Rearing heifer calves is the second largest annual expense in a dairy business’ production costs after feed. Dr Alana Boulton from the Royal Veterinary College undertook a DairyCo funded study to examine in more detail the economics of heifer rearing.
As many will know, rearing is the ‘non- productive’ period of the dairy farming cycle, and the length of this period is determined to a large extent by the farmer’s decisions on plane of nutrition and reproduction management.
While a higher plane of nutrition may generate greater daily feed costs, these costs are generally recouped when heifers calve at a younger age through savings on labour, housing and the overall feed outlay.
Recent estimates of the cost of rearing have ranged from £1000-£1500, and tend to average about £1200. But to create a more accurate estimate and address an absence of GB-based empirical data on current heifer rearing practices and costs, a survey of 102 dairy farms in England, Scotland and Wales was undertaken.
The rearing period was separated into three distinct periods: birth to weaning, weaning to conception, and conception to calving. Farm factors and key rearing events including mortality were analysed and a gross margin calculated for each farm. The length of time it took for the heifer to repay its cost of rearing was also determined.
The cost of rearing, incl- uding fixed and variable costs, interest on capital and opportunity costs, ranged from £1073.36 to £3070.46, with an average cost of £1819.01 – which is considerably more than previous estimates.
The period from birth to weaning contributed, on average, 10.8% of the total cost of rearing, while weaning to conception had an average contribution of 40.4% to total cost. The conception to calving period contributed 24.5%.
Interest on capital and opportunity cost of a dairy heifer accounted for on average 24.3% of the total cost of rearing. But on a practical basis, it may be more advantageous to look at these costs on a daily basis. The daily cost of rearing per heifer was £1.47- £3.35 with an average of £2.31. (see table below).
Daily cost per heifer for each of the heifer rearing periods
|Rearing period||Number of farms||Minimum (£)||Maximun (£)||Average (£)|
|Birth to weaning||102||1.68||6.11||3.14|
|Weaning to conception||101||0.75||2.97||1.65|
|Conception tp calving||101||0.56||2.86||1.64|
source: DairyCo *includes fixed and variable costs, interest on capital, opportunity cost and cost of mortality
The period from birth to weaning had the highest average daily cost of £3.14, weaning to conception had an intermediate daily cost of £1.65, and conception to calving had the lowest daily rearing cost of £1.64 per heifer.
These differences could be explained in part by the difference in input costs (for example, milk powder has the highest cost per tonne) during the three periods, and the labour and housing costs once the heifer is weaned.
The largest contribution to costs overall was from feed. Excluding interest and opportunity cost, purchased feed and home-grown forage contributed 36.8% and grazing 6.9% to the cost of rearing.
Labour and bedding were the next two largest contrib- utors accounting for 22.3% and 8.7% of costs respect- ively. (See pie chart). The factors identified as having the most significant effect on cost of rearing were age at first calving (AFC), the percentage of time the heifer spent at grass, calving pattern, herd size and breed.
The mean cost of rearing increased by £2.87 for each day increase in AFC and decreased by £6.06 for each percentile increase in time spent at grass. Both spring and autumn block calving herds had lower average costs of rearing compared to all- year-round calving and multi-block calving farms.
Farms with herd sizes of more than 100 had lower average costs of rearing compared with farms with fewer than 100 cows. This is likely due to economies of scale where all input costs and costs of mortality are apportioned to a larger number of surviving heifers.
The average cost of mortality apportioned to each surviving heifer was £139.83, ranging between £103.49 and £146.19, which represented mortality rates of between 3.4% and 7.9% at various stages between birth and first calving. Gross margins per heifer averaged £441.66, ranging from -£367.63 to £1120.08. (See Table 2). It is important to note gross margins do not include fixed costs and estimates of output rely on livestock market and disposal sale prices. These vary greatly depending on the time of year, breed, genetics of the animal and livestock numbers available for sale.
To determine the repayment period for the heifer to pay back the cost of its rearing, for each day after first calving, extra cost in the form of maintenance or variable costs (food, housing, breeding, veter- inary, etc) was balanced against the revenue secured from milk production.
In this study, the average number of days post first calving in which heifers paid back their cost of rearing was 530 days, with a range from 168 to 2321 days. This translates into about 1.5 lactations (with a range of one to six lactations) before heifers begin to make a profit for the farm. The importance of knowing when the break- even point occurs is because the average number of lactations which are currently completed by dairy cows in Britain is 3.8, so some of the farms in the study are likely to have heifers which will leave the herd before they have started to repay their cost of rearing.
Gross margins per heifer for each of the heifer rearing periods
|Rearing period||Number of farms||Minimum (£)||Maximum (£)||Average (£)|
|Birth to weaning||102||-129.40||338.77||103.22|
|Weaning to conception||101||-485.61||747.16||314.49|
|Conception to calving||101||-251.15||260.23||24.37|
Source: DairyCo *includes fixed and variable costs, interest on capital, opportunity cost and cost of mortality
Overall, there was large variation in costs between individual farms and within similar calving systems. This is likely due to the diversity in heifer rearing practices which were observed and recorded during the survey. The results of the economic analysis indicate management decisions on key reproduction events and grazing policy signif- icantly influence the cost of rearing.
Heifers are the future of the dairy herd and deserve to have the best management which incorporates all the latest research and ad- vice that is available. In return, they will repay the investment through higher milk production and a longer herd life.