Investing in dairy cattle can seem risky to many breeders.  Doing so, when prices are setting new records, can scare even the most confident among us.  However, more recently, prices have taken a downward trend and now could be the time to ask, “Am I in this for the long haul?  Or do I prefer to sit on the sidelines?”

With many sales coming up throughout North America, there are certainly going to be lots of animals to choose from.  For the first time in recent years, supply might be greater than demand.  There are two main reasons for this.  First, so many of the top cattle have been on extensive IVF programs that the owners of these cattle have way more daughters than their breeding program needs.  (Read more: FAST TRACK GENETICS: More Results in Less Time and IVF: Boom or Bust for the Dairy Industry)  Considering the significant investment that IVF requires, these breeders are looking to recoup their expenses as soon as possible.  Also typically these calves are most valuable at as young an age as possible, so that their indexes are as high relative to the rest of the breed as possible (Read more: Informed Heifer Buying – Are you fully prepared?)

The second reason that prices may be the lowest we have seen in years is that it appears that we have passed the investor bubble that funded massive investment and high prices over the past few years.  Many early investors are now realizing that there were more expenses associated with running their genetic programs than they first anticipated (i.e. IVF, recipients, feed etc.) and are starting to wonder if it was a wise investment after all.  Most were thinking their investment have a short-term 2-3 year payout and not take longer than that.  Perhaps they didn’t account for three specific things:

1. Flush history of the animals they were purchasing.
   Even with IVF there is no comparison on the return of a family that flushes well compared to one that only produces 4-5 eggs even on IVF.  IVF may give more progeny than you would have had using traditional flush methods, but it also incurs more expense.
2. Cost of recipients
   One area many breeders/investors do not account for when first purchasing is recipient costs.  From that purchase to, feeding and then adding on implanting expenses, the investment in recipients can often outweigh the cost of the actual donor animal.  After multiple years of flushing and then starting to flush the progeny of the original donor, these costs can skyrocket.
3. True return on investment
   First things first.  I know many investors invested without even having a clear plan.  “They just wanted to make big money.”  In addition, thought that ROI would happen quickly.  Many perceptive and knowledgeable investors would have realized that a significant return would have to come from semen sales and not from live animal sales.  The problem with building your program around semen sales is that you first need to be in the top .1 percent of the breed and secondly it takes many years to actually see this payoff.

Having said all that, now just may be the wise time to invest.  You see the initial whoosh has passed and prices are now dropping on many great animals.  Over the past few months I have seen animals that are within the top .2 percent of the breed selling for less than $5,000, sometimes even less than $3,000. (Read more: Where did the money go?)  Many naysayers would say this is the price these animals should be selling for anyway.  Those who are willing to do their homework, invest their time and not just their money, are now able to pick up some great animals that can significantly advance their breeding programs.  Even if you have no interest in doing IVF on them, at those prices they can make their return with just traditional flushing techniques, or even just breeding them normally.

The Bullvine Bottom Line

There is no question that any marketplace is going to have its highs and lows.  It’s those with the perception to understand when the highs are and when the lows are that are going to make the most return on their investment.  In the dairy genetics marketplace there is no question we are currently entering a down period.  The thing many wise investors will realize is that it takes two years of planning in advance to know when it’s the time to invest and when it’s the time to sell.  Just now, if we look two years out, it looks pretty safe to say that prices will be higher.  That is simply market economics.  Therefore, those with the cash flow to invest in some additions to their herd may find that “Now!”  is the exactly right time for them to buy.

Not sure how much to spend on that great 2 year old or heifer?
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In the heat of an auction buyers need to be well aware of the genetic merit of the animal they are bidding on. Sales managers make every effort to make sure that the numbers in the sales catalogues are accurate and complete, however there is frequently added information that potential buyers did not have when they closely reviewed the catalogue before the sale. Additionally at times buyers may not be aware if the animal in the sales ring is of elite genetic merit.

In an attempt to give buyers interested in purchasing an elite young female to add to their breeding or marketing program from future sales this fall, the Bullvine has analyzed the heifers born and registered in the herd books in North America from March 2012 to August 2013. This group of females was chosen as they are likely to be the ages of heifers that will go through sales auctions over the next two months. The information from the CDN files was used as it is the animal information that is available free of charge.

Breed Toppers

Buyers are advised to have at their fingertips the total merit indexes for the very best animals so that they can value an animal that they are considering buying. The following table lists the averages for the top twenty-five heifers.

