When it comes to the profitability of your genetic programs, nothing compares to a cow’s ability to flush. A good “chicken” will outperform a great cow that does not flush. To demonstrate let’s take a look at a comparison of a “B” level cow that flushes well versus an “A” level cow that does not flush well.
Common Factors
Here are the common assumptions in both cases:
Boarding expense per day ($10)
Years of productive embryo production (3)
Flushes per year (4)
Flush strikeout ratio (25%)
Base cost per flush ($650)
Cost per embryo ($150)
Recipient price ($1,500)
Conception rate of recipients (45%)
Advertising expense/year ($1,500)
Other promotion expense ($500)
Ratio grade A/B embryos (70%)
Ugly duckling rate (40%)
Differences
“A”
“B”
Purchase price
$50,000
$25,000
Sale price per embryo
$3,000
$1,500
Sale price per heifer
$20,000
$10,000
Numbers of embryos per flush
5
10
Performance
“A”
“B”
Total Revenue per flush
$7,875.00
$7,875.00
Total cost per flush
$3,087.50
$5,525.00
Total profit per flush
$4,787.50
$2,350.00
Total heifer sales per year
$8,748.00
$8,748.00
Total boarding expense
$11,314.50
$11,679.00
Total promotional expenses
$4,000.00
$4,000.00
Total Revenue
$83,694.00
$54,444.00
Total Profit
$18,379.50
$13,765.00
Return on investment
37%
55%
The Bullvine Bottom Line
As the numbers show, there really is no comparison when it comes to the most important factor in the profitability of your genetic and embryo programs. In fact, for each embryo flush where a donor is able to produce over 10 eggs per flush, you will typically see 24% greater return on your investment. It takes a rare case (1 in a million) to have a cow that flushes less than seven embryos per flush be a profitable cow. Therefore, as much as you spend a great deal of time researching the pedigree and looking at your potential purchase’s conformation, there really is nothing more important than hers and her families historical flush ability. Take the time to make sure that than animal will be able to flush 7+ embryos per time. If you are not sure they will, or don’t have any flush history on the family (strongly maternal) wait. Look for a new animal. Your pocket book will thank you.
When it comes to investing in cattle, there are those who only get it right some of the time and there are those who get it right quite often. Such a case could be made for Pierre Boulet, who has built Ferme Pierre Boulet Inc. on successful cattle investments based on his first impression. “The way that I have always bought, and the way that I will always buy, is to look first and foremost at the cow or heifer in front of me. If I don’t like what I see in front of me, I don’t go any further.” Obviously, he has gone further more than once. Looking back at several winners he starts by saying, “In each of their cases, I fell in love with the animal first. When I looked at their pedigrees, the breeding consistency of their dams and the great sire stacks, I knew that I had a low risk investment.”
PEDIGREE AND SIRE STACK: Don`t have one without the other
Pierre considers other factors before he makes the final commitment to invest. “When I like what I see, the next thing that I check is the pedigree for the family and the sire stack. The family is obviously important because a solid family that consistently breeds well takes away a lot of risk. At the same time, the importance of the sire stack is often disregarded. When a cow or heifer is backed by several generations of great bulls it gives you the reassurance that there is solid, well proven genetics in her blood.” Located in East Central Quebec, Pierre is enthusiastic about cattle breeding and his growing list of winners.
STAR QUALITY: Laws of Attraction:
Pierre has no problem singling out the cow that rises to the top. “There is obviously Thrulane James Rose with all of the success that she has had she obviously creates an enormous amount of demand for genetics from her and her daughters.” And this leads him naturally to the most important reason Rose is special. “There is a whole other aspect that we have to consider with Rose and that is the publicity that she has generated for us. A cow like her puts our name out around the globe, attracts people to our farm and indirectly generates business for the other genetics that we offer.” Once the word is out, it’s a lot easier to share your breeding philosophy and the successes that have come from it.
