According to a new report (.pdf) from CoBank, a sharp decline in the number of dairy heifers available to replace older cows exiting the U.S. dairy herd could limit meaningful growth in milk production.
The number of dairy replacement heifers has fallen almost 15 percent in the last six years to reach a 20-year low. While the global demand outlook for U.S. dairy products is murky due to export market uncertainties, any potential growth opportunities may get stymied by an inability to expand U.S. milk production.
- Just behind feed and labor, the cost of raising a dairy heifer is the third-highest expense on dairy farms.
- In the past 20 years, dairy rearing costs have climbed by more than 50% to over $2,000 per head. Less than a decade ago, dairy heifers sold for a tidy profit but rearing costs today mean they sell at a loss.
- To better manage their on-farm heifer inventories and investment, dairy farmers have turned to a more profitable opportunity: Using beef semen on a portion of their dairy herd to produce and sell beef-on-dairy calves.
- Due to the shift to beef-on-dairy, dairy replacements expected to enter the milking herd have shrunk by almost 15%, or 709,100 head, in the past six years to reach a 20-year low.
- The reduced number of heifers eligible to enter the milking herd – plus their higher purchase price today of $1,890, an eight-year high – could limit the upside on expanding U.S. milk production.
The new report from CoBank’s Knowledge Exchange says the rising cost of rearing dairy heifer calves has far outpaced increases in heifer values over the last several years. That imbalance has prompted dairy farmers to reduce their replacement heifer inventories, doing so, in large part, by breeding more dairy heifers and cows to beef bulls.
“Farmers can cut costs associated with heifers and generate additional income from beef,” says Cory Geiger of CoBank.
(From the National Association of Farm Broadcasters)
Corey Geiger, lead dairy economist with CoBank’s Knowledge Exchange, discusses his latest report, Dwindling Dairy Heifer Numbers May Inhibit New Milk Production, co-authored with Abbi Prins. The cost to rear a dairy replacement heifer today exceeds its sale price, so margin-conscious dairy farmers have turned to producing and selling #beef-on-dairy calves. As a result, dairy replacements expected to enter the milking herd have shrunk by almost 15%, which could limit the upside on expanding U.S. milk production. Geiger explains how the industry transformed and how it could rebuild dairy replacement inventories.