Figure 1.0 Top Twenty-Five North American Heifers (Born March 2012 to August 2013)

Some points worthy of note from this table are: i) do not compare the Holstein and Jersey LPI values as the formulae differ; ii) the top 25 Holstein heifers are a very elite group with the DGV LPIs exceeding the gLPIs by 161 points; iii) Red Carrier Holsteins heifers have made considerable improvement in the last couple of years by the use of top BW sires on RC or Red females; iv) Polled Holsteins heifers have and are likely to continue to make rapid advancement again by the use of top horned BW sires on polled females; and v) the values listed for the Red Holstein heifers are parent averages as only two of the top twenty five heifers were genomically tested.

Use these benchmarks as you review the sales catalogues either on-line or using a hard copy of the catalogue.

Top Values

Often buyers wish to know benchmark numbers beyond the LPI value. The average index for the top five heifers for each trait in each animal category are as follows:

Remember these are the averages for the very best five animals in the various categories.

Sires of the Heifers

Buyers often want to know the sires of the top heifers. Knowing the sires of the top twenty-five heifers gives an indication of who the competition will be when you are marketing in the future from your purchases.

Sires with more that two daughters in the various categories are listed below. Each category has twenty five heifers. The bracketed number is the number of daughters the sire has on the list.

Holstein

• Seagull-Bay Supersire (8)
• De-Su BKM McCutchen (5)

RC Holstein

• De-Su BKM McCutchen (6)
• Seagull-Bay Supersire (5)
• Mountfield SSI Dorcy Mogul (4)

Polled Holstein

• Sea-Gull Bay Supersire (9)
• Da-So-Burn MOM Earnhardt P (5)

Red Holstein

• Dymentholm S Sympatico (8)
• Curr-Vale Destined (5)
• Tiger-Lily Ladd P-Red (5)

Jersey

• Sunset Canyon Dimension (5)
• All Lynns Valentino Marvel (4)

Health & Fertility

In the Holstein breed many breeders are starting to place increased emphasis on the Health and Fertility rating that CDN assigns animals. The value assigned can be found by looking up the animal on the CDN website. Factors used in calculating the H&F index include: Herd Life; SCS; Daughter Fertility; Milking Speed; and some other correlated traits.

The top five Holstein heifers in the various categories had average DGV Health and Fertility ratings as follows:  Holstein 465;  RC Holstein 413;  Polled Holstein 423. Clearly an animal over 375 to 400 for H&F is at the top of the breed. An H%F value is not available for Red Holstein as so few of them are genomically tested.

The Bullvine Bottom Line

It is important to know the genetic superiority of an animal when purchasing or using them in your breeding or marketing program. It is the Bullvine’s hope that the above statistics will assist. Wise investment should give you a leg up on moving your herd forward.

Not sure how much to spend on that great 2 year old or heifer?
Want to make sure you are investing your money wisely?
Download our Dairy Cow Investment Calculator.

The Bullvine has produced many articles on investing in genetics using genomic information including our early article 6 Ways to invest $50,000 in Dairy Cattle Genetics. Other Bullvine articles included Craswell Common Sense – Go For the Total Package, Mapel Wood Farms – Invest in the Best Forget the Rest,  The Judge’s Choice – Investment Advice from Tim Abbott, and the Bullvine’s frequent articles on top picks in upcoming sales (Read more: Dairy Cattle Investment Advice). All these articles deal with finding and investing in the very top genetic animals.  Today these investments are usually virgin heifers. Specifically, they are the ones that everyone sees in the press, in on-line sales catalogues or on Facebook. These young females usually sell for over $20,000 to $25,000. But what does a beginning breeder do? With limited capital what options are there if you want to kick-start the genetic level of his herd or start a new cow families? You need to think outside the box.

Invest Your Time

The term ‘sweat equity’ is often used when a person takes on a project themselves rather than hiring an outside expert.  Well the sweat equity when it comes to buying top genetics is the time that you will need to invest in researching and finding animals. This is not meant to say that your time is worth little. What it does mean is that breeders, taking this approach, will need to search, search, search,…study, study, study,… and above all exercise patience until they find the right one(s).

At every sale there will be some good buys. It just takes time to do your homework to know which ones are good and which ones you will regret.

The Concept

A concept that bottom line focused beginning breeder might consider is to buy a top heifer for $6,000 or less. Flush the heifer and put embryos in your low genetic merit animals. The heifer will need to have a Net Merit of $775, a gTPI™ of 2400 or a DVG LPI of +3200.

Some folks may ask why invest in a heifer and not in embryos. Well it comes down to economics. Embryos from top cows sell for $1500 to $2000. It takes five unsexed embryos to get a live heifer. Then you must factor in that perhaps only one in four heifers will have high enough genomic numbers to be near the top and you can have $30,000 invested in getting a top daughter. It is more cost effective to buy a heifer about which you already know the genomic numbers.