THRULANE JAMES ROSE EX-97-2E-CAN 2*, GRAND ROYAL 2009,2008,2006
FOUNDATION FAMILY: The Flush of Success
Ferme Pierre Boulet has excelled in both sales and the show ring. One investment has been especially important says Pierre. “I have to point out Viapax B C Madison who is now VG 6*. I purchased her as a heifer in a sale. She has become the source of a fantastic family for me which has had several show winners and breeds all around great cows. I have been able to heavily flush her, her daughters and her grand-daughters, so she is really the foundation of a family that has generated lots of business for me.”
PEDIGREE POTENTIAL: The Future Looks Great
Pierre’s philosophy of love at first sight and strong cow families is working consistently for him. “Other cows that have turned into great investments for me are Howes B C Sassy EX-2E 7*, Pineland Goldwyn Tidbit VG-89 and Lindenright Goldwyn Royce VG-89-2YR. Sassy I bought as a heifer, Tidbit and Royce as fresh young cows. I always look for the future of an animal, how she will develop and her long-term potential. In all of these cases they were animals that had the build to mature and develop extremely well.”
PINELAND GOLDWYN TIDBIT VG-89-3YR-CAN
LINDENRIGHT GOLDWYN ROYCE VG-89-2YR-CAN
COMMON SENSES TELLS US “You Can’t Take The Bad Ones Back!”
There is no way to turn back the clock on a bad investment. It’s tempting to think that those who are extremely successful in the cattle breeding business don’t ever make mistakes. Pierre sets that legend to rest. “There are always some that you wish you could take back, but that’s the name of the game. One cow that comes to mind I had invested $40,000. She was a great cow with a great pedigree. She did really well for us at the shows and we had fun with her. However, we were never able to make our money back since we couldn’t get any embryos out of her and no calves either. But that’s all part of the business. Every investment has risks and you have to be prepared to assume losses when there are risks involved.”
GENOMICS: Using This New Trend as an Added Tool
Obviously, in the last five years the whole genomics question comes into play for everyone in the cattle breeding business however Pierre feels it hasn’t changed his viewpoint. “Personally, the impact has not affected me all that much. I still go with the basics, look at the animal in front of me, consider the sire stack and family. If she has these basics and the genomics are an interesting aspect of that particular animal, then I start to consider her numbers. At the moment many people rely entirely on genomics, and I think that we will see that tendency turn more toward using genomics as a tool that people consider (much like the way we used LPI scores) rather than relying entirely on its outcome.”
BEAUTY AND FUNCTION: They Work for Everybody
The functional cow is a huge focus for our industry, as much for the show ring cows as the commercial cows. Great feet and legs, great udders, and the importance of health traits will just continue to grow in popularity. We work with lots of show cows and deal thousands of commercial cattle, udder quality, teat placement, rump angle and locomotion are characteristics that both markets put a lot of emphasis on. I think that the tendency to work towards a well-balanced, functional cow will continue to grow in popularity.
IT`S YOUR BUDGET: Make it Work for YOU!
Of course the budget that you have is a big consideration, when you have a considerable amount to invest, looking into good young cows (who have gone through the riskiest part of calving) who come from families reputed for their breeding capacity with great sire stacks is the best way to go. I am not saying invest in a cow you think will clean up the Jr 2 class at The Royal, but you can go a long way breeding from a young cow that is VG first calf. When someone has a bit less budget, investing in embryos from this same type of family, a family that has proven its breeding capacity and great sires is probably the best way to go.
BULLVINE BOTTOM LINE
The most important thing to consider and the first thing to look at is whether you like what you have in front of you or not. If you don’t like the cow, no matter what is behind her, you don’t go any further than that.
