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 $6.63 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 2017: Economic Value Update
Effective emphasis on the individual traits within Breeding Worth.
This year, the update to the economic values involves updating the data for the 2015/16 season (previously a forecast) and rolling the five-year average forward to include a forecast for the 2016/17 season.
The major change that has come through in this update is a lower 5-year average price for milk solids (In 2016, the five year rolling average milk price was $6.19/kg of milk solids. In 2017 this will be updated to $5.86/kg.).
The reduced value of milk solids is due to a decrease in the value of milk protein. The value of milk fat has remained constant.
Read on to learn why the economic values for individual traits have changed, and what the impact will be across herds and AE enrolled dairy sires.
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Economic value for milk protein decreases, economic value for milk fat increases
The economic values of fat and protein incorporate the value of each component, as well as the cost to produce it.
The value comes from a five year rolling average of the milk price, and the cost is based on the reduced stocking rate that is required to make feed (i.e. energy) available to produce each component.
Milk Protein
The value of milk protein has been declining for the past two seasons. This is forecasted to continue in the 2016/17 season, and although it is slightly off-set by the decreasing cost of producing protein, the impact over all is a decline in the economic value for protein.
Milk fat
The value of milk fat has remained constant, while the cost of producing it has decreased. Overall this results in an increase in the economic value for milk fat.
Economic value for liveweight and SCC increase (i.e. The economic penalty applied to these traits is reduced)
Economic values for fertility, residual survival and body condition score decrease
A proportion of the economic values of the above traits is based on the value of efficiency, that is, poor performance in these traits would result in inefficient use of feed.
For example, cows with higher liveweight require more feed for maintenance. This effectively takes feed out of the system, where it could have been used for milk production.
The total milk price determines the 'opportunity cost' of feed, and at a lower milk price, the cost is less.
The lower ‘opportunity cost’ causes the economic values for fertility, residual survival, and body condition score to decrease, along with the penalty applied to liveweight and somatic cell score.
How will this impact the BW of my herd?
- On average, herd BW's will decrease by around $4
- Friesian herds will decrease by the most, as the most significant change is a decrease in the value of protein.
The following graph shows the expected shift in BW following the update to the economic values. This graph includes herds which are eligible for Animal Evaluation (AE), and have more than 50 animals.
How will this impact the BW of AE enrolled bulls?
- On average, Friesians’ are the most affected, with an average shift of (-) $7.3 across bulls born after 2000, with a BW reliability of greater than 75%. Crossbred, Ayrshire, and Jersey bulls have shifts of (-) $2.8, (+) $2.6 and (+) $3.4, respectively.
- Of the bulls born after the year 2000, and with a Breeding Worth Reliability of greater than 75% the majority will move no more than plus or minus $10.
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.
Economic Values explained
Protein, Milk Fat, Milk Volume
The EVs for milk components are calculated using a 5 year rolling average, which accounts for the past four years of pricing, as well as price forecasts for one future season.
Liveweight
The EV for liveweight comprises four components: cow maintenance requirements, heifer replacement feed costs, cull cow value and bobby calf value.
Somatic Cell Score
A decrease in somatic cell score can have a significant economic effect. The following effects are accounted for in the calculation of the SCS economic value.
Fertility
The EV for fertility includes value gained through increased survival and value gained through earlier calving dates: longer lactations.
Residual Survival
The EV for residual survival is based on the rationale that animals with better longevity will reduce the requirement for replacement heifers entering the herd.
Body Condition Score
The EV for Body Condition Score (BCS) represents the improved profitability of an animal who is able to maintain body condition over her lactation.
