WEBVTT 00:00:11.720 --> 00:00:15.060 Breaking free from the chains of the past Where 00:00:15.060 --> 00:00:18.820 truth moves faster than a Holstein calf No law 00:00:18.820 --> 00:00:21.660 waiting on some printed page We're charting new 00:00:21.660 --> 00:00:25.300 ground in the digital age From genomic codes 00:00:25.300 --> 00:00:29.120 to robot facts We cut through the noise, no hold 00:00:29.280 --> 00:00:32.460 them back not your daddy's dairy news tonight 00:00:32.460 --> 00:01:03.479 we're sparking Welcome back to the Bullvine Podcast, 00:01:03.740 --> 00:01:06.260 where we cut through dairy industry noise to 00:01:06.260 --> 00:01:08.719 get you the insights that actually matter for 00:01:08.719 --> 00:01:11.159 your operation. And today, we're diving deep 00:01:11.159 --> 00:01:13.359 into a feature piece about genetic alignment. 00:01:13.900 --> 00:01:16.420 This should honestly be mandatory reading for 00:01:16.420 --> 00:01:18.799 every producer. We're talking about the surprising 00:01:18.799 --> 00:01:21.659 gap between what the proof sheets promise and 00:01:21.659 --> 00:01:24.159 what your milk check delivers. Right. It's a 00:01:24.159 --> 00:01:26.700 gut check on profitability. And it's not about 00:01:26.700 --> 00:01:29.640 finding the highest ranked bull in the catalog. 00:01:30.409 --> 00:01:33.510 It's about something much more fundamental. It 00:01:33.510 --> 00:01:35.730 is the core paradox of modern dairy genetics. 00:01:36.030 --> 00:01:38.709 We're looking at hard data that shows the exact 00:01:38.709 --> 00:01:42.069 same genetic potential bull semen from the same 00:01:42.069 --> 00:01:46.329 tank can lead to a catastrophic $190 ,000 annual 00:01:46.329 --> 00:01:50.069 loss on one farm. Wait, hold on. $190 ,000? Annually. 00:01:50.170 --> 00:01:52.599 Yeah. While at the same time, it's generating 00:01:52.599 --> 00:01:56.799 a $57 ,000 margin gain on a farm of similar size, 00:01:56.900 --> 00:01:59.079 maybe just down the road. A six -figure swing 00:01:59.079 --> 00:02:01.819 based on genetics that are supposedly identical. 00:02:02.140 --> 00:02:04.500 That sounds almost impossible. We're all chasing 00:02:04.500 --> 00:02:06.680 the same indexes, aren't we? That's the myth 00:02:06.680 --> 00:02:08.900 we're busting today. The difference isn't the 00:02:08.900 --> 00:02:12.020 genetic quality. It's pure, simple alignment. 00:02:12.599 --> 00:02:15.520 The analysis we reviewed proves it pretty conclusively. 00:02:15.659 --> 00:02:17.939 Fit beats rank. Fit beats rank every single time. 00:02:17.979 --> 00:02:20.879 Okay, I'm listening. Because on the farm, we 00:02:20.879 --> 00:02:23.280 see it. The pace of genetic progress is accelerating 00:02:23.280 --> 00:02:25.680 for sure. The indexes are climbing. Genomic selection 00:02:25.680 --> 00:02:28.800 is doing its job. And yet, I agree. That gap 00:02:28.800 --> 00:02:31.699 between the top 10 % of profitable farms and, 00:02:31.759 --> 00:02:33.740 you know, the average guy seems to be getting 00:02:33.740 --> 00:02:37.560 wider. Why is that? Because, as the analysis 00:02:37.560 --> 00:02:40.060 puts it, we are paying for genetic potential 00:02:40.060 --> 00:02:43.080 that our specific farm system, our market contract, 00:02:43.180 --> 00:02:46.120 or our management practices simply cannot capture. 00:02:46.300 --> 00:02:48.939 So we're optimizing for a ghost market. Exactly. 00:02:49.060 --> 00:02:50.939 And that's where this quiet profitability drain 00:02:50.939 --> 00:02:53.060 starts. Let's set the stage because the context 00:02:53.060 --> 00:02:55.319 here is critical. This conversation about alignment 00:02:55.319 --> 00:02:57.560 couldn't be more timely, really. Things are always 00:02:57.560 --> 00:03:00.439 shifting. They are. And we just saw a major, 00:03:00.539 --> 00:03:03.620 major industry driver that forces this reevaluation. 00:03:04.099 --> 00:03:08.719 The USDA's April 2025 NM1 Net Merit Dollar Revision. 00:03:08.780 --> 00:03:11.879 That revision is key. It completely changes the 00:03:11.879 --> 00:03:14.860 goalposts. It fundamentally shifts the weighting, 00:03:14.879 --> 00:03:17.599 putting a much heavier emphasis on components 00:03:17.599 --> 00:03:20.319 and efficiency. It's essentially telling the 00:03:20.319 --> 00:03:22.979 industry that chasing pure volume is, well, it's 00:03:22.979 --> 00:03:25.000 an outdated strategy. And the stakes here are 00:03:25.000 --> 00:03:26.580 huge. We're not talking about small adjustments, 00:03:26.780 --> 00:03:29.080 are we? No, not at all. We're discussing what 00:03:29.080 --> 00:03:32.180 the sources call a quiet profitability drain. 00:03:32.750 --> 00:03:35.289 You invest 50 bucks in high merit semen. You 00:03:35.289 --> 00:03:37.389 spend two years raising that heifer. All that 00:03:37.389 --> 00:03:39.409 time, all that feed. And then you realize you 00:03:39.409 --> 00:03:42.449 optimized her for the wrong thing. That six figure 00:03:42.449 --> 00:03:45.389 annual loss on a moderate sized 600 cow herd 00:03:45.389 --> 00:03:49.590 or that potential $57 ,000 gain. That is the 00:03:49.590 --> 00:03:51.310 difference between reinvesting in infrastructure 00:03:51.310 --> 00:03:54.250 and just just fighting to hold on to the status 00:03:54.250 --> 00:03:56.090 quo. It's the difference between grinding and 00:03:56.090 --> 00:03:58.939 progressing. Absolutely. The psychological pressure 00:03:58.939 --> 00:04:01.919 of that quiet drain must be immense because the 00:04:01.919 --> 00:04:04.719 bulk tank looks full. Right. The tank is full. 00:04:04.800 --> 00:04:06.659 You think you're doing great, but the efficiency 00:04:06.659 --> 00:04:09.340 metrics are just slowly eating you alive from 00:04:09.340 --> 00:04:11.860 the inside out. Which brings us directly to the 00:04:11.860 --> 00:04:13.960 inherent controversy this deep dive explores. 00:04:14.300 --> 00:04:17.339 For decades, the dairy industry's focus, heavily 00:04:17.339 --> 00:04:19.879 influenced by AI -stud marketing, has been on 00:04:19.879 --> 00:04:22.209 one question. Which bull is best? Which bull 00:04:22.209 --> 00:04:24.829 is best, exactly. The analysis we reviewed challenges 00:04:24.829 --> 00:04:27.689 that premise entirely. The conversation has to 00:04:27.689 --> 00:04:30.509 shift to, which bull fits my system? You know, 00:04:30.610 --> 00:04:33.129 it sounds like common sense when you say it out 00:04:33.129 --> 00:04:36.370 loud. But we often ignore common sense when there's 00:04:36.370 --> 00:04:38.910 a huge NM1 number flashing at us on a monitor. 00:04:39.110 --> 00:04:41.509 We get seduced by the rank. Totally. And the 00:04:41.509 --> 00:04:44.250 sources also tease a massive long -term risk 00:04:44.250 --> 00:04:46.269 tied to this. It's about genetic concentration. 00:04:46.920 --> 00:04:49.319 We have to discuss why the most successful sires 00:04:49.319 --> 00:04:52.720 in recent memory, names like Mogul, Oman, Planet, 00:04:52.899 --> 00:04:55.779 Legends, they now actually pose the biggest systemic 00:04:55.779 --> 00:04:58.639 risk to the breed's overall diversity and long 00:04:58.639 --> 00:05:01.180 -term health. That's a real quantifiable cost, 00:05:01.379 --> 00:05:03.680 and we need to unpack how it hides in your conception 00:05:03.680 --> 00:05:06.420 rates and your feet and leg issues. That's terrifying. 00:05:06.800 --> 00:05:09.519 The success of a bull is measured by units sold, 00:05:09.660 --> 00:05:12.120 and that very success is exactly what leads to 00:05:12.120 --> 00:05:14.060 the long -term risk of inbreeding depression. 