Welcome to the Bullvine Podcast, where we tear
apart dairy myths and rebuild them with data
-driven truth. Today, we're tackling the billion
-dollar question keeping every dairy producer
awake in 2025. Should you buy replacements, or
is that financial suicide? Heifer prices just
hit $412 for Segwit. Megadaries are hoarding
genetics, and your competitors are locking in
54 % savings by raising their own. This isn't
your grandfather's replacement math. It's a survival
equation where genomics meet robot feeders. We'll
expose why that $3 ,000 heifer purchase could
bankrupt your operation within two lactations.
You'll hear how Ontario producers are slashing
infertility rates by 41 % using genomic firewalls,
and we'll break down the three labor metrics
that separate profitable heifer programs from
money pits. Stick around. By the end of this
episode, you'll know exactly how to calculate
your break -even point using the BCRC calculator,
and why waiting six months could cost you $2
,810 per heifer in lost lifetime revenue. Let's
dig in. Well, hello there, you financially astute
dairy folks. If you've so much as glanced at
the recent auction results or maybe dared to
open your 2025 budget, you've likely felt that
tightening in the chest. Oh, yeah. Seeing what
replacement heifers are going for these days.
It's pretty eye -watering. Makes you wonder if
they're sprinkling gold dust on those feed rations,
doesn't it? It really does. It's a far cry from
just a few short years ago, that's for sure.
We're in territory that would have made even
the most seasoned dairy economist, well, raise
an eyebrow or two. Absolutely. And that's precisely
what we're unpacking for you today. You might
as well toss those old spreadsheets, the ones
comparing raising versus buying. Yeah, they're
probably out of date. Right out the window. The
game has seriously changed, and our deep dive
into the latest data suggests that in 2025, raising
your own replacements isn't just like... a smart
move. It could actually be the financial linchpin
of your whole operation. We're talking about
potentially uncovering some serious profit hiding
right there on your farm. Precisely. We're witnessing
a real confluence of factors here in this replacement
market. A perfect storm, you could call it. A
perfect storm, yeah. You've got these record
-breaking prices bumping right up against the
supply that is, quite frankly, shrinking faster
than ice in July. Shrinking is putting it mildly.
Let's throw some hard numbers your way just to
paint a clearer picture. We've got recent auction
data out of Ontario. Okay. For those heifers
tipping the scales at over 900 pounds, we're
seeing prices hitting $326 to $328 per hundredweight.
Averaging around $326 per 92 cents. Exactly.
That's definitely not chicken feed. No. And it
gets even more... shall we say, motivating. When
you look at the slightly lighter categories,
those 800 to 899 pound heifers, they're commanding
between $300 to $72 and $383 per hundredweight.
Okay. And the 700 to 799 pound group, well, brace
yourselves, we're looking at a range of $356
.07 all the way up to a jaw -dropping $407 .11
per hundredweight. Wow. And some sales even peaked
higher than that, around $412. So just to bring
that down to earth for a second. If you were
actually in the market for, say, a 900 -pound
heifer, you'd be looking at an outlay of roughly
$2 ,942, give or take. That's a substantial investment
for just one animal that hasn't even started
contributing to the milk tank yet. Exactly. It
really underscores the significant financial
pressure that buying replacements puts on producers
in today's market. And look, this price surge
isn't happening in a vacuum. No, it's tied directly
to supply. It's directly tied to the increasingly
tight supply of available heffles. Yeah, the
figures on heifer availability are genuinely
cause for concern. As of January 1st, 2025, the
number of dairy heifers expected to calf. Okay,
what are we looking at? It stood at 2 .5 million
head. Now that's down 0 .4 % year over year,
which doesn't sound huge, but here's the kicker.
That's the lowest number we've seen since the
USDA began tracking this specific data. Talk
about a historical low. Wow, lowest ever recorded
for expected calving? And the broader snapshot
isn't much more encouraging either. The total
count of dairy heifers weighing 500 pounds or
more registered at just 3 .914 million head.
