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 --> 00:01:03.409 we're sparking You know, if you were driving 00:01:03.409 --> 00:01:07.329 your truck and you suddenly realized your GPS 00:01:07.329 --> 00:01:10.049 was intentionally routing you the long way around. 00:01:10.349 --> 00:01:12.709 Like adding an extra 20 miles just for the fun 00:01:12.709 --> 00:01:15.390 of it. Exactly. Burning up your gas, adding miles 00:01:15.390 --> 00:01:17.969 to your tires, wasting your whole morning. And 00:01:17.969 --> 00:01:21.650 you find out it's doing this also. Some delivery 00:01:21.650 --> 00:01:24.430 company somewhere could avoid paying a toll on 00:01:24.430 --> 00:01:27.109 their end. Oh, man. I'd be absolutely furious. 00:01:27.269 --> 00:01:29.129 I mean, you'd probably pull over and throw that 00:01:29.129 --> 00:01:31.790 GPS right out the window. Right. Because you're 00:01:31.790 --> 00:01:34.230 the one footing the bill for someone else's efficiency. 00:01:34.670 --> 00:01:37.189 You would never, ever trust that screen again. 00:01:37.450 --> 00:01:39.409 No, of course not. You'd go back to relying on 00:01:39.409 --> 00:01:42.090 your own map or, you know, just your own knowledge 00:01:42.090 --> 00:01:44.370 of the local roads. You certainly wouldn't keep 00:01:44.370 --> 00:01:46.370 blindly following the blue line while your fuel 00:01:46.370 --> 00:01:49.230 gauge just drops to empty. Well, the crazy thing 00:01:49.230 --> 00:01:51.109 is when it comes to breeding dairy cows right 00:01:51.109 --> 00:01:54.269 now. Thousands of producers might be staring 00:01:54.269 --> 00:01:57.030 at a genetic GPS that is doing exactly that. 00:01:57.189 --> 00:01:59.730 Yeah, that's the scary part. Welcome back to 00:01:59.730 --> 00:02:01.609 the Bullvine Podcast, where we cut through the 00:02:01.609 --> 00:02:03.549 dairy industry noise to get you the straight 00:02:03.549 --> 00:02:05.989 -talking, no -BS insights that actually matter 00:02:05.989 --> 00:02:08.469 for your operation. And today we are doing a 00:02:08.469 --> 00:02:11.009 deep dive into a major feature piece from the 00:02:11.009 --> 00:02:18.770 Bullvine. It's called TPI 2026's $17 ,500 Protein 00:02:18.770 --> 00:02:21.449 Trap. Breeding Holsteins for a protein market 00:02:21.449 --> 00:02:23.349 that doesn't exist. And let me tell you, this 00:02:23.349 --> 00:02:25.370 is one of those deep dives that will fundamentally 00:02:25.370 --> 00:02:28.210 change how you look at the semen catalogs sitting 00:02:28.210 --> 00:02:30.250 on your desk. It really is. And, you know, to 00:02:30.250 --> 00:02:32.389 be clear, right out of the gate, this isn't just 00:02:32.389 --> 00:02:34.330 some abstract genetic theory. We aren't just 00:02:34.330 --> 00:02:36.169 talking about stuff that only matters to guys 00:02:36.169 --> 00:02:38.590 in lab coats. Right. This is real world impact. 00:02:38.889 --> 00:02:41.569 Exactly. We're talking about the brand new Holstein 00:02:41.569 --> 00:02:45.949 USA April 2026 TPI formula. TPI, or the Total 00:02:45.949 --> 00:02:47.969 Performance Index, is basically the gold standard 00:02:47.969 --> 00:02:50.379 that Practically everyone uses to rank Holstein 00:02:50.379 --> 00:02:52.960 genetics. And if you're following this new formula 00:02:52.960 --> 00:02:55.240 blindly like, if you're loading those top ranking 00:02:55.240 --> 00:02:57.560 bowls into your nitrogen tank just because they 00:02:57.560 --> 00:03:00.000 look great on a semen reps glossy slide deck. 00:03:00.039 --> 00:03:02.000 Which so many people do, by the way. Which they 00:03:02.000 --> 00:03:04.639 do. But our mission today is to show you why 00:03:04.639 --> 00:03:07.520 that exact strategy could be leaking thousands 00:03:07.520 --> 00:03:09.439 of dollars right out of your milk check over 00:03:09.439 --> 00:03:11.060 the next five years. Yeah, we're going to get 00:03:11.060 --> 00:03:12.919 into the hard math today. But we're going to 00:03:12.919 --> 00:03:15.580 do it in a way that translates directly to your 00:03:15.580 --> 00:03:18.379 farm's bottom line. Because the new TPI formula 00:03:18.379 --> 00:03:20.939 has shifted its production slice in a way that 00:03:20.939 --> 00:03:24.620 gives protein a massive 70 % leverage over fat. 00:03:25.060 --> 00:03:28.240 70 %? Which is wild, because they've done this 00:03:28.240 --> 00:03:30.919 despite the fact that your real -world class 00:03:30.919 --> 00:03:34.710 3 and 4 VMO checks... are paying you significantly 00:03:34.710 --> 00:03:37.469 more for fat right now. Exactly. So we are going 00:03:37.469 --> 00:03:40.569 to tease out what might be the biggest aha moment 00:03:40.569 --> 00:03:43.509 of the year. This index might actually be steering 00:03:43.509 --> 00:03:45.889 the Holstein breed to heavily benefit cheese 00:03:45.889 --> 00:03:49.710 processors while quietly, almost invisibly, sacrificing 00:03:49.710 --> 00:03:52.069 your farm's profitability. And looking at this 00:03:52.069 --> 00:03:54.289 from the practical farmer perspective, you know, 00:03:54.310 --> 00:03:55.770 the perspective of someone who actually has to 00:03:55.770 --> 00:03:57.990 pay the feed bills and navigate all this margin 00:03:57.990 --> 00:04:00.409 compression, my immediate reaction to reading 00:04:00.409 --> 00:04:02.889 this piece was, Pretty skeptical. Skeptical how? 00:04:03.150 --> 00:04:05.370 Like, what does this actually mean for my bulk 00:04:05.370 --> 00:04:07.789 tank and my actual milk check? Because at the 00:04:07.789 --> 00:04:09.629 end of the day, I don't get paid on a theoretical 00:04:09.629 --> 00:04:12.270 ratio. Right. You don't take a pretty genetic 00:04:12.270 --> 00:04:14.729 index score to the bank. Exactly. I get paid 00:04:14.729 --> 00:04:17.050 on total physical pounds of fat and protein shipped. 00:04:17.329 --> 00:04:20.329 Period. So we need to look at exactly what this 00:04:20.329 --> 00:04:22.550 new index is doing to those physical pounds. 00:04:22.750 --> 00:04:24.870 So let's break down exactly what happened with 00:04:24.870 --> 00:04:28.240 this 2026 QPI shift. Because the headlines from 00:04:28.240 --> 00:04:30.540 the Breed Association, well, they make it sound 00:04:30.540 --> 00:04:32.779 like a minor housekeeping update. Oh yeah, just 00:04:32.779 --> 00:04:34.759 a little tune -up. Nothing to see here. Right. 00:04:34.860 --> 00:04:38.100 The core issue here is the headline change in 00:04:38.100 --> 00:04:41.620 the formula's production slice. For years, they 00:04:41.620 --> 00:04:44.600 weighted protein and fat equally. It was 19 % 00:04:44.600 --> 00:04:48.199 protein and 19 % fat. What the industry calls 00:04:48.199 --> 00:04:52.319 the 1919 split. Perfectly balanced scale. Exactly. 00:04:52.889 --> 00:04:54.709 But the new formula shifts that weighting to 00:04:54.709 --> 00:05:00.629 24 % protein and 14 % fat. So 24 -14. Now, on 00:05:00.629 --> 00:05:02.610 the surface, if you're just skimming an industry 00:05:02.610 --> 00:05:04.790 press release, that looks pretty innocent, right? 00:05:04.930 --> 00:05:07.050 Oh, totally. It looks like a simple five -point 00:05:07.050 --> 00:05:09.490 tweak. You subtract five points of emphasis from 00:05:09.490 --> 00:05:12.250 fat. You add five points of emphasis to protein. 00:05:12.870 --> 00:05:14.790 What's the big deal? Right. It sounds like they 00:05:14.790 --> 00:05:16.730 are just fine -tuning the engine a little bit. 00:05:16.870 --> 00:05:20.009 But the math tells a wildly different, much more 00:05:20.009 --> 00:05:23.180 aggressive story. We really need to bust the 00:05:23.180 --> 00:05:25.660 myth right now that this is just a minor adjustment. 00:05:25.879 --> 00:05:28.579 Yeah, let's talk about the leverage because that's 00:05:28.579 --> 00:05:31.019 where the real story is. If you look at the leverage, 00:05:31.079 --> 00:05:33.360 which is the actual mathematical weight of one 00:05:33.360 --> 00:05:36.740 trade against another, the old protein to fat 00:05:36.740 --> 00:05:40.019 leverage was 19 divided by 19. Which equals exactly 00:05:40.019 --> 00:05:44.459 1 .0. Like I said, a balanced scale. One pound 00:05:44.459 --> 00:05:46.579 of protein pull equaled one pound of fat pull. 00:05:46.720 --> 00:05:48.819 But look at the new leverage. You divide 24 by 00:05:48.819 --> 00:05:52.360 14 and you get 1 .71. And that number, that 1 00:05:52.360 --> 00:05:55.740 .71, is the key to this entire trap. Break that 00:05:55.740 --> 00:05:57.699 down for us. What