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Serving: WI
black calves in pen Fran O'Leary
WIN-WIN: Breeding the bottom end of your dairy herd to beef bulls will lower the number of replacement dairy heifers nationally, raise the value of replacement heifers and hopefully control the excess of milk in the U.S.

Breeding half of dairy herd to beef bulls makes 'cents'

Agrivision: Premiums on finished beef animals can make the difference between profit and loss.

My son and I milk 125 cows and farm 300 acres in central Wisconsin. We were looking forward to a better year, but this seems a lot like the past five years. Fortunately, two years ago our neighbor started breeding the bottom third of his dairy herd to AI beef bulls. That led us to breed the bottom third of our herd to beef bulls. We are actually doing fairly well raising beef. This year, we are breeding the bottom half of our dairy herd to AI beef bulls. Do you think this is a good plan? Are there any drawbacks? We still plan to keep milking cows, but right now we are making more profit from raising beef.

Tom Kestell: Thank you for your thoughtful question. I feel it is always good to think outside the box when we are dairy farming. I’m also glad that you find raising dairy crossbred beef profitable. Most of the AI companies report that their highest unit sales per bull are now beef bulls. This trend extends across the entire U.S. and all herd sizes.

I would offer a few cautions, however. Breed the kind of beef crosses the buyers want. There are certain studs that have developed beef bulls for this purpose. There are also a few semen suppliers that offer sexed male semen to breed to dairy cows. Many of these dairy-beef crosses are raised in large feedlots and contracted at the time of purchase. This market might become more volatile, and looking into contracting your finished product is something to consider. It would be easy to expand your animals on feed because there is an abundance of dairy farmers breeding a portion of their dairy cows to beef.

I would caution you again to use the right bulls to end up with a product the buyers are looking to buy. The premiums received on the finished beef animals can easily make the difference between profit and loss. I would also caution you to not breed too high a percent of your herd to beef so that you still have adequate replacements in the future. I would also not breed your virgin heifers to beef semen. Your heifers should be your best genetics, and breeding them to top Holstein sexed semen should be quite successful.

Even though I do not plan to participate in this new trend, I support it wholeheartedly. This practice will lower the number of replacement heifers nationally, raise the value of replacement heifers and hopefully control the excess of milk in the U.S. It could be one of the rare times that it is a win-win for all involved. Good luck!

Sam Miller: The advancements in genomic testing and sexed semen technologies have had a profound impact on the dairy business. Coupled with a multiyear downturn in milk prices, many dairy farmers have adopted a plan similar to the one you describe. Reduced heifer raising costs by gaining more heifers from the best animals in the herd and breeding the bottom 25% to 50% of the herd to beef bulls which are sold at a premium to Holstein calves or fed out as beef realizes improved financial results. As long as beef calves are more valuable than dairy calves, your plan makes sense.

Whether you should feed out the steers depends on the economics of beef prices versus cost to raise the animals. A partial budget can help you make this determination. Visit with your Extension ag agent, technical college farm trainer or banker for assistance in analyzing this enterprise. Good luck with your plan.

Katie Wantoch: Market diversification may result in decent profits. In particular, cattle feeding over the past five years has increased with respectable gains. A word of caution: Feedlots tend to have a narrow margin and do not allow much room for error. There are several stages of feeding dairy steers:

  1. first eight weeks (similar to replacement heifers)
  2. 20 weeks, or 350 to 400 pounds
  3. 400 to 650 or 700 pounds
  4. finishing, or 1,150 to 1,300 pounds 

It is important to remember that you do not need to retain ownership of calves to the full finishing stage or slaughter. Find that narrow window of opportunity and decide which stage or stages work best for your operation. Extension educators have been conducting research trials and have resources available at fyi.extension.wisc.edu/wbic/dairybeef.

Off-farm employment loss

My wife was just laid off from her job as a bank teller because of the coronavirus. We are wondering if there is something she can do on the farm while she is at home? We have no idea how long this will last. We milk 55 cows and farm 250 acres on the farm where I grew up in northeastern Wisconsin. We are wondering if she should take over milking the cows while I put in crops and do some custom planting and custom haying for neighbors? She already feeds the calves. We have a decent line of equipment. We are in our late 20s and don’t have any children. What are your thoughts?

Tom Kestell: To start with, congratulations on being a young, successful dairyman. You said your wife just got laid off due to the COVID-19 virus. I believe most layoffs will be temporary, and the workforce will have pent-up demand for skilled and trained workers once this crisis is past. 

This is an ideal time to work together on the farm and to fine-tune your dairy operation. This temporary situation will allow your wife and partner to understand fully how the farm operates and to appreciate short- and long-term goals. This also will give you time to discuss and plan present and future career goals together. Working together should be easier and more enjoyable than if you each do your own thing. 

I would caution you to be careful how you price custom work, and be careful to only do work that you are assured you will be paid for your services. Many custom operators have huge accounts receivable that add costs to the operation and stress to their lives. It’s always important to maintain your own farm as your priority so your farm does not suffer because you are doing someone else’s work. I have done custom work for over 40 years, but in recent years I have done less and taken that time to improve my own farm.

Off-farm employment for your wife can have both financial and social advantages. Health insurance, reliable steady income and other benefits can provide a sense of stability in a volatile dairy industry.  Make a mutual decision that benefits your situation. This COVID-19 crisis will pass, but wise or unwise decisions will have lasting and long-term effects.

Sam Miller: The coronavirus epidemic has created a very different situation for everyone across the world. I am sorry to hear about your wife being laid off. First, seek out an unemployment claim and research if there are any additional programs to assist through federal or state legislation. As for work at the farm, you can best determine any reallocation of tasks. There are also many companies currently looking for employees, and there may be opportunities in your community for other employment. Good luck working through the current challenges.

Katie Wantoch: We are in uncharted territory due to the pandemic. Many people and businesses are struggling and may feel a bit overwhelmed. Both of you may feel mixed emotions — at the same time and at different times. All of these responses are normal as work and life transitions take time to adjust. Please visit fyi.extension.wisc.edu/covid19, where Extension educators have shared resources to assist farmers, farm families, businesses and all community members. Financial choices will be difficult to make, but there may be ideas to explore. Can you identify other cash flow opportunities? Are you able to analyze the financial loss this will have on your business? Do you need to start thinking about exit or partial exiting? Take it one day at a time, but start to have these conversations with your wife.

Agrivision panel: Tom Kestell, dairy farmer, Sheboygan County, Wis.; Sam Miller, managing director, group head of agricultural banking, BMO Harris Bank; and Katie Wantoch, Extension agricultural agent specializing in economic development, Dunn County, Wis. If you have questions you would like the panel to answer, send them to: Wisconsin Agriculturist, P.O. Box 236, Brandon, WI 53919; or email  fran.oleary@farmprogress.com.

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