Managing Dairy Heifer Growth Investment

Accelerated prepubertal growth rates can lower heifer raising costs but may put heifers at risk for impaired mammary development and have been found to be detrimental decreased to milk production in the first lactation. The tradeoff between heifer raising costs and milk production loss is examined in a capital budgeting model. Monthly annuity net present value of a heifer investment through the first lactation is assessed for heifers calving at 20, 22, 24, 26 and 28 months of age. A 24 mo AFC base case strategy with 9009.5 kg subsequent first lactation milk yields $7.34 in returns per month. Accelerated growth resulted in higher returns ($12.77/mo for 20 mo AFC; $9.86/mo for 22 mo AFC) when milk production is not affected as total raising costs decline relative to the base case. Slower growth resulted in lower returns ($5.12/mo for 26 mo AFC; $3.15/mo for 28 mo AFC). When milk production declines, revenues decline as do feed and marketing costs which are a function of milk produced. Adjusting for factors, breakeven milk production losses were 10.6 % for 20 mo AFC and 5.3 % for 22 mo AFC relative to the 24 mo AFC base. These results were not sensitive to the assumed discount rate, heifer feed costs or discount rate. Other operation-specific heifer management factors including calving season, reproduction, herd size/expansion considerations and, in the longer-term, heifer facilities investments may be more significant economically than the differences found in this analysis.

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Department of Agricultural Economics Staff Paper 2006-37

 Record created 2017-04-01, last modified 2017-08-23

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