00:05:14.439 --> 00:05:16.990 It's a vicious cycle. It is, and we need to address 00:05:16.990 --> 00:05:19.129 it with practical strategies, not just academic 00:05:19.129 --> 00:05:21.790 warnings that we all file away somewhere. Okay, 00:05:21.829 --> 00:05:24.069 let's unpack this using the structural framework 00:05:24.069 --> 00:05:27.430 from the source material. The three interlocking 00:05:27.430 --> 00:05:30.810 gears. This is the foundational model for achieving 00:05:30.810 --> 00:05:34.310 alignment. I love this image. A machine only 00:05:34.310 --> 00:05:37.379 works smoothly when the gears mesh. If they don't, 00:05:37.379 --> 00:05:40.740 you get that expensive grinding friction. Gear 00:05:40.740 --> 00:05:42.920 one is genetics. That's your breeding program. 00:05:43.120 --> 00:05:46.860 What specific traits, volume, fat, protein, health, 00:05:47.019 --> 00:05:49.860 stature, calving ease, are you actively selecting 00:05:49.860 --> 00:05:52.879 for? Gear two is the market, your contract with 00:05:52.879 --> 00:05:54.459 your processor. What are they actually paying 00:05:54.459 --> 00:05:57.279 you for? Is it a fluid milk contract where volume 00:05:57.279 --> 00:06:00.899 is king? Or is it a class three or class four, 00:06:00.959 --> 00:06:03.660 plant cheese, butter? powder, where high components 00:06:03.660 --> 00:06:05.720 translate directly into premium checks. And then 00:06:05.720 --> 00:06:07.459 gear three is management. This is your physical 00:06:07.459 --> 00:06:09.720 system. Do you run a robotic milking system? 00:06:09.839 --> 00:06:12.019 Are you short on labor and need maximum longevity? 00:06:12.439 --> 00:06:14.980 Are your feed costs through the roof? Do you 00:06:14.980 --> 00:06:17.399 have high replacement costs? This gear defines 00:06:17.399 --> 00:06:19.459 the environmental constraints and the actual 00:06:19.459 --> 00:06:22.259 costs of your operation. And if those three gears, 00:06:22.379 --> 00:06:25.079 genetics, market, and management, don't mesh 00:06:25.079 --> 00:06:28.079 perfectly, you don't get smooth progress. You 00:06:28.079 --> 00:06:31.379 get grinding. And the sources give a fantastic, 00:06:31.620 --> 00:06:34.120 terrifying example of a herd where these gears 00:06:34.120 --> 00:06:37.139 were actively grinding, leading to massive financial 00:06:37.139 --> 00:06:39.560 loss. Let's do it. Let's dive deep into that 00:06:39.560 --> 00:06:44.019 specific case study, the $190 ,000 drain. So 00:06:44.019 --> 00:06:48.680 picture this, a 600 -cow Midwest free stall operation. 00:06:49.000 --> 00:06:52.350 Okay. The critical detail is their market. They 00:06:52.350 --> 00:06:55.910 ship Class III milk, primarily going to a cheese 00:06:55.910 --> 00:06:58.490 plant. So a high -component premium market. The 00:06:58.490 --> 00:07:00.730 market gear is literally screaming, we want solids, 00:07:00.829 --> 00:07:03.629 we need protein to maximize cheese yield. Exactly. 00:07:03.709 --> 00:07:06.850 Based on that November 2025 component price data 00:07:06.850 --> 00:07:09.750 we reviewed, protein was priced at over $3 per 00:07:09.750 --> 00:07:12.449 pound. $3. And butterfat was high too, at $1 00:07:12.449 --> 00:07:14.649 .71 a pound. That's where all the value is concentrated. 00:07:15.069 --> 00:07:17.069 But the genetics gear on this farm was spinning 00:07:17.069 --> 00:07:19.699 in the complete opposite direction. They had 00:07:19.699 --> 00:07:21.680 this legacy breeding program focused entirely 00:07:21.680 --> 00:07:24.660 on volume. Big, powerful production sires, just 00:07:24.660 --> 00:07:27.199 chasing high milk numbers year after year. The 00:07:27.199 --> 00:07:29.680 manager saw a full bulk tank and assumed everything 00:07:29.680 --> 00:07:32.120 was fine. But the component test must have told 00:07:32.120 --> 00:07:35.220 a different story. A brutal story. Their cows 00:07:35.220 --> 00:07:37.519 were optimized for volume, producing massive 00:07:37.519 --> 00:07:39.860 amounts of water and lactose alongside the solids. 00:07:40.100 --> 00:07:43.079 They were running a test of only 3 .6 % fat. 00:07:43.360 --> 00:07:46.560 Which is low. And a painful 2 .95 % protein. 00:07:46.819 --> 00:07:50.540 Oh, wow. 2 .95 let's just pause on that number 00:07:50.540 --> 00:07:53.910 that is a huge red flag it's massive The Canadian 00:07:53.910 --> 00:07:56.370 Dairy Information Center's 2024 data suggests 00:07:56.370 --> 00:07:59.389 that the average modern Holstein herd should 00:07:59.389 --> 00:08:03.810 be hitting around 4 .15 % fat and 3 .36 % protein. 00:08:04.029 --> 00:08:06.769 So this operation is dramatically behind the 00:08:06.769 --> 00:08:09.110 breed average on the one component that their 00:08:09.110 --> 00:08:11.250 processor rewards the most. They are essentially 00:08:11.250 --> 00:08:13.470 trying to make cheese with skim milk. They are 00:08:13.470 --> 00:08:15.870 optimized for a fluid milk check that disappeared 00:08:15.870 --> 00:08:18.209 10 years ago when they signed that Class 3 contract. 00:08:18.350 --> 00:08:20.720 It's the perfect misalignment. And the sources 00:08:20.720 --> 00:08:22.800 meticulously quantified where the money leaks 00:08:22.800 --> 00:08:26.699 out. First, protein. Running 2 .95 % protein 00:08:26.699 --> 00:08:30.519 instead of the 3 .2 % or 3 .3 % that other successful 00:08:30.519 --> 00:08:32.500 herds were achieving. Meant they were leaving 00:08:32.500 --> 00:08:36.740 roughly 75 to 90 cents per hundred weight on 00:08:36.740 --> 00:08:39.179 the table. Just on the protein premium alone? 00:08:39.480 --> 00:08:41.419 Just on protein. When you factor that volume 00:08:41.419 --> 00:08:44.639 over a whole lactation, what does that translate 00:08:44.639 --> 00:08:50.399 to? It's a staggering... 140 to 195 dollars per 00:08:50.399 --> 00:08:54.399 cow per lactation in foregone protein revenue 00:08:54.990 --> 00:08:57.409 That's money they earned but didn't collect because 00:08:57.409 --> 00:08:59.870 the genetic instructions were just wrong. Then 00:08:59.870 --> 00:09:02.830 you add the butterfat gap. That 0 .3 to 0 .4 00:09:02.830 --> 00:09:05.590 percent difference in fat test adds another 95 00:09:05.590 --> 00:09:09.750 to 125 dollars per cow per year in missed premiums. 00:09:09.750 --> 00:09:12.309 And this is where the third gear management starts 00:09:12.309 --> 00:09:14.309 to fail them as well, right? Right. Because they 00:09:14.309 --> 00:09:16.330 are selecting for high volume, low component 00:09:16.330 --> 00:09:19.730 cows. They are forcing the system, their feed, 00:09:19.909 --> 00:09:22.649 their metabolism, their labor to move more water 00:09:22.649 --> 00:09:25.830 through the cow to get the necessary. It creates 00:09:25.830 --> 00:09:28.629 a tremendous feed efficiency drag. They are literally 00:09:28.629 --> 00:09:31.370 investing feed dollars to move water, not to 00:09:31.370 --> 00:09:32.990 generate the higher component revenue the cheese 00:09:32.990 --> 00:09:35.230 plant is paying for. The cows are highly productive, 00:09:35.409 --> 00:09:38.549 but terribly inefficient for that specific contract. 