Rearing Replacements- How Real Costs of RaisingHeifers Can Impact on Your Bottom Line

With the real cost of raising a heifer at least $500 higher than previously estimated, consider the number of young females your farm needs to supply herd replacements. A new study on heifer-rearing costs has raised the bar considerably on how much they can impact your bottom line.

For the past few years, $1,300 to $1,400 has been the commonly used cost estimate of raising a heifer. However, a recently completed analysis puts the figure at more than $1,900.

The analysis is based on data from the Ontario Dairy Farm Accounting Project 2000 (ODFAP) survey. Led by Dairy Farmers of Ontario (DFO), it compiled data from 110 Ontario dairy farms.

Most producers can readily identify the cash costs of raising a heifer. But they often overlook some of the overhead costs, and their own time and management.

Cash costs in the ODFAP, based analysis totalled $1,249, with feed and crop costs being the biggest share (see Table 1). It doesn't include any value for colostrum or milk fed to the calf. As well, it doesn't directly value homegrown feeds. Instead, it includes the crop production costs of the feed. It appears that, at $566, the ODFAP study may underestimate feed and crop production costs.

Other significant cash expenses include interest costs of $230 and repair expenses of $119 per heifer. Depreciation of buildings and equipment used for heifers add another $217.

The study also reported 38 hours of unpaid labour and management per heifer. As a producer, your time is worth money, but at what value per hour? At $12 per hour, it adds $456, bringing the total cost of raising a heifer to $1,922.

Some producers would price labour at a lower rate, while others would value it higher.

At $7 per hour, the total cost of raising a heifer would be $1,732. If the calculation had used the DFO suggested rate of $19.64 for labour and management, the cost to raise a heifer would total $2,212.

These Ontario numbers are similar to U. S. reports on heifer-raising costs. A budget from Pennsylvania State University in 1999 (Tozer, Gabler, Schiefer and Heinrichs) estimated the cost at $1,714 ($1,128 US). A Virginia Co-operative Extension publication (Bailey and Currin) suggests costs of $1,520 to $1,976 ($1,000 to $1,300 US). The 2000 heifer budget from Iowa State University (Faust, Brown and Kleusner) estimates an even higher cost-$2,365 ($1,556 US).

Neither the Ontario nor U.S. reports included the value of the new-born calf in their costs.

Considering the cost of raising one heifer, the number of animals you have to raise to supply your herd replacement needs can have a measurable impact on your total farm costs. Table 3 determines the number of heifers required to supply the herd replacements.

The table takes into account two factors: age at first calving and the milking herd's annual turnover percentage. It includes a 15 per cent allowance for culling, non-breeders and death loss.

Currently herds on Ontario DHI average 33 per cent annual herd turnover and 26.7 months of age at first calving. The following two examples, one with a lower than average first-calving age and the other higher than average for both calving interval and herd turnover percentage, show the impact of heifer costs.

A 100-cow herd with a 33 per cent turnover and a 24-month age at first calving would need 76 heifers on hand to supply adequate herd replacements. A second 100-cow herd with a 41 per cent turnover and a 28- month age at first calving would need 110 heifers in inventory to meet replacement requirements.

The 34 extra heifers needed in the second herd would be a significant extra expense.

Moreover, the first herd could sell six extra heifers each year, thereby reducing net heifer expenses. The second would have to buy three each year to maintain enough replacements.

Heifers represent an important investment in the future of your dairy farm. Like all investments, however, you also need to look at their costs. .

Special thanks to Phil Cairns, Dairy Farmers of Ontario senior policy adviser, for his assistance with summarizing the 2000 ODFAP report.

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