does that actually mean inside 00:05:57.699 --> 00:06:00.279 the formula? It means that inside the TPI formula, 00:06:00.620 --> 00:06:04.379 one pound of PTA protein, the predicted transmitting 00:06:04.379 --> 00:06:06.680 ability, which is basically the genetic baseline 00:06:06.680 --> 00:06:09.360 a bull passes down to his daughters. Right, his 00:06:09.360 --> 00:06:12.360 genetic potential. Yeah. So one pound of that 00:06:12.360 --> 00:06:16.139 PTA protein is now pulling like 1 .7 pounds of 00:06:16.139 --> 00:06:20.899 PTA fat. That is a 70 % increase in the leverage 00:06:20.899 --> 00:06:24.720 protein has over fat. It's a massive structural 00:06:24.720 --> 00:06:27.959 overhaul of how the breed is evaluated. And what's 00:06:27.959 --> 00:06:30.500 incredibly frustrating is that Holstein USA's 00:06:30.500 --> 00:06:33.160 own description of this change claims it is designed 00:06:33.160 --> 00:06:35.740 to yield, quote, additional pounds of fat and 00:06:35.740 --> 00:06:38.459 protein with slightly more emphasis on protein. 00:06:38.720 --> 00:06:40.980 Yeah, slightly is doing a whole lot of heavy 00:06:40.980 --> 00:06:43.579 lifting in that sentence. A 70 % increase in 00:06:43.579 --> 00:06:46.459 leverage is not slight, not by any definition. 00:06:46.759 --> 00:06:48.680 No, it's not slight at all. And let's translate 00:06:48.680 --> 00:06:50.759 this into born reality, because I have to push 00:06:50.759 --> 00:06:53.220 back hard on their claim that this creates additional 00:06:53.220 --> 00:06:56.160 pounds. Wait, doesn't create more pounds? No. 00:06:56.519 --> 00:06:59.300 This formula change isn't magically creating 00:06:59.300 --> 00:07:02.079 more total components out of thin air. It is 00:07:02.079 --> 00:07:05.180 redistributing the emphasis within a finite biological 00:07:05.180 --> 00:07:09.180 system. OK, so it's a tradeoff. Exactly. It forces 00:07:09.180 --> 00:07:12.819 you as a farmer to chase a protein to fat ratio 00:07:12.819 --> 00:07:16.160 AP over F ratio rather than total combined output. 00:07:16.480 --> 00:07:19.319 If you start selecting the bulls that this new 00:07:19.319 --> 00:07:22.620 TPI suddenly loves, you are actively moving your 00:07:22.620 --> 00:07:25.819 herd's component profile away from fat. Just 00:07:25.819 --> 00:07:28.279 to make a ratio look prettier on a piece of paper. 00:07:28.459 --> 00:07:31.160 Precisely. You are leaving fat pounds behind. 00:07:31.439 --> 00:07:33.579 Which brings up something I really need you to 00:07:33.579 --> 00:07:37.620 explain because the article mentions a... a biological 00:07:37.620 --> 00:07:40.500 trap hidden in this math. Yeah, this is the really 00:07:40.500 --> 00:07:42.600 fascinating part. Explain the biology to me. 00:07:42.680 --> 00:07:45.240 Why can't I just breed a cow that pumps out pure 00:07:45.240 --> 00:07:47.779 protein without the extra water? What is actually 00:07:47.779 --> 00:07:50.300 happening in the udder when we chase this protein 00:07:50.300 --> 00:07:52.680 ratio? That's a perfect question. Because we 00:07:52.680 --> 00:07:54.639 often talk about these genetic traits like when 00:07:54.639 --> 00:07:56.180 you're building a machine out of Lego bricks, 00:07:56.360 --> 00:07:58.319 you know, like you can just snap on more protein 00:07:58.319 --> 00:07:59.899 and take off some water. Right, like you're just 00:07:59.899 --> 00:08:02.800 adjusting dials on a dashboard. Exactly. But 00:08:02.800 --> 00:08:05.990 a cow is a biological organism. mammary gland 00:08:05.990 --> 00:08:08.810 physiology doesn't work like that inside the 00:08:08.810 --> 00:08:11.389 udder protein yield specifically the synthesis 00:08:11.389 --> 00:08:14.670 of casein is incredibly closely tied to milk 00:08:14.670 --> 00:08:17.069 volume through something called osmotic pressure 00:08:17.069 --> 00:08:19.290 osmotic pressure okay give me the plain english 00:08:19.290 --> 00:08:21.709 version of that basically when the cow's udder 00:08:21.709 --> 00:08:25.350 synthesizes milk it produces lactose And lactose 00:08:25.350 --> 00:08:27.889 acts as an osmotic draw. It physically pulls 00:08:27.889 --> 00:08:30.470 water into the udder to maintain the right concentration 00:08:30.470 --> 00:08:32.950 