00:09:38.889 --> 00:09:41.610 You stack all those losses up. The protein premium 00:09:41.610 --> 00:09:45.090 loss, the butterfat gap, and the drag from inefficient 00:09:45.090 --> 00:09:48.220 feed use. The estimated annual cost for this 00:09:48.220 --> 00:09:53.059 600 cow herd is approximately $150 ,000 to $190 00:09:53.059 --> 00:09:56.879 ,000. It's devastating. Almost $200 ,000 in revenue 00:09:56.879 --> 00:09:59.879 the processor was ready to pay. And the producer 00:09:59.879 --> 00:10:02.600 feels good because the tank is full. That's the 00:10:02.600 --> 00:10:05.240 nature of the quiet train. It's invisible until 00:10:05.240 --> 00:10:07.679 you analyze the component revenue share. Which 00:10:07.679 --> 00:10:09.960 brings up a critical definition we need to establish 00:10:09.960 --> 00:10:12.789 right now. we keep using the term component revenue 00:10:12.789 --> 00:10:15.330 share. For the producer driving the tractor, 00:10:15.509 --> 00:10:17.330 what is that, simply? It's just a percentage 00:10:17.330 --> 00:10:19.330 of your total monthly milk check that comes from 00:10:19.330 --> 00:10:21.929 component premiums, butterfat, and protein pounds, 00:10:22.090 --> 00:10:24.750 as distinct from the baseline fluid volume pay. 00:10:24.970 --> 00:10:27.250 So if you're selling into a high component market 00:10:27.250 --> 00:10:29.990 like this Class III plant, your component revenue 00:10:29.990 --> 00:10:33.320 share should be what? Well over 25%, maybe even 00:10:33.320 --> 00:10:36.019 pushing 30 % depending on the month. If you are 00:10:36.019 --> 00:10:40.039 chasing high NM mob bulls and your component 00:10:40.039 --> 00:10:43.039 revenue share is only 15%. You have just exposed 00:10:43.039 --> 00:10:45.940 your six -figure drain. That's it. I'm not willing 00:10:45.940 --> 00:10:48.379 to call the cows bad though. They were bred to 00:10:48.379 --> 00:10:51.120 produce high volume, and they succeeded. The 00:10:51.120 --> 00:10:53.320 issue is they were optimized for a fluid milk 00:10:53.320 --> 00:10:56.139 system that this specific operation no longer 00:10:56.139 --> 00:10:58.679 runs. We have to stop looking at the proof sheet 00:10:58.679 --> 00:11:01.000 in isolation and start looking at the market 00:11:01.000 --> 00:11:03.799 contract as the primary genetic filter. That 00:11:03.799 --> 00:11:06.080 lesson optimization for volume in a component 00:11:06.080 --> 00:11:09.139 market is a recipe for expensive grinding leads 00:11:09.139 --> 00:11:12.139 us directly to the indexes. It does. Because 00:11:12.139 --> 00:11:13.960 if our market check is telling us one thing, 00:11:13.960 --> 00:11:16.200 but our breeding program is following in a mother 00:11:16.200 --> 00:11:18.529 to the letter, We need to understand what that 00:11:18.529 --> 00:11:20.789 index is actually prioritizing. That's our next 00:11:20.789 --> 00:11:23.490 deep dive segment, Industry Reality Check, understanding 00:11:23.490 --> 00:11:25.769 what you are actually buying when you choose 00:11:25.769 --> 00:11:29.070 an NM Muller or TPI bull. These indexes, NMBU 00:11:29.070 --> 00:11:31.570 and TPI, they're necessary starting filters. 00:11:31.730 --> 00:11:34.470 We use them. But as the analysis points out, 00:11:34.509 --> 00:11:36.870 we have to treat them as tools with known biases, 00:11:37.070 --> 00:11:39.629 not as some religious text that guarantees profit. 00:11:39.950 --> 00:11:43.269 And that April 2025 NM war revision is the critical 00:11:43.269 --> 00:11:46.340 context here. Okay, let's unpack the USDA's philosophy 00:11:46.340 --> 00:11:50.879 behind NM2025. It is explicitly designed by the 00:11:50.879 --> 00:11:53.700 USDA's Animal Genomics and Improvement Lab to 00:11:53.700 --> 00:11:56.860 maximize lifetime profit. For an average U .S. 00:11:56.860 --> 00:11:59.480 Holstein herd. Selling into average market conditions. 00:11:59.820 --> 00:12:02.419 And that word average is the danger zone for 00:12:02.419 --> 00:12:04.539 specialized farms, isn't it? It is. The waiting 00:12:04.539 --> 00:12:07.019 tells the story of what the USDA sees as the 00:12:07.019 --> 00:12:10.120 future of profitability. Right. So the 2025 revision 00:12:10.120 --> 00:12:13.799 places a massive 31 .8 % emphasis on butterfat. 00:12:13.980 --> 00:12:18.149 31 .8. And 13 % on protein. And that it combines 00:12:18.149 --> 00:12:21.250 17 .8 % on feed saved. Which is your body weight 00:12:21.250 --> 00:12:24.269 composite and residual feed intake, or RFI. Exactly. 00:12:24.289 --> 00:12:27.110 That is a heavy structural lean toward components 00:12:27.110 --> 00:12:29.809 and metabolic efficiency. So what does that weighting 00:12:29.809 --> 00:12:32.409 tell you from a practical perspective? It tells 00:12:32.409 --> 00:12:35.429 me that the USDA recognizes that pure volume 00:12:35.429 --> 00:12:39.429 chasing is a mugs game. The future is concentrated 00:12:39.429 --> 00:12:42.350 product and efficient use of inputs. They're 00:12:42.350 --> 00:12:44.970 telling us that feed costs and components are 00:12:44.970 --> 00:12:47.250 the two biggest levers for the average operation. 00:12:47.590 --> 00:12:50.470 But let's compare that to the competition. TPI, 00:12:50.750 --> 00:12:53.210 Total Performance Index, is often the preferred 00:12:53.210 --> 00:12:55.629 index for operations that focus on selling breeding 00:12:55.629 --> 00:12:58.269 stock or show cattle. Yeah, and why is that? 00:12:58.730 --> 00:13:01.830 Because TPI places a higher value on confirmation, 00:13:02.370 --> 00:13:05.909 aesthetics, structural integrity. They need that 00:13:05.909 --> 00:13:08.990 cow to look good, last well, and be marketable 00:13:08.990 --> 00:13:10.830 to other breeders. It's not just about milking 00:13:10.830 --> 00:13:13.149 efficiently for cheese. Exactly. My neighbor 00:13:13.149 --> 00:13:15.269 who is selling embryos and breeding stock should 00:13:15.269 --> 00:13:18.110 probably use TPI because his market rewards appearance 00:13:18.110 --> 00:13:21.250 and deep pedigrees. I, however, am selling ingredients 00:13:21.250 --> 00:13:24.129 to a food company. So if you follow TPI, you 00:13:24.129 --> 00:13:26.190 might be paying for traits like mammary system 00:13:26.190 --> 00:13:28.490 depth that don't increase your component revenue 00:13:28.490 --> 00:13:30.990 one bit. Not one bit. And here's the key distinction 00:13:30.990 --> 00:13:33.629 for you listening. If I'm a producer in a fluid 00:13:33.629 --> 00:13:35.690 market in the Northeast with minimal component 00:13:35.690 --> 00:13:40.320 pay and I follow NM by religiously. That 31 .8 00:13:40.320 --> 00:13:43.519 % emphasis on butterfat could be steering me 00:13:43.519 --> 00:13:46.679 into paying a premium for a trait my market barely 00:13:46.679 --> 00:13:49.539 rewards. You're paying for semen that maximizes 00:13:49.539 --> 00:13:52.100 butterfat yield, but you're getting paid mostly 00:13:52.100 --> 00:13:54.940 on volume, a total mismatch. And conversely, 00:13:54.940 --> 00:13:57.460 if I'm that Midwest cheese plant operation from 00:13:57.460 --> 00:14:00.980 our first example, NM1 is helpful. but it might 00:14:00.980 --> 00:14:02.919 still underweight the protein component that 00:14:02.919 --> 00:14:05.279 drives my biggest revenue stream. It's a superb 00:14:05.279 --> 00:14:07.299 filter, but it doesn't replace the requirement 00:14:07.299 --> 00:14:09.720 to check the three years. This highlights that 00:14:09.720 --> 00:14:12.440 modern genetics are specialized tools, not universal 00:14:12.440 --> 00:14:15.100 solutions. We have to look at specific elite 00:14:15.100 --> 00:14:18.100 sires to understand the inherent costly trade 00:14:18.100 --> 00:14:20.659 -offs built into their genetics. The analysis 00:14:20.659 --> 00:14:23.740 gave three great contrasting examples. Let's 00:14:23.740 --> 00:14:27.679 start with de novo 2776 leads. He's massive in 00:14:27.679 --> 00:14:30.259 the industry. Huge. His value proposition is 00:14:30.259 --> 00:14:32.679 focused on reducing labor and calving interventions. 