While Table 1 shows four calf categories, the modelling process involved just three categories of weaned calves based on their growth potential.
We did this modelling on the same pasture growth curve, so feed demand was matched with feed supply. Irrespective of whether the calves had high, medium, or low growth potential we started them off as weaners at 100kg for bull or steer calves and 90kg for heifer calves.
If we assume a high-quality category A calf with good growth potential was bought for $500 then the relative value of medium category B and low growth potential category C calves was determined by adjusting the buying price of the calf to achieve the same gross margin as the most profitable Category A bull policy. The results from this process are shown in Table 2.
The most profitable calves are the benchmark Category A Bull calves, purchased in October at 100kg for $500. The purchase price includes the cost as a five-day-old calf plus the cost of rearing. If we assume the cost of the five-day-old category A bull calf was $100 then the cost of rearing (milk, meal, animal health and labour) would be $400.
In practice the rearing cost is higher for category C calves because they are smaller at birth, grow slower and therefore cost more to get through to target weaning weight. What is clear is the cost of rearing is at least $400 and is non-negotiable meaning that the category C heifer calf must bear the discounted price of at least minus $120 per head. Or put another way, the October bought category A bull calf is worth $620 more at calf weaning compared to a Category C heifer calf at the same time.
The message for dairy farmers is quite straightforward – produce more Category A calves otherwise your calves will be unwanted, or heavily discounted, to the point where you will need to pay a beef finisher to take them away.
This modelling project also highlighted the need to be thinking about dairy beef calves on more than what they look like. Things like whether they have five white points, in the case of Friesian bull calves, or a white head in the case of steer and heifer calves, is not good enough. We need a system that is much more objective than that.
The strong suggestion is that we need an Index for dairy-beef calves based on their potential value to finish profitably. The basis for an Index system could work as follows:
- All dairy beef calf offspring are DNA tested and reported with sire and dam and an associated Dairy Beef Value Index (DBVI) within five days of birth. The basis of this system would be:
- All dairy cows and all dairy and beef sires utilised in dairy herds are DNA-profiled (many are already).
- Every dairy dam is categorised with their Friesian and Jersey content and therefore their calf’s potential for growth e.g. greater than F12, F11 down to F8, F7 down to F4 and less than F4 (This information is also known in most cases).
- Every sire used in dairy herds is categorised with their potential for growth. Ideally, all beef sires would have been progeny tested through the Dairy Beef Progeny Test. If not then their value should be discounted according to the information available.
Dairy farmers already have their MINDA system for recording their breeding stock and so it would be a small step to include the dairy beef offspring into this system. Yes, there would be a small extra cost, but the value of the information would by far exceed this investment.
Overlays of calf birth weight and birth date can be added to the DBVI as per client requirements.
Finally, Relative Economic Values could be applied to the contributors of calf value in much the same way as at the Terminal Index compilation with Breedplan for beef and N-Prove for sheep.
Provided the dairy beef calf was healthy and up to weight, the beef finisher would have much more confidence to purchase when the Index, and associated purchase price, more objectively represented the potential of the calf to grow and finish.
