by Greg Hamill, LIC Genetics Business Manager
It’s important that an animal evaluation index based on the efficiency of the bull’s offspring in converting feed to profit reflects economic reality for farmers. We know that dairy sector experiences volatility in milk prices throughout the years. For this reason New Zealand farmers see annual adjustments to the economic weighting of their index Breeding Worth (BW).
Traditionally these figures haven’t been released until February, when the spring mating season is complete for dairy farmers. However this year in early September, New Zealand Animal Evaluation Ltd (NZAEL), a subsidiary of DairyNZ, officially released the new economic weightings that are set to contribute to overall Breeding Worth calculations from early 2019.
This was an excellent decision by NZAEL. Although the changes didn’t come in to effect until four months later in February 2019, the move allowed dairy farmers to make informed decisions (i.e. bull selections) before the spring mating season gets underway.
The economic changes also better-align world commodity prices that our milk processors receive with the various milk/animal components that make up breeding worth.
Before the September announcement, LIC’s genetics and sire selection staff had already selected its 2018 bull teams based on the likely changes NZAEL would make, and had ranked the bulls accordingly.
Now the official economic values have been released, we’re able to include a new set of BWs for the bulls that LIC markets.
Breed changes are a reflection of the economic values’ impact on the traits associated within each breed, but breed choices remain the domain of LIC’s farming customers.
LIC still fields a very strong offering of bulls in all three breeds it markets: Holstein Friesian; Jersey, and; KiwiCross.
Fat is back!
So why the adjustment in 2019?
Global dairy markets have seen a resurgence in demand for fat over the last few years, and this demand has been reflected in strong prices for the component.
The graph below shows how the relative value of fat to protein has risen significantly since 2016.
Fonterra’s current three-year rolling average for value component (VCR) ratio sits at 1.3.
Although likely to rise over the next few seasons, the current VCR of 1.01 that feeds into BW (which NZAEL is using) reflects a ‘long term view’ of fat values; over the long term these values are expected to plateau and move closer to parity with protein values.
BW remains the best indicator to use among NZ farmers who want to breed progeny that are profitable and efficient converters of feed into what milk processors are paying, and being paid, for.
What’s driven the economic changes?
Cows naturally produce more kilograms of fat compared to protein. The base cow (that the NZ industry uses as a benchmark in BW values), born in 2005, which came into milk in 2007, produced 218kg of fat and 174kg of protein when fed five tonnes of dry matter.
With many processors receiving more money for fat than protein, the new weightings for 2019 better reflect long term predictions of where fat is likely to sit relative to protein.
The move in BW is based on where prices have been sitting and an informed view of where they will settle based on global demand.
For our international farmers, as always, breeding decisions need to be based on the type of cow/herd you believe will deliver the most value to you in five, ten or fifteen years’ time. For many it will mean tailoring your criteria to suit your situation.
Please look to your local
LIC representative for more information to support your decision making process.