00:14:32.919 --> 00:14:35.659 Great calving ease. He traces back to the D. 00:14:35.700 --> 00:14:38.759 Sue Frazzled 6984 family, known for commercial 00:14:38.759 --> 00:14:41.340 functionality and easy births. You buy leads 00:14:41.340 --> 00:14:43.659 to reduce pooled calves and those nighttime labor 00:14:43.659 --> 00:14:46.899 calls. But what is the tradeoff? The sources 00:14:46.899 --> 00:14:49.039 note that leads has essentially flat components. 00:14:49.600 --> 00:14:52.399 And the physical reality of breeding for extreme 00:14:52.399 --> 00:14:55.259 calving ease? often means compromising structural 00:14:55.259 --> 00:14:57.879 integrity. Smaller, finer skeletal structure, 00:14:58.080 --> 00:15:00.799 narrower pelvis, things like that. So if my assisted 00:15:00.799 --> 00:15:03.419 births are already under 15 % because I have 00:15:03.419 --> 00:15:06.299 good labor and management, am I really benefiting 00:15:06.299 --> 00:15:08.899 from paying a premium for leads while sacrificing 00:15:08.899 --> 00:15:12.360 structure? Which might just lead to higher involuntary 00:15:12.360 --> 00:15:15.519 culling later on. Exactly. Probably not. The 00:15:15.519 --> 00:15:17.500 sources make a compelling case that the structural 00:15:17.500 --> 00:15:20.340 compromise or lower component test might cost 00:15:20.340 --> 00:15:22.820 me more in the long run than the $100 I save 00:15:22.820 --> 00:15:25.720 by not calling the vet to pull a calf. You have 00:15:25.720 --> 00:15:28.120 to analyze your specific management deficiencies, 00:15:28.159 --> 00:15:31.139 not just the index average. Okay, next up, DeNovo 00:15:31.139 --> 00:15:34.940 6856 Hotshot. He's explicitly focused on health, 00:15:35.120 --> 00:15:38.179 livability, and longevity, coming from that BOMAS 00:15:38.179 --> 00:15:41.840 perfect P line. Longevity is gold on paper. We 00:15:41.840 --> 00:15:43.759 all want a cow that lasts through five or six 00:15:43.759 --> 00:15:46.220 lactations, especially when replacement heifers 00:15:46.220 --> 00:15:47.919 are costing a fortune, which we know they are 00:15:47.919 --> 00:15:51.059 right now. But Hotshot is a moderate milk -proof 00:15:51.059 --> 00:15:54.759 bull, so the tradeoff is clear. If he's giving 00:15:54.759 --> 00:15:57.379 me six or eight pounds less milk per day than 00:15:57.379 --> 00:16:01.720 an alternative, do I actually win? Only if the 00:16:01.720 --> 00:16:04.720 cost savings from his longevity outweigh the 00:16:04.720 --> 00:16:06.779 lost revenue from lower production. And if my 00:16:06.779 --> 00:16:08.960 replacement costs are already low or if my feed 00:16:08.960 --> 00:16:11.500 costs are through the roof, that lower production 00:16:11.500 --> 00:16:14.100 proof might negate all his longevity benefits. 00:16:14.279 --> 00:16:16.480 You have to run the five -year math, the full 00:16:16.480 --> 00:16:19.200 economic analysis on those lower producing daughters 00:16:19.200 --> 00:16:21.840 to see if the specialization actually pays off 00:16:21.840 --> 00:16:24.570 in your specific system. And finally, a bull 00:16:24.570 --> 00:16:27.129 like Urzikari from Synetics. This is a hyper 00:16:27.129 --> 00:16:29.470 -specialized tool. He's explicitly optimized 00:16:29.470 --> 00:16:32.370 for robotic milking systems traits, like specific 00:16:32.370 --> 00:16:35.429 teat position, ideal udder balance, and superior 00:16:35.429 --> 00:16:37.970 locomotion for navigating the barn quickly. That 00:16:37.970 --> 00:16:39.830 is the epitome of the alignment principle. If 00:16:39.830 --> 00:16:43.309 I run a $1 .5 million robotic parlor, I absolutely 00:16:43.309 --> 00:16:46.330 need these specific traits. If Urzikari shaves 00:16:46.330 --> 00:16:49.309 30 seconds off every milking visit for 100 cows, 00:16:49.509 --> 00:16:52.850 that's huge. Massive labor savings. But if I 00:16:52.850 --> 00:16:55.769 run a conventional double -ape parlor, I am paying 00:16:55.769 --> 00:16:58.789 a premium for specific teat length or positioning 00:16:58.789 --> 00:17:01.649 that is utterly irrelevant to me. And you might 00:17:01.649 --> 00:17:03.649 be compromising on a component trait you desperately 00:17:03.649 --> 00:17:06.130 need just to get a robotic -specific feature. 00:17:06.289 --> 00:17:08.730 The takeaway here, for everyone listening, is 00:17:08.730 --> 00:17:12.069 that none of these elite Sires leads, Hotshot 00:17:12.069 --> 00:17:15.170 or Zocari, are universally optimal. They are 00:17:15.170 --> 00:17:18.069 specialized tools. And you must ensure the philosophy 00:17:18.069 --> 00:17:20.470 you are buying matches your economic reality. 00:17:21.150 --> 00:17:23.170 Now that we understand the cost of misalignment 00:17:23.170 --> 00:17:25.890 and the bias of the indexes, let's follow the 00:17:25.890 --> 00:17:28.049 money trail. This is where we see the immense 00:17:28.049 --> 00:17:31.210 economic potential of proper alignment, the quantified, 00:17:31.210 --> 00:17:34.569 repeatable $57 ,000 advantage. We have to start 00:17:34.569 --> 00:17:36.750 with component prices. They're volatile, but 00:17:36.750 --> 00:17:39.210 their long -term trend is undeniable. Solids 00:17:39.210 --> 00:17:43.529 pay. We saw that November 2025 AMS data, protein 00:17:43.529 --> 00:17:47.309 over $3 a pound, fat at $1 .71. That relationship 00:17:47.309 --> 00:17:49.980 flips sometimes. Butterfat was over $3 a year 00:17:49.980 --> 00:17:52.059 prior, but you have to breed for the long term. 00:17:52.299 --> 00:17:54.980 Absolutely. The long term global signal is clear. 00:17:55.519 --> 00:17:59.640 Demand for solids, butter, powder, cheese is 00:17:59.640 --> 00:18:03.940 structural. But the other massive lever. The 00:18:03.940 --> 00:18:05.900 one that is always there regardless of price 00:18:05.900 --> 00:18:08.299 volatility. Is feed efficiency. This is the biggest 00:18:08.299 --> 00:18:12.519 factor the NM 2025 revision targeted. Feed costs 00:18:12.519 --> 00:18:15.960 average a devastating 58 % of milk income, according 00:18:15.960 --> 00:18:19.720 to USDA data. 58%. 39 % for production, 19 % 00:18:19.720 --> 00:18:21.839 just for maintenance. You can move that needle, 00:18:21.920 --> 00:18:24.180 you win the game. And the NMU revision acknowledged 00:18:24.180 --> 00:18:27.900 this by placing 17 .8 % emphasis on feed saved, 00:18:28.119 --> 00:18:30.380 based on body weight composite and residual feed 00:18:30.380 --> 00:18:33.759 intake, or RFI. We can't just gloss over RFI. 00:18:33.779 --> 00:18:35.900 We need to explain what it is and why it matters 00:18:35.900 --> 00:18:38.339 so much. Okay, RFI is the metabolic efficiency 00:18:38.339 --> 00:18:40.869 of the cow. Think of it this way. You have two 00:18:40.869 --> 00:18:42.809 identical pickup trucks hauling the exact same 00:18:42.809 --> 00:18:44.890 load, say 5 ,000 pounds. Same distance, same 00:18:44.890 --> 00:18:47.029 load. But one trick is finely tuned and burns 00:18:47.029 --> 00:18:50.430 10 % less fuel to do the job. That saved fuel 00:18:50.430 --> 00:18:54.230 is RFI. In a cow, RFI is the difference between 00:18:54.230 --> 00:18:57.089 her expected feed intake, based on her size and 00:18:57.089 --> 00:19:00.690 production, and her actual feed intake. Selecting 00:19:00.690 --> 00:19:03.329 for negative RFI means you're selecting for a 00:19:03.329 --> 00:19:05.730 more efficient metabolism. A cow that gets the 00:19:05.730 --> 00:19:08.869 same job done, but uses fewer resources. The 00:19:08.869 --> 00:19:11.009 sources confirmed it has moderate heritability, 00:19:11.170 --> 00:19:14.609 about 0 .15 to 0 .25, meaning we can definitely 00:19:14.609 --> 00:19:17.109 make progress on it. Now let's get into the detailed, 00:19:17.230 --> 00:19:19.890 powerful calculation that proves Fitbit's rank. 00:19:20.130 --> 00:19:22.410 We're up. Comparing cow A, who is volume -focused, 00:19:22.589 --> 00:19:25.430 and cow B, who is component -aligned. And this 00:19:25.430 --> 00:19:28.750 is in a 500 -cow class 3 market, using those 00:19:28.750 --> 00:19:31.410 specific November component prices. Cow A is 00:19:31.410 --> 00:19:34.140 the volume cow. She gives 62 pounds a day. with 00:19:34.140 --> 00:19:37.940 lower components. 