DairyNZ: Breeding shift may continue

High milk fat prices means farmers need to rethink breeding. Photo: Getty Images

Dairy farmers will need to think about their breeding choices to ensure they have a herd capable of producing milk with higher fat content to get the best returns, a new report says.

DairyNZ strategy and investment leader Bruce Thorrold released the report, which said shifts in bull breeding worth (BW) reflected an increase in the value of fat.

In what was the most significant change to global dairy trade in the last 20 years, milk fat would earn dairy farmers more than protein in the 2018-19 season.

Fat had been a low-value milk component, but it had seen a steady rise in recent seasons due to consumer-driven market value, Dr Thorrold said.

"That's a welcome change for New Zealand farmers who are set to receive a strong milk price, buoyed by the value of milk fat."

The changes in fat price had produced large shifts in BW, both between and within breeds. Of the top 200 bulls by BW, 70% were Jersey, 5% were Holstein-Friesian and 25% were cross-bred (Jersey and Holstein-Friesian), he said.

On average, Jersey bulls were increasing by $25 BW. Cross-bred and Ayrshire bulls were relatively unchanged, down $4 and $3 respectively.

Within breeds, individual bulls would shift up or down by as much as $40 BW relative to their breed average shift.

New Zealand Animal Evaluation, a wholly-owned subsidiary of Dairy NZ, administers the BW index, which is used to rank cows and bulls according to their ability to meet the national breeding objective of breeding dairy cows that would be the most efficient converters of feed into profit for farmers.

The economic values for fat and protein were calculated by partitioning the milksolids price into a value for fat and protein before accounting for the cost of producing each component. The value of fat relative to protein had been increasing for the past three seasons, and the trend was forecast to continue, Dr Thorrold said.

New Zealand was uniquely positioned to take full advantage of strong demand for fat-based milk products, due to the strong influence of Jersey genes in the national herd.

There was a high genetic variation in the trait in New Zealand dairy cattle which enabled farmers to respond quickly to market signals.

The milk prices used in BW lagged behind the market price because it looked out to smooth short-term changes.

"For breeding the national herd, we need a long-term view. If current fat prices are maintained, the shift in favour of high fat bulls will continue next year."

Calves born in spring 2019 would have the BW2019 values, he said.

Many farmers used semen from bull teams selected by breeding companies to help them breed the next generation of milking cows. The breeding companies were aware of the changes and were using them to help select the bulls they used in their teams.

DairyNZ was encouraging farmers to talk with their breeding companies to review whether the product they ordered was still meeting their needs.