Informed Viewpoint: Brian Craswell from Hunter River PEI often has the best seat in the house when it comes to studying cattle. With his wife Amber, he has built Crasdale Farms Inc. into a thriving dairy operation. This lifelong on the job education has been further enhanced by his other business, Brian Craswell Auctions Ltd. Positioned behind the microphone he has the clearest sight lines in the building as great opportunities come and go in sales ring. Over and over again he witnesses the thrill of getting in on an opportunity or the defeat when that opportunity is missed when the final hammer falls before a decision was made. His other centre-of-the-showring position as show judge is probably the best view of all. Brian has judged the Royal Winter Fair (2003) and World Dairy Expo (2010). He has traveled to many countries around the world to share his talent for ranking cattle. Of course Brian Craswell is well positioned to have an informed viewpoint on dairy cattle investing.
Winterbay Goldwyn Lotto EX-95-5YR-USA
Stick to a Winning Strategy: When looking to invest in dairy cattle Brian starts with his own feelings. “First I have to like them.” In today’s market, he then looks for two other attributes: cow family and genomics. “I want the total package.” Says Brian who points to Winterbay Goldwyn Lotto as the best investment he ever made in terms of profit and how the animal turned out.
Be Willing to Walk Away: Brian admits that not every deal has been perfect. He says, “I heard about a cow once and made myself like her. She wasn’t what I liked and she didn’t turn out.” He probably wishes he had followed some good advice he was given. “An older dealer told me one time that if you have to make yourself like them, then walk away.”
You Don’t Win Every Time: Despite knowing what to look for and Brian acknowledges that sometimes you walk away from a deal and sometimes the deal walks away from you. He recalls that this very thing has happened a few times. “I almost bought Lacoulee Justine Goldwyn when she was a December calf and 4th at a show. I didn’t and she went on to be Jr Champion at the Royal. I was runner up on the Jr Champ from the Royal Winter Fair last year when she sold in The Canadian National Convention Sale.” He goes on, “I also was runner-up on Pineland Goldwyn Tidbit when she sold in our Opportunity East Sale as a 2 year old.” You don’t win every time.
PINELAND GOLDWYN TIDBIT VG-89-3YR-CAN
Take Calculated Risks: Craswell Holsteins has invested in both young stock and already proven cattle. Going back to his focus on cow families Brian points out, “I will not hesitate to buy young ones from great families that I like. Sometimes the calculated risk of buying them younger enables you to pay a little less.”
Keep Up With the Changing Marketplace: In the past five years Brian sees that the marketplace “has changed immensely with the emphasis that is being placed on genomics. This has driven the price of high genomic animals up and, in particular, the younger high animals.” He recognized that debate is going on. “Some would say that genomics has devalued animals. I would argue that it has raised the bar on the high ones and widened the spread.”
Brian says, “In This Business, You Don’t Have a Crystal Ball”: But then he goes on to say “Genomics is here to say and the use of it will find its place. Right now it is almost everything in the high end market.” He often refers to his philosophy of balance in the cow business and he foresees “genomics coming into balance with great cow families with numbers”. Again he focuses on the complete package.
Know the market. Know your customer: There is so much to learn in this business and Brian encourages those who are starting to invest in dairy cattle to “try to find a member of one of the great cow families that has that total package and invest at the top end of genetics right from the start.” Of course this is expensive but by focusing on these top animals “you can cash flow it with embryo sales, while you build your own branch.”
BULLVINE BOTTOM LINE: It’s all about the package.
“You need to have the package that people want to successfully market your cattle business.” Brian Carswell, Crasdale Holsteins.
“What’s the plan?” We hear or refer to that question several times every day. It’s the driving force when growing a business, or when you’re a resolving problem in the board room or, for those of us in the cattle industry, when you’re in the barn. People like Tim Abbott thrive on finding the answer. The owner of St. Jacobs ABC knows that having a good plan, from the barn to the board room, is the cornerstone of success in the dairy cattle business today. Whether you are starting out or have more than twenty years in the business like he does, Tim says the first step must be, “Chart a plan”. That comes first. Then, you have to “know how your investment can accomplish your goals.” He sums it up clearly, “I think you need a plan for any investment in our business.”
“One size does not fit all!” When it comes to investing in the dairy cattle business this can be modified to,” One plan does not fit all!” You have to have a plan and it has to be a focused plan. That’s where the critical differences come in for someone like Tim Abbott. “Whether it is show cattle or genomics or great maternal lines” he insists “You must have a plan for what you want to achieve”.
