Manitoba Agriculture, Food and Rural Initiatives

Replacement Heifers and Culling Options Post-BSE

The border closure has had  dramatic impact on the Manitoba dairy industry. Loss of revenue due to depressed replacement prices have been considerable. There are currently initiatives to increases the provinces slaughter capacity. In the interim there are many more animals on farm than is needed and the logic of keeping older cows because the cull market is reduced is questionable.

To date there has been no ruling on breeding stock under or over 30 months of age moving across the border. Tentatively the ban is scheduled for 7 years therefore speculation of a border opening to replacement stock is not advised

Cost

The cost of raising heifers depends on a number of factors linked to farm type, feed and management ability. Most producers tend to underestimate the cost of raising heifers as they only consider feed costs. Although considerable, feed costs represent less than half of the cost associated with raising heifers. Table 1 below details 2 estimates of the cost of raising a heifer to calving at 24 months of age.

Table 1. Breakdown of heifer raising cost to calve at 24 months of age

The price of bred replacements currently is in the $800-1200 range, down from  above $2500 in March 2003. However, the cost of raising heifers has remained unchanged therefore the extra expense of raising heifers on farm if it costs approx $2000 are in the range of $800-1200 per animal.
 

Where is the Trade-off Currently?

Consider a situation where the bought in heifer is of lower genetic merit and will therefore have significantly lower potential milk yield. As an example it would be the difference between the bottom 25 and the top 10% of Manitoba herds reporting to DHI. The difference in yields for 2004 was 2697 L.

• The milk value from this assuming 1 hectoliter = $59.73 after deductions
• Gross value of increased milk in first lactation for raised heifer (2607/100) X $59.73 = $1610.9
• Net value of increased milk (20%) after cost of production = $322
• Assume lower merit bought in heifer cost 1000 and cost of raising heifer = $2099
• The trade-off is ($2099-$1000) - net value of extra milk ($322) = $777

To recoup the costs the home grown heifer must survive in the herd for  3 lactations to break even.

Other Considerations

There is a long term value to improved genetics. Keeping replacements from lower quality bought in animals will ultimately be counterproductive to farm profitability. The border will eventually open and it will be producers with higher quality stock that will gain the maximum benefit.

There are also availability issues as heifers will not be available on demand but subject to other market forces. Finally bought in animals pose a real disease risk for herds and effort should be placed upon sourcing disease free, vaccinated  replacements 

How Many Replacements Do You Need?

Replacement needs depend on farms breeding programs culling rates and saleable heifers.

A recent  study  used a direct programming model of a 100 cow herd using average US Heard record data (Tozer & Heinrichs 2001.  J. Dairy Sci. 84:1836-1844). The program was able to calculate the number of additional replacements needed under various culling, mortality and breeding situations. The researchers varied the following parameters:

• Age at first calving
• Heifer mortality from birth-first calving
• Calving interval
• Cull rate

Calving interval significantly affected the number of additional (i.e. bought in) replacements needed on a yearly basis (Table 2). At Manitoba calving intervals and culling rates of 25-30% the model estimated 10 additional heifers need to be purchased.

 
Table 2. Number of replacements needed under different calving intervals, culling and heifer mortality rates
(100 cow herd, calving interval is 13 months)

Age at first calving had minimal effect upon the numbers of additional replacements needed if calving interval was kept at 13 months. Table 3 details this with figures equivalent to Manitoba  being underlined.
 

Table 3. Number of additional replacements needed per year at different first calving ages, culling and heifer mortality rates
(100 cow herd, calving interval is 13 months)

The model also provided relevant information about the portion of raising costs attributed to each factor. Reducing the age of first calving by 1 month gives 4.3% reduction in heifer raising costs whereas  reducing culling rate by 1% gives a 3.8% reduction . A 1 % decrease in culling rate  is equivalent to 1 cow in a 100 cow facility has a far greater impact on raising costs. This strongly suggests that producers should concentrate on the major factors influencing culling decisions on farm as this has a far greater return than closely managing heifers to calve at 24 months.

Based on 2004 DHI records for Manitoba the major reasons for culling were:

Reproduction Mastitis Milk yield Lameness Udder conformation      Other

31% 16% 12% 10% 12% 19%

Consider investing in synchronized breeding management, heat detection technology and improved dry cow therapy to reduce culling rates on your farm.
 

Voluntary Culling

The alternative option with low bought in heifer prices is to increase the level of voluntary culling in the herd.

A lower genetic merit herd can vastly improve yields and future profitability by culling below average cows and replacing with high genetic merit cattle at reasonable prices. This greatly speeds up the rate of genetic improvement typically seen on farms.

Herds with endemic levels of Staph. aureus can also benefit. Staph. aureus is a contagious mastitis bacteria with notoriously poor  cure rates. Most of the problems occur with older animals with established infections  Depending  on the number of cows infected culling can be a viable economic option to eliminate Staph. aureus from the herd is heifers can be bought for lower than $1500.

Conclusions

• At present the net loss from raising a heifer on farm  and buying an equivalent in calf heifer in is approximately $1000.

• Only raise heifers from the best cows and buy in the remainder is the best current option to capitalize on low heifer cost. Buy in equivalent or better quality replacements for maximum benefit.
• Crossbreds: consider breeding the bottom 30% of the herd to beef sires to produce more saleable calves.
• Speculation on the price of heifers could be costly if the border reopens. Some producers could theoretically have to buy in large numbers at a much higher cost/head than was predicted. It is better to reduce the need for extra replacements by concentrating on lowering culling rates.

Prepared by:

Rob Berry
Dairy Cattle Specialist
Manitoba Agriculture, Food and Rural Initiatives

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