3 .7 % fat, 3 .0 % protein. 00:19:38.140 --> 00:19:40.500 Cow B is the component cow. She gives slightly 00:19:40.500 --> 00:19:43.599 less milk, 56 pounds a day, but is highly concentrated. 00:19:43.980 --> 00:19:47.519 4 .2 % fat, 3 .3 % protein. On the face of it, 00:19:47.599 --> 00:19:49.220 the volume cow looks like the winner, right? 00:19:49.299 --> 00:19:51.579 Yeah. More milk in the tank. But when we run 00:19:51.579 --> 00:19:53.880 the revenue calculation based on that Class 3 00:19:53.880 --> 00:19:59.039 contract, Cow A generates about $2 ,904 per lactation. 00:19:59.119 --> 00:20:04.039 And Cow B? Cow B generates $2 ,927 per lactation. 00:20:04.180 --> 00:20:06.319 So the component advantage for Cow B is only 00:20:06.319 --> 00:20:09.339 $23 per lactation. That's not what's going to 00:20:09.339 --> 00:20:12.160 convince a farmer to switch. No. The real magic 00:20:12.160 --> 00:20:14.660 happens on the cost side, where efficiency meets 00:20:14.660 --> 00:20:18.240 alignment. Precisely. Cow B produces less overall 00:20:18.240 --> 00:20:20.819 volume and higher concentration, which means 00:20:20.819 --> 00:20:23.779 she requires less dry matter intake over the 00:20:23.779 --> 00:20:26.859 lactation. The calculation showed Cow B requires 00:20:26.859 --> 00:20:31.660 375 pounds less DMI over 305 days to achieve 00:20:31.660 --> 00:20:34.079 that slightly higher revenue. Now we apply the 00:20:34.079 --> 00:20:37.230 cost. At the value used in the NM2025 feather 00:20:37.230 --> 00:20:41.369 calculation, 13 cents per pound of DMI at 375 00:20:41.369 --> 00:20:44.710 pounds saving. Translates to a $49 per lactation 00:20:44.710 --> 00:20:46.789 advantage for the component -aligned cow, cow 00:20:46.789 --> 00:20:48.990 B. That's double the revenue advantage just in 00:20:48.990 --> 00:20:51.269 feed savings. And here's where the NM War Vision 00:20:51.269 --> 00:20:54.190 really rewards us. We add in the RFI advantage. 00:20:54.869 --> 00:20:59.210 If cow B has just 3 % better residual feed intake, 00:20:59.549 --> 00:21:03.349 which is a conservative, achievable goal, that's... 00:21:03.549 --> 00:21:08.009 An additional 325 pounds of DMI saved. That nets 00:21:08.009 --> 00:21:11.789 another $42 per lactation. Wow. So the total 00:21:11.789 --> 00:21:14.990 advantage for the component line cow B is $23 00:21:14.990 --> 00:21:18.650 from revenue, plus 49 from baseline feed savings, 00:21:18.809 --> 00:21:23.369 plus 42 from RFI. It totals approximately $114 00:21:23.369 --> 00:21:26.670 per lactation. That is the core number. $114 00:21:26.670 --> 00:21:29.789 per cow achieved not by getting the highest price 00:21:29.789 --> 00:21:32.690 or having the most volume. But by buying the 00:21:32.690 --> 00:21:34.890 bull that aligns with their class three contract 00:21:34.890 --> 00:21:37.670 and focuses heavily on efficiency, scale that 00:21:37.670 --> 00:21:40.950 up to a 500 cow herd and you've unlocked a $57 00:21:40.950 --> 00:21:43.930 ,000 annual margin game. And that money goes 00:21:43.930 --> 00:21:46.009 straight to the bottom line because it's a structural 00:21:46.009 --> 00:21:48.250 efficiency improvement. And the analysis stresses 00:21:48.250 --> 00:21:50.289 the flip side, which brings us back to alignment. 00:21:50.410 --> 00:21:53.069 In a fluid market with minimal component pay, 00:21:53.230 --> 00:21:56.579 the math completely reverses. Coway's extra volume 00:21:56.579 --> 00:21:59.619 generates significantly more revenue and the 00:21:59.619 --> 00:22:01.880 feed efficiency advantage shrinks dramatically 00:22:01.880 --> 00:22:04.180 because you aren't capturing the component value. 00:22:04.400 --> 00:22:06.660 It underscores that you must calculate the return 00:22:06.660 --> 00:22:09.920 on investment for your specific contract. Efficiency 00:22:09.920 --> 00:22:14.519 is always a premium, but that $57 ,000 only materializes 00:22:14.519 --> 00:22:16.420 if the market is ready to pay for the concentration. 00:22:16.920 --> 00:22:20.339 The gears must mesh. They have to. That discussion 00:22:20.339 --> 00:22:23.130 on efficiency and component value proves that 00:22:23.130 --> 00:22:25.630 these market signals are not temporary blips. 00:22:25.670 --> 00:22:28.589 They are structural changes. Let's look forward 00:22:28.589 --> 00:22:30.930 to future implications. Because the global component 00:22:30.930 --> 00:22:33.750 shift is only accelerating. If we connect this 00:22:33.750 --> 00:22:36.609 to the bigger picture, we see that North America 00:22:36.609 --> 00:22:39.349 is following a global trend. Look at European 00:22:39.349 --> 00:22:41.789 and oceanic systems. We reviewed data from Ireland. 00:22:42.240 --> 00:22:45.299 Right. Where January 2025 milk fat content averaged 00:22:45.299 --> 00:22:49.940 4 .51 % and protein hit 3 .58%. That's a fundamentally 00:22:49.940 --> 00:22:52.160 different cow than the U .S. average. And New 00:22:52.160 --> 00:22:54.799 Zealand's Fonterra, a massive global exporter, 00:22:54.880 --> 00:22:57.220 bases its milk price on standardized benchmarks 00:22:57.220 --> 00:23:01.589 of 4 .2 % fat and 3 .4 % protein. That's a direct 00:23:01.589 --> 00:23:04.430 reflection of decades of component breeding required 00:23:04.430 --> 00:23:06.930 in their pasture -based system. Even more telling. 00:23:07.150 --> 00:23:10.529 Across the EU, the demand for fat pushed butter 00:23:10.529 --> 00:23:13.910 prices to record highs in early 2025, hitting 00:23:13.910 --> 00:23:17.329 over 7 ,000 euros per metric ton. Which was a 00:23:17.329 --> 00:23:21.309 36 .5 % increase over the previous year. Analysts 00:23:21.309 --> 00:23:24.990 are calling this fat. premium structural, not 00:23:24.990 --> 00:23:27.670 some temporary blip. This means every processor 00:23:27.670 --> 00:23:31.430 globally is going to demand more solids and concentrated 00:23:31.430 --> 00:23:33.529 product. And that means one thing for our listeners, 00:23:33.789 --> 00:23:36.150 processor contracts are tightening everywhere. 00:23:36.390 --> 00:23:38.910 If your herd is currently misaligned, the next 00:23:38.910 --> 00:23:41.450 contract renewal could be financially painful. 