One-time investment, lifetime use and profit
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One-time investment, lifetime use and profit

February 04, 2016
POSTED BY: Cheryl Marti | MS | MBA | Associate Director | Genetics & Reproduction Marketing | Zoetis

Decisions you make for your herd today have the potential to impact multiple future generations in terms of genetic progress and economics. The results from CLARIFIDE® genomic testing can set you up with data to unlock your herd’s genetic potential and help increase your dairy’s profitability. And the efficiencies gained are even more important during financially challenging times. Here are some strategies to do this.

Sell bottom-end calves to improve cash flow
The fastest way to improve cash flow is to identify and sell the unneeded, low-end calves based on genomic results. Just as you want to be very selective in the employees you hire, you also should be selective with the calves you invest in to raise. 

Assuming a newborn heifer calf is valued at $200 to $300, the total investment to raise her in 2011, whether for a home- or custom-raised heifer, was estimated at $1,600 to $1,900.1 That’s a big investment to put into raising every single heifer when you don’t know her future profitability within your herd. Similarly, based on 2011 numbers, a cow must produce more than 31,000 pounds of milk before she has recovered her raising costs and her ongoing cost of production.1 By the time they achieve this production number, most cows are in their second lactation.

The cost to raise excess heifers far outweighs the cost of genomic testing. So why not identify the potential of heifers early to get the fastest cash flow opportunities that could come from saving on the costs of raising heifers and selling young calves with low genetic merit?

But if you are not willing or able to sell animals, there are other ways to benefit from investing in CLARIFIDE testing.                                              

Make better breeding decisions
Once you’ve committed to raising the best group of heifers, you can use CLARIFIDE genomic results to make better and more prioritized breeding decisions.

For example, you could use female-sorted, sexed semen two or more times on the top 50% of animals and use conventional semen on the bottom 50% of animals, giving you the opportunity for more heifer calves born from the best group of heifers in your herd. By creating more excess heifer calves you can become choosier in the ones you keep in the next generation, making each generation better and more profitable than the last.

Additionally, once you have decided on the type of semen to breed with, you can use CLARIFIDE information to make more informed mating decisions. This can help improve your odds of breeding a better animal and avoid the risks of matching animals of the same undesirable recessive or haplotype traits, and avoid creating undesirable inbreeding levels.

If using embryo transfer as part of your reproductive and genetics management, you also can decide which cattle are the best donors and which are the best recipients for the more valuable embryos. Please read Breed for Fewer Stillbirths for more information about this topic.

Use NPV to measure profitability
To measure the profitability of genomic testing verses other alternatives, such as using parent average, expansion or no investment, it’s important to use Net Present Value (NPV). NPV considers the discounting of future cash flows, accounting for genetic improvement over time. In other words, your cash has value, and this helps you take into account the interest you might otherwise earn if you use it for other investments. In addition, genetic selection decisions alone take time before they impact profit improvement from an improved group of animals you select to keep, or the improved progeny they and the next generations also contribute. 

Please listen to the Economics of Genomics webinar for various strategic decision examples that view both a real-herd scenario comparison and a comparison of the profitability potential using a 10-year NPV model that compares CLARIFIDE testing all heifers early in life versus no change (or selection) and compares using CLARIFIDE testing versus parent average. Both scenario comparisons are based on a 1,000-cow herd.

Do better
Now is the time to start genomic testing. Investing now rather than later will put you further ahead. Investing in genetics is as important as investing in a 401(k) early, as it is even more difficult to catch up later.

Through making strategic herd management decisions based on CLARIFIDE results, the genomic value of your herd will continue to rise because you will have higher merit heifer calves to choose from, allowing you to raise better and better animals year after year. It’s comparable to investing in a higher-yielding compounding interest savings account — it increases its value faster each year.  

Another exciting thing about CLARIFIDE is that you pay for the test once, but can use the results multiple times over an animal’s lifetime. This creates undeniably higher profit potential from the decision to use CLARIFIDE testing.

The bottom line is, the more you use genomic information, the more profit and efficiency you can gain for your dairy now and in the future.

This topic is part of a seven-part webinar series developed by Zoetis and Holstein Association USA as an educational resource for current and prospective customers of CLARIFIDE and users of Enlight®.

1 Bruno R, Marti C. The role of genomics in heifer-raising programs. DairyBusiness. September 25, 2015. http://www.dairybusiness.com/dbc-story.php?id=167066&title=#sthash.h0sxpp1n.7dEUeFth.dpbs. Accessed January 26, 2016.

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