Economics of delayed replacement when cow performance is seasonal

Abstract

An optimal dairy cow culling and replacement model was developed; it included the option to delay entering heifers into the herd after cows were culled. The objective was to investigate whether leaving a slot temporarily vacant, to enter a heifer at a more favorable time of the year, could be economically advantageous when cow performance is seasonal. The goal of the optimization was therefore to maximize net return per slot per year. The model consisted of 3 modules: 1) a bioeconomic module to enter and calculate cow performance data and prices, 2) a replacement policy module based on dynamic programming to calculate optimal culling decisions for individual cows and when to enter heifers, and 3) a herd performance module based on Markov chains to calculate summary results for the herd. Results for the optimal culling policy under typical conditions in Florida showed that immediate replacement was economically advantageous throughout the year. However, for a nonoptimal culling policy, cows culled in May, June, and July would not be replaced by heifers until August. Realistic increases in seasonality or heifer prices, or lower milk prices, showed economic advantages of delayed over immediate replacement for both culling policies. The maximum advantage of delayed replacement of 486 price scenarios was $88 per slot per year; cows that left the herd in the early summer and spring were not replaced by heifers until the late summer. Delayed replacement was economically advantageous when fixed costs and net returns per slot were low and seasonality was high, which is the case for a portion of Florida dairy producers.