of fluids. Okay, so more lactose equals more 00:08:32.950 --> 00:08:35.809 water. Right. And protein synthesis happens alongside 00:08:35.809 --> 00:08:38.250 this process. The biological reality of the Holstein 00:08:38.250 --> 00:08:41.090 cow is that you cannot drastically increase the 00:08:41.090 --> 00:08:43.750 pounds of protein she produces without also dragging 00:08:43.750 --> 00:08:45.629 a significant amount of water along with it. 00:08:45.750 --> 00:08:48.299 Interesting. But fat is different. Yeah, fat 00:08:48.299 --> 00:08:49.860 is totally different. Fat is synthesized and 00:08:49.860 --> 00:08:51.419 secreted differently. You can actually breed 00:08:51.419 --> 00:08:54.360 a cow to produce a much denser, higher fat milk 00:08:54.360 --> 00:08:57.139 without dramatically increasing her total fluid 00:08:57.139 --> 00:08:59.240 volume. So that's why we've been able to breed 00:08:59.240 --> 00:09:02.500 these incredibly efficient component maker Holsteins 00:09:02.500 --> 00:09:06.200 over the last 10 years that give like a 4 .5 00:09:06.200 --> 00:09:09.279 or 5 .0 percent fat test. Exactly. We've made 00:09:09.279 --> 00:09:11.600 massive strides there. But if I'm understanding 00:09:11.600 --> 00:09:13.919 this new formula right, if I aggressively select 00:09:13.919 --> 00:09:18.029 for protein over fat. Using this new 1 .71 leverage, 00:09:18.309 --> 00:09:21.570 I'm not just tweaking the solids. Right. What 00:09:21.570 --> 00:09:23.850 are you actually doing to the cow? I'm inadvertently 00:09:23.850 --> 00:09:26.789 telling the cow's biology to pump more water. 00:09:27.110 --> 00:09:30.269 When you chase a high protein to fat ratio, you 00:09:30.269 --> 00:09:33.710 are subtly but surely nudging your entire herd 00:09:33.710 --> 00:09:36.169 toward becoming higher volume fluid style cows. 00:09:36.669 --> 00:09:38.769 Wow. So you're actively selecting for the kind 00:09:38.769 --> 00:09:41.289 of big water pumping cow we had 15 or 20 years 00:09:41.289 --> 00:09:44.750 ago. Yes. Instead of the dense, highly feed efficient 00:09:44.750 --> 00:09:47.830 component maker we actually need today. And remember, 00:09:47.909 --> 00:09:49.950 it takes a lot more feed energy to maintain that 00:09:49.950 --> 00:09:52.350 larger fluid volume. So if enough commercial 00:09:52.350 --> 00:09:54.990 dairymen do this over the next decade, just because 00:09:54.990 --> 00:09:57.750 they're blindly following the TPI rankings? We're 00:09:57.750 --> 00:10:00.470 literally re -steering the entire U .S. Holstein 00:10:00.470 --> 00:10:03.409 breed backwards in a dairy market that is almost 00:10:03.409 --> 00:10:06.039 entirely driven by component pricing. That is 00:10:06.039 --> 00:10:08.799 a fascinating way to look at it. Trying to maximize 00:10:08.799 --> 00:10:11.620 protein without fat is like, I don't know, trying 00:10:11.620 --> 00:10:14.519 to tune a heavy diesel tractor to run like a 00:10:14.519 --> 00:10:17.039 Ferrari. Huh. Yeah, exactly. You might get the 00:10:17.039 --> 00:10:19.139 raw speed on the straightaway, but you completely 00:10:19.139 --> 00:10:21.860 destroy your torque. And torque is what actually 00:10:21.860 --> 00:10:25.279 pulls the plow. In dairy terms, total combined 00:10:25.279 --> 00:10:28.590 fat and protein is your torque. That's a great 00:10:28.590 --> 00:10:31.509 analogy. You're sacrificing the fundamental pulling 00:10:31.509 --> 00:10:34.690 power of your herd's genetics for a flashy metric 00:10:34.690 --> 00:10:36.889 that doesn't actually do the work you need it 00:10:36.889 --> 00:10:39.289 to do. But theory and biology are one thing. 00:10:39.509 --> 00:10:41.889 To see the real damage, we need to look at what 00:10:41.889 --> 00:10:44.309 happens to a standard commercial herd over five 00:10:44.309 --> 00:10:46.809 years of making these genetic decisions. Right. 