Several factors can bridge the gap in value between owning your replacements and purchasing them from the open market.
By Tim Swenson, AgStar Financial Services, ACA
As producers continue to improve calf facilities and calf-raising protocols, calf survival rates (including DOAs) of 90%+ are being achieved. Producers are now faced with answering the question, "Does every heifer born on my operation get raised and freshened into the milking herd?"
Many operations, if they freshen every heifer they currently are growing, are looking at replacement rates (cows culled + death loss) in the upper 40%, some over 50%.
In the past, producers could raise their heifers, and then sell the excess as springers. This age-old strategy does not appear economically feasible in today’s marketplace. Analysis of our latest benchmark data shows that the cost of raising replacement heifers across Minnesota and Wisconsin dairies falls between $1,400 and $1,700. Adding $300 for the value of the calf pushes total replacement values upwards of $1,700 per head. With springing heifers averaging $1,250-$1,300 throughout Minnesota and Wisconsin, should producers be raising their own replacements?
There are a number of factors that can bridge the gap in value between owning your replacements and purchasing replacements from the open market. Knowledge can be an offsetting factor in evaluating the additional costs of raising the replacements versus purchasing them from the marketplace.
By owning your replacements, you have first-hand knowledge of:
• The genetic base of your heifers;
• The nutrition program the animals have been on throughout their growing phase;
• The service date;
• The service sire (calving ease sire or not);
• Whether or not vaccination and parasite control protocols have been followed.
On the other hand, many producers choosing to raise their own replacements are raising more than they need. Instead of targeting a healthy turnover rate and growing the number of replacements necessary, producers are choosing to grow every heifer and let the number of replacements calving drive their dairies’ turnover rate. Based on the economics listed above, waiting until heifers are ready to calve to decide whether to keep her or not, unnecessarily wastes the operation’s resources (feed, labor, facilities, and CASH!).
In order to make these decisions sooner rather than later, there are numerous decision criteria a producer can employ to manage the number of heifers in his or her inventory. A few tactics to consider are:
• Tracking heifer growth rates (both height and weight) and culling animals that are falling behind herdmates;
• Evaluating the genetic base of the milking herd, and breeding the bottom tier of cows to beef sires. The resulting crossbred calves are sold to market, with no temptation to keep a heifer calf;
• Evaluating the genetic potential of the heifer inventory (based on pedigree or preferably genomic testing), and culling the bottom tier of growing heifers;
• Removing heifers that don’t conceive by the third service;
• In all cases, this identifies the heifers used for replacements earlier in the growing phase. The producer can then reallocate the resources associated with growing those unneeded animals to other enterprises of his or her operation.
There are numerous factors that must be considered when weighing the decision to grow your own heifers, either at your current operation or a custom grower. The best choice may be a different answer for each operation, but with objective reasoning, the right decision can be determined. After deciding to grow or purchase replacements, the hardest choice may require a philosophical change. Are you going to grow every heifer born at your operation, or are you going to grow only what are needed for your dairy herd’s replacement needs?
Swenson is Senior Business Consultant with AgStar Financial Services, ACA, which he joined in 2006. He consults with family dairy businesses and large producer operations across the upper Midwest. Contact him at: Office: 715-688-6362; Cell: 715-491-8161 or firstname.lastname@example.org.