Modelling
The lifetime profit of a dairy cow can be
described in the following general equation: milk income has to pay for her own daily milk
production cost while “paying back” her rearing
cost.
Profit = (output x price) – (input x price) – fixed
costs Lifetime profit margin
It must be kept in mind that modelling only
gives an indication of the effect of specific
factors on profit margins. When changing the
value of any of the factors, the final result
changes. Farmers should therefore develop a
model based on their own production system.
For this article an example of a Jersey cow
producing on average 6000 kg of milk over
the first four lactation periods in a pasture-
based system being fed 7 kg of concentrates
per day and delivering two heifer and two
bull calves, was used. The rearing cost of the
cow as a heifer was R9000 to 24 months of
age and the survival rate of heifers to first
calving was 75%. Other factors and prices
that were used included, a milk price of
R4.85/litre, feed cost at 70% of all production
costs, concentrate cost at R4.85/kg, pasture
cost at R1.50/kg, age at first calving of 24 months
and a 75% heifer survival to first calving. The
effect of lactation number and age at first
calving (AFC) on the lifetime profit margin of
cows is shown in the following figure.
The output for a cow refers to all the milk
produced during her lifetime plus the value
(at birth) of bull or heifer calves at each calving
event and the cow’s own salvage value at culling.
The input refers to all the costs required to
rear heifers to first calving plus all the feeding
and other production costs during the subse-
quent lactation and dry periods. The fixed
costs include all the infrastructure, interest,
etc. required to operate a dairy farm. Because
this differ among farms, herds producing the
same level of milk would have different profit
margins. This is not included in this exercise.
As the input of a cow’s lifetime production
starts as a heifer, it naturally follows that
rearing cost of heifers to first calving, age at
first calving, the number of heifers surviving
to first calving, culling age of heifers, the
mortality cost of heifers not reaching first
calving, would affect lifetime profit. Therefore, a
cow’s output starts on a negative basis because
of her rearing cost while during first lactation
Photo: Photography by Gillian