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Strategies for Successful Breeding and Marketing of Genetics in Domestic and Export Markets

Richard Vanderwal

Cedarwal Farms Ltd.,
5904 Interprovincial Hwy., R.R. #1,
Yarrow, B.C. Canada V0X 2A0

Take Home Messages

The Canadian Holstein today is less of a distinct bloodline, and more of a distinct philosophy. Top genetics exist in other countries, and we participate with them in creating global breed improvement strategies.

Genetic Indices of sires and cows are important genetic tools, and need to be utilized in breeding decisions. However, the need for breeders to use their cow sense is increasingly important when we consider the use of changing management tools in the population, and the impacts they will have on the assumptions that underlie genetic evaluation models.

Value-added cattle should be the result of a well-thought out breeding program. Our challenge today is to evaluate the cows in the barn in terms of profitable breeding goals, and to develop strategies to supply market demands.


Farm Sketch

Cedarwal Farms Ltd. (CWF) is a family corporation which employs six people to manage 220 milk cows and the replacement and recipient herds. The cattle are primarily registered Holsteins on official test and classification programs.

ProdN: 208 records: 10,578M - 3.5%F - 3.2%P (234-216-235)
ClassN: 5 Ex, 61 VG, 127 GP, some lower.

The farm crops about 300 acres; 160 grassland and 140 corn silage. Other feeds are bought in. Although a little grain is fed in the parlor and the hay is fed separately, the majority of the feed is fed twice a day as a TMR of home-grown silages and economical commodity feeds.

We are in the dairy business first. The farm carries a high debt load, and thus it is important to make net dollars, that is, make milk efficiently. Good cash flow depends on good milk flow.

We work at breeding good cattle. Our goals are to use economical breeding tools to make each generation better than the previous one, and strive for a profitable, problem free mature cow. Marketing genetics through cattle, bulls, and embryo sales has been a learning experience for us from a business and breeding program decisions standpoint. We are proud of some of the animals that represent our breeding program.

Defining the Profitable Cow

What Determines Profit on Your Farm?

The answer should be many profitable cows. The most profitable cow, by definition, is the one that makes the most money for a producer after deducting expenditures. The only way to increase profit is to increase gross sales, decrease expenses, or both. There are three steps in evaluating profit from a genetics influence perspective:

Define it.
Achieve it.
Market it.

This will form the basis of our discussion.


Defining Profit From A Genetics Influence Perspective

The most profitable cow, by definition, is the one that makes the most money for a producer after deducting expenditures. The only way to increase profit is to increase gross sales, decrease expenses, or both. How can the dairy cow increase in value and supply value-added products?

Increase Gross Sales.
Overview Approach by Farm Income.

Percent generated by milk (and components)
% = $ milk sales/ $ milk, embryo, and cattle sales

B.C. : 93% of gross sales
CWF : 65% of gross sales

Overview Approach by Individual Cow Incomes. Each cow has five potential sources of income - milk, heifers, bulls, embryos, and herself.

Your attitude and goals should be to develop cow income by identifying specifically what particular cows excel at, and how that affects the farm income.

Milk Sales

Milk yield. Production/day. Not cow index.
kg / cow / day of life -- use all lactations to predict total lifetime profit.
lifetime profit -- profit per day of life is correlated to first lactation yield, although it is influenced by age at calving and calving interval. Lifetime profit is determined by the cow.
longevity -- profit per day of life increases with more lactations, plateauing somewhat at four lactations as health and other costs rise. Other advantages are less replacements required, and herd "culling" for the right reasons. Determined by the farmer.
efficiency -- how do we define traits of economic importance? We all have that problem-free cow that we really appreciate when she reaches eight years old. Can you measure her profitability when yield and efficiency are so closely tied?

Components. The opportunities vary with milk and milk component pricing.

BF differential $
protein or SNF

Type. How do we increase gross dollars income with type? The two extreme positions for type goals appear to be:

the true type model, or
the idea that one must pick the most productive cow, let her tell us what she wants to look like.

I don't agree with the second assumption:

first, production and type are not related,
second, the correlation data that this idea is based on reflects the population's type at the time, not the profitable production traits of the day, and
third, productive is not necessarily profitable.

Functional Type. Ten years ago, functional type implied strong loins for good fertility. We now include the pelvic length and width, loin strength, and thurl position as important. They are related to set of leg-rear view. Teat length and shape influence SCC. Udder depth and suspensory ligament are the only two traits shown to be directly related to longevity.