That's a weight 9 % decrease from the previous
year. And that number. That's the smallest inventory
we've recorded since way back in 1978. Some of
you listening might actually remember 1978. It
feels like we're taking a step back in time,
but, you know, not in a good way for finding
replacements. And what's particularly eye -opening
is that even these historically low numbers might
be a bit optimistic. How so? Well, apparently
the USDA has made some rather significant downward
revisions to the inventory figures from previous
years. That's right. Between January 2023 and
January 2024, the agency revised the dairy replacement
numbers downwards by a staggering 371 ,600 head.
Wow. 371 ,000. Yep. That's an 8 .6 % reduction
that wasn't initially reflected in the reports.
It really emphasizes the severity of the supply
crunch we're in. So what's behind this Great
Heifer Vanishing Act then? Our sources point
pretty strongly towards the growing trend of
using beef semen on dairy cows. Ah, the beef
on dairy trend. It seems to be gaining traction
at a really impressive rate. It is indeed. As
James Wilson from Agritrends put it, it's taking
hold like shoppers looking to grab deals on a
Black Friday shopping spree. Yeah, that's a good
way to put it. And with overall beef cattle numbers
generally on a decline anyway, this move towards
beef on dairy looks like a trend with some real
staying power. It's not just a blip. Okay, so
recap. The cost of buying replacements is sky
high. Fewer and fewer heifers are available for
purchase. Which naturally leads us to the, well,
the multi -thousand dollar question. What about
raising your own? Exactly. Is it truly the financial
sweet spot in the current climate? Well, the
data certainly leans very heavily in that direction.
While those market prices for purchased heifers
have, you know, shot through the roof, the cost
of raising them on your own farm, provided you're
running a tight ship, offers a very, very compelling
alternative. Okay, let's get down to brass tacks
then. Let's look at those costs. According to
the Canadian Cow -Calf Cost of Production Network.
Good data source there. The average cost of raising
a replacement heifer back in 2023 was around
$2 ,904. Now that's an average figure, remember.
Right. And it includes everything, feed bills,
labor, those sometimes tricky to pin down opportunity
costs. Exactly. And as Dr. Sarah Johnson over
at the University of Gulf points out, when you
factor in, say, a typical 10 % open rate, and
you distribute those costs across the heifers
that actually get bred, the average cost per
bred heifer drops to approximately $2 ,382. Right,
$2 ,382. Now, hold on to your hats, folks, because
here's where it gets really interesting. When
we stack that $2 ,382 figure against those eye
-watering purchase prices we were just talking
about. Yeah, like that $400 plus per hundredweight
peak. Especially those 700 and 799 pound heifers
hovering around an implied $388 .81 per hundredweight
based on that peak. We're potentially looking
at cost savings at around 54%. 54%. Yeah. That's
not just a little bit of wiggle room in the budget.
That's a potential game changer. Absolutely.
I mean, 54 % cheaper, that's a massive difference
that can significantly bolster a farm's profitability.
That's the difference between a profitable year
and maybe a struggling one. For sure. And it's
really crucial to understand where those on -farm
raising costs actually come from. Right. Our
sources break it down pretty clearly. The biggest
chunk, a hefty 60%. 60. Wow. Is that opportunity
cost. Think of it this way. That calf you could
have sold for immediate cash. Yeah. It's now
an investment in your future herd. The opportunity
cost is basically the profit you forego today
for that future benefit. And in this market,
it looks like a very worthwhile trade -off. Seems
like it. Other significant cost components include
labor at about 9%, feed at 6%, machinery also
at 6%, and land around 5%. The rest is smaller
stuff, vet bills, building upkeep, you know.
Precisely. And while that opportunity cost might
seem large on paper, the current market dynamics
for replacement heifers really shift the whole
calculation in its favor. Okay, now let's zero
in on that labor piece. It's always a hot topic,
right? Around the coffee pot on any dairy farm.
Always. And it sounds like it's a real linchpin
when it comes to the financial viability of raising
your own replacements. Without a doubt. The research
from that Canadian cow -calf cost -to -production
network highlights a surprisingly wide range
in labor efficiency. Oh, really? Yeah, the average
is around 15 hours per cow annually, but some
farms are clocking in significantly more and
some significantly less than that benchmark.
Big variation. We even have a concrete example
here. Michael Thompson, who manages a 300 -cow
dairy up in Ontario. Okay, what did he find?
