In the United States, cow replacement cost is the second largest cost of production, following feed costs on almost all dairy farms. As the cost of production has risen over the past several years, producers have been looking for opportunities to decrease their cost of production in hopes of maintaining economic viability. Given the value of cull cows for beef, producers now have an opportunity to cull cows more aggressively which could lower actual replacement cost helping to improve herd health and performance.
Replacement cost is calculated with the following equation:
[(Cost of Replacements) – (Cull Cow Income)]/Hundred Weight of Milk Sold
With this equation, replacement costs would be lowered by decreasing the cost of buying or raising replacements and by increasing cull cow income. Recently, the value of purchasing replacements has been lower and the value of good quality cull cows is extremely high. In some instances, good quality cull cows are more valuable than springing heifers. This current pricing situation has created an opportunity that producers should be considering.
A misconception is that high cull rates is an indication of unhealthy and unthrifty cow herd. Culling more aggressively creates an opportunity to improve herd health. Rather than working with a mindset to keep as many cows in the herd as possible, producers can cull cows before problems develop that lead to more herd health problems, such as, thinner and less valuable culls. Culling cows more aggressively can increase cull cow income by increasing the value of saleable cows and lowering death rates resulting in more cows to be sold.
Again it should be stressed that culling more aggressively using this scenario can improve overall herd health resulting in increased milk production and lowering cost of production. Dairy producers have a previously unprecedented opportunity to capitalize on the high beef prices to offset replacement costs. Producers should consider taking advantage of this opportunity to decrease replacement costs and reap potential benefits of improved herd health.