Show/Style Type. Everyone in this country should have the freedom to 'do their own thing'. We believe show type does not prevent great production, it is just harder to attain because of the narrow gene pool that gives "show type". But if you want to develop and market something "uniquely Canadian", she better have more going for her than a wide ass, and walk uphill.

Genetic Value. Increasing $ in:

production -- cattle have no value if they don't milk. The world doesn't want them, and neither does your neighbor.
production genetic indexes -- You don't make any money directly, but every market for your cow is interested in an estimate of her ability to genetically transmit her production, and her rank in the population. Look at your cow as the world does: which countries emphasize protein yield, or de-emphasize milk yield, or require a high percent protein?
type -- subjective standard, but what traits are emphasized in your market?
type indexes -- your markets are also interested in an estimate of her ability to genetically transmit her type traits.
value of pedigree -- strength/uniqueness. What is the relative emphasis of trait selection in the pedigree?, and what uniqueness does it offer? Maternal uniqueness is valuable, but so is well-designed line breeding, global outcrosses, red and whites, and high index sire stacks.

Decrease Expenses. Decrease expenses/input costs = primarily: feed + care + environment costs, but what genetic components?

feed input per unit milk output (feed efficiency): Efficiency to date is best achieved by selection for yield. The correlation is very high. Heritability for yield (as a trait) is also higher. Canadians like the term efficiency better than yield.
milking speed;
calving interval (reproductive performance);
health costs.

What kind of cow maximizes profit?

Production capabilities: 25,000 to 30,000 lb.mature cows

Persistency of lactation reduces stress!
Milk and income per day of life.
Butter fat depends on pay out
Protein 3.3%, and rising; paid in MCP systems.
Clean milk out
SCC <100,000
Aggressive/ workability traits

Type characteristics:

Medium + stature, and capacious.
Mammary - teat size and shape, suspensory ligament, texture, carried at hocks.
Feet & legs - clean boned, track straight, good depth of heel.
Pelvis - must retain length, width, and thurl placement for pelvic angle.

Achieving Profit From a Genetics Influence Perspective

We all know what we want -- HOW DO WE GET THERE?

Tools to Work With.

sire proofs -- sire genetic indexes
cow indexes -- estimate of the cow's genetic transmitting ability
A.I. and E.T.
maternal selection -- all leading breeders have the same access to the top sires of the day -- what is your advantage? if not maternal marketability?
THE BREEDER -- defining goals, cow sense, and common sense

Discussions. The Role of Global Proofs. Let's examine the origins of gene pools and the work at harmonization. North America: where did genetics come from? the North American cow. Canada versus? US. As information and genetics go global, we see a move to similar stated breeding goals, but conformation traits differ in interpretation and the ideal from country to country. Yield interpretations may vary with different production and genetic base levels of a particular country.

Let's discuss sire rankings using the performance and profitability indexes of several countries. This will emphasize differing breed strategies. The intent here is to:

recognize that the same bloodlines form the current base of global Holstein genetics,
recognize that there are many similarities, and yet enough system differences to define genetic and market uniqueness.

The Role of Cow Indexes. The system of estimating the ability of two year olds to produce is the summary of the "index". So it is a genotypic estimate based on information of phenotypic performance values.

I believe that indexes are very useful, and should be considered and used in breeding decisions. I also believe they are being overweighted in their usefulness in breeding decisions, and want to encourage you to THINK about their use in your breeding program. Consider some questions about the information that goes into calculating the index number:

Genetic gain graphs are very popular within all countries. Most of these genetic gains are probably being overestimated. We need to look at some of the historical assumptions that undergird these estimates.
What about the role of herd variance and range? For production, most herds used to follow a fairly good distribution curve with quite a variability in genetic merit. The assumptions for the animal model are based on that historical pattern. Farm economics have changed that pattern to low variability between herds and within herds, with the genetic merit for production also being consistently higher.
Deviations continue to have a heavy weighting in calculations. Are current deviations of herd individuals following the same pattern as years ago? Consider that different feeds, or biotechnologies such as rBST can exaggerate high end deviations, or shrink them if used on the bottom two-thirds of the herd.
In type indexes, how accurately are the bottom end cattle being evaluated, and what impact is that having on sire proofs? The classification range on two year olds is basically 75 to 83. What's the real difference between 75 or 65 or 55 point herdmates, and what effect does their scoring have on sire proofs?
The basic raw data that enters the computers for type evaluations needs to be repeatable, requiring constant standardization and alignment with breed goals. Recognize that comparisons reflect changes over time and differences between countries.
How has the importance of genetic merit restricted the selections of young sire entries into progeny programs, and what are the results?