He managed to slash his labor costs by an impressive
40%. Forty percent. How? Simply by implementing
automated feeding systems and doing some strategic
grouping of their animals. That's a serious chunk
of time and money saved right there. It absolutely
is. And when you compare the numbers between,
say, high profit and low profit farms, the disparity
is really striking. High profit farms average
just 8 .8 hours of labor per cow per year. 8
.8. Whereas low -profit farms are labor away
for a hefty 23 .9 hours, almost three times as
much. Wow, that's huge. That difference in efficiency
translates directly to an average labor cost
difference of about $327 per cow. $327 per cow
just on labor difference. Which can represent
a significant 18 % of total production costs.
So yeah, getting a handle on labor efficiency
is absolutely paramount if you want to make raising
replacements a truly profitable venture. Okay,
so the potential for significant cost savings.
That's a major draw for raising your own heifers.
Clearly. Definitely. But our sources argue there's
an even more compelling advantage, something
that purchased heifers just, well, they can't
offer. Ah, now we're talking genetics. Exactly.
Unparalleled value of genetic selection through
genomics. This is where things get really exciting,
I think, and where raising your own replacements
truly shines. You have complete command over
the genetic makeup of your future herd. Right.
You're not just inheriting someone else's breeding
decisions. Or potentially they're less desirable
animals, let's be honest. Genomics isn't just
about, you know, fancier cows on paper. It translates
directly. Think about a 40 % reduction in heifer
losses, significantly higher conception rates.
That means more productive future generations,
faster return on your investment. Yeah, exactly.
We have a compelling example here from David
Williams, runs a 120 -cow dairy near Woodstock,
Ontario. He reported a remarkable 40 % reduction
in heifer losses and a huge improvement in conception
rates in his genomically selected heifers. Way
better than conventionally selected heifers.
Over 65 % conception in the genomic group versus
just 52 % in the others. That's a game changer
for future productivity. It truly is transformative.
Modern genomic testing has revolutionized herd
management. You look at the replacement head
for profit index, the RHPI. Right, the RHPI.
That's a key indicator. It weighs hybrid vigor
really heavily, about 80%. And then the other
20 % is split across seven key traits, efficiency,
growth, fertility, longevity, that kind of stuff.
And the impact of that RHPI score is pretty dramatic,
isn't it, when you look at the numbers? Absolutely.
Heifers with above average RHPI scores, they
demonstrated significantly lower open rates.
We're talking just 13 .7 % open. 13 .7, okay.
Compared to a considerably higher 23 .4 % in
the group with below average scores. So that's
almost a 10 percentage point difference. Exactly.
Which translates to approximately 9 more calves
per 100 replacement heifers you raise. That's
a level of productivity enhancement you simply
cannot guarantee when you buy off the shelf.
Okay. So for any dairy producers out there who
are still kind of weighing the pros and cons,
buy versus raise, our sources lay out three critical
questions you absolutely need to ask yourselves
before you make that call. These are fundamental
questions, really. They can steer that crucial
decision first. What is the true genetic potential
of the heifers you're thinking about buying?
As we've discussed, you know, they might be animals
that didn't quite fit into someone else's breeding
program. Could be culls, basically. Could be.
When you raise your own, you're in the driver's
seat of your own genetic roadmap. Exactly. Second
question. What does your current labor efficiency
actually look like? Be honest with yourself.
Right. Benchmark it. If you're consistently operating
above that average of, say, 15 hours per cow
annually, we mentioned, that's a bright red flag.
Yeah. Got to fix that first, maybe. You might
need to prioritize streamlining your labor practices
before fully committing to raising a significantly
larger number of heifers on your own. Makes sense.
And the third vital question. It revolves around
your feed cost advantage. Do you have the capacity,
the land, the equipment to grow your own high
quality forage? Because. Operations that can.
They typically realize substantial savings. We're
talking in the ballpark of 30 to 40 percent on
their feed costs compared to farms solely reliant
on purchased feed. 30 to 40 percent feed savings.
That's another huge lever to pull for profitability.
