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Grasshill Purebred
Holsteins  &  Saanens

Payback Time
Lloyd & Barbara Wicks 
... Shawna, Holly, Emily & Matthew ...

3X Master Breeder
 CHAH accred.

102 Kenstone Beach Rd.
 Bobcaygeon, Ontario, Canada 
K0M 1A0
 Phone: (705) 738-2787 
 fax: (705) 738-4580 
grasshil@peterboro.net 
 

... "When Profit Begins" ...                      

 

INTRODUCTION

A LOOK AT THE PROTOTYPE

POSSIBLE ADVANTAGES

KEY PROBLEM AREAS

HOW TO USE

CONCLUSION

AN EXAMPLE

INTRODUCTION:

The decision which cows to own and breed from is one of the most critical in the dairy industry since for most breeders the cows are expected to pay the bills. Whether the choice made is to focus selection on animals excelling in production, type or a combination of the two, means must be available not only to identify animals with those traits, but also to constantly evaluate the appropriateness of their choice in terms of the bottom line for most breeders--profitability. Whereas individuals high in the production, or type categories are quite quickly identified by our present ranking systems (milk recording, BCA's, classication, shows), those animals which quietly 'stack up' the profits by combining efficient production and type characteristics in a relatively maintenance-free, long-lasting package are largely unrecognized-- the means to assess their profitability as yet unaddressed. The purpose of this paper is to propose a means of attaching actual $ values to an animal's lifelong achievements--such a system thus not only providing grass-roots dairymen with a powerful management tool in identifying their most profitable animals, but also a tool for all dairymen in evaluating the appropriateness of their own particular emphasis on 'desirable' production and type traits. Intended to complement, rather than replace, existing systems, the prototype herein described is designed first and foremost as a basic management tool for any dairyman, whatever his focus. Its potential to yield more far-reaching 'payback' benefits is an extra that can be explored later.

A LOOK AT THE PROTOTYPE:

(In this case, for easier display, figures used are Ontario averages)

In actuality, sets of numbers for expenses, income etc are required from two sources:

l. national averages and actual ODHIC values

2. numbers from the individual farm - for that farmer's own use

(the more numbers from individual farms that are provided, the more accurate evaluations will be as an aid in answering current questions)

N.B. Optional provision for the breeder to enter specific values customizes this system for the individual herd allowing room to input differing $ values depending on the level of efficiency and focus toward commercial or purebred (ET,show etc). Since these values are not as relevant to the majority of breeders, they would not be included in the overall numbers but could be of use analyzed as a separate group in other calculations geared more for pedigreed breeders' purposes.

Expense and Income Categories to Calculate:

l. Rearing &/or purchase cost: i.e. accumulated cost upon entering the milking row

- based on lst calving date and OFMAP avg rearing cost to 24 mos of age

- $1500 + $3 a day (the 'average' Ontario heifer 'owes' $1679 by lst calving time)

2. Lact Overhead Costs: i.e. housing, hydro, equipment etc.

-based on the OFMAP avg cost per cow of $3.21 per day

3. Lact Maintenance Feed Cost

-to keep animal alive each lact after lst calving

-based on the OFMAP avg cost of $1.66 per day

 

4. Lact Marginal Feed Cost:

-to support milk production

-based on OFMAP avg cost of $2.31/kg fat

5. Lact Health Costs:

-to help determine if there is a genetic basis (as many suspect), it is necessary to record health traits and their costs in some way for further study such as:

i. Normal Calving, Live calf, Bull : $0 Cost

Heifer: $0 Cost

ii. Difficult Calving: Cost = vet fees including caesarian etc

iii. DA's: Cost = vet DA fee + cost of lost production (currently bridged)

iv. Mastitis, mild case (approx 2 tubes & 4 days milk lost): Cost = $100

acute case with vet care: Cost = up to $500

6. Lact Quota Opportunity Cost:

-interest cost (not principal) for the amount of quota necessary to support the cow's level of production (to ensure that high production animals are not given an unrealistic advantage)

7. Lifetime Lactation Expense: the total of Expenses for the Individual Lacts

(#2+#3+#4+#5+#6)

8. Lifetime Total Expense: Rearing/purchase cost + Lifetime Lactation Expense

(#1) (#7)

9. Lactation Milk Value

-gross value of milk produced

i.e. the Ontario price for milk components minus deductions

l0. Lifetime Milk Value:

-accumulated value of milk produced in lifetime to date

l1. Lactation Progeny Value:

-entered as average values: bull $100, heifer $250

-opportunity for breeder to enter realistic individual values

(this can also include value of ET offspring as long as all ET expenses have been

deducted first)

l2. Lifetime Progeny Value: cumulative

 

l3. Salvage (or Resale) Value: (projected figures if actual not available)

Beef Purposes - 36 mo value (determined by 'taping' at closest test or using size classification values to estimate)

Dairy Purposes - it is important that only realistic numbers be entered by the individual breeder

l4. Lifetime Total Value: Lifetime Milk(#10) + Progeny(#12) + Salvage(#13)Value

l5. Net Income: Lifetime Total Value(#14) - Lifetime Total Expense(#8)

- the number that indicates which cows are profitable

- can be used in the herd's managment & breeding program to improve 'bottom line'

POSSIBLE ADVANTAGES OF THE ABOVE PROTOTYPE SYSTEM:

l. To encourage the breeding of profitable cows!

