Heifers: Home or away

There is no other production system on your dairy quite so loaded with pesky details as the heifer replacement program.

Do the girls stay? Or do they go?

Sketching out a game plan to answer those questions takes more than a whiteboard. Pro-Dairy's Jason Karszes, senior Extension associate in Cornell University's Department of Applied Economics and Management, designed this decision tree framework to help you form a strategy. Coupled with your business mission, vision and values, this process will help you find the right answer for your operation.

1: Are you raising a quality heifer? Y

our first goal is to raise the highest quality heifer that will maximize profits once she's milking. Poor feet and legs, mastitis, large variation in calving age and high body condition scores are the kind of characteristics that could limit a heifer's profitability once she enters the lactating herd.

2: Are your costs to raise a heifer competitive?

Granted, you want to raise the highest quality heifer, but costs to do so can't be so high they offset the profits you gain in the process. Nor can they be unusually higher than other producers' heifer-raising costs. Feed, labor, treatments, housing systems and heifer non-completion rates can all play into the equation. An eye to maintaining quality while lowering costs can improve profits.

This is where you sign on to benchmark your heifer program against dairies whose systems are set up similarly (For more information read about the Heifer Cost Calculator).

3: Can you acquire the resources to raise a quality heifer?

Analysis helps you identify the weakest points in your heifer replacement program. Impact areas such as management, capital, labor, feed, health care, biosecurity or facilities are likely to need additional resources if you want to change or improve them. Target those resources at areas that offer the greatest amount of improvement.

4: Can you make changes in your heifer program to lower the costs linked to raising your dairy replacements while maintaining a quality program?

Look closely at the highest costs such as labor and feed. Experiment with measureable changes you could make to reduce these.

5: Will your business make the greatest improvement in profitability by investing in your heifer enterprise program?

What is the performance of your overall business?

It's a big question that must be answered before you can decide to invest resources in the heifer program. Obviously, resources committed to the heifers are not available for other areas of your business. Limited resources need to be invested in areas that have the highest and quickest rate of return within the business, while simultaneously supporting the overall mission of the business.

For example: Let's say the barn and milking parlor are running at design capacity. From the business analysis, milk production per cow and voluntary culling decisions appear to be the main areas for improvement. The management team agrees that the quality of the heifers is one of the primary limiting factors impacting milk production in the first lactation. With the current cow facilities being used at capacity, this might be a good time to invest resources in the replacement program.

6: If you commit additional resources to the dairy replacement enterprise, will your costs stay competitive with other options for acquiring dairy replacements?

Pouring unlimited resources into the heifer program could raise costs prohibitively, putting the dairy's overall profitability at risk. Alternatively, adding resources that change the current system could actually improve some cost areas.

7: What is the long-term direction for the business? If you invest in or change the heifer program, does this limit what you may do in the future?

Raising replacements at home may limit future growth of cow numbers due to forage production capacity, manure management issues, site limitations or borrowing capacity. If you're planning to exit the industry soon, will you get enough payback for investments made now?

8: **Contribute additional resources to the heifer enterprise and keep raising your heifers. However, continual analysis will be necessary to ensure you're generating the return for this investment.**

9: Is there a viable option to either custom board or purchase your heifers while maintaining or improving heifer quality? Heifer quality is key to a dairy's success. Do the custom growers have track records showing high quality performance? Are there references you can check?

What protocols do they follow to ensure consistency within the program? An increasing number of custom heifer raisers offer various services to dairy producers with a wide range of costs, services and quality.

10: Is the cost for custom-raising services or purchased animals comparable with your internal system? Or is the quality of the animal high enough that profits offset the cost?

Costs tied to raising heifers—whether at home or by a custom grower—range widely. Furthermore, market forces impact what you pay for purchased heifers. How do these costs compare to what you're paying to raise heifers within your business? A significant increase in the quality of heifers can offset a higher custom-raising cost as compared to what you spend to raise them at home.

11: If you board out your heifers, or sell and buy them back, will you be able to generate more revenue with the resources that are freed up? Or will you be able to get rid of the excess resources?

Without increased revenue or an avenue to dispose of the excess resources, it may be too expensive to use a custom heifer raiser or to sell and buy back the heifers. However, significant improvements in heifer quality may make hiring a custom raiser still a good idea.

12: **Look at either boarding out or buying all your replacements as ways to increase business profits.**

13: **Without viable options for hiring custom growers or purchasing dairy replacements, the only way to improve quality is to make changes in the current system. Refer back to questions 2 and 3 to identify the areas with the best potential for gains.**