As a rule of thumb, I try to never use rules of thumb, especially when evaluating a dairy operation. Every dairy operation has its own strengths, weaknesses, challenges and goals.
The problem with rules of thumb is that no dairy is perfectly normal relative to the industry and, because of this, every aspect of the dairy needs to be evaluated as a part of the overall dairy operation.
This is especially true when evaluating heifer programs.
A few years ago, I heard a lot of dairymen and industry experts tossing around 85 percent of the milking herd as the right number of heifers to rear. The more dairies I work with, the more I realize there is no magic number that stands alone.
With pregnancy rates, facility constraints, feed availability, lending relationships and working capital in play, there are many factors that need to be considered when developing a game plan for your heifer-raising operations.
How much are you spending to raise a day-old calf to maturity?
The first essential factor is costs related to raising heifers. While it’s easy to hang one’s hat on excellent milk production, number of cows milking and number of acres farmed, I haven’t come across too many dairymen boasting about their costs to raise a heifer to calving.
This might be because it’s a difficult number to calculate, but more than that, I just don’t think too many dairymen are trying to track it close enough.
I once heard a speaker at a conference state that the cost to raise a heifer to maturity was close to $2,500. While there were many in the audience who may have blinked at the number, myself included, his number has been proven true for many of my clients.
Some dairymen do an excellent job tracking and understanding the expenses associated with their heifer programs, while others are simply hoping to be competitive to the market.
On many of the dairies, the heifer program and heifer costs are huge areas of opportunity simply because they have never been evaluated with a fine-tooth comb. A typical 2,000-cow dairy with a full heifer program can easily spend $2.5 million a year. As an industry, we need to better understand the financial impacts these costs are making to our bottom line.
How does your self-raised heifer compare to those available at market?
With the cost to raise a heifer to maturity so high, every operation must be able to truthfully answer whether the heifers coming out of your replacement program are better-quality than what is available at market.
If you spend $2,500 to raise a day-old calf to maturity but are able to buy a springer for $2,200, are you losing money by rearing your own animals? It depends. The $300 premium may be a bargain if you have superior genetics, good health and overall quality.
On the other side, if you are spending $1,800 to raise a heifer that is in poor condition and doesn’t transition into your milking herd well, you are probably losing money in the long run. Are you tripping over dollars to pick up pennies by cutting costs so low that you’re cheating that animal of sufficient body condition and overall quality?
The decisions you make in your replacement program will have huge impacts on your farm’s bottom line. The goal of every well-run heifer program is to set up its animals for long, sustained success by not cutting corners on costs.
Are your heifers today better than they were two years ago?
Another area to understand when evaluating your heifer program is timing of breeding and calving. You cannot meet your highest potential as a dairy operation without having both consistency and quality in your replacement animals.
On top of the dollars spent to raise a heifer to maturity, the lost profits resulting from an inconsistent or underperforming heifer program can be staggering.
Make sure you know how your heifers look and perform when they enter the milking herd. Ask your nutritionist and veterinarian if they see areas for improvement in the heifer program and be willing to make changes based on their recommendations.
The ability to replace underperforming mature animals with timely and well-performing springing animals will ensure that a dairy is able to withstand the highs and lows all too common in the dairy industry.
Do you have the heifer quality and quantity to progress going forward?
Of course, the main goal of investing in a replacement program is to maintain a sustainable and high-performing herd on your dairy.
Along with milk and feed prices, cow flow is a main driver of any dairy’s success, and a lot of progress can be lost if there aren’t enough producing animals to carry the growing weight of your fixed costs and debt payments. Are you able to look to the future and be confident your herd will be better than it is today?
How well are your replacements transitioning into the milking herd?
Regardless of the route you take to raise a heifer, everything comes down to one question: “How are your heifers transitioning into the milking herd?” This takes precedence over every other factor in a replacement program. You can be doing everything right, but if the animals are struggling in transition, both your bottom line and animals will suffer.
The economics of the dairy industry are changing every single day. Far too often, the phrase “We’ve always done it this way” is thrown about. With the ever-changing milk and feed markets, every aspect of your operation should be evaluated for maximum efficiency, profitability and sustainability.
The only way to make sure you stay ahead of the competition is to continually improve and progress as an operation, and the heifer program is a great place to start. PD
- Frazer LLP
- Email Leland Kootstra