00:10:46.889 --> 00:10:49.429 We need to follow the money. Exactly. And the 00:10:49.429 --> 00:10:52.610 bullvine piece laid out a fantastic, deeply detailed 00:10:52.610 --> 00:10:55.190 composite case study of a producer named Mark 00:10:55.190 --> 00:10:58.070 H. Let's walk through this because this isn't 00:10:58.070 --> 00:11:00.269 just a math problem. This is reality playing 00:11:00.269 --> 00:11:02.730 out at kitchen tables across the country. Yeah. 00:11:02.950 --> 00:11:05.850 Mark's operation is a perfect baseline. He runs 00:11:05.850 --> 00:11:09.230 a 500 -cow Holstein dairy in New York. He's got 00:11:09.230 --> 00:11:12.129 a very solid, well -managed commercial herd. 00:11:12.490 --> 00:11:15.129 They aren't doing anything crazy, just good, 00:11:15.230 --> 00:11:17.029 consistent dairy farming. What are his current 00:11:17.029 --> 00:11:19.509 numbers looking like? His herd average is 26 00:11:19.509 --> 00:11:24.090 ,700 pounds of milk. They are making 1 ,070 pounds 00:11:24.090 --> 00:11:28.809 of fat and 840 pounds of protein per cow per 00:11:28.809 --> 00:11:31.029 year. Okay, so if you break that down into percentages, 00:11:31.149 --> 00:11:35.590 that's roughly a 4 .0 % fat test and a 3 .1 % 00:11:35.590 --> 00:11:38.440 protein test. Very realistic. Highly relatable 00:11:38.440 --> 00:11:41.059 numbers for a modern U .S. dairy. So picture 00:11:41.059 --> 00:11:43.080 Mark sitting down at his kitchen table with his 00:11:43.080 --> 00:11:45.139 genetics advisor. They've got the laptop open, 00:11:45.240 --> 00:11:47.899 the new 2026 sire summaries are out, and they 00:11:47.899 --> 00:11:50.240 game out two different futures for his herd over 00:11:50.240 --> 00:11:52.519 the next five years. Right. Same herd of cows 00:11:52.519 --> 00:11:54.779 today, but they're going to model two totally 00:11:54.779 --> 00:11:58.200 different sire selection paths from 2026 to 2030. 00:11:58.539 --> 00:12:01.480 Path one is what the article calls the TPI ratio 00:12:01.480 --> 00:12:04.039 chase. What does that actually look like in practice 00:12:04.039 --> 00:12:06.639 for Mark? This is the path where Mark listens 00:12:06.639 --> 00:12:09.720 to the industry buzz. His rep tells him, hey, 00:12:09.860 --> 00:12:13.019 TPI is heavily awaiting protein now. You really 00:12:13.019 --> 00:12:15.419 need to get ahead of this trend. So he leans 00:12:15.419 --> 00:12:19.220 right into the new 24 -14 signal. Exactly. He 00:12:19.220 --> 00:12:21.759 filters his sire list and picks the bulls that 00:12:21.759 --> 00:12:25.299 look fantastic on the new TPI rankings. Biologically, 00:12:25.480 --> 00:12:28.960 these bulls have high PTA protein, but only moderate 00:12:28.960 --> 00:12:32.190 PTA fat. And crucially, they're... predicted 00:12:32.190 --> 00:12:34.529 transmitting ability for the protein to fat ratio 00:12:34.529 --> 00:12:39.889 is 0 .60 or higher. Right. They are protein specialists. 00:12:40.269 --> 00:12:42.750 And the article maps out the conservative genetic 00:12:42.750 --> 00:12:45.549 gains of this strategy over five years. You have 00:12:45.549 --> 00:12:47.250 to factor in the lag, right? Yeah. You buy the 00:12:47.250 --> 00:12:49.429 straw today, but it takes nearly three years 00:12:49.429 --> 00:12:51.289 before that daughter is in the milking string 00:12:51.289 --> 00:12:53.169 actually producing your own components. So over 00:12:53.169 --> 00:12:55.490 a five -year period of consistently picking bulls 00:12:55.490 --> 00:12:57.889 this way, this strategy adds about 15 pounds 00:12:57.889 --> 00:13:00.450 of fat and 20 pounds of protein to the average 00:13:00.450 --> 00:13:04.009 cow's annual yield. So by year five, Mark's average 00:13:04.009 --> 00:13:07.649 cow is producing 1 ,100 pounds of fat and 880 00:13:07.649 --> 00:13:10.399 pounds of protein. And if we look at the total 00:13:10.399 --> 00:13:14.000 components, what we call total CFP, or combined 00:13:14.000 --> 00:13:18.220 fat and protein, that cow is now making 1 ,980 00:13:18.220 --> 00:13:21.019 pounds of CFP. And hey, if you look at the ratio, 00:13:21.200 --> 00:13:23.879 the index is absolutely thrilled. The herd's 00:13:23.879 --> 00:13:26.860 protein to fat ratio has climbed to a very pretty 00:13:26.860 --> 00:13:30.360 0 .80. Right, Mark's rep is giving him high fives. 00:13:30.360 --> 00:13:32.980 The herd looks incredibly progressive on paper. 00:13:33.200 --> 00:13:36.279 The index is happy. The paper cows look great. 