Huge. Okay. So once you've given those questions
some serious thought. It's also essential, they
say, to keep a close eye on some key performance
indicators, you know, to assess the success and
efficiency of your heifer program if you go that
route. Absolutely. Tracking these metrics provides
invaluable insights into the financial health
and, really, the long -term viability of raising
your own replacements. So what's a key one? One
crucial benchmark is the payback period. Essentially,
how many years does it take for a replacement
heifer to generate enough revenue to recoup her
development costs? Right. Makes sense. And our
sources indicate that analysis of Canadian benchmark
farms reveals a payback period ranging from roughly
five years. Five years for the really efficient
ones. Yeah, for the most efficient, low -cost
operations, up to around seven years. for those
with higher development costs. And Dr. Robert
Chen from the University of Manitoba highlights
something important here. Operations that can
keep those development costs under $2 ,400 per
heifer. Okay, under $2 ,400. They not only achieve
those quicker payback periods, but they also
gain greater resilience, more flexibility to
navigate market fluctuations. Good point. Another
key benchmark to consider is looking at the total
expense of replacements, but spread across your
entire milking herd. Right, the whole herd perspective.
That Canadian research suggests the average replacement
cost per cow was about $139 back in 2023. Okay,
$139 per cow. But there's a pretty considerable
range there. It can be as low as $50 per cow
or as high as $272. Wow, big range. It largely
depends on your herd's replacement rate and,
of course, the individual cost you have for developing
each heifer. Now, this widespread shortage of
heifers, it isn't just some random market blip,
is it? Doesn't seem like it. Our sources suggest
there's actually a strategic element at play
here. particularly among the very large dairy
operations. That's a very insightful point, as
the dairy sector continues its trend towards
consolidation. Which it definitely is. These
mega -dairies are increasingly recognizing the
sort of strategic imperative of maintaining control
over their own replacement pipeline. Why is that
so important for them? Well, it gives them greater
security, for one, and the autonomy to implement
their very specific genetic strategies without
being subject to the volatility and the high
prices of the open market. Jennifer Martinez,
she's an industry consultant, even suggests that
the top 5 % of producers are, in essence, kind
of locking down their genetic future. Securing
their genetic future, yeah. Which could, unfortunately,
widen the productivity gap between them and smaller
operations even further. It's a concerning dynamic,
for sure. And with milk margins projected to
remain pretty strong in 2025, around $13 .37
and 100 weights expected. Right. Those larger
operations that have a firm grip on their replacement
pipeline, they're really well positioned for
potential expansion. While smaller producers
might find themselves in a much tighter spot,
may be struggling to even maintain their herd
size because of the high cost and the limited
availability of replacements they can buy. Yeah,
tough spot. So, okay, if you do make the decision
to raise your own replacements, you absolutely
must be on your game when it comes to health
management. It sounds like investing in the well
-being, the survival of those heifers is just
critical. It's not just important, it's fundamental.
Yeah. a comprehensive health management program,
including a really well thought out vaccination
protocol that's... Non -negotiable. Non -negotiable.
It's essential for minimizing losses and maximizing
the return on your investment and raising those
valuable replacements. And the key vaccines they
specifically mention are for IBR. Infectious
bovine rhinotrichitis. BVD. Bovine viral diarrhea.
BRSV. Bovine respiratory syncytial virus. VI3.
Parainfluenza 3 virus. And those troublesome
clostridial diseases as well. Right. And the
timing of those vaccinations is... equally crucial.
You can't just do them whenever. Okay, so what's
the ideal schedule look like? Generally, an initial
round around four months of age, then booster
shots before weaning, another round at pre -breeding,
say, 13 to 16 months, and then a final set about
40 to 60 days before they're due to calve. This
strategic timing really helps build robust immunity
during those critical developmental stages. Gotcha.
It's also worth noting that even with maybe a
slight anticipated easing of feed prices in 2025.
Yeah, maybe a little dip. Labor costs still represent
a pretty significant portion of the heifer budget.
Around 15%, they estimate. 15 % just for labor
on heifers. Which really highlights the increasing
value of, well, automation. Things like robotic
feeders, health monitoring systems. They're rapidly
transitioning, aren't they, from being seen as
maybe luxuries? Right. To becoming pretty essential
tools for maintaining competitiveness, especially
with rising labor costs. That's spot on. These
technologies can significantly enhance labor
efficiency, like we talked about, and potentially
lead to earlier detection of health issues, both
of which contribute to a lower overall cost of
raising those replacements. Makes total sense.