“Know what cattle you are focused on.” “For us we really prefer to buy cows.” He recognizes “There certainly is good money in buying the right heifer.” But he returns to his point, “At St. Jacobs ABC have focused on show animals, so milking cows are our preference.”
“Investment cows need star power.” Here Abbot continues to fine tune what St. Jacob’s is looking for. We want “a cow that can become iconic as an individual”. You might be wondering how they find that winner. Tim explains, “The cows must have a sire stack that tells us they can be great and a maternal line that has proven to be successful.” You can never have too much information. It is the basis of decision-making and good planning. “We always try to figure out how many daughters it will take to pay off our initial investment. We like to stay in the range of 10 or less daughters to get the purchase price back.”
Which brings Abbott to how important budgeting is to the planning process? “Be sure you can afford to pay for what you buy.”
“Is that in the budget?” It seems a no brainer but the devil is in the details and in the budget too! Tim cautions” You need to budget for the expenses after your purchase. IVF, flushing recips, advertising – these will add up no matter what your investment level is. Be sure you have the money for all of this.” The money and what you spend it on is the key to success. “Over the years we have spent too much on average ones.” Although hindsight is 20/20, when looking at some past decisions he says he wishes “we had stayed with the great ones.”
“Stick with the great ones!” Tim feels that in today’s market, “There is very little middle ground. Cows are commercial or very valuable.” In the last five years genomics has had a huge impact on the cattle business. “The genomic business is fantastic right now and the upper end has great value for the next generation and embryos.”
“Weigh In on the Genomics Debate” Tim’s view on this phenomenon is “Good breeder, type cows and heifers don’t have enough value in my mind but that is reality. IVF has had a huge impact because you can make daughters so efficiently and I think that is why the middle ground cattle have lost some value.
“Where’s the focus for St. Jacobs ABC?” Abbott summarizes the key issues. “We have chosen to stay out of the genomics game and focus on cows that are like our bulls … high type, great sire stacks and good female lines.”
“Stay positive. Be careful.” “I think the good ones, whatever your focus, will continue to have tremendous value. I think people will have to be careful with IVF not to make too many daughters of certain cows and watch the market very closely”. He sees three possibilities:
Big herds that have great access to recipients will have some success for sure.
Show cows will remain very valuable
Top genomic animals will be great property
THE BULLVINE BOTTOM LINE
FOCUS ON TOP GENETICS. PLAN ON TOP DOLLARS.
“As things change with testing bulls, the value of top genetics could keep going because of the potential for breeders to have very valuable bulls. I think we will see some similarities to when there were many breeder proven bulls….the VERY top will make top dollars.” Tim Abbott, St. Jacobs ABC.
Imagine someone comes up to you and says, “Make a huge commitment of your family, your money and your time. Put it all into the Holstein dairy business. In less than ten years you will have one of the country’s largest dairy herds and your farm prefix will be recognized around the world.” It’s quite probable that you would assess that person as a few sandwiches short of a picnic.
Is it hard to believe? Yes!
Could it happen? Also, “Yes”.
The proof of this success story is Morsan Farms Ltd. owned and operated by Morris and Sandra Thalen. They are living the dream. When they moved their dairy operation to Ponoka, Alberta in 1996, they milked 200 commercial grade cows. Today 80% of the herd is purebred. They milk between 1600 and 1800 cows and own about 250 dry cows, as well as 3500 head of young stock. They have genetics from 300 cow families and provide breeding stock to dairy farms in 21 countries. While it may sound like an “as seen on TV sales pitch”, their success is actually based on their skills as producers and business managers.
