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Are you asking the right questions regarding heifer raising?

Matt Lange for Progressive Dairyman Published on 24 May 2017

Many agree raising quality, healthy heifers is one of the most important goals for any dairy producer. It is surprising, though, that most discussion regarding heifer raising immediately gravitates toward cost.

Producers will often ask, “What should it cost to raise my heifers?” For those who outsource their heifer raising, “Am I paying too much per head per day?” In these conversations, I challenge the producers with, “Is that the right question we need to answer?”

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“Are we getting what we are paying for?” I contend this is the question we really should be asking with regard to raising heifers or frankly, almost any expense. Whether it costs $1,650 to raise our heifer from birth to freshening or it costs $1,800 doesn’t tell us much other than we spent $150 more between one versus the other. “What did we get for that extra $150?” “Was it worth it?”

For home-raised heifers, the cost analysis can be a bit tricky to break down if the accounting system is not enterprised. Still, producers can get very close with their overall cost breakdown. Generally speaking, the feed cost is the easiest to calculate as we can take our ration and use our purchased feed prices and the cost of our homegrown forages to measure our feed portion of the raising.

  • Feed and labor are generally our largest expenses; feed comprising about 60 to 70 percent of the total cost.

  • Labor is about 10 to 15 percent. Labor can be a bit trickier to calculate, but estimating the time it takes for each task, multiplied by your labor rate, divided by your heifer numbers can get you very close. It can also help you know how much time a task should take versus what it actually takes.

  • Then we have other production costs; animal health, breeding, bedding, supplies. Vaccinations and breeding, for example, are very brief in the overall timeframe of a heifer’s life, but costs need to be attributed. This can range from 10 to 15 percent.

  • We also have to attribute some capital expense, overhead and depreciation – 5 to 10 percent.

In these calculations, it is helpful to break down age groups as your rations are broken down: 0 to weaning, weaned to 6 months, 6 months to 1 year breeding and so on. Usually, one can expect costs of anywhere from $2.35 all the way up to $3.20 per day. It’s a broad range, as far as heifer-raising expenses go.

Generally speaking, we see the total cost range from to $1,600 to $1,900; and that’s before the value of the heifer calf that she’s carrying.

So, is it worth it? How long does it take before we can get that heifer to freshen? Let’s look at a possible scenario where heifers are at a grower (Table 1).

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Raising heifers: two scenarios

This could work equally for home-raised. Case A, we have 705 days at the heifer grower versus 678. We would think a shorter term would be a better situation as far as cost goes, but what if we alter the rate per head per day? Going from $2.50 to $2.60, that’s maybe not quite as clear.

Are we willing to pay 10 cents more per head per day to get those days lower? A lot of times we focus on the cost per head per day, and it’s not necessarily the cost, it’s a combination of cost and the duration those heifers are being raised.

Duration of time for raising that heifer is obviously important. So could two herds have the same average age at first calving and cost per head per day and still have a total cost that is different?

In Figure 1, the average age at first calving for blue and red herds are 23 months. However, there are 130 more head, or roughly 13 percent more of the herd, above 23 months of age at first calving with the red herd versus the blue herd.

Distribution of age at first calving

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At a rate of $2.60 per head per day, those 130 for this snapshot in time have cost approximately an additional $5,070 to raise. The net impact of the overall difference in heifer-raising expense between these two herds at $2.60 per head per day is $26,921.97 for this snapshot in time.

In a second scenario (Table 2), we’re looking at a situation where the heifer is being raised for, again, 705 days for both cases, but what if the one costs us $2.75 versus $2.60 per head per day? Are we willing to pay 15 cents more per head per day?

Raising heifers: quality comparison

The difference at the end of the 705 days is $1,940 versus almost $1,840, so we’re paying just over $100 more to have that heifer raised over that same period of time. What if we said there’s the potential that she’s going to give us 5 more pounds of peak milk in that first lactation? What is that value to us? Is it worth the additional cost?

When we run the analysis, and in this case we’re using $17 milk, the increased milk would add $191.25 of value of having the additional peak milk of 5 pounds. Obviously, there’s added feed cost in order to get her to produce that much milk.

We subtract off about $65 for that relative feed cost, and we come, basically, to a cost of just under 18 cents per head per day that we could effectively have a margin on in terms of our heifer-growing situation.

Now, we said we would be paying 15 cents more per head per day, but yet our margin is actually just under 18 cents per day. In this particular scenario, it actually proves we might be better off paying more to get a better-quality heifer producing more milk.

While duration of growth, distribution of age at first calving and potential increased milk production are valuable metrics to evaluate cost and benefit, they are retrospective in nature. It is essential that ongoing metrics be in place to track progress toward having a healthier, more productive animal.

While not all producers will weigh calves and heifers at various stages to track growth, it would be valuable to tape and measure animals at various stages in the life cycle. Evaluate breeding and rebreeding protocols with your breeder and stick to target breeding dates.

Far too often, herds continually “cherry-pick” breedings and there is substantial evidence to show that first-service conception rates on these animals is unnecessarily low.

Lastly, for most operations, it will take at least 30,000 pounds of milk shipped to cover the cost of the heifer raising. This means most animals are in their second lactation and beyond before we have covered that cost. Target and monitor culling rates and evaluate which heifers are worth keeping.

Those that are lower-quality or in excess of what you need should be culled as soon as possible. Producers can calculate the approximate number of heifers they need each month to sustain inventory by using the calculation in Table 3.

Number of heifers needed each month to sustain inventory

While this is not an exhaustive list of considerations in heifer-raising costs, these items will allow producers to begin evaluating heifers from a different perspective other than pure cost. A lower cost of raising a heifer that compromises the quality and potential she has as an adult is a costly mistake. Make certain you are getting what you paid for.  end mark

Matt Lange
  • Matt Lange

  • Dairy Business Consultant
  • AgStar Financial Services
  • Email Matt Lange

For additional insights from AgStar industry experts or to learn more about our programs addressing financial management and operational management, feel free to check out additional insights at AgStar Financial Services, ACA.

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