00:13:36.679 --> 00:13:38.620 But now let's look at path two. We'll call this 00:13:38.620 --> 00:13:41.980 the total CFP anchor. This is the boring path. 00:13:42.139 --> 00:13:44.980 Really boring path. In this timeline, Mark ignores 00:13:44.980 --> 00:13:47.639 the new TPI noise entirely. He tells his rep 00:13:47.639 --> 00:13:50.460 to put the glossy catalog away. Instead, he filters 00:13:50.460 --> 00:13:53.059 bulls using an economic index that actually starts 00:13:53.059 --> 00:13:55.299 with real world dollars and cents. And he sorts 00:13:55.299 --> 00:13:57.500 them by pure combined fat plus protein pounds. 00:13:57.879 --> 00:13:59.379 He doesn't care about the leverage shift at all. 00:13:59.440 --> 00:14:02.139 He deliberately keeps the Sire ratio in a sane, 00:14:02.279 --> 00:14:07.899 balanced band of 0 .5, 0 to 0 .60. And this is 00:14:07.899 --> 00:14:10.899 exactly where the divergence happens. When you 00:14:10.899 --> 00:14:13.399 run the genetic progress numbers on path two 00:14:13.399 --> 00:14:17.460 over those same five years, it adds 22 .5 pounds 00:14:17.460 --> 00:14:20.980 of fat and 17 .5 pounds of protein. Okay, so 00:14:20.980 --> 00:14:24.700 by year five, this cow is making 1115 pounds 00:14:24.700 --> 00:14:29.240 of fat and 875 pounds of protein. Her total combined 00:14:29.240 --> 00:14:33.620 fat and protein is 1990 pounds. So let's pause 00:14:33.620 --> 00:14:35.899 right there and look at that. The boring CFP 00:14:35.899 --> 00:14:39.019 cow is making 10 more pounds of total components 00:14:39.019 --> 00:14:42.460 than the high -flying TPI cow. Yes, 10 more pounds 00:14:42.460 --> 00:14:45.820 of physical, measurable solids in the tank. But 00:14:45.820 --> 00:14:49.600 her ratio is only 0 .79. So TPI doesn't like 00:14:49.600 --> 00:14:51.259 this cow as much because she didn't hit that 00:14:51.259 --> 00:14:53.639 aggressive protein leverage. Right. She ranks 00:14:53.639 --> 00:14:55.860 lower on the official lists. She's not the cover 00:14:55.860 --> 00:14:57.879 girl for the semen catalog. But I'm guessing 00:14:57.879 --> 00:14:59.879 her bank account ranking is a bit different. 00:15:00.240 --> 00:15:02.340 Let's do the math on the financial bleed here 00:15:02.340 --> 00:15:04.220 and let's frame it around the listener's perspective. 00:15:04.519 --> 00:15:06.620 Yeah, let's get into the dollars. Because if 00:15:06.620 --> 00:15:08.200 you are looking at your milk check right now, 00:15:08.320 --> 00:15:10.740 you know exactly what these components are worth. 00:15:10.919 --> 00:15:13.259 The article crunches these year five production 00:15:13.259 --> 00:15:17.000 numbers using very conservative, realistic. class 00:15:17.000 --> 00:15:20.200 three prices. We're talking $3 a pound for fat 00:15:20.200 --> 00:15:23.139 and $2 a pound for protein. Which is a very fair 00:15:23.139 --> 00:15:25.299 baseline for recent federal order pricing. It's 00:15:25.299 --> 00:15:27.860 actually pretty standard. So let's look at path 00:15:27.860 --> 00:15:31.960 one, the ratio chase. That cow generates $3 ,300 00:15:31.960 --> 00:15:36.019 in fat revenue and $1 ,760 in protein revenue. 00:15:36.360 --> 00:15:40.919 That's $5 ,060 per cow per year in total component 00:15:40.919 --> 00:15:44.580 value. Now look at path two, the CFP anger. That 00:15:44.580 --> 00:15:50.539 cow makes $3 ,345 in fat and $1 ,750 in protein. 00:15:50.759 --> 00:15:54.879 So that total is $5 ,095 per cow per year. Meaning 00:15:54.879 --> 00:15:59.179 the boring CFP anchored herd wins by $35 per 00:15:59.179 --> 00:16:03.240 cow per year. Exactly. $35 a cow. And for Mark's 00:16:03.240 --> 00:16:07.820 500 cow dairy, that is $17 ,500 left on the table. 00:16:07.960 --> 00:16:10.909 Gone. Evaporated. Just because he wanted to buy 00:16:10.909 --> 00:16:13.330 bulls that had a pretty ratio on a piece of paper. 