00:23:42.009 --> 00:23:44.630 We're seeing major regional shifts already, like 00:23:44.630 --> 00:23:47.029 the massive component pricing change coming to 00:23:47.029 --> 00:23:49.450 Western Canadian provinces. That change, effective 00:23:49.450 --> 00:23:52.829 April 1st, 2026, is a fundamental rebalancing 00:23:52.829 --> 00:23:55.670 of value moving the ratio from 85 % fat and 10 00:23:55.670 --> 00:23:59.569 % protein to 70 % fat and 25 % protein. Wait, 00:23:59.650 --> 00:24:03.210 hold on. 85, 10 to 70, 25. Yeah. That's not a 00:24:03.210 --> 00:24:05.509 nudge. That's a seismic shift toward protein 00:24:05.509 --> 00:24:08.049 value. If you're a Canadian producer who has 00:24:08.049 --> 00:24:10.390 been selecting for butterfat over protein for 00:24:10.390 --> 00:24:14.269 years, you have precisely one year to fix that 00:24:14.269 --> 00:24:16.769 genetic trajectory before the financial penalty 00:24:16.769 --> 00:24:19.809 hits hard. And the U .S. is following suit. Yeah. 00:24:19.930 --> 00:24:22.329 New processing capacity, especially new cheese 00:24:22.329 --> 00:24:25.329 and drying plants, comes with stricter non -negotiable 00:24:25.329 --> 00:24:28.029 contract requirements. The analysis suggests 00:24:28.029 --> 00:24:30.769 that today's direct contracts increasingly expect 00:24:30.769 --> 00:24:34.349 protein tests to be consistently above 3 .2%. 00:24:34.349 --> 00:24:36.509 So if your genetics have drifted toward that 00:24:36.509 --> 00:24:39.930 2 .95 % mark, as in our misalignment example, 00:24:40.230 --> 00:24:42.769 you're going to be scrambling to keep your component 00:24:42.769 --> 00:24:45.109 revenue share up. Genetic decisions made today 00:24:45.109 --> 00:24:47.869 must explicitly anticipate tomorrow's stricter 00:24:47.869 --> 00:24:50.289 contract standards two to three years down the 00:24:50.289 --> 00:24:52.589 road. And this structural tightening of the market 00:24:52.589 --> 00:24:55.250 directly impacts another major trend we see on 00:24:55.250 --> 00:24:57.670 the farm, the beef on dairy connection. Oh, yeah. 00:24:57.769 --> 00:24:59.609 Let's look at the data because it's staggering. 00:25:00.069 --> 00:25:03.309 7 .9 million units of beef semen were sold to 00:25:03.309 --> 00:25:06.309 U .S. dairy operations in 2024. That represents 00:25:06.309 --> 00:25:08.930 over 80 percent of all beef semen sales in the 00:25:08.930 --> 00:25:11.309 entire country. For the bottom tier of the herd, 00:25:11.369 --> 00:25:13.869 this is an aligned, profitable management decision. 00:25:14.150 --> 00:25:17.230 If a cow isn't productive enough or healthy enough 00:25:17.230 --> 00:25:20.809 to produce a high -value dairy replacement, you 00:25:20.809 --> 00:25:23.269 breed her to beef. You optimize your calf value 00:25:23.269 --> 00:25:26.309 and you reduce replacement raising costs. Beef 00:25:26.309 --> 00:25:28.670 on dairy crossbreds are an indispensable part 00:25:28.670 --> 00:25:31.250 of the Fed slaughter market now. But the critical 00:25:31.250 --> 00:25:34.069 structural issue here is the corresponding drop 00:25:34.069 --> 00:25:36.970 in dairy heifer inventory. The sources note that 00:25:36.970 --> 00:25:39.309 dairy heifer inventories are at 20 -year lows. 00:25:39.900 --> 00:25:43.640 2 .5 million head as of January 2025. Co -bank 00:25:43.640 --> 00:25:47.460 projects, we will have 357 ,000 fewer dairy heifers 00:25:47.460 --> 00:25:50.640 entering the herd in 2025. This creates a compounding 00:25:50.640 --> 00:25:53.579 risk. If you are using beef on over 40 % of your 00:25:53.579 --> 00:25:55.900 herd, which is the threshold cited in the analysis 00:25:55.900 --> 00:25:58.440 as a management red flag, you have made your 00:25:58.440 --> 00:26:00.660 genetic pool smaller. You must be absolutely 00:26:00.660 --> 00:26:02.400 certain that the replacements you are keeping 00:26:02.400 --> 00:26:05.059 come from only your top component aligned genetics. 00:26:05.460 --> 00:26:07.720 Accidentally breeding beef on a high merit component 00:26:07.720 --> 00:26:10.099 focused cow, the one you should be using to produce 00:26:10.099 --> 00:26:13.140 your next high performing replacement, is a devastatingly 00:26:13.140 --> 00:26:15.619 costly mistake. Especially given this current 00:26:15.619 --> 00:26:18.079 heifer shortage. That's the misalignment trap 00:26:18.079 --> 00:26:21.789 again. Using beef is smart. but using it on the 00:26:21.789 --> 00:26:24.609 wrong cow as a long -term profit killer. Due 00:26:24.609 --> 00:26:26.470 diligence is everything when your replacement 00:26:26.470 --> 00:26:29.109 numbers are this tight. You can't afford to make 00:26:29.109 --> 00:26:31.150 an expensive mistake that takes two years to 00:26:31.150 --> 00:26:33.950 discover. That structural pressure tightening 00:26:33.950 --> 00:26:36.849 markets and low heifer inventory pushes us directly 00:26:36.849 --> 00:26:39.759 into our contrarian take. the cost of genetic 00:26:39.759 --> 00:26:42.220 concentration. We have to challenge the popular 00:26:42.220 --> 00:26:45.400 narrative that faster genetic gains mean everything 00:26:45.400 --> 00:26:48.440 is fine. Genomic selection has been a miracle 00:26:48.440 --> 00:26:50.940 for increasing profitability traits, absolutely. 00:26:51.339 --> 00:26:53.859 But the analysis warns that it also sped up the 00:26:53.859 --> 00:26:56.420 concentration of the breed. We are focusing on 00:26:56.420 --> 00:26:59.579 fewer and fewer powerful family lines because 00:26:59.579 --> 00:27:02.329 they have proven high NML. The source's site 00:27:02.329 --> 00:27:04.250 estimates that the effective population size 00:27:04.250 --> 00:27:06.690 of Holsteins, which is a technical measure of 00:27:06.690 --> 00:27:09.990 genetic diversity, is only 66 to 79 animals. 00:27:10.130 --> 00:27:13.710 Wait, only 66 to 79 animals? Considering there 00:27:13.710 --> 00:27:15.630 are millions of Holsteins milking worldwide, 00:27:15.829 --> 00:27:18.529 that sounds incredibly low. It is, and the critical 00:27:18.529 --> 00:27:20.829 threshold for long -term adaptability concern 00:27:20.829 --> 00:27:23.730 is generally considered to be below 50. We are 00:27:23.730 --> 00:27:26.630 dangerously close. So why is that number so important? 00:27:26.869 --> 00:27:29.349 Why does low effective population size matter 00:27:29.349 --> 00:27:32.039 to the producer today? Because it's the breed's 00:27:32.039 --> 00:27:34.859 insurance policy. If diversity drops too low, 00:27:35.059 --> 00:27:37.619 the entire population becomes highly vulnerable 00:27:37.619 --> 00:27:40.619 to a new disease or a sudden, drastic environmental 00:27:40.619 --> 00:27:44.140 change. Say, an unexpected heat wave or a sudden 00:27:44.140 --> 00:27:46.859 shift in available forage quality. If every cow 00:27:46.859 --> 00:27:49.980 traces back to the same few ancestors, the whole 00:27:49.980 --> 00:27:53.099 herd is susceptible. It's a huge risk. That's 00:27:53.099 --> 00:27:56.619 terrifying. Dr. Chad Dexchau at Penn State has 00:27:56.619 --> 00:27:59.359 documented how rapidly genomic selection concentrates 00:27:59.359 --> 00:28:01.859 these genetics. The problem is insidious because 00:28:01.859 --> 00:28:04.059 when you request an outcross bull, you think 00:28:04.059 --> 00:28:05.579 you're getting something different. Once you 00:28:05.579 --> 00:28:08.180 unfold his pedigree far enough, he often traces 00:28:08.180 --> 00:28:11.480 back to the exact same influential sires. Mogul, 00:28:11.500 --> 00:28:14.160 O -Man, Planet, or Super Sire. This is the Mogul 00:28:14.160 --> 00:28:17.819 Paradox. Mountfield SSI DC Mogul exceeded 1 million 00:28:17.819 --> 00:28:20.799 units sold by age 7, a record. He was a phenomenal 00:28:20.799 --> 00:28:22.500 bull, and his daughters delivered production. 