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1008 PD: What’s your genetic selection strategy for 2016?

Nate Zwald Published on 30 June 2008

What will 2016 look like for the dairy business?

It’s hard to imagine a picture that is dramatically different from today, since the horizon is only eight years away. However, in the March 22, 2008 issue of Progressive Dairyman, business strategist Jim Austin plots out four possible scenarios for the industry. He challenges dairy leaders to evaluate what each scenario will mean for the dairy business and to focus on a strategy that can succeed across these scenarios.

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It’s good to challenge our own assumptions about our industry. So I take up Austin’s challenge, in this article, to identify what each scenario would mean for genetic selection and dairy cows. I conclude with what I see is the dominant genetic selection strategy that can succeed across future possibilities.

A future unfolds…
Dairy Depression, All Bagged Up & Nowhere to Go, American Gothic and Field of Dreams are the names given to these four very different possibilities for the dairy business of the future. Each scenario is defined by a particular combination of consumer attitude toward the dairy business (positive or negative) and the impact of technology (moderate or significant). Figure 1 defines each scenario.

With these scenarios, what are the possible implications for genetic selection on dairies? What will the dairy objective be? And what will be the selection emphasis? I summarize some possibilities for each scenario in the matrix below.

Dairy Depression
Distrust in the industry does not necessarily mean distrust in particular farms. Many producers may want to sell “direct from farm” or “farm fresh” products with brand names associated with that. The selection strategy would focus on creating cows that are healthy and “attractive” to the public. Producers will move from price-taker to price-maker and will grow with sustainable demand. Traditional conformation (the “classic cow”) and health traits would be the likely emphasis genetically in this scenario. With higher margins on farm-branded and “low food miles” milk and dairy products, the emphasis on production is probably less than today. Consumers are paying more for the emotional benefits of milk, compared to the nutritional benefits.

All Bagged Up
Cost of production needs to be as low as possible, and each cow treated as a production unit. Profitability of each production unit must be maximized, and thus production per cow maximized. An efficient cow with high feed utilization will be required. Marginal milk will be a priority to maximize contribution margin and return to fixed costs. In this scenario, a selection strategy that maximizes production per day is most likely, so selection pressure will be on production.

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A “wild card” possibility is transgenics, which focuses on genetic modification of production animals in order to produce highly valued or unique products. One current example is transgenic goat research at UC – Davis, where genetically modified goats are producing lysozyme-rich milk that can limit the growth of bacteria-causing diarrhea and intestinal infection. Current research is on a pig model, since the pig digestive tract is similar to humans. Regardless, transgenic research is being done, and if it yields major human health benefit, then it can help combat negative consumer attitudes and boost demand.

American Gothic
If it ain’t broke, don’t fix it. The positive consumer attitude toward the industry and dairy products allows for the greatest scope selection strategies. Type, production and health traits will all figure into the selection strategies of dairy operations. Selection indexes like Type-Production Index (TPI) will have popularity.

For those dairies choosing “non-conventional” production systems like organic systems, then health traits will figure prominently into the mix. This is because fertility performance will depend more on genetics. Quite simply, cows that can break the genetically antagonistic relationship between fertility and production will be extremely profitable. Perhaps use of sires that have daughters who perform on pasture-based systems will increase as well.

Field of Dreams
Go for it. That’s the optimism of the industry in this scenario. Research and development will explode and new innovations will burst onto the market. Traditional production, new functional foods and nutraceutical products will redraw market segments rapidly. Low-cost commodity producers and specialized producers will coexist in separate, but adjacent, supply chains.

It’s the most difficult to predict a genetic selection strategy for this scenario. Genetic selection strategies in this scenario may include selecting for specific lines that are known to produce certain types of milk (“BB” Kappa Casein is a current example of such).

Genetic selection programs will be radically transformed. National average indexes like TPI and net merit value (NM$), will probably break down under the intense pressure of highly specialized, niche production systems. Mass customization is the likely the rule of the game.

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Genomics may also radically change the way young sires are brought to market. The generation interval that helps govern the rate of genetic improvement will shrink. The pace of genetic progress will accelerate.

Genetic modification of cows to make dairy products even healthier is readily accessible. Cows that do not produce specific allergens in their milk, prevent lactose production and add certain other vitamins and minerals will increase the overall health of dairy products. In this scenario, we need “production- specific” cows – cows that produce according to specific needs.

The different scenarios each point to a different genetic selection strategy and possible shape of the A.I. business. However, is there a dominant selection strategy that will be more likely to succeed across scenarios? I think there is.

Efficiency is still the king
While all of the scenarios are interesting and variable, we need to pay attention to a couple basic facts common to all. First, in all cases, dairy farming remains a business enterprise that is driven by profitability. And that is about maximizing revenue and minimizing expenses. Second, competition is going to increase in the future – both from foreign dairy industries that export to the U.S., and between U.S. producers and foreign competitors in third-party markets. Competition from substitute goods will also rise, as more of the grocery stores are stocked with soy-based beverages and calcium-fortified waters and juices. Third, costs are going to rise, especially as more feed grains and concentrates are diverted structurally to biofuel production.

These basic facts point to it being a safe bet for producers to focus on selection strategies that produce trouble-free, profitable cows. Cows that are able to compete in challenging dairy environments and produce quality milk with minimal maintenance and production costs will be able to contribute profits to the dairy enterprise – across scenarios. So, as I see it, the dominant genetic selection strategy is a production and health strategy.

It is interesting to note that this genetic selection strategy is most popular among dairy managers of large herds in the U.S. We tracked selection strategies of our largest clients from across the nation; our report is listed in Table 1. The largest dairies on average are working with a production and health genetic plan. This focuses on maximum pounds of fat and protein, while also paying attention to daughter fertility, calving ability and udder health. Those decisions today will create the trouble-free cow for tomorrow.

The future is here … the future is now
All of this is speculative and risky – including a risk of being wrong. Some things we are very confident will happen, while others are less of a probability. Still, it is important to pay attention to the future that will surround your dairy because genetic improvement is a project that takes time. A brutal fact is that the genetic decisions you make today will set in motion what you get in the parlor three years from now. I hope Austin’s scenarios and my thoughts on genetic improvement give you food for thought. PD

Nate Zwald
Alta Genetics’
Director of Alta
Advantage program

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