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Rising heifer numbers should shift management philosophies

Colten Green Published on 30 August 2013

Historically, heifer programs have been a source of widely varied growth patterns. Dairy producers that could produce more heifers than needed generated additional revenue by selling extra heifers for a premium.

This association of extra heifers as a supplemental revenue stream lasted so long in the dairy industry that some producers are having challenges accepting the monumental shift in the way lenders and accountants view excessive heifer programs today.

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Extra heifers were once a symbol of financial strength; now, they are often viewed as a red flag for high operating costs and reduced cash flow.

Advances in management practices have reduced rearing loss and improved reproductive efficiency. Also, the acceptance and widespread use of sexed semen has made it easy to sustain a total ratio of more than 50 percent heifer calves per freshening.

For example, if six years ago, a dairy had 48 percent heifers per freshening with 9 percent stillbirths and 15 percent rearing loss, then the total number of actual milking replacements produced per freshening was 0.37.

Today, if they get 59 percent heifers per freshening with 7 percent stillbirths and 10 percent rearing loss, the total percentage of replacements per freshening is roughly 0.49. This means an extra 12 replacement heifers per 100 freshenings are produced today compared to six years ago.

Moreover, freshening is at a higher rate because of improved reproductive efficiency. Now we get to the issue at hand: Heifer programs on modern dairy operations are experiencing exponential growth. (See the sidebar for an illustration of the principle of exponential growth.)

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Managing heifer inventory
Recently, several articles have been written about excessive cost associated with extra heifers. Their solution aims to reduce heifer inventory through more aggressive management plans resulting in freshening at a younger age.

For example, reducing the average age of freshening from 24.5 months to 23 months would take approximately six weeks of heifer inventory off your hands.

These principles are true and should be considered. However, one should also consider that reducing age of freshening in heifers simultaneously increases the rate at which replacements are produced and decreases the number of replacements needed.

The recommended strategy intensifies the problem long term. A more optimal solution establishes a business plan that yields the necessary number of replacements with limited investment in unwanted heifers.

The two easiest options to control replacement numbers are voluntary culling or breed selection.

1. Voluntary culling: When keeping the minimal number of replacements needed, you must decide which heifers to remove from the herd.

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Choosing a method to remove heifers can be tricky. For many, once a heifer is a month old, you invested as much as the calf is worth on the market.

Investments beyond one month generally are not returned unless she provides sizeable milk production later on. Therefore, waiting to choose which heifers to sell almost guarantees a loss on your investment.

Two simple methods I recommend are to cull anything with more than one recorded respiratory disease in the first months of life and to cull heifers that require more than three inseminations.

These methods conservatively remove 12 to 15 percent of total heifers. In some cases, they still leave more replacements than needed.

Another option is to test heifers with a low-density genomic test (6K) or remove heifers based on parent average or sire PTA values.

With this option, it is important to evaluate the quality of data received against the cost of genomic testing rather than focusing on the initial investment of low-density genomic testing.

2. Breed selection: A second management strategy incorporates beef semen and alleviates excessive replacement production by creating terminal beef crosses rather than dairy animals.

Many farms use this strategy but only use beef semen on problem breeders – and end up culling half the cows pregnant to beef semen.

A more beneficial strategy is to choose which cows will have the least-valuable offspring and inseminate those with beef semen. This provides an additional lactation from the cow without producing a low-value replacement heifer.

In taking a large number of replacements out of your program by simply not producing them, the farm captures the value of a targeted number of replacements and a targeted profile of lactating cows.

Measuring the impact

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Before explaining Table 1 , a short disclaimer seems appropriate. Many factors on a dairy are multifactorial.

As culling rates increase, days in milk (DIM) likely decreases, and production increases short-term.

Additionally, factors such as calving interval decrease as cows are culled more frequently.

However, to make a model that is more easily understood, some data points must remain constant.

In Table 1, these factors remain constant throughout the five years represented.

Table 1 depicts four farms each with 1,000 cows. In the first year, each farm has 360 first-lactation cows and 640 with multiple lactations.

Each dairy also has 460 heifers more than 12 months old that freshen in year one and 490 heifers less than 12 months old. In total, each farm starts year one with 1,000 cows and 950 heifers.

By implementing different breeding programs, each farm produces a different number of replacements per freshening:

• Farm A uses only non-gendered dairy semen.

• Farm B uses non-gendered dairy semen on cows. Half of the heifers are pregnant to gendered dairy semen. The other half are pregnant to non-gendered dairy semen.

