Replacement Costs

Herd replacement

Rearing costs

Rearing costs for dairy heifers tend to be underestimated by most farmers. DairyCo studies have shown that UK dairy farmers in general tend not to effectively plan how many heifers they need or how to rear them efficiently. Coupled with the high culling rates on some farms, this means that the true costs of herd replacement are not being recognised.

The reasons behind and costs associated with high culling rates are further discussed here.

Measuring the costs associated with heifer rearing begins by calculating the 'opportunity cost' of having a heifer calf born. This allows for the cost of semen, which itself is affected by conception and culling rates within the herd, and the 'cost' of having a bull calf being born instead of the heifer calf needed to rear as a replacement. This opportunity cost may be in the region of £250 and is an expense which begins nine months before the calf is actually born, and does not allow for the average 8% mortality of dairy calves at or soon after birth.

Variable costs associated with calf rearing, such as feed, vet, forage and bedding costs, are generally well-understood and therefore controllable. The overhead costs, however, tend to be understated and because they are less visible, there tends to be less effort expended in controlling them. Overheads associated with calf rearing include the costs of machinery in handling forage and manure, labour costs (which in some instances can be considerable), and the maintenance of calf housing, as well as the cost of any finance.

Buying-in replacements

In herds and farm systems reliant on the buying-in of replacement dairy heifers or cows, careful planning must ensure that a sensible price is paid for replacements purchased on the open market, so a fair return can be produced on the 'investment' made in these animals.

This may entail a degree of forecasting in order to time the need for and purchase of replacements. Careful observation of current market prices for dairy livestock is essential; to this end, DairyCo Datum compiles regular market trend bulletins.