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Title: ESTIMATION OF RELATIVE ECONOMIC VALUE FOR HERD LIFE OF DAIRY CATTLE FROM PROFIT EQUATION

Author
item JAGANNATHA, S.
item KEOWN, JEFFREY
item Van Vleck, Lloyd

Submitted to: Journal of Dairy Science
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 2/19/1998
Publication Date: N/A
Citation: N/A

Interpretive Summary: The economic importance of herd life for dairy producers has been well documented. Two distinct effects of longer herd life on profitability are reduced replacement costs and more cows producing at mature levels. The main objective of this study was to estimate and compare relative economic values for herd life and for yields of milk, fat, and protein using two profit functions, one of which credited income from herd average replace- ments to the cow and the other which ignored production of replacements. When income from random average replacements was ignored, the relative economic value of herd life was determined to be about five times more important than the relative economic value of yield of milk, fat, and protein. When income from random average replacements was included in profit, the relative economic value for herd life was only about twice that for lactation yields. Thus, not accounting for income from replace- ments overestimates by a factor of 2.5, the economic importance of herd life for selection relative to the economic importance of lactation yield.

Technical Abstract: Lifetime records of 122,679 cows from 7,557 herds obtained from Midstates Dairy Records Processing Center were used to obtain relative to net income and relative net income for the planning horizon. With a planning horizon of five lactations for each cow, estimated profit from replacements was credited to each cow not surviving until fifth calving. Relative net income was defined as lifetime income minus costs. Relative net income fo the planning horizon was defined as relative net income plus profit from replacements within the planning horizon. Income was from sale of milk, calves and cull cows. Costs were included for heifer rearing, feed, labor, and breeding. Longer herd life yielded greater profit for both relative net income for the planning horizon and for relative net income. Rate of increase in profit for longer herd life was reduced for relative net income for the planning horizon, which accounts for profit from cows replacing a culled cow as compared with relative net income. Relative economic value of production to herd life was 0.18:1 for relative net income and 0.46:1 for relative net income for the planning horizon. Relative value for herd life was overestimated by about 2.5 times when profit from replacements was not considered. Values for production relative to herd life increased for high milk and low feed prices. Lower cull cow prices in combination with high milk and low feed prices increased the relative economic value of milk and low feed prices increased the relative economic value of production.