You’ve likely seen the headlines about shrinking heifer numbers around the U.S. Herds right-sizing heifer inventories, dairy expansions, and the trend to buy instead of raise replacement heifers continues to push replacement values higher and higher. If you’re like many of your peers, you may be wondering if it’s time to adjust your breeding strategy.
Obviously, I’m not an economist, so it’s difficult to recommend if you should or should not create and sell additional replacements based solely on expected demand. I can, however, confidently encourage you to think through the decision carefully, taking time to investigate key elements and potential pitfalls. If the new national landscape regarding replacement numbers has you contemplating entering this market, consider the following before changing course with your breeding program.
Know your market and costs
This seems obvious, but do you have a secure market for surplus heifers that is actually profitable? When someone sells replacements, and I ask about the price, they’re usually pleased with around $2,500; which, here in Wisconsin, is a great price. But my question always is, did they make money?
Hopefully, you know your rearing cost in detail, but if not, in most cases that number is well more than $2,000. When you combine that expense with the lost-opportunity cost of selling beef x dairycross calves, today, I surmise $2,500 is probably not enough. So, is your local market going to value your animals/genetics high enough to pay you a premium over market price?
Know your facility capacity
Overcrowded heifer pens can be disastrous leading to potential lost growth and development, decreased reproductive performance, poor hoof health, and everything in between. Many of these side effects last long into the future, impacting the performance of animals you keep for your dairy herd. Remember, you are a milk producer first and seller of cattle second. Do not allow the byproduct of your dairy (replacement heifers or beef calves) to negatively affect milk production.
Understanding feed inventory
Although we have been blessed with more rain later in the season, it has still shaped up to be a dry summer. Bear in mind, already-high feed costs are likely to increase through the year, and who knows what coming years will bring. This environment can lead to increased rearing costs and/or feeding sub-par feed, which will negatively affect growth and future performance.
Immediate sales or added expense
With the current milk price possibly impeding your dairy’s cash flow, raising and selling excess heifers can sound promising. However, doing so will add significant additional expense for the next several years. You won’t reap the benefit for two to three years, if you sell them as springers, which is when the demand is usually the strongest. In addition to the added cost, you will forgo the sale of valuable beef x dairy-cross calves available today.
As a mentor early in my career used to say, there may be money to be made selling replacements at times, but you will never lose money by only raising what you need. Before you decide to change course with your breeding program, invest the time to consider your operation’s capacity to withstand that risk, should markets shift against your favor.
For help evaluating which decision is right for your farm, reach out to me or a member of your CentralStar team.
Author: Cole Mark, Director of Consulting and Profit Strategies, CentralStar Cooperative