Finally, let's touch quickly on long -term strategic
planning. What kind of annual replacement rates
should producers generally be aiming for to ensure
the long -term health and productivity of their
herds? Well, the ideal replacement rate can fluctuate
a bit, obviously, depending on your specific
herd goals, your culling strategies. But the
research generally suggests that the most efficient
operations maintain rates somewhere between 10
% and 14 % annually. 10 to 14%. Okay. And that
Canadian benchmark farm data backs this up. Low
cost operations averaged around 10 .4%. Medium
costs were at 12 .5%. And the higher cost operations
were around 13 .7%. So right in that sweet spot.
And modern reproductive technologies, things
like sexed semen and using beef semen strategically,
they can play a pivotal role in fine -tuning
those replacement strategies, right? Precisely.
Using sexed semen on your genetically superior
females, that allows you to generate a higher
percentage of potential replacements from your
absolute best cows. Focus the genetics. Exactly.
Conversely... Employing beef semen on your lower
merit cows does two things. It reduces the number
of dairy heifer calves you don't necessarily
need. Right. And simultaneously creates valuable
beef cross calves that can often command a premium
in the market. It's all about strategically managing
your breeding program. To optimize both your
replacement pipeline and the overall value of
all the calves produced on your farm. You got
it. Maximum value. So... When we put all these
pieces together, it really does appear that the
stars have kind of aligned for raising replacement
heifers in 2025. For some operations, yeah. At
least for those dairy farms that are, you know,
well managed, efficient, and really focused on
strategic breeding. That's the key takeaway,
I think. The combination of the super high purchase
prices and the really constrained availability
has created a genuinely favorable economic landscape
for raising your own replacements. Yeah. The
potential for significant cost savings is just
undeniable. And then you add the ability to implement
targeted genetic selection that offers a long
-term competitive edge you simply cannot buy.
That comparison our sources made really sticks
with you, doesn't it? Which one was that? The
purchased $3 ,000 heifer might need to produce...
a staggering 24 calves just to reach the breakeven
point 24 whereas a genetically superior home
-raised animal starts contributing to your bottom
line much much sooner it truly forces you to
ask the question doesn't it can producers really
afford not to be actively raising their own replacements
right now especially when especially when their
competitors are likely strategically building
future profitability through their own proactive
breeding programs as we speak yeah Definitely
some crucial points to ponder there, folks. So
the core message here seems clear. For well -run
dairy operations, raising your own replacement
heifers in 2025 presents some incredibly compelling
economic and genetic advantages. Huge advantages.
We're talking potential cost reductions of up
to, what was it, 54 %? Up to a remarkable 54
% compared to mine, yeah. Coupled with that invaluable
ability to steer your herd's genetic progress
through targeted selection. Absolutely. And we
strongly encourage you listening to carefully
evaluate those key questions we discussed earlier.
Your farm's genetic goals. Your current labor
efficiency. Be honest. And your feed cost advantages
or disadvantages. Put them in the context of
your own specific operation. And be sure to take
a close look at those crucial benchmarks for
heifer program success too. Understanding your
payback period and your total replacement cost
per cow. That can provide critical insights into
the efficiency and the profitability of whatever
strategy you're currently using. Ultimately,
it's about critically assessing your current
replacement strategies in light of these really
significant shifts we're seeing in the market.
The dairy landscape is constantly evolving and
making proactive, informed decisions in this
particular area. Replacements can have a profound
and lasting impact on your farm's future profitability
and its long -term sustainability. If today's
numbers shocked you, 388 does an 81 for 700 pound
heifers. 86 .3 % conception rates in top genomic
tiers, you need to act now. Raising replacements
isn't about nostalgia. It's about wielding data
like a scalpel. As David Williams proved with
his operation, homegrown heifers out -earn purchases
by 2 .7 lactations. The question isn't if you
should raise replacements, it's how fast you
can build your genetic firewall. Subscribe now.
Next week, we're exposing the robot feeder revolution.
saving Wisconsin Dairy's $261 heifer annually.
Until then, this is the Bullvine reminding you,
in the Dairy Game, you either crunch the numbers
or get crushed by them.