Producers who farm out their heifers to a custom grower soon realize that they now have fewer options for dealing with their lower quality forages and manger sweepings. The mindset that heifers can act as the farm's "garbage cans" to dispose of such feeds is a reason why many heifers grow far below their potential and end up calving greater than 24 months and at lighter body weights.

Failure to Reallocate Resources Efficiently. To realize the full benefits of having replacements raised by a custom heifer grower, the owner must decide how to reallocate resources on the dairy. Custom raising costs must be recouped from reduced expenses and/or increased returns to improve farm profitability. Examples include: using the extra land base to raise forages for sale; using extra time and labour to concentrate on critical activities of managing lactating and dry cows; using the extra space to house and manage a small beef herd to have an avenue for disposing of poor quality feeds and sweepings; facility renovation to allow expansion of the dairy herd; purchasing additional quota; and increased record-keeping.

Performance Failure. There is always a risk that the grower will not achieve growth performance expectations agreed to in the original contract. Although remedies for performance noncompliance may exist, this does little to recoup lost growth on animals that may be only a few months away from calving. Farming out heifers to a custom grower who does not have a proven track record in the business is always a risk. Other criteria may need to be used to assess the grower's ability such as past dairy experience, personal references, and close scrutiny of the site where the heifers are to be raised.

Custom Heifer Raising Contracts and Agreements

This section provides a brief overview of custom heifer agreements. However, the reader should also consult Custom Raising Heifers Part C: Contracts and Agreements for a more in-depth review. Part C deals with specific issues that need to be discussed, written up as an agreement and signed by both parties prior to the owner and grower entering into a business relationship.

Upon entering a custom heifer agreement, it is imperative that both parties clearly understand what the other party expects of them and what roles each will play. Getting it in writing and defining who is responsible for what, who pays for what and when, and how disagreements will be resolved is very important to ensuring everyone is on the "same page" at the outset of the agreement. How detailed the contract is depends on the grower and owner; however, referring to the factsheet on "Contracts and Agreements" will provide a solid basis in drafting an agreement that meets the interests of both parties.

A typical custom heifer raising program starts at three to four months of age and returns the heifers four to six weeks before calving; however, the owner and grower may agree upon a different age for delivery and return. Payment is monthly and is usually defined on a per head per day basis although other payment options are outlined in the factsheet on "Contracts and Agreements".

It is not uncommon to see different rates charged for different ages such as one fee for animals less than one year and another fee for animals greater than one year. Usually the rates charged include feed, bedding, routine health care, labour and housing. Semen, vaccines, specialized health needs are extras billed at product cost with labour supplied by the custom operator. Mortality losses can be handled different ways as well. Again, the many variations in how payment can be structured relative to these costs and services are detailed in the factsheet on contracts and Agreements.
 

Further information:

1. Custom Raising Dairy Heifers Part B: Economic Considerations
2. Custom Raising Dairy Heifers Part C: Contracts and Agreements
3. Guidelines for Estimating Cost of Raising Dairy Heifers Based on 100 Head
4. Management Practices for Raising Dairy Calves: Birth to Weaning
5. Management Practices for Raising Dairy Heifers: Weaning to Calving
6. Monitoring Dairy Heifer Performance Using Standardized Growth Charts

References:

1. Karszes, J.; Cady, R. 2001. Contracts and Agreements for Custom Dairy Heifer Growing.
2. Rodenburg, J. 1997. Custom Raising of Replacement Heifers. OMAF.
3. Rodenburg, J. 1997. Current Status of Heifer Raising in Ontario. OMAF.
4. Mongeon, M.; Rodenburg, J.; Russwurm, J.; Werry, M. 1998. Considerations for Custom Raising Dairy Heifers. OMAF.
5. Tofer, P.; Gabler, M.; Schriefer, T.; Heinrichs, J. 1999. Heifer Economics. Pennsylvania State University.
6. 2002. Western Canadian Dairy Herd Improvement Services.
7. Personal Communications with Manitoba Agriculture and Food Dairy and Beef Specialists.

For further information please refer to the: Manitoba Agriculture, Food and Rural Initiatives  Contacts page.