Dairy cows

Cows feed at a dairy near Kuna, Idaho. American dairy farmers, distillers and drug makers have been eager to break into India, the world’s seventh-biggest economy but a tough-to-penetrate colossus of 1.3 billion people.

Breeding beef genetics onto dairy cows to create calves that are fully functional in the beef industry can provide an additional revenue stream for dairy producers.

Programs to do that have been in development for the past 10 years, and enthusiasm is growing.

Dairies and semen companies expect a large increase in beef-on-dairy calves coming to market in 2020 with rapid transition taking place over the next three to five years, said Don Close, Rabo AgriFinance senior animal-protein analyst and author of “Dairy Calves Get a Beef Makeover” report.

In the past, all dairy heifers were bred and calved and then producers determine which ones they wanted to keep to replace cows they would be culling. The ones they didn’t want to keep went to slaughter as used cows and into the ground beef supply and sirloin for secondary steakhouses, he said.

But technology and economic necessity are changing breeding practices on dairies. Producers aren’t keeping all their heifers for possible replacements. They’re selecting the top 30% of cows and using sexed semen to breed for replacements.

That opens up 70% of their cow herd for breeding with beef bulls to produce a calf that is attractive to cattle feeders and beef processors, he said.

“They are replacing calves that were often liabilities with animals that are creating value,” he said.

The beef-on-dairy crosses entering the beef production system are exceptionally uniform, grading at or above average with good yield. Compared to conventional dairy calves, they are more efficient at feed conversion, reach full weight three to four months earlier and have a higher percentage of red meat yield, he said.

It’s important to note that beef-on-dairy programs don’t create any more animals, he said.

“All cattle ultimately end up in the beef supply chain,” he said.

Dairy steers are already going into the fed-cattle stream. Adding dairy heifers to that stream will increase fed cattle supplies and tighten up supplies of grinding beef, but it will only cause a nominal change in total beef tonnage, he said.

He doesn’t see any price pressure on the beef production chain, he said.

When it comes to feeder cattle, the top tier of beef cow-calf operators won’t see any competition whatsoever, but the bottom end of cow-calf operators are likely to see more competition, he said.

Beef-on-dairy calves don’t bring as high a price as a straight beef calf, but they are often worth $100 to $150 more per head than a conventional dairy calf, he said.

“It certainly incentivizes dairies to go through the additional expense,” which is about $15 to $25 a head in extra newborn care and colostrum, he said.

With several years of low milk prices, producers have already eliminated any cost they could, and this opens up a new revenue stream, he said.

“The industry is still in a level of transition. But because of the premiums, it’s occurring rapidly,” he said.

It’s also the only program that breaks down the barriers between the beef and dairy sectors, he said.

Even when the industry was filling the gap in tight cattle supplies from 2012 to 2016 by feeding more Holstein steers, it was a lot like driving a square peg into a round hole. A straight Holstein steer takes an average of 335 days on feed to reach a finished weight, he said.

The beef-on-dairy crosses take about 170 days on feed, equivalent to a beef breed, he said.

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