00:28:23.079 --> 00:28:26.019 But the sheer scale of his success means his 00:28:26.019 --> 00:28:28.200 genetics are now the foundation of the entire 00:28:28.200 --> 00:28:31.200 breed structure. And that level of market penetration 00:28:31.200 --> 00:28:34.039 means that when I buy a highly ranked bull today, 00:28:34.160 --> 00:28:37.099 I may just be deepening my inbreeding coefficient 00:28:37.099 --> 00:28:40.019 and increasing my connection to mogul. Rather 00:28:40.019 --> 00:28:43.200 than diversifying your gene pool, checking kinship 00:28:43.200 --> 00:28:45.660 data isn't being paranoid anymore. It is now 00:28:45.660 --> 00:28:49.500 absolutely essential due diligence. And the economic 00:28:49.500 --> 00:28:51.619 bite of this concentration isn't theoretical. 00:28:51.839 --> 00:28:54.160 It's being quantified right now. This is where 00:28:54.160 --> 00:28:56.619 it gets really interesting. The sources cite 00:28:56.619 --> 00:28:59.799 Italian research showing the hard cost. A 1 % 00:28:59.799 --> 00:29:02.380 increase in genomic inbreeding is associated 00:29:02.380 --> 00:29:06.980 with about 134 pounds, 61 kilograms less milk. 00:29:07.180 --> 00:29:10.019 134 pounds less milk per lactation for every 00:29:10.019 --> 00:29:12.920 1 % increase in inbreeding. And the losses are 00:29:12.920 --> 00:29:15.960 compounding year after year. hiding behind the 00:29:15.960 --> 00:29:18.359 overall positive genetic progress of the herd. 00:29:18.519 --> 00:29:20.480 German research confirms this trend. They're 00:29:20.480 --> 00:29:24.920 showing 32 to 41 kilograms less milk, 1 .4 to 00:29:24.920 --> 00:29:29.940 1 .7 kilograms less fat. And 1 .1 to 1 .3 kilograms 00:29:29.940 --> 00:29:34.400 less protein per 1 % increase. Plus, and this 00:29:34.400 --> 00:29:36.579 is the killer for management, calving intervals 00:29:36.579 --> 00:29:38.819 stretched by a quarter day. A quarter day seems 00:29:38.819 --> 00:29:41.619 small, but if you stack that up over a 600 cow 00:29:41.619 --> 00:29:44.599 herd year after year, That reduced fertility 00:29:44.599 --> 00:29:47.700 and stretched interval is a huge loss of efficiency. 00:29:48.180 --> 00:29:50.660 It's the definition of the quiet profitability 00:29:50.660 --> 00:29:53.180 drain we discussed earlier. The Wisconsin producer 00:29:53.180 --> 00:29:55.740 the sources quoted nailed this disconnect perfectly. 00:29:55.960 --> 00:29:58.240 He said, the daughters are producing more milk 00:29:58.240 --> 00:30:00.819 than their dams, so the genetic progress is real. 00:30:01.039 --> 00:30:03.740 But conception rates and feet and leg issues 00:30:03.740 --> 00:30:06.039 have gotten harder to manage. I'm not sure the 00:30:06.039 --> 00:30:08.539 net gain is as large as the proof sheets suggest. 00:30:08.940 --> 00:30:11.220 That, quote, perfectly encapsulates the cost 00:30:11.220 --> 00:30:13.559 of concentration. You are gaining on the production 00:30:13.559 --> 00:30:15.720 front, but you are losing ground on the health 00:30:15.720 --> 00:30:17.859 and fertility front, the management side. Due 00:30:17.859 --> 00:30:20.140 to concentrated genetics and inbreeding depression. 00:30:20.539 --> 00:30:22.640 So finding genuine diversity requires effort. 00:30:22.779 --> 00:30:25.480 You have to look outside the top 100 bulls. The 00:30:25.480 --> 00:30:28.440 analysis suggests actively looking at niche Holstein 00:30:28.440 --> 00:30:31.299 lines, legacy maternal lines like Hanover Hill, 00:30:31.519 --> 00:30:34.799 Meteor, or Durham. For 5 to 10 % of your matings. 00:30:34.799 --> 00:30:37.359 This maintains your options for the future. And 00:30:37.359 --> 00:30:39.819 crucially, this is where technology becomes affordable. 00:30:40.799 --> 00:30:44.279 For $40 to $50 per head, genomic testing your 00:30:44.279 --> 00:30:46.940 top -tier heifers isn't an optional expense anymore. 00:30:47.200 --> 00:30:50.059 It's a necessary investment to accurately track 00:30:50.059 --> 00:30:53.359 inbreeding, kinship, and ensure you are keeping 00:30:53.359 --> 00:30:56.099 the highest merit replacement. You can literally 00:30:56.099 --> 00:30:58.420 see which ones are too closely related to your 00:30:58.420 --> 00:31:00.880 sire battery. You remove the guesswork. You have 00:31:00.880 --> 00:31:04.619 to actively select and utilize one genuine outcross 00:31:04.619 --> 00:31:07.420 sire from an underrepresented maternal line, 00:31:07.539 --> 00:31:10.400 even if his NM mole isn't top five. That 5 % 00:31:10.400 --> 00:31:12.859 to 10 % investment in diversity is an insurance 00:31:12.859 --> 00:31:15.200 policy against future disaster. Okay, we've covered 00:31:15.200 --> 00:31:17.319 the problem, the cost of misalignment, the economic 00:31:17.319 --> 00:31:19.559 advantage, the market shifts, and the risk of 00:31:19.559 --> 00:31:21.980 concentration. Let's wrap this up with our actionable 00:31:21.980 --> 00:31:24.740 review. Focusing on a recovery story and a red 00:31:24.740 --> 00:31:27.839 flag checklist. The recovery story from the 550 00:31:27.839 --> 00:31:31.000 -cow Minnesota operation really brings this alignment 00:31:31.000 --> 00:31:33.400 concept home. It gives us hope. They were chasing 00:31:33.400 --> 00:31:36.640 high TPI for eight years using genetically sound 00:31:36.640 --> 00:31:39.700 bulls, but their protein tests slid from a respectable 00:31:39.700 --> 00:31:44.799 3 .25 % down to a painful 3 .05%. They realized 00:31:44.799 --> 00:31:48.240 they were leaving over $180 per cow annually 00:31:48.240 --> 00:31:50.779 in component revenue on the table because their 00:31:50.779 --> 00:31:53.119 genetics gear was simply wrong for their Class 00:31:53.119 --> 00:31:55.339 III market gear. They made a difficult pivot. 00:31:55.789 --> 00:31:57.910 changing their selection criteria. They filtered 00:31:57.910 --> 00:32:00.750 hard for positive protein deviation and strong 00:32:00.750 --> 00:32:03.490 component balance regardless of the overall TPI 00:32:03.490 --> 00:32:06.430 ranking. They were willing to sacrifice 50 or 00:32:06.430 --> 00:32:09.329 100 TPI points to achieve better alignment. And 00:32:09.329 --> 00:32:11.589 three years later, their protein test is back 00:32:11.589 --> 00:32:15.720 up to 3 .22%. And the manager's takeaway is exactly 00:32:15.720 --> 00:32:18.440 the lesson of this deep dive. He said, the genetic 00:32:18.440 --> 00:32:20.900 progress feels slower on paper. Our index rank 00:32:20.900 --> 00:32:23.440 isn't as high, but the mil check is bigger. That's 00:32:23.440 --> 00:32:25.119 the number that actually matters. That is the 00:32:25.119 --> 00:32:27.480 ultimate proof that fit beats rank. Measure the 00:32:27.480 --> 00:32:29.859 margin, not the index points. All right, let's 00:32:29.859 --> 00:32:32.039 turn this entire discussion into an immediate, 00:32:32.160 --> 00:32:34.720 actionable checklist for you. These are the five 00:32:34.720 --> 00:32:37.079 red flags that signal your three gears may be 00:32:37.079 --> 00:32:40.119 grinding right now. Red flag number one. Your 00:32:40.119 --> 00:32:43.579 fat or protein test has dropped 0 .2 % or more 00:32:43.579 --> 00:32:46.519 over three years, while you are selecting high 00:32:46.519 --> 00:32:49.180 enamel bowls that emphasize components. If you 00:32:49.180 --> 00:32:51.819 are paying a premium for component genetics and 00:32:51.819 --> 00:32:54.119 your components are decreasing, something is 00:32:54.119 --> 00:32:56.819 fundamentally wrong. You are losing component 00:32:56.819 --> 00:32:59.880 revenue you paid for. Red flag number two. Your 00:32:59.880 --> 00:33:02.599 component revenue share, that percentage of your 00:33:02.599 --> 00:33:05.779 total check from components, is under 20%, but 00:33:05.779 --> 00:33:07.720 you are heavily using component -focused tires. 