So the challenge or opportunity, depending on how you look at it, is to find and buy a heifer that does not top the charts but is close to the top and that will give you progeny whose genomic indexes exceed, by a considerable amount, their parent average and that is  also an animal that does not cost an arm and a leg to buy.

Know Your Focus

As most breeders do not attend or participate in showing, the focus for breeders early in their careers will be cow families, high lifetime yields, fertility and ability to stay in the herd and not be culled. In the future that check list is likely to include feed and labor efficiency. Above all when you’re starting out establish your focus. It will change over time but searching for show genetics one week, protein yield the next week and then before the month is out five other traits is not likely to get you to where you need to be. This is especially true if you are working with only a couple of heifers at any given time. Unlike breeders with a larger program who can likely cover a number of breeding fronts at one time.

Don’t let the excitement of the sale get the better of you.  Keep your focus and know your criteria, your price may be different than someone elses, that’s ok.  You have to do what works for your plan.

Purchase Criteria

Breeding chart topping heifers and bulls can not be achieved by starting with animals that are only moderately above average (for example gTPI™ of 2000 to 2200 or gLPI of +2800 to +3000). You need to be starting with animals that are 95% Rank or higher at least for the major traits you are breeding for.  Starting any lower will mean that you are two to three generations away from having chart toppers. The Bullvine polled a number of people who have had success in topping the charts and they provided the following necessary ingredients for success:

• Cow Families – success is much more likely if you purchase heifers from cow families that have high genomic values
• Sire Stack – make sure the sires behind the heifer are high indexing and that the sires’ indexes compliment your objectives
• Ability to Flush – you need to get 6+ embryos per flush and there are differences between families in how they flush (Read more: What Comes First The Chicken Or The Egg)
• The Heifer will need to produce well, for milk fat and protein, and classify GP83 or higher in her first lactation. Eventually she will need to score VG.
• The heifer’s genomic indexes (DGVs) will need to be within 200 for gTPI™ or 300 for gLPI of the very best heifers on the lists
• A cow with many daughters with very high genomic indexes is a family you should be buying from
• Likely the heifer you will be able to afford will be the third ranking full sister by a high genomic evaluated bull. It is how she will breed that will be important not that she’s third ranked.

What are the Facts

Knowing that the our readers like to see the actual facts, the Bullvine did an analysis on the top one hundred indexing heifers born and registered from January to June (inclusive) in 2013 in North America. The sources of the data for this study was CDN as it is the only source where breeders are not charged for look-ups. Here is what we found:

• All but three of the top one hundred indexing heifers are sired by bulls with only a genomic index. Those three are sired by bulls on the top ten International gTPI™ list.
• Females with a DGV LPI below +3200 can produce top daughters when mated to the best bulls available. The dams of the top one hundred heifers with DGV LPIs below +3200 broke out as follows: 2 have daughters in the top ten; 18 in the top fifty and 35 in the top one hundred.
• As we would expect the top 20 heifers are a very superior group. i) All are from well known high indexing cow families. ii) All are over +3500 for their gLPI averaging + 3568; iii) Their DGV LPIs exceed their gLPIs by 338 on average.  iv) Seven are sired by Seagull-Bay Supersire, five by De-Su BKM McCutchen and eight by six other high genomic bulls. v)  These twenty heifers make the top of the list because they are exceptionally high for traits like fat yield, protein yield, herd life, SCS, daughter fertility and mammary system. vi) Worthy of note in the fact that only one  of the twenty does not have positive indexes for %F and %P.
• One dam MISS OCD ROBST DELICIOUS-ET has seven daughters that make the top one hundred list. Her Butz-Butler Shotglass daughter tops the list at +3682 gLPI and her DGV LPI is a very high + 3909; that DVG LPI is 401 over the DVG LPI average of her parents. The Crocket-Acres Elita Family has three heifers in the top twenty.
• One heifer, S-S-I Zeus Mae 9096-ET, stands out as far exceeding (by 640 LPI) her parents in DVG LPI. Her sire De-Su Robust Zeus 11009-ET (DVG LPI +3301) and dam S-S-I Observ Manteca 7197-ET (DGV LPI + 3020) are not list toppers in their own right but together they produced this #6 heifer.

The Short Story

It is possible to get top progeny (daughters and sons) from females that may not quite be at the top of the indexing lists, provided, you use complimentary mating (Read more: Let’s Talk Mating Strategies)  and the very best sires available on those females.

The Bullvine Bottom Line

Innovative forward thinking breeders have been and will always be the people who move dairy cattle breeding ahead. They are not satisfied to only think within the box. They use the approach that work for them. That’s always the best alternative.

Not sure how much to spend on that great 2 year old or heifer?
Want to make sure you are investing your money wisely?
Download our Dairy Cow Investment Calculator.