The intent here is to:

recognize that sire indexes accurately rank sires; the actual numbers are less reliable,
recognize that the interpretation of cow indexes requires herd distribution, management, and integrity information, and
recognize the importance of both the utilization and perspective of indexes.

The Role of Longevity. Proofs are primarily based on two year old yields.

When brought to bottom line terms, the positive influence of +200 milk can be balanced by longevity quite quickly. Two lactations of +2000 is 4000 pounds, surprisingly only 55 to 60 days of production. The goal is heavy production cows that last; a case must be made for productivity from cows that last 60 days longer than average.
Herd distributions influence farm profits. Taking Ontario data

1st lactation = $ 3.30 profit / day of life
2nd lactation = $ 5.50 profit / day of life
3rd and over = $ 8.50 profit / day of life

Clearly, increasing the average lactation of the herd increases the average $/day/life of the herd. But obviously, the net dollars achievable for the herd replacements will also play a role in management decisions.

A significant problem is the ability to define longevity early in the process of making genetic mating decisions. Market demands dictate that yearling heifers are flushed to accelerate genetic gain. What are your selection tools?

The Role of Size. Extremely large size is not a commercially desirable trait, but needs to remain a selection criteria for seedstock breeders. In our experience, nice little cows are not significant contributors of improved progeny or breed improvement. In fact, in many cases they parallel the concept as in other species of a "terminal cross". Optimum size for dams of significant progeny is medium to large frame.

The show ring has a place that must ensure that these cows are also correct, dairy and productive; if it fails to do that, it will lose it's credibility. In addition to marketing aspects, the show ring has provided the check and balance for retaining frame size and width in the spectrum of choice for the production of optimum performance commercial cattle.

The Role of Auxiliary Traits. The role of secondary traits in culling decisions is apparent, and some of this discussion can fall under a discussion of the role of longevity. The role of selecting for secondary traits has been minimal, and deserves to be that way because of the poor heritability estimates. Understand that this estimate is low because of inaccurate data collection, and does not reflect true heritability. The demands of workability traits in larger operations requires that seedstock producers eliminate undesirable characteristics before they get into the sire side. Genetic progress on workability traits is now primarily through a genetic tool called culling.

The Role of Reproductive Technology. Just a short note to recognize that artificial insemination, embryo transfer programs, and nucleus herd concepts are NOT the breeding program. They are only tools to accelerate the direction of choices made in the breeding program.

Summary. In this discussion, achieving genetic progress is focussing on breeding for one trait called "profitable production". A balanced perspective of the use of breeding tools in our program reflects our understanding of the Canadian balance breeding philosophy, and developing that genetic product for the market.

Market It

A discussion on developing a conscious system that sets goals for the farm/breeding program.


Who determines the right choices? You; your neighbor; export.
What is their concept of "the best"?
Producing a product where the DEMAND is greater than the SUPPLY is usually a profitable choice.
If you would sell John Smith.........

Technique. Market it - marketing techniques:

herd tours
purchases - traffic + discipline
retail versus wholesale
customer follow-up

Thoughts. Buying drills or holes? cows or calves, production, profit opportunity?

the 80/20 rule - 80% of the genetics sales come from 20% of the eligible cows.
Examine that group!
Invest in the future of your breeding stock:
- target matings to meet "the right choices"
- sire selection
- maternal uniqueness
- Marketing the farm:
- Fellow breeders - not the competition!
Look at and develop alliances for marketing.


When Cedarwal Holsteins develop a herd improvement strategy, we participate with you in creating global breed direction/ progress.

Total cows are defined as excelling in profit-oriented traits. We don't want average -- it is too close to mediocre. The market does not want average. Our banker certainly doesn't want average.

There is no difference in what we want in B.C. or what you here want in a registered Holstein dairy cow:

Cattle that produce profitably, year after year with minimal special attention, and are capable of supplying value added products that are easy to market.

We all need to recognize the value of genetic indexes for sires and cows, but the challenges of accurate genetic evaluations of changing dairy populations will alert the serious breeder that defined goals, cow sense, and common sense are still three valuable tools for genetic progress.

Our challenge today is to evaluate the cows in the barn in terms of profitable breeding goals, and develop strategies that supply what your market demands.

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