2. Will provide dairy farmers with a much better tool to make management decisions

3. Should be a strong encouragement to maintain breeders on test and encourage new people to get involved

4. Should provide concrete numbers to solve age old debates on which type traits are the most profitable e.g. size (which is more profitable? a 1600 lb or 1200 lb cow?)

KEY PROBLEM AREAS WHICH COULD BE ADDRESSED:

l. Cull Rates: In the present method of calculating proofs, an animal culled before 90 days is ignored-- if after 90 days, her lactation results are prorated

i.e. weighted according to the # of days actually completed. Thus her negative influence on the sire's proof is only partially weighted--the earlier identified as unsuitable and subsequently culled, the less the influence.

What this means is that present bull proofs are based on a system in which it can take at least 4 daughters culled between 90-200 days to have the same amount of weighting as 1 daughter who lives to complete 3 lactations.

With this 'payback' system, however, each daughter culled would leave with a net income value on her final day whether it was at 10 days fresh, or after 3 or even 12 lactations. This value would be included in her sire's proof.

2. Calving Interval and Reproductive Efficiency:

Currently, calving interval is not considered in our BCAs, cow indexes or bull proofs. With this system, it would automatically be calculated into the net income value of each cow and the average calculated into that of her sire.

3. Longevity: Many breeders now base their decision-making on the assumption that good type as it is now defined results in increased longevity and therefore, greater profits. When this system is used in conjunction with our elite classification system, numbers will be available to actually test the above theory giving further insight into the type traits most necessary for the balancing of production and longevity to achieve maximum profitability.

4. Health Traits:

Predominantly unexplored here in Canada, health is an area that other countries are already dealing with at various levels-- we need to get started. This system could be used to gather information and determine the genetic correlations and financial returns.

5. Age at First Calving:

The trait for producing growthier and faster maturing daughters (who can thus enter the milk row sooner) needs to be identified and the appropriate sires rewarded.

6. L.P.I. and T.E.V:

These are based on theoretical future values and are not always relative to the animals that are making the farmer money in the barn today.

This system is based on actual $.

HOW TO USE THE NUMBERS GENERATED BEYOND IMMEDIATE MANAGEMENT AND RESEARCH?

l. Identification and Rewarding of Top Cows:

The identification of 'elite' cows would yield much truer results if evaluation for county awards, honor lists etc was based on net income (at 36mos, 48 mos, 60 mos,etc...,lifetime) rather than using BCAs or deviations etc.

2. Identification of Top Bulls:

Although not meant to replace listings for other purposes, this system could be more useful than current lists (LPI or TEV) in selecting bulls to supplement particular traits. Bull proofs would be based on daughters' average net income values at 36, 48, 60 mos etc instead of lst, 2nd, 3rd lacts etc.

These proofs would automatically identify the bulls whose daughters were the most profitable based on

i) Production -- under today's payment program

ii) Type -- since the % of 3rd lact daughters is the largest determinant of profitability

iii) Cull Rates -- since every animal culled will have a net income value to include in proofs

iv) Calving Interval

v) Health Concerns --- these are calculated into every cow's

vi) Age at lst Calving net income value

N.B. This system was designed to complement current type or production proofs, not replace them. Instead of taking anything away from cows and bulls already high on today's ranking lists, it will identify a third important group of animals very important to most breeders, but sometimes missed in today's rating systems -- those selected for profitability!

CONCLUSION:

This approach may do more than anything yet to encourage dairy farmers to breed cows that are not only high-producing, but made correctly to last over many lactations with relative ease of management. Moreover, once these profitability numbers have been generated, their analysis could be extremely useful in aiding producers to find answers to many other relevant questions.

Canadian breeding philosophy has always emphasized that the most profitable animal is the one combining high production with high type i.e. the 'type' that enables this production and reproduction over a long period of time with relative ease of maintenance. At present though, too many ambiguities and inconsistencies arise when comparing a cow's production (BCA) and classification scores with her ultimate profitability (in terms of lifelong contribution through milk, offspring, resale value etc). True justification of the Canadian balanced breeding approach is only possible when it is ensured that the measurement tools used really do represent accurate gauges of profitable production and the type that enables it. The purpose of this proposal is to suggest that if these tools could be developed to work 'in synch' actually reflecting realistic DOLLAR VALUES, then the relatively small hassle and cost of the development of such a system would be more than justified by the enormous benefits it could supply not only as a day-to-day management tool for profitable dairy herd operation, but equally important, as a cornerstone for genetic improvement geared towards the same profitability.

Lloyd Wicks
Grasshill Farm Ltd.
102 Kenstone Beach Rd.
Bobcaygeon, Ontario, K0M 1A0
phone: (705) 738-2787
fax: (705) 738-4580
email: grasshil@peterboro.net

  Example:

   

 

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Copyright 2002 Grasshill Farm Ltd.   Last modified: April 26, 2011