00:16:13.889 --> 00:16:16.289 Bulls that ranked higher on an index that totally 00:16:16.289 --> 00:16:19.230 doesn't line with his milk buyer. Now, $35 a 00:16:19.230 --> 00:16:21.870 cow. I mean, it doesn't sound like a four alarm 00:16:21.870 --> 00:16:24.370 fire on a random Tuesday morning when you're 00:16:24.370 --> 00:16:26.710 out there fixing a broken skid steer. No, it 00:16:26.710 --> 00:16:28.669 doesn't. It's a slow leak. You don't see it happening 00:16:28.669 --> 00:16:31.940 day to day. Yeah. But structurally. Yeah. It 00:16:31.940 --> 00:16:34.960 is bleeding the farm's efficiency dry over a 00:16:34.960 --> 00:16:37.200 decade. Let's tie this back to the real world 00:16:37.200 --> 00:16:39.379 economics we discussed in a previous deep dive. 00:16:40.259 --> 00:16:43.679 2025's $21 milk reality. Oh yeah, we talked extensively 00:16:43.679 --> 00:16:45.620 about margin compression in the dairy sector 00:16:45.620 --> 00:16:49.279 there. Costs for feed, labor, equipment, they're 00:16:49.279 --> 00:16:51.419 not going down. They never go down. Right. So 00:16:51.419 --> 00:16:53.980 if you are shipping 267 hundredweight per cow 00:16:53.980 --> 00:16:58.120 a year, like Mark is, that $35 loss equates to 00:16:58.120 --> 00:17:00.600 roughly a 13 cent per hundredweight bleed on 00:17:00.600 --> 00:17:02.850 your margin. And in a year where your margin 00:17:02.850 --> 00:17:05.250 might only be 50 cents or a dollar per hundredweight 00:17:05.250 --> 00:17:08.069 to begin with, giving up 13 cents to a genetic 00:17:08.069 --> 00:17:11.410 mathematical quirk? That's devastating. It's 00:17:11.410 --> 00:17:14.470 inexcusable. You are pointing the genetic engine 00:17:14.470 --> 00:17:17.930 of your herd toward a fluid -style cow, but your 00:17:17.930 --> 00:17:20.470 processing plant is still rigidly paying you 00:17:20.470 --> 00:17:23.750 on total components sold. It's a complete mismatch 00:17:23.750 --> 00:17:26.450 between the breed association's genetic goals 00:17:26.450 --> 00:17:30.069 and the economic reality of the farm gate. Absolutely. 00:17:30.309 --> 00:17:32.400 But wait. Let me play devil's advocate here for 00:17:32.400 --> 00:17:34.660 a second, because I know there's a producer listening 00:17:34.660 --> 00:17:37.220 to this on the tractor right now who is practically 00:17:37.220 --> 00:17:39.519 yelling at the radio. Oh, for sure. I can hear 00:17:39.519 --> 00:17:42.119 them now. They're saying, but what if the market 00:17:42.119 --> 00:17:44.980 changes? Everyone says global protein demand 00:17:44.980 --> 00:17:48.119 is rising. What if plant demand shifts next year 00:17:48.119 --> 00:17:51.400 and protein suddenly becomes way more valuable 00:17:51.400 --> 00:17:55.220 than fat? Right. Doesn't this new TPI formula 00:17:55.220 --> 00:17:58.720 protect me and position me for that future? Yeah. 00:17:59.079 --> 00:18:01.819 It's the exact sales pitch you will hear from 00:18:01.819 --> 00:18:04.140 the genetics companies. Position yourself for 00:18:04.140 --> 00:18:06.420 the future. So let's test that theory. Let's 00:18:06.420 --> 00:18:09.079 do an industry reality check. Let's completely 00:18:09.079 --> 00:18:12.039 stack the deck in favor of protein and see if 00:18:12.039 --> 00:18:14.220 the math finally works out for the TPI ratio. 00:18:14.539 --> 00:18:16.440 Okay, let's build that protein -friendly future 00:18:16.440 --> 00:18:18.700 grid. Let's say the market completely flips. 00:18:18.960 --> 00:18:21.619 We will drop the price of fat down to $2 .80 00:18:21.619 --> 00:18:24.480 a pound, and we will spike the price of protein 00:18:24.480 --> 00:18:28.680 all the way up to $3 .50 a pound. Wow. In this 00:18:28.680 --> 00:18:31.740 hypothetical scenario, protein is worth 25 % 00:18:31.740 --> 00:18:35.019 more than fat. Yes. This is an incredibly aggressive, 00:18:35.299 --> 00:18:38.500 almost unprecedented premium for protein compared 00:18:38.500 --> 00:18:40.400 to anything we've seen recently in the federal 00:18:40.400 --> 00:18:42.740 orders. Okay, so we take our two -year five cows 00:18:42.740 --> 00:18:45.740 and run them through this new, heavily protein 00:18:45.740 --> 00:18:48.900 -slanted pricing grid. The ratio herd, the one 00:18:48.900 --> 00:18:51.279 TPI loves, the one that sacrificed fat to get 00:18:51.279 --> 00:18:55.579 more protein, makes $6 ,160 per cow. And the 00:18:55.579 --> 00:18:58.650 CFP herd. The CFP herd. the boring one that just 00:18:58.650 --> 00:19:03.869 focus on total pounds, makes $6 ,184 .50. Wait, 00:19:03.890 --> 00:19:05.789 let me make sure I heard that correctly. The 00:19:05.789 --> 00:19:08.869 boring herd still wins. Yes. Even in a market 00:19:08.869 --> 00:19:11.569 that pays a massive 25 % premium for protein, 00:19:11.869 --> 00:19:16.130 the CFP herd still beats the ratio herd by $24 00:19:16.130 --> 00:19:20.150 .50 per cow per year. So for Mark's 500 cows, 00:19:20.349 --> 00:19:23.529 he is still losing over $12 ,000 a year by following 00:19:23.529 --> 00:19:26.349 the TPI index. Even when the market does exactly 00:19:26.349 --> 00:19:29.450 what the TPI advocates hope it will do. How is 00:19:29.450 --> 00:19:32.049 that biologically or mathematically possible? 