Farmgate milk price: Putting a price on herd testing benefits

The Livestock Improvement Corporation (LIC) operations and service general manager Andrew Fear told the Herd 17 crowd in Bendigo last week the number of herd test samples in New Zealand dropped by about 2 million between 2014 and 2015, with LIC losing about 15 per cent of its business. This corresponded with farmgate payouts of NZ$4.40 a kilogram of milk solids in 2015 and $NZ3.90kg/MS in 2016.

Mr Fear said 70 per cent of New Zealand dairy farmers did herd tests.

“Falling volumes with high fixed costs equals a loss-making service,” he said of LIC’s position.

LIC took “substantial” costs of its business but made a loss for the first time in its 106-year history in 2015-16.

Mr Fear said LIC reshaped its communication, stopped talking in general terms and started talking specifically to individual farm businesses about the value of herd testing.

The focus was specifically on the cows which did not create value — the “robbers”.

Through analysis of herd test results, farmers could identify the value of each cow.

For example, one farm found its top-performing heifers earned $NZ349.91 on average each year more than those at the bottom. The top third heifers on this same farm earned 43.33 per cent more than the bottom third.

Mr Fear said it helped one farm identify there was a 136kg/MS difference between the top and bottom 25 per cent of the herd.

He said herd testing provided a good return on investment and represented a cost of only $NZ0.03 within the average farm working expenses on a New Zealand dairy farm.

Calculating a 183 per cent return on investment for four herd tests, Mr Fear said the tests would cost $NZ3592 in total with borrowing costs at $323 (9 per cent) for a 400-cow herd this season.

Benefits included a lower bulk milk somatic cell count worth $NZ3596; fewer “robbers” delivered a benefit of $NZ1689; and efficient feeding as a result of removing robbers contributed $NZ3350.

Overall benefits was $NZ11,080 for a net benefit of $NZ7165, or 183 per cent return on investment.


Source: WeeklyTimes



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