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Breeding Worth & Economic Values

Economic Values (EV) are the estimate value of each trait (seen below) to the New Zealand farmer. The EV placed on each trait is calculated using the predicted New Zealand average prices of fat, protein and milk minus the cost of generating replacements and dairy farm expenses.

For example, the milkfat EV is calculated based on a five-year rolling average (four years historical + one year forecast) of the farm gate milkfat price, then adjusted based on the consumer price index [CPI], minus the cost to produce 1kg of milkfat, as well as the necessary reduction in stocking rate to account for that additional kg of milkfat.

Breeding Worth (BW) is the National Breeding Objective (NBO) in New Zealand.

BW ranks bulls and cows on their expected ability to breed profitable and efficient replacements. Breeding Worth is an economic index and is calculated by multiplying breeding values with the appropriate economic values.

A Breeding Worth index is calculated for all recorded dairy animals, although the source of information differs slightly depending of the sex of the animal. Both cows and bulls have ancestry and progeny information included (where available), while cows  have the additional data source of their own information.

The source and volume of the information available on an animal effects the reliability of their BW, which is essentially the confidence that we have in our breeding predictions.

Source: http://www.dairynz.co.nz/animal/animal-evaluation/interpreting-the-info/all-about-bw/

 

The Current Traits for BW and their Economic Values
 

The economic value of milk components (protein, fat and volume) is calculated using a 5 year rolling average, which accounts for the past four years of pricing, as well as including the price forecasts for one future season. This system ensures that while the volatility of the milk market is being recognised, it is not able to create large fluctuation in economic values.

To calculate the economic value of specific milk components, we account for:

1. The dollar value of milk components

2. The amount of energy the cow requires for the production of that milk component

3. The reduction in stocking rate that will be required to accommodate the extra feed that a cow requires  for that additional unit of volume, fat or protein

The economic value of milk components (protein, fat and volume) is calculated using a 5 year rolling average, which accounts for the past four years of pricing, as well as including the price forecasts for one future season. This system ensures that while the volatility of the milk market is being recognised, it is not able to create large fluctuation in economic values.

To calculate the economic value of specific milk components, we account for:

1. The dollar value of milk components

2. The amount of energy the cow requires for the production of that milk component

3. The reduction in stocking rate that will be required to accommodate the extra feed that a cow requires for that additional unit of volume, fat or protein

The economic value of milk components (protein, fat and volume) is calculated using a 5 year rolling average, which accounts for the past four years of pricing, as well as including the price forecasts for one future season. This system ensures that while the volatility of the milk market is being recognised, it is not able to create large fluctuation in economic values.

To calculate the economic value of specific milk components, we account for:

1. The dollar value of milk components

2. The amount of energy the cow requires for the production of that milk component

3. The reduction in stocking rate that will be required to accommodate the extra feed that a cow requires for that additional unit of volume, fat or protein

The economic value of liveweight comprises four components:

1. Cow maintenance requirements – increasing cow liveweight is expected to result in higher annual maintenance feed requirements for the cow

2. Heifer replacement feed costs – there are higher feed requirements for maintaining and growing larger replacements

3. Cull cow value – heavier cows have more value as culls

4. Bobby calf value – increasing cow liveweight increases the size (and value) of bobby calves produced

The economic value of fertility comprises two main components:

1. High fertility leads to high survivability – early calving cows have an increased chance of survival, as they have more chance to get in calf the following season. If cows don’t get in calf they are generally culled

2. Change the herd calving distribution – high fertility cows create a much tighter pattern of calving across the herd, and they themselves generally have longer lactations. This has two economic effects: the tighter calving pattern allows cows a longer lactation period, which results in higher yields; but, at the same time it increases feed demand in early spring, which creates a cost to the farming system

A decrease in Somatic Cell Count (SCC) can have a significant economic effect. The following effects are accounted for in the calculation of the SCC economic value:

1. Higher survival – cows with low SCC scores will survive longer in the herd

2. Fewer price penalties on milk supplied – low SCC cows help keep the bulk SCC down, which avoids penalties and grades from milk processors

3. Fewer cases of clinical mastitis – low SCC cows are less likely to have clinical mastitis. Because of this link between SCC and clinical mastitis, the costs associated with the treatment of mastitis are built into the economic calculations

The economic figure for residual survival is based on the rationale that animals with better longevity will reduce the requirement for replacement heifers entering the herd.

There are three components to the economic value of residual survival:

1. A change in the costs associated with heifer replacements

2. A change in the revenues from cull cows

3. A change in other costs and revenues per lactating cow assuming cows of different parities differ in their herd profitability

The EV for Body Condition Score (BCS) represents the improved profitability of an animal who is able to maintain body condition over her lactation.

Cows that lose body condition easily incur costs in three ways:

1. It is inefficient to lose condition and then have to gain it again

2. The thinner cow may have to be dried off earlier, reducing days in milk and therefore production and profit

3. She will have to be fed more through autumn and winter in order to gain the condition she has lost. The cost here is not lost production, but the cost of suppling expensive feed to achieve that condition gain

 

The economic model considers the historical industry average production and liveweight, average herd life and age structure, average SCC and replacement rate.

Source: http://www.dairynz.co.nz/animal/animal-evaluation/interpreting-the-info/economic-values/

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