Breeding Worth is the industry index which ranks cows and bulls on their ability to breed profitable and efficient replacement dairy heifers.

How economic values (EVs) are calculated and why they change.

EV’s represent the value of different traits to New Zealand dairy farmers.

The economic values are applied on a ‘profit per unit’ basis. For example, one additional kg of protein creates $6 of additional profit for a dairy farmer.

Calculations account for milk production, historical, current and forecast milk prices, income from culls, surplus cows and bobbies, the cost of generating replacements and general dairy farm expenses.

Economic values are updated every year to reflect changes in these values, ensuring Breeding Worth remains relevant in an ever changing market environment.

February 2019: Economic Value Update

In February 2019, the Economic Values used to calculate Breeding Worth will be updated. This update reflects changes on the world market where there has been a significant increase in the value of fat and a decrease in the value of protein. The good news is that the high value of milk fat is delivering a strong milk price for the 2018/19 season.

Frequently asked questions about Economic Values

• Why are Jerseys ranking so much higher than Friesians?

  Jerseys typically have the highest ratio of fat to protein in their milk and this means that a kilogram of milk solids from a Jersey cow will, on average, be worth more to a farmer than a kilogram of milk solids from a Friesian cow.

  The calculation used to set the weightings on fat and protein in BW 2019 is made using a Valued Component Ratio (VCR) of 1.01 (i.e. fat is worth 101% of the value of protein). This is made up of a five-year average which includes one forecast year. In future, Jerseys are likely to continue to rise as the value of fat remains strong and low VCR years will drop out of the average for the next few years.

• Can I still rely on BW if I prefer Friesian cows?

  Yes, in New Zealand, we have a unique opportunity to respond to a high value for milk fat, regardless of cow breed. This is due to high genetic variation in fat production across major breeds.

  Breeding Worth (BW) can help you identify sires and cows whose progeny have the strongest ratio of fat to protein across all breeds.

• What is the Fat Evaluation Index (FEI) and will it penalize high fat herds?

  The FEI grading system was introduced by Fonterra in 2018. The main driver of the FEI is the amount of PKE fed and the PKE fat content. 

  High fat herds will not be penalized. The FEI is a score given to individual herds, based on the composition of the milk fat produced, rather than the amount. It is designed to make sure New Zealand’s milk fat is suitable for manufacturing products that meet customer specifications.

  This index was designed to indicate the suitability of the milk fat composition for processing into a variety of products. A high fat herd and a low fat herd can have the same FEI, providing the composition of the fat is the same. The FEI is altered by diet, for example, a herd that is fed a large quantity of palm kernel extract (PKE), will have a higher FEI than a herd that is predominantly grass fed. Further information on PKE is available here.

• The high value of fat might be a passing fad. Could we be jeopardizing progress in other important traits by responding so aggressively.

  The value of milk fat has been climbing for several seasons. The VCR was 0.43 in in the 2014-15 season and has risen consistently since then. BW 2019 is conservative when compared to the current market. The VCR used in the BW 2019 calculations is 1.01 while the latest Fonterra VCR has milk fat at 130% of the value of milk protein (e.g. a VCR of 1.30).

• As a farmer, what should I do?

  Check with your breeding company to learn how they are responding to this change. If you know the bulls on your team, you can look at DairyNZ’s bull team builder tool to search for any AE-enrolled sire and see his BW 2019 figure. Check it out here.

The table below shows the new economic values.

Trait	2018	2019	Change
Milkfat ($/kg)	2.85	3.49	0.64
Milk protein ($/kg)	6.06	4.38	-1.68
Milk volume ($/L)	-0.088	-0.092	0.004
Live weight ($/kg)	-1.30	-1.30	0.00
Residual survival ($/day)	0.124	0.112	-0.012
Somatic cell score ($/SCS)	-38.33	-37.3	1.03
Fertility ($/CR42)	6.55	5.88	-0.67
Body Condition Score (Units)	100.6	96.3	-4.3

Key assumptions

Economic values are calculated assuming industry averages for animal production, feed requirements and farm systems. The following table is a list of the key averages which are incorporated into the Economic value calculations.

• Click here for key assumptions table

  Milk volume (litres/cow)	3,764
  Milkfat (kg/cow)	180
  Protein (kg/cow)	143
  Milksolids (kg/cow)	323
  Milkfat (%)	4.82
  Protein (%)	3.82
  Liveweight (kg/cow)	453
  Replacement rate (%)	21
  Total metabolisable energy requirements per lactating cow (MJME/cow)	55,517
  Total dry matter requirements per lactating cow (t DM/cow)	5.05

How this will impact the BW of AE-enrolled bulls

The BW of high fat sires will increase, and conversely the BW of high protein sires will decrease. For bulls born after 1999 with a BW Reliability of 75% and a BW 2018 of >0, Friesian bulls are the most affected, with an average shift of -$27.7. Jersey, Cross-Bred and Ayrshire bulls have shifts of $23.3, -$4.8 and -$3.4 (see graph).

Economic Values - factors and effects