00:33:08.319 --> 00:33:10.619 This means your market doesn't reward the genetics 00:33:10.619 --> 00:33:13.200 you are buying. You might be better off pivoting 00:33:13.200 --> 00:33:15.779 toward volume or balanced sires and stop paying 00:33:15.779 --> 00:33:18.420 that premium. Red flag number three. You cannot 00:33:18.420 --> 00:33:20.960 find a prospective sire with less than 8 % relationship 00:33:20.960 --> 00:33:24.160 to your core herd ancestors. That is the flashing 00:33:24.160 --> 00:33:26.920 warning sign that genetic concentration has narrowed 00:33:26.920 --> 00:33:29.319 your options too much. You need to actively look 00:33:29.319 --> 00:33:31.799 for outcrosses before inbreeding costs hit your 00:33:31.799 --> 00:33:34.339 conception rates and health. Red flag number 00:33:34.339 --> 00:33:37.099 four. Your processor has recently mentioned tightening 00:33:37.099 --> 00:33:40.000 component thresholds or premium structures. Look 00:33:40.000 --> 00:33:42.700 at the Western Canada shift. Look at the U .S. 00:33:42.700 --> 00:33:47.019 requiring 3 .2 % protein. If you hear these signals, 00:33:47.299 --> 00:33:49.740 your genetic decisions today must anticipate 00:33:49.740 --> 00:33:51.900 those stricter standards two years from now. 00:33:52.079 --> 00:33:55.569 And finally... Red flag number five. You're using 00:33:55.569 --> 00:33:58.829 beef genetics on over 40 % of your herd, but 00:33:58.829 --> 00:34:01.049 haven't genomic tested your dairy replacements. 00:34:01.230 --> 00:34:03.509 This is a massive risk in a tight heifer market. 00:34:03.730 --> 00:34:06.390 You are shrinking your genetic pool, so you must 00:34:06.390 --> 00:34:09.070 know precisely which cows hold the highest genetic 00:34:09.070 --> 00:34:11.809 merit for your future herd. Genomic testing removes 00:34:11.809 --> 00:34:14.030 the guesswork entirely. If you check two or more 00:34:14.030 --> 00:34:16.030 of those flags, you need a formal review of your 00:34:16.030 --> 00:34:18.110 breeding program's alignment immediately. All 00:34:18.110 --> 00:34:19.889 right, a farmer just finished milking and is 00:34:19.889 --> 00:34:22.369 driving to the feed store. What are the three 00:34:22.369 --> 00:34:24.590 core practical actions they need to remember 00:34:24.590 --> 00:34:27.329 from today, broken down into timelines? We've 00:34:27.329 --> 00:34:30.010 got three core actions for you. Market, genetics, 00:34:30.230 --> 00:34:32.829 and efficiency. First takeaway, know your market's 00:34:32.829 --> 00:34:36.130 reward. Remember, fit beats rank. Immediate action 00:34:36.130 --> 00:34:38.769 this week. Pull your last six milk checks and 00:34:38.769 --> 00:34:41.329 calculate your component revenue share. It's 00:34:41.329 --> 00:34:44.070 a five -minute exercise. If you are selling into 00:34:44.070 --> 00:34:48.139 a component market, aim for over 25%. If you're 00:34:48.139 --> 00:34:50.119 under 15, you're paying too much for genetics 00:34:50.119 --> 00:34:52.880 your market ignores. Medium -term strategy, three 00:34:52.880 --> 00:34:55.280 to six months. If misalignment is confirmed, 00:34:55.539 --> 00:34:57.900 review the weighting you give to NM -SYS versus 00:34:57.900 --> 00:35:00.679 volume or type traits. Don't abandon the index, 00:35:00.820 --> 00:35:03.780 but adjust your filters. Identify two alternative 00:35:03.780 --> 00:35:05.860 sire families that move away from your historical 00:35:05.860 --> 00:35:08.719 choices. Long -term positioning, one to two years. 00:35:09.230 --> 00:35:11.530 Ensure all your genetic decisions are anticipating 00:35:11.530 --> 00:35:14.309 tomorrow's contract. If your processor is clearly 00:35:14.309 --> 00:35:17.570 heading toward a strict 3 .2 % plus protein requirement, 00:35:17.889 --> 00:35:19.849 your replacement targets and genetic filters 00:35:19.849 --> 00:35:22.329 need to reflect that now. Second takeaway, manage 00:35:22.329 --> 00:35:24.769 genetic concentration. Inbreeding costs real 00:35:24.769 --> 00:35:27.110 dollars in lost fertility and health. Immediate 00:35:27.110 --> 00:35:29.190 action this week. Call your AI representative 00:35:29.190 --> 00:35:31.429 and request the genomic kinship data on your 00:35:31.429 --> 00:35:34.369 top five prospective sires. Flag any sire that 00:35:34.369 --> 00:35:36.750 shows an elevated relationship over 8 % to your 00:35:36.750 --> 00:35:39.500 core ancestors like Mogul or Oman. Medium term 00:35:39.500 --> 00:35:42.320 strategy, three to six months. Genomic test your 00:35:42.320 --> 00:35:45.920 top tier heifers. That $40 to $50 cost per head 00:35:45.920 --> 00:35:48.480 is instantly recovered if it stops you from breeding 00:35:48.480 --> 00:35:51.000 an inbred animal or steers you away from keeping 00:35:51.000 --> 00:35:53.159 a lower merit heifer. Long term positioning, 00:35:53.460 --> 00:35:56.000 one to two years. Actively select and utilize 00:35:56.000 --> 00:35:59.019 one genuine outcross sire from an underrepresented 00:35:59.019 --> 00:36:01.860 maternal line for five to 10 % of your matings. 00:36:01.920 --> 00:36:04.679 This is not an academic exercise. It's maintaining 00:36:04.679 --> 00:36:07.519 genetic options and health for your entire herd 00:36:07.519 --> 00:36:10.590 structure. And the third takeaway. Account for 00:36:10.590 --> 00:36:13.869 tradeoffs. Specialization costs money if it doesn't 00:36:13.869 --> 00:36:16.670 solve your specific high -cost problem. Immediate 00:36:16.670 --> 00:36:19.329 action this week. Review the five red flags in 00:36:19.329 --> 00:36:21.949 your current involuntary culling rate. If culling 00:36:21.949 --> 00:36:24.110 is high, you must prioritize health and longevity 00:36:24.110 --> 00:36:27.050 traits over small production gains. If calving 00:36:27.050 --> 00:36:30.230 is fine, don't overinvest in calving ease. Medium 00:36:30.230 --> 00:36:32.969 -term strategy. Three to six months. Run the 00:36:32.969 --> 00:36:35.230 full five -year economic math on a few TEF meetings. 00:36:35.449 --> 00:36:37.670 Account for production, components, replacement 00:36:37.670 --> 00:36:40.190 costs, and feed costs. Make sure the specialized 00:36:40.190 --> 00:36:41.969 trait you're buying actually pencils out in your 00:36:41.969 --> 00:36:44.849 system. Long -term positioning. One to two years. 00:36:45.409 --> 00:36:48.309 Integrate feed saved. Specifically, RFI traits 00:36:48.309 --> 00:36:51.789 heavily. Why? Because feed costs are 58 % of 00:36:51.789 --> 00:36:53.969 your income. That is the single largest leverage 00:36:53.969 --> 00:36:56.010 point for sustained profitability, regardless 00:36:56.010 --> 00:36:59.110 of market price fluctuations. Efficiency is always 00:36:59.110 --> 00:37:01.510 a guaranteed premium. This has been another Bullvine 00:37:01.510 --> 00:37:04.150 Podcast from the Bullvine Podcast. For more street 00:37:04.150 --> 00:37:08.230 -talking industry analysis, head to www .thebullvine 00:37:08.230 --> 00:37:10.980 .com. Subscribe wherever you get podcasts. We're 00:37:10.980 --> 00:37:12.679 out with new episodes every day, and upcoming 00:37:12.679 --> 00:37:15.360 topics will be exploring the new USDA data on 00:37:15.360 --> 00:37:17.420 forage quality trends and the economic impact 00:37:17.420 --> 00:37:19.960 of labor availability on parlor efficiency. You 00:37:19.960 --> 00:37:20.360 don't miss it.