Investing in genetics when cash flow is tight

Cost cutting can be an effective tactic to help weather periods of tight cash flow.  For many practices employed by dairies, cost-return data can be compiled to evaluate the payback for various practices and identify candidates for trimming.  However for genetics, data for decision making are much more elusive due to the long time horizons, the difficulty in quantifying opportunity costs of alternatives, and the relative permanence of genetic decisions.  Moreover, in a given herd we never are able to evaluate the opportunity costs of genetics that were not used and whether alternatives are superior or inferior to the genetics that were used.

 

Let’s set the stage and start with some tools that can be used today to identify genetics that deliver value for money for commercial dairies.  There are many genetically solid Holstein sires to select from; despite smaller population sizes with more limited choices, I sincerely hope that our colleagues with protein breed herds can take away some useful points as well.

Benchmark #1:  We need to know the rate of genetic progress.  This gives us perspective on the population average pace of change, and how wide the gap can

become for herds that take their eyes off of the genetic “ball” for even a mere 12 months.  For more than 30 years, the genetic gain for U.S. Holstein bulls in Lifetime Net Merit (NM$) averaged $19 to $21 per year.  Acceleration of genetic progress began during the early to mid 2000s and gained additional speed after the adoption of genomics in 2008-2009. Currently, the rate of gain for marketed Holstein sires is running at more than $80 Net Merit per year!  Paying attention to genetics is critical today to ensure that herds keep pace.

 

Benchmark #2:  We need to know the genetic merit and spread of top end sires that are available widely.  These data provide benchmarks for comparing where in the ranking sires sit and how many sires are above and below them in genetic merit.  Table 1 includes the ranges for top deciles of proven Holstein sires for NM$, CM$, and FM$ from the August 2018 genetic evaluations.  Each of the respective deciles is expected to include ~55 to 60 proven sires.

 

Table 1.  Range for top deciles of proven Holstein sires for NM$, CM$, and FM$ (August 2018).
Range for NM$ Range for CM$ Range for FM$
Top 10% 730 – 1000 743 – 988 698 – 1009
Top 10% to 20% 664 – 729 678 – 742 636 – 697
Top 20% to 30% 617 – 663 629 – 677 583 – 635
Top 30% to 40% 559 – 616 571 – 628 534 – 582
From:  Council on Dairy Cattle Breeding.   2018.

Benchmark #3:  Also, we need to know the genetic merit and spread of top end genomic sires that are available widely.  At this time, the official August 2018 genomic data are not yet available, but based on historical results it is expected that the gNM$ for the top end genomic Holstein sire will be $1060 to $1075 for Net Merit.  This is ~$60 to $75 higher than the Net Merit of $1000 reported for the top proven Holstein sire (see Table 1).

Putting it all together:  The graphic represents the spread of widely available Holstein sires for Net Merit $.  This range would include 550 to 600 proven sires plus many more genomic sires.  Candidate sires can be compared with this scale and with the data in Table 1 for NM$, CM$, and FM$.  Please note that data for GM$ and TPI were not available at the time of writing.

 

  • In light of the very fast pace of genetic change, it is critical to avoid slipping behind. Consider sires on the upper half of the scale (see graphic and Table 1) as cash flow allows.
  • Consider a mix of upper end proven and genomic sires.
  • For genomic sires, buying from several similar sires can help to protect against the risk that any single genomic sire may disappoint when his daughters come into production.
  • For all sires, consider that the highest demand sires are those that “do everything well.”
  • Good breeding programs can effectively and profitably use a variety of sires by taking a more surgical or specialist approach. This can be as straightforward as the following.
    1. Identify high genetic merit sires using a comprehensive profit focused index. Several examples are discussed in this piece.
    2. Identify the one or two common weaknesses in the herd, (heifers and cows) and eliminate sires from the original high index group that have low merit for these higher priority traits. For example, a dairy may determine that the herd wants to continue its focus on fertility and desires more moderately sized cows.  In this case, the herd would eliminate sires from the initial high genetic merit list that are too high for Body Weight Composite (BWC) and too low for Daughter Pregnancy Rate (DPR).
    3. Cut any sire/s from this second list that exceeded your price parameters.
    4. Ensure that there are sufficient calving ease bulls in the third-pass list.
    5. From the list that remains, buy the best that your cash flow will allow.

Congratulations for investing wisely in the future of your herd!