Speer: Genomic Testing an Investment In Herd Profitability
Heifer Retention: CattleFax headlined their Sep 29 weekly Update with the following: All Eyes on Heifer Retention. The discussion is right in line with much of the conversation that’s occurring out in the country.
Valuation: That brings us to valuation. Short supply of bred heifers coupled with stronger calf prices and salvage values have led to a stellar market for replacement females. For example, 381 bred commercial heifers averaged $2900/head at the recent Gardiner Angus Ranch Fall Sale. For discussion purpose, let’s just round that down to $2,500.
Total Investment: Next comes consideration of maintaining a female over her productive lifetime. Keeping it simple, assume she weans seven calves starting as a two-year-old and leaves the cowherd at 8 years of age. Annual cow costs are reasonably estimated around $1100+/year (consistent with both LMIC and KFMA data). Accordingly, total lifetime investment into that female (in today’s dollars) is roughly ~$10,200 ($2500 plus 7 years @ $1100/year).
Genomics: For accounting purposes, all cows in the herd cost the same. The goal is to ensure we keep and maintain only those females which are highly productive. But how do we decide which ones will be the most profitable? The answer: genomic testing.
Results are provided across several categories including maternal and soundness, growth and feed efficiency, and carcass traits. Ultimately, they enable producers to make unbiased, objective and targeted selection decisions to build the cowherd with the right females.
Cow Math: For many producers the first set of results are often surprising. The variation across a given set of heifers is typically far bigger than anticipated. “Wow, I didn’t know there’d be that much difference!”
However, there’s always skepticism about the expense: “Is it really worth it?” After all, the genomic test, depending on the company and the solutions you request, generally runs ~$35/head. Let’s do some math to put that in perspective.
Assume you own 100 cows and opt to test your heifer calves before deciding which ones to keep as replacements (test-then-select is the correct order of doing things; it doesn’t do much good to select-then-test). Based on national averages, that likely means you have about 43 heifer calves to test. The total expenditure will be ~$1500 (43 @ $35/head).
Double Whammy: Let’s further assume you generally keep the upper third-or-so to develop as replacements (knowing they won’t all make the cut later). If you’re like many producers you’ll likely feel you wasted $35 on those you don’t keep (the other two-thirds) because there’s no market value when selling them as feeders.
But that’s the wrong perspective. Based on the 1/3, 2/3 split you’ve effectively invested ~$105/head for each replacement heifer that stays home and becomes a cow. The expenditure represents only 1% of the total investment you’ll make in that cow during her lifetime (remember the $10,200 from above?). That’s a pretty cheap insurance policy. Consider it as an extended warranty against buying a lemon.
That’s especially true given the huge variability that typically exists within a set of heifers. The investment pays off in two parts:
- Direct: genomic testing helps ensure you select the right ones. That pays immediate dividends during that heifer’s lifetime.
- Indirect: genomic testing also pays over subsequent generations; you’re ensuring better genetics as you build the cowherd and market calves over time. Genomic testing today puts you ahead of the curve; in the future, the right marketing channels will discern that information and provide financial rewards for better performing cattle.
Genomic Testing Equals Investment In Herd Profitability: Genomic testing represents far more than just genetic assessment of the calf crop. Rather, when considering the capital commitment required to maintain a cow over her lifetime, it’s really a financial risk management tool and an investment in total herd profitability. Accordingly, every commercial producer is encouraged to learn more about how to implement it as part of their standard management practices.
Nevil Speer is an independent consultant based in Bowling Green, KY. The views and opinions expressed herein do not reflect, nor are associated with in any manner, any client or business relationship. He can be reached at nevil.speer@turkeytrack.biz.
