Culling Dairy Cows - Dairy Producers Affected by U.S. Border Closure

Table of Contents

1. Introduction
2. Keep or Cull Surplus
3. Increase Culling Rates
4. Cull For Milk Production
5. Cull to Eradicate Staph. Aureus Mastitis
6. Cull to Eradicate Johne's Disease
7. Decrease the Number of Heifers Raised

Introduction

Traditionally, Ontario dairy producers replace 25 to 40 percent of the milking herd annually with first calf heifers. Cows may leave the herd "involuntarily" due to failure to conceive, clinical mastitis, lameness, udder breakdown, or death on the farm. Alternatively, they may leave "voluntarily" as breeding stock sales or because the genetics or health status of replacement heifers provides an opportunity to improve the herd. The timing and level of culling usually involve management decisions driven by net returns to the dairy enterprise.

Since the U.S. announced the border closure to live dairy cattle from Canada in May of 2003, the economics of culling have changed dramatically. Fresh or springing dairy heifers and good young cows that sold for $2,500 before May 2003 are now bringing less than $1,000. Cull cows worth $500 to $800 in early 2003 are worth $250 or less today. Prior to the border closure, the livestock sales of a typical Ontario dairy farm represented about 10 percent of gross income. Since net income is typically about 30 percent of gross returns, the current reduction in revenue from livestock sales results in a 20 to 25 percent decrease in net income for the average farm. Dairy farms with above average costs or larger debt servicing needs may see an even greater drop in net returns.

Keep or Cull Surplus?

When cull cow values are very low, there may be a temptation to dry off and hold cows back from the market until prices improve. Since there is both a limited slaughter capacity and a limited market for meat from cull dairy cows within Canada, a major price recovery is not likely unless the U.S. border re-opens. Even when it does re-open, changes in how markets are supplied may result in a very slow return, or even no return, to pre-May 2003 conditions. While some ruminant products are now being allowed into the U.S., an open border for either cull cows or dairy breeding stock of any age is unlikely in the short-term. Since these decisions are entirely up to U.S. health authorities and no part of the decision is made in Canada, speculation about when the border will open has a strong likelihood of missing the mark.

Changes in U.S. border regulations with regard to cull cows and breeding stock are probably still at least 6 months, and perhaps as far as several years away. An open border for meat from cattle over 30 months of age, or for live cattle over 30 months destined for slaughter, would most likely be based on an international agreement to change animal health policy and/ and likely be subjected to court challenges in the U.S. An open border for dairy breeding stock of any age is probably even further away and dependent on re-negotiated international policies and perhaps lifetime traceability of individual animals in the U.S. Access to other markets such as Mexico is possible, but Mexico exports 600,000 head of live cattle to the U.S., and cannot jeopardise their market.

It follows that holding cull cows in the hope of an open U.S. border and better prices may be a long-term and high-risk proposition. While not devoid of potential for profit, both the high-risk and the long time period before returns are realized make holding onto cull cows a poor bet for farms already financially stressed by reduced revenues. Older cows that have, or may develop, health problems are definitely not worth this risk and are best culled as soon as possible, regardless of end value.

A healthy, open Holstein dry cow housed in reasonable facilities has an estimated feed cost for maintenance of $1.25 to $1.50 per day. If utilities, bedding, health maintenance, death losses and interest on accumulated costs add an additional $.25 to $.50 per day, these cows have to be worth an additional $315 in six months, or $630 a year from now, to recover direct costs. Prices of $375 and $750 would be needed to provide a reasonable return to labour, housing and risk over these periods. Despite the seemingly wasteful decision to cull cows from the herd when they have little market value, the chances of realizing a return on delayed culling appear slim.

On most farms, proper housing, labour and other resources may not be readily available. It should be noted that in winter, dairy type animals with thin hides and limited, exterior fat cover lose body heat more easily than beef cows. Especially for thin cows, feed requirements for maintenance go up dramatically in cold housing or when wintered outdoors. Based on current NRC recommendations, maintenance energy requirements for dairy breed cows are 20 percent higher than beef breeds in warm conditions. Because of their thin hides and lack of external fat, feed energy needs increase by 9 percent at 10 ° F (-12 °C) and by 33 percent at -10 ° F (- 23 °C). If hair is matted and wet, the increase is 41 percent and 74 percent respectively. Animals in a 10 mile per hour wind, and with wet hair coats, double their daily feed energy needs from summer conditions. Assessing body condition in cows with long hair is quite difficult; so weight loss in cold weather is often overlooked. All in all, over-wintering dry dairy cows in conditions involving less than adequate shelter or insufficient bedding or inadequate feed quality can be very detrimental.

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Increase Culling Rates

For several years the "replacement cost" or spread between the value of a cull cow sold for beef and a replacement heifer added to the herd to take her place, has been roughly $1,500 to $2,000. While both animals are worth comparatively little today, the spread between a heifer worth less than a $1,000 and a cull cow of low value is the smallest it has been in many years. While the current situation is no doubt a cloud over the industry, for financially secure producers the opportunity to increase the level of voluntary culling is a small silver lining. Most dairy herds raise roughly one heifer for every two cows in the herd. Traditionally, after replacing 25 to 40 percent of the herd, the remainder is sold. With little market for these surplus heifers, this is an excellent time to review the genetic quality and health status of the herd, and use the extra heifers available this year to realize genetic and health improvements.

