Investing in your dairy herd's future

Investing in your herd's future Heifers are an important investment in your dairy farm's future. As with all investments, assessing costs as well as returns could pay dividends for your bottom line.

For the past few years, the cost of raising a heifer from birth to calving has been estimated at $1,500 to $2,000. However, a recent analysis, based on 2007 Ontario Dairy Farm Accounting Project (ODFAP) data, puts the figure at nearly $2,500. Led by Dairy Farmers of Ontario, ODFAP collected data from 84 Ontario dairy farms.

Cash costs in the analysis totalled $1,614, with purchased feed and crop production making up the biggest share (see table). Feed costs exclude values for colostrum or milk fed to calves. The study uses crop production costs instead of directly calculating a value for home-grown feeds.

Interest charges totalled $394, higher than many producers might expect. Other significant cash costs included $150 per heifer for repairs. Building and equipment depreciation added another $294.

Most producers can readily identify heifer-raising cash costs, but often overlook overhead and their own time and management costs.

The study reported it takes 39.2 hours of unpaid labour and management to raise a heifer. If the value of this unpaid time is calculated at $15 per hour, it could add $588, bringing the total cost of raising a heifer to $2,496. This is up 30 per cent from a similar Ontario analysis in 2000 that calculated the cost at $1,922.

The new CanWest DHI Profit Profiler program states annual heifer-raising costs account for 12 per cent of farm milk revenues. Actual costs range from eight to 16 per cent for mid-range farms -25th to 75th percentile.

Profit Profiler calculated average annual heifer-raising costs in 2008 at $944, excluding interest and depreciation. Over the two years it takes to raise a heifer from birth to calving, Profit Profiler's total costs are close to $2,500.

 

Heifer Cost of Production, Ontario, 2007

Item (Cash Costs)	Cost
Purchased feed	$249
Crop production costs	$418
Vet and medicine	$48
Machinery building repair and maintenance	$150
Property tax and insurance	$101
Hydro and telephone	$90
Hired labour	$79
Other cash expenses	$85
Interest	$394
Cash costs subtotal	$1614
Depreciation	$294
Unpaid labour 39.2 hr @$15/hr	$588
Total	$2496

This article first appeared in the Ruminations column of The Milk Producer Magazine, December 2010.