Middle Ground
Selection Will Favour Less Extreme Genetic Makeup for Butterfat and Protein

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The national structural surplus of solids non-fat (SNF) has prompted several provinces, including Ontario, to pay producers more for butterfat than for protein. All provinces have agreed to lower their SNF-butterfat ratios. While feeding and management practices can change components immediately, genetics can change them long-term. One question remains: will the structural surplus issue persist, or will it be resolved in short order relative to cattle breeding terms? For now, the logical choice for selecting for components is the perceived middle ground.

Changing genetic traits-even highly heritable traits like fat and protein yield-takes two generations to get meaningful results. A dairy cow generation is around five years, so we are talking about designing selection criteria that will be marketplace- appropriate in 10 years. However, selection decisions also have to make economic sense on your farm and be in line with the most profitable milk production for today.

Developing selection weights is challenging when prices do not necessarily reflect end-use product value. If prices are being set to accomplish a change in the components you supply, rather than marketplace value, it is difficult to predict when and by how much they may change.

The Ontario price change that took effect August 2004 resulted in a higher gross price per kilogram for butterfat than for protein. Producer prices for August 2004 were $9.12 per kilogram for butterfat, $6.96 per kg for protein and $1.42 per kg for other solids.

How do you determine economic weights? It is more relevant to your farm's profit to look at returns rather than gross values. Feed comprises the largest portion of direct milk and component production costs. Other costs can be attributed on a per cow basis, instead of a per kg of fat or protein.

Previous work by Jack Rodenburg, dairy systems lead with the Ontario Ministry of Agriculture, Food and Rural Affairs calculated the incremental amount of energy and protein necessary to produce butterfat, protein and lactose.

These nutrient amounts can be assigned a value using a common formula and current soybean meal and corn prices. The incremental cost of producing a kg of butterfat is 39 cents, a kg of protein $1.22 and a kg of lactose and other solids 18 cents.

Quota Value. The cost of holding quota should somehow be counted against income. There are various ways to do this, from amortizing the cost of buying quota over a number of years to allocating interest only. Allocating no quota costs biases the approach unrealistically. Even if you did not purchase the quota, it does have market value and an opportunity cost.

It has been suggested that some quota value be allocated against protein value because you must hold a minimum five kg of quota to market milk. In reality, this applies to very few producers. The same argument can be made for amortizing quota's total value and charging it against the fat value when producers are purchasing their entire quota. It's a critical factor for some, but not for the majority.

Using a value of $27,500 per kg of quota and six per cent annual simple interest, the interest charge against a kg of butterfat would be $4.52. Deductions from the volume total $3.96 per hectolitre, or $0.0384 per kg.

Depending on how quota is valued, the returns per component appear the best at equal emphasis on fat and protein to about 40 to 60 (see table).

This is a significant change from the previous pricing system. When the accent was on protein, these calculations gave an emphasis based on net returns of about one-to-seven in favour of protein.

Lifetime Profit Index (LPI). The genetic evaluation board has recommended that the breeding industry change the relative emphasis on fat and protein in the LPI's production portion. The recommendation is 40 to 60 on fat-to-protein, with a small weight on percentage composition for both fat and protein. Positive weight on per cent components achieves the same result as a small negative on volume and will improve component levels over time.

Provincial situations are slightly different. Alterations should be made to this model to better suit conditions in other provinces with respect to price paid for milk components and quota values. How do we deal with caps on protein production or the SNF-butterfat ratio? It is nearly impossible to apply any kind of selection to deal with a cap when one set of prices applies to the kg of fat or SNF produced under the cap, and a different set of rules applies to the first kg produced over the cap.

Genetic progress. The influence of genetic gain from breeding decisions takes place gradually over a number of years, and may not be noticeable in a given year. Over time, however, genetic change has a powerful influence.

LPI is the driving force for genetic change in Canada. That's because the LPI considers a rather complex array of traits, including fat and protein yield and percentages. It identifies the top improver bulls available from which dairy farmers can choose to suit their herds' needs. Ranking in the top 20 of the LPI usually determines bulls that dairy producers will use heavily and bulls that will be sires of sons. In the 1990s, the relative emphasis in the LPI's production portion was a one-to-seven fat-to-protein ratio. In 2001, the ratio was reduced to one-to-three.

Did selection have any effect? The graph shows that selection has had an effect on improving the genetic level for protein production versus fat. There was strong emphasis on protein during that time, and results are quite obvious. Genetically, protein increased by 4.4 kg per year versus 4.0 for fat over a 10-year period in the national herd. In Ontario, protein increased at a rate of 4.6 kg per year to 4.1 kg for fat.

The heavy use of certain bulls has also influenced the SNF-butterfat ratio. For example, according to the latest November 2004 Holstein Proofs, Startmore Rudolph is the leading sire of top 100 LPI Bulls (10 per cent) and is the leading sire of the top 1,000 LPI Holstein cows (12.6 per cent). He fits the pattern for relative emphasis on protein with lower fat.

Conversely, Canada's Jersey breed has progressed genetically at a slightly faster rate for fat at 2.61 kg per year versus protein at 2.28 kg per year. The SNF-butterfat ratio for the breed is favourable under current goals.

What do we expect? With emphasis now closer to one-to-one or 40-to- 60 for fat and protein, selection will favour bulls and cows with a less extreme genetic makeup for fat and protein. The high correlation between fat and protein content will mean that high improvers for both fat and protein will be the norm rather than the exception. They appear to be the most profitable animals in the short term. Any small differences in emphasis between fat and protein are probably not that important compared to identifying and using the top bulls and cows that will provide the best progress.

This article appeared in the January 2005 edition of the Milk Producer magazine.

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