LIC chief executive Wayne McNee says the agritech co-operative's $70 million investment in genomics research and development is paying off.
"Genomics helps up predict which bulls will breed better. And it helps us do it more quickly," says McNee. "That means farmers can breed from a bull when he is younger."
"Traditionally we've had to wait until a bull has had daughters before we know how good he is. With genomics you can tell from before a bull is born whether he will be good. That means you can start using him as a sire as soon as he is mature. And you can use the first to sire other predictable bulls. This accelerates the rates of genetic gain quite significantly."
Using genomics takes about three years off the normal bull breeding cycle. McNee says on top of that benefit there is the knowledge the bull's sons will also be able to start breeding within a year.
"This is a real breakthrough for us. It gives a big step forward."
Now LIC research is moving on to the next stage. McNee says: "We're doing a lot more work on this in terms of identifying the traits of bulls. Producing less methane is part of that and also identifying bulls who sire cows that produce less nitrogen."
Genomics has a fast pay off for farmers because they see an accelerated gain in animal performance. Meanwhile LIC earns a return because it can charge farmers more.
This performance gain is vital. McNee says that after 20 or so years of increasing cow numbers in the New Zealand dairy herd, environmental restraints means numbers are now declining.
If we are going to have fewer cows, we need to make sure the ones we have are better. So breeding becomes more and more of a focus.
This year there will be 50,000 fewer cows. He predicts the numbers will continue to fall in coming years.
"If we are going to have fewer cows, we need to make sure the ones we have are better. So breeding becomes more and more of a focus. That's good for farmers and it is good for us."
Another step towards this goal is the Single Step Animal Model (SSAM). The project has been under way for some time, its commercial release was earlier this year. SSAM is a way of blending genomics with traditional breeding methods in a single step.
McNee says it has been peer reviewed both in New Zealand and overseas.
SSAM leads to a more efficient breeding programme because it gives farmers clearer information on the most profitable cows on their farm. This helps them make better breeding decisions.
The last year has seen a rise in demand for sexed semen, another technique to manage herds and make them more productive. It allows a farmer to choose a calf's sex and that gives farmers more flexibility.
McNee says sexed semen is widely used overseas, but until now has been less popular in New Zealand. In part this is because our dairy farms are free range. Animals live and feed outside on grass pastures. They lead more natural lives and that means farmers tend to do all the breeding in season. There is a short, six-week window. New Zealand farmers time births so cows are milking in the spring when grass is growing.
Overseas dairy cows are often housed in sheds which have similar conditions year round. They are fed continually and can get pregnant at any time. Our short breeding windows means there is a high demand for semen for that short time.
He says that farmers use sexed semen on their top cows and 95 per cent of the time they will choose a female calf. This accelerates the rate of genetic gain in a herd, but there are other benefits. When they don't need to produce a female calf, they will produce an animal that will go to dairy beef. This means there are less bobby calves.
Sexed semen is reliable, but it comes with a downside. McNee says the sexing process damages the semen. This means you get fewer inseminations from a bull. Another downside for LIC is that it doesn't own the technology. It has to pay an American company to do the work and that makes it more expensive.
LIC's Hoofprint index is a recent addition to the catalogue showing the bulls available for use in the mating season. It gives farmers an insight into a bull's ability to produce cows that have a lower environmental impact. The Hoofprint Index gives bulls a score which shows how they rank for methane and nitrogen efficiency.
"We recently employed Tony Fransen, a rural environmental specialist. He's been helping us focus on environmental impact," says McNee. "Last year we joined the Sustainable Business Council and the Climate Leaders Coalition. That's lead to a focus on our internal business being more efficient in use of fuel and water. At the same time we've looked at what we're offering farmers in terms of improving their environmental impact.
"The Hoofprint Index is a piece of work Fransen has done with our genetics team. It identifies the bulls that will be more likely to have a reduced environmental impact in both methane and nitrates. It's not a perfect tool, but it ranks on a scale of one to 10 the likely impact. This gives farmers another option when choosing the bulls to breed from. Genetics is a long game, it doesn't happen overnight, but if you combine the tools you can speed up the improvement."
McNee says farmers are keen to produce more efficient cows using these tools.
Every year LIC publishes sustainability information about the improved efficiency of dairy animals and the extra value that creates for farmers. McNee says: "As part of the work we're doing now with Fransen and our internal team we are starting integrated reporting.
"There will be a light touch this year where we will produce a sustainability report alongside our annual report that will focus on we are doing to help farmers.
"We've a good story to tell consumers about our industry with our grass-fed, mainly free-range cows. Most other countries' dairy industries are not like that."