PIN value gains outweigh extra replacement costs

19 June 1998

PIN value gains outweigh extra replacement costs

Dairy producers could

increase profits by opting for

higher genetic index,

according to a new report.

Sue Rider reports

PURSUIT of higher genetic index is the route to better dairying profits – no matter what management system is used and even when it leads to an increase in herd replacement rates.

Steve Amies, director of Genus Breeding, bases his recommendation on findings of a new report which examines the influence of genetics on performance of 500 Axient costed farms.

"This gives overwhelming evidence that breeding for higher index pays," explains Mr Amies. "Even if replacement rates are significantly higher, financial gains from higher PIN animals far outweigh the extra replacement costs – on high or low input systems."

According to Mr Amies, it is the first time the financial advantage of superior genetics has been demonstrated commercially. The new figures show that for every £1 increase in PIN, margin over purchased feed a cow rises by £7.50 (table 1). This gain is 50% higher than that shown by research comparing cows under common management; work at SACs Langhill herd, Edinburgh, and Moorepark, Ireland, shows a £5 gain.

Mr Amies attributes the difference to the fact that higher PIN herds tend to be better managed.

The £7.50 benefit falls to £6.44 for every £1 increase in PIN when replacement costs are taken into account, says Mr Amies. But herds with replacement rates of 30% are spending on average an extra £30 a cow a year on replacements compared with those running a 25% replacement rate (table 2). And the herd replacing at a higher rate is still making an extra £244 margin over purchased feed because of an average herd PIN of £46 against £15.

On this basis, he says the most cost-effective route to achieving improvement on many farms is a higher replacement rate – voluntary culling – of low index animals, offset by lower involuntary culling of high index cows.

"Most culling is involuntary, due to lameness, mastitis and infertility. If you minimise that by good management and genetics to less than 20% then there may be scope to cull another 5% for genetic reasons," says Mr Amies.

He suggests carrying out a cost/benefit analysis when deciding on replacement rates, bearing in mind that rate of genetic progress will be influenced by replacement rate and sires used. "I see no reason, given bulls available today, for using any below £80 PIN and when you want to push harder aim for £100-110 PIN." This argument applies whether the herd is high or low input management system.

"Our data confirms the message that higher merit cows perform better than their lower merit contemporaries on all systems."

Mr Amies is concerned that too many farmers are getting side-tracked from the main issue of breeding for index by concerns over fertility and whether high index cows will perform on their system.

"There is a danger that some producers are getting hung up on the fact that they might need different cows for different environments. In doing so are missing their main chance to improve profits," he says. "Do not let the system deflect you from the main goal of increasing genetic index.

"There will be the odd individual farming at the management extremes, but for most farmer managers who want to be here in ten years time, management this should be no concern at all.

"The UK herds average PIN is still quite low at £22 – about £35 PIN lower than in Holland which means the Dutch are earning an extra £260 a lactation given the £7.50 gain in margin/£1 PIN." &#42

Financial gains from higher PINanimals far outweigh extra replacement costs, according to Genus Breedings Steve Amies.

Table 1: Impact on yield and margin over feed costs*

Group £PIN Number of Average Yield MOPF

Herds PIN (£) (litres a cow) (£ a cow)

A £40 and above 27 46 7,224 1,452

B £30-£39 100 34 6,698 1,342

C £20-£29 168 24 6,391 1,285

D £10-£19 136 15 5,975 1,200

E Less than £10 69 2 5,567 1,108

Average 22 6,270 1,258

Average gain in MOPF a cow per £1 rise in PIN: £7.46

*500 herds grouped by herd genetic merit (£PIN).

Table 2: Herd replacement rate, financial performance

(net of replacement costs) and herd genetic merit

Group Average Average MOPF Replacement MOPF &

PIN Replacement (£ a cow) Costs (£ a cow) Replacement

Rate (%) Costs (£ a cow)

A 46 30 1,452 180 1,366

B 34 29 1,342 174 1,257

C 24 27 1,285 162 1,202

D 15 25 1,200 150 1,122

E 2 24 1,108 144 1,043

Average 22 27 1,258 154 1,178

Average increase in replacement cost per £1 increase in PIN: £1.62.

Average gain in MOPF and replacement costs per £1 increase in PIN: £6.44.

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