Eastside Lewisdale Gold Missy - Grand Champion WDE and Royal '11
Don’t Waste Time Looking in the Rear-view Mirror
The minute we are faced with outstanding success, human nature makes us ask, “Yeah but. What mistakes did you make along the way?” It could also be human nature that successful businesses don’t spend a lot of time on their mistakes or the would’a, could’a, shoulda’s. Chris Parry, who manages the genetics and marketing side of the business at Morsan Farms Ltd, points out, “there is something to be learned even with those few purchases that could have worked out better”. He recommends that you “Do your homework. Make the decisions.” That is probably what led to one of their biggest successes. Chris points to Eastside Lewisdale Gold Missy. “She has to be the biggest name so far.”
Teamwork is Your Best Investment
With obvious pride Morris and Sandra say, “It’s been a great privilege to work with our children and see their interests in Morsan Farms develop.” The Thalen’s know that this family teamwork is mirrored by their eighteen full time staff and is the foundation for their continued success. The dairy business is all about relationships – cattle and people – on the farm and off. Morris says, “Our philosophy is complete customer satisfaction. I can tell you that for every 1000 animals we sell, 950 of them are sold over the phone. That has everything to do with trust.”
With their rapid growth, exacting attention to detail and over-riding goal of delivering the very best, it isn’t surprising that Morsan Farms Ltd. has attracted many partners. In the business world, volumes have been written on the pluses and minuses of business partnerships. Chris Parry has a positive outlook on this part of the business. “Investing with partners can be extremely beneficial to long-term business as long as all management matters are clearly defined ahead of entering into any investment agreement. There are many examples of successful partnerships and a few examples of unsuccessful partnerships”. He considers and then adds, “I think partnerships that don’t work are the ones where partners receive unexpected surprises which cause friction. In most cases our experience with partners has been exceptional.” He sums up the partnership discussion by saying, “We have a lot partners who have now become great friends of the business.”
It is an exciting time to be in the dairy cattle business and Chris was emphatic that the first step in investing in dairy cattle is to know your own goals first. He offered many possibilities. “I think if you are looking to invest in genetics the key is to decide what your expectations are? To improve your herd? To market genetics? To market the business? To bring in a direct or indirect return on the investment? To put bulls in AI and work in the genomics market? When these questions are answered then it’s time to do your homework”. Doing the homework is what Morsan Farms Ltd. is obsessive about. The “first step is to identify the consistent cow family and the best member of that family you can find. Then it is simply down to the investment level you are comfortable with and your expectations on the return on that investment”.
Where is the Excitement in Cattle Investing Today?
MS Chassity Goldwyn Cash
Everyone is talking about Genomics. Morsan Farms Ltd. has a plan. Chris Parry’s personal view is “I look at this as a positive not a negative. Lots of investment has been made in this new area of the industry which would not have been made before. A good percentage of this investment has come from outside of the industry and this is a good thing”. He cautions, “The danger here is again down to expectations. Know the science and know this part of the industry and your investment will be justified” He throws in a word to the wise, “Make sure you invest in genomics backed by a good sound cow family so if you don’t get the number you still have something to work with.” When pressed for examples Chris pointed out, “Over the past two years or more the majority of the purchases have been based on genomics most notably in cows like MS Chassity Goldwyn Cash, MS Atlees Shottle Aubry, MS Atlees Goldwyn Ariel just to name a few”. Chris summed up this discussion by looking to the future. “I would say the genomic investment will continue to be the driving force in the industry but I see the investments made will have a higher degree of calculation and understanding.”
THE BOTTOM LINE: From Day One, Set Yourself Up for Success!
Everyone involved with Morsan Farms Ltd. shares real enthusiasm for their work. They see breeders as dedicated people, like themselves, who are passionate about the industry. “We have to be. To work the long hours we all put in 365 days a year in all-weather conditions takes a unique breed of people. This is normally the same drive that makes your business investments succeed”. It all comes down to teamwork. Good information. Trust you’re your first impression when looking at a potential investment is normally the correct one. Talk to people in the industry whom you respect. Get good information. Don’t fall for the hype.”
Morsan Farms is an example of exactly that path. Relatively unknown just six years ago and now a well-respected brand name in the industry backed by an extremely dedicated family and motivated professional staff.
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