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Cull For Milk Production

For most situations, the most profitable culling criterion will be milk production. As an example, assume a herd has a healthy 5 year-old cow that is 20 percent below the herd average for milk production or 160 BCA versus 192 BCA average. An average replacement heifer with a modern sire is predicted to be 5 percent above herd average or 201 BCA. Because of her younger age, the heifer results in 350 litres less milk in this lactation than the cow she replaced. But two years from now, the heifer will be a four year-old producing 10,000 litres, while the cow at 7 years will at 8,600 litres. The extra milk from the genetically better heifer, estimated as 1,700 litres over the three lactations, repays the "replacement cost" and results in a younger, genetically superior and probably healthier herd two years down the road. Harder culling of the herd based on milk and protein production is a practical recommendation for most herds. The Ontario Dairy Herd Improvement, (DHI) milk recording program provides detailed information on age-adjusted merit for production in the form of breed class averages or BCA. The Cow Income Monitor Option provides "Mature Equivalent Milk Value" and "Net Milk Value after Quota Ownership". Dairy Comp 305 includes a "cow value" that identifies profitable cows based on future income. These DHI calculations are all excellent tools for identifying potential culls for low production.

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Cull to Eradicate Staph. Aureus Mastitis

Other culling criteria may also improve future profits. For example, roughly 1 Ontario dairy cow in 12 is infected with the mastitis-causing bacteria, Staphylococcus aureus (Staph.aureus). Prevalence in individual herds may vary from 0 to 50 percent Most herds that teat dip properly, and dry treat routinely, have only 2 or 3 infected cows. This bacteria lives almost exclusively inside the udder and on teat skin, so the only real source of new infections is infected cows in the herd. Subclinical Staph. aureus infections increase Somatic Cell Count (SCC) and decrease milk production, and occasionally cause clinical cases as well. New infections in young cows, especially those found at calving in first calf heifers, are often eliminated spontaneously; but established infections in older cows are almost impossible to cure. Even dry cow treatment of chronic infections meets with only limited success. For long established infections, culling is the only way to remove the organism and thus prevent exposure for other cows and heifers. The decision to cull, especially if it involves an above-average production cow, is difficult at all times, but may be easier and more economical when net replacement cost is less than $1,000 than when it is over $2,000.

As an example, assume a herd has 4 Staph. aureus positive cows with an average age of 4 years, and genetics which are 10 percent above average. These cows will be producing at roughly 85 percent of their potential because of subclinical mastitis. Replacing them with 4 heifers of average genetic merit costs $4,000 and reduces production by about 4,600 litres over the next two years. The $2,700 lost milk income is partially offset by $700 in savings, since there will be no milk discarded and no antibiotic treatments of clinical Staph. aureus cases. Two years from now, with no Staph. aureus cows in the herd and no new Staph. infections, these heifers will collectively produce 2,700 litres more than the cows they replaced. More importantly, because they are uninfected, they will not infect other good young cows coming into the herd with this costly form of mastitis.

By culturing milk samples from individual cows, the herd veterinarian can help identify Staph. aureus cows in the herd and determine if reducing this disease through culling is practical and economical in a specific situation. Repeated testing and an organized plan of attack, including culling some cows and either treatment in lactation or at dry off for others, will be required to ensure success. Of course, if replacements are being purchased, these should also be tested by milk culture and SCC.

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Cull to Eradicate Johne's Disease

The economic importance of Johne's disease (JD), a bacterial infection caused by Mycobacterium paratuberculosis, is not well defined. Clinical signs include chronic diarrhea without fever, weight loss and decreased milk production, which usually result in the culling of affected cows. There is no cure or treatment for this disease. In our smaller herds, the clinical disease is typically limited to a few older cows, but a U.S. survey showed that on large farms JD positive herds produced $200 per cow less income due to lower production and earlier culling. Another reason for recent interest is speculation that JD may be linked to Crohn's disease in humans. As herds increase in size and if the Crohn's link is verified, eradication of this disease on a province-wide basis may become a priority.

A field survey of Ontario herds showed that about 2.2 percent of dairy cattle in the province test positive for JD and that about 10 percent of herds have positive animals. If you normally operate a closed herd and you want to be at the leading edge of industry self-improvement, or if you suspect JD is in your herd, knowing the extent of the problem may be of interest. With the co-operation of the herd veterinarian, Ontario DHI is able to offer an inexpensive ELISA milk test available on a herd basis only. If the number of infected cows is small, interested herds might consider using current low replacement costs as an opportunity to embark on a JD eradication program. Although experience with this is limited, eradication may be achievable in a closed herd, with a program combining culling and management practices that limit the spread of the disease.

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Decrease the Number of Heifers Raised

While the price of purchased heifers is much lower today, the cost of raising them remains unchanged. According to data from the Ontario Dairy Farm Accounting Project, the average cost of raising a heifer from birth to calving is $1,900. If conditions two years from now remain unchanged, and her market value is $1,000, raising heifers for sale will result in a net loss of $900 per head. If herd records indicate that you traditionally replace 30 percent of your dairy herd annually, raising heifers from only the best cows and selling the rest at birth into the veal trade may be good economics. Traditionally beef cross calves attract slightly higher prices from veal buyers. Since the sex of calves cannot be predicted, a good strategy may be to rank all the milking cows in the herd according to productivity, breed the bottom third to beef, and breed the remainder with dairy sires. Then, raise only enough heifers from the best cows to meet traditional replacement needs. Of course, if the border re-opens or markets recover, herds that have applied this strategy will not have heifers to sell.

The current disruption in dairy cattle markets is undoubtedly a serious hardship for dairy producers. Regardless of how the industry responds, net income will be affected on all farms. Changes in culling and replacement strategies may be warranted, to take advantage of the current surplus of breeding stock and to adjust to new market realities, which may continue for some time. Individual producers need to realistically assess their situation, and consider non-traditional practices that may be more economically justified at this time.

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