• Farm C models a common Jersey dairy program. Half of the cows are pregnant to gendered dairy semen. The other half are pregnant to non-gendered dairy semen. All heifers are pregnant to gendered dairy semen.

• Farm D gets half the cows pregnant to non-gendered dairy semen and half pregnant to beef semen. Half of the heifers are pregnant to gendered dairy semen. The other half are pregnant to non-gendered dairy semen.

At each farm, the turnover rate of first-lactation cows increases each year as the percentage of first-lactation cows increases. However, the turnover rate is dependent upon the replacement rate.

For instance, Farm A increases turnover by 1 percent each year (in year one they remove 27 percent of 460 heifers that freshen, and in year five 31 percent of heifers that freshen).

Conversely, Farm C increased turnover at a much faster rate (41 percent during year five) to manage the overwhelming flow of replacements.

Number of cows within each lactation, estimated milk production and estimated change in milk revenue are calculated on the first day of each respective year.

There are several key points from this example. First, as farms generate a greater number of replacements, they experience a loss in milk production.

This occurs as the number of first-lactation cows increases to the point where some dairies exceed 50 percent of the lactating herd in the first lactation.

As stated earlier, high culling rates can decrease DIM and increase milk production short term. If taking a long-term approach, a herd averaging 35 percent first-lactation cows and 175 DIM is better off than a herd with 45 percent first-lactation cows and 165 DIM.

While many might say it is easier to manage first-lactation cows, I argue the convenience of a young herd is overcome by the fact an older herd can produce substantially more milk.

The second point focuses on the heifer-to-cow ratio, which has major implications on operating costs. Compared with year one, these farms generate less revenue (less milk) with higher costs because they have more total animals on feed.

For example, during year five, Farm B (1,468 replacements) will have higher operating costs than Farm D (1,018 replacements).

It’s a Jersey dilemma, too
Jersey producers are probably thinking this is a Holstein guy’s problem, but Farm C models a situation I regularly encounter.

When many Jersey cattle producers are presented with the idea of crossbreeding cows with beef semen to control heifer inventory, the response is ridicule: “Why would I want to breed to beef semen when the Jersey springer market is so lucrative?”

Look again at Farm C. The same farms purchasing Jersey springers today will be competing with you on that Jersey springer market in a couple years.

The low value of Jersey bull calves and the ability of the lactating Jersey cow to conceive to gendered semen at an acceptable rate enable herds to far exceed 2-to-1 heifer-to-cow ratios in only a few years.

The springer market will close faster than most producers hope because of the ability to grow Jersey herds at a high rate.

A few weeks ago, I had dinner with a producer who has three similar-sized dairies. One dairy has Holsteins, one has Jerseys, and the third is converting from Holstein to Jersey. The producer built the Jersey dairy five years ago.

Presently, he has so many extra Jersey heifers that he’s stocking the dairy that is converting from Holstein to Jersey and selling Jersey springers.

He had already begun strategically using beef semen on his Holstein cows 18 months prior to our dinner and shared what he learned when the Holstein springer market changed a few years back.

He had seen heifer buyers name the terms on which animals they would take animals. The offers were “take it or leave it” because the farm next door also had extra springers.

He invested two years into raising these replacements and was forced to either sell his best or milk them and lose out on the milk older cows would have produced in their place.

When he dabbled in the Jersey springer market a few months ago, he saw that buyers already have enough inventory available to them and are naming the terms on which heifers to take.

The producer, having been down that road once already, is strategically breeding his Jersey cows to beef semen and has set a ceiling on each dairy to not exceed 40 percent of cows in the first lactation.

Conclusion
If you have not already thought through your heifer program, then you are presented with some choices. You can address the issue and manage it to your advantage, or you can keep the status quo.

However, the thing about exponential growth in your heifer program is that it’s a problem that can only get bigger without intervention. PD

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Colten Green
National Account Specialist
Genex Cooperative Inc.

What is exponential growth?

Imagine you just won a prize. You can choose $1 million in cash today or $0.01 in cash today and receive double the amount from the previous day every day for a month. Which option would you choose?

Obviously, the question leads towards the second option yielding a larger prize. To be exact, in the second option you would earn more than $1 million on the 28th day alone.

If the month had 31 days, you would acquire more than $10 million on the 31st day alone. This simple example shows the power of exponential growth.

A more practical example is to look at finances. Suppose you invested $1,000 into a stock that yielded an average 9 percent growth annually over 10 years. To make things simple, assume you don’t have to pay taxes on the interest earned.

At the end of the 10-year period your $1,000 will have turned into $2,367. Without exponential growth, you would have simply added 9 percent to the original principal every year for 10 years and only yielded $1,900.

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