00:19:32.309 --> 00:19:34.329 I mean, if protein is suddenly worth so much 00:19:34.329 --> 00:19:37.529 more money, shouldn't the high protein cows absolutely 00:19:37.529 --> 00:19:40.029 dominate the spreadsheet? Here's where it gets 00:19:40.029 --> 00:19:42.049 really interesting. And this is the concept every 00:19:42.049 --> 00:19:44.799 producer needs to write down. It all comes down 00:19:44.799 --> 00:19:47.279 to the biological trade you are making when you 00:19:47.279 --> 00:19:49.839 select these sires. The biological trade. Yeah. 00:19:50.160 --> 00:19:52.519 Look at the difference in genetic progress between 00:19:52.519 --> 00:19:55.960 the two herds in year 5. The ratio herd lost 00:19:55.960 --> 00:20:00.180 15 pounds of fat compared to the CFP herd, but 00:20:00.180 --> 00:20:03.759 it only gained 5 pounds of protein. Ah. You were 00:20:03.759 --> 00:20:06.259 trading 15 pounds of fat to get 5 pounds of protein? 00:20:06.519 --> 00:20:09.619 Precisely. Because of the negative genetic correlations 00:20:09.619 --> 00:20:11.740 and the way the leverage works, you are giving 00:20:11.740 --> 00:20:14.799 up three pounds of fat just to coax one extra 00:20:14.799 --> 00:20:17.180 pound of protein out of the cow. Wow. Three for 00:20:17.180 --> 00:20:20.279 one. Yes. So for that trade to make any financial 00:20:20.279 --> 00:20:22.640 sense whatsoever on your milk check, the new 00:20:22.640 --> 00:20:25.119 money you make on that one pound of protein has 00:20:25.119 --> 00:20:27.900 to completely cover the money you lost on those 00:20:27.900 --> 00:20:30.339 three pounds of fat. So one times the protein 00:20:30.339 --> 00:20:32.319 price must be greater than three times the fat 00:20:32.319 --> 00:20:35.220 price. If we simplify that equation, we arrive 00:20:35.220 --> 00:20:38.019 at the absolute core insight of this entire deep 00:20:38.019 --> 00:20:40.940 dive, the break -even formula. The protein price 00:20:40.940 --> 00:20:43.359 divided by the fat price must be greater than 00:20:43.359 --> 00:20:46.200 3 .0. This is the aha moment. I want everyone 00:20:46.200 --> 00:20:49.299 listening to let this sink in. Your protein price 00:20:49.299 --> 00:20:52.009 has to be three times higher. than your fat price 00:20:52.009 --> 00:20:56.710 for this 2026 TPI shift to actually pay off in 00:20:56.710 --> 00:20:59.349 your bulk tank. Three times. Three times. So 00:20:59.349 --> 00:21:01.450 let's look at the real market data. You pull 00:21:01.450 --> 00:21:04.869 the USDA Federal Order Class III and YV component 00:21:04.869 --> 00:21:08.990 pricing data through 2024 and early 2025. Does 00:21:08.990 --> 00:21:11.089 protein ever hit three times the price of fat? 00:21:11.309 --> 00:21:13.720 Not even close. Not in the same universe. Never. 00:21:14.000 --> 00:21:16.019 Protein pricing is volatile, sure. Sometimes 00:21:16.019 --> 00:21:17.839 it rallies and then gets somewhat close to the 00:21:17.839 --> 00:21:19.779 price of fat. Yeah. But for many recent months 00:21:19.779 --> 00:21:21.599 and years, it's been significantly cheaper than 00:21:21.599 --> 00:21:24.660 fat. So what's the actual ratio right now? If 00:21:24.660 --> 00:21:26.420 you look at the actual ratio of protein price 00:21:26.420 --> 00:21:28.839 to fat price recently, it sits somewhere between 00:21:28.839 --> 00:21:31.700 0 .6 and 1 .2. Let me repeat that for clarity. 00:21:31.900 --> 00:21:34.839 You need a 3 .0 ratio to break even on this genetic 00:21:34.839 --> 00:21:37.519 strategy, and the actual U .S. dairy market is 00:21:37.519 --> 00:21:41.430 hovering around 1 .0. Yes. The market for this 00:21:41.430 --> 00:21:44.369 index does not exist in the United States. Period. 00:21:44.789 --> 00:21:47.309 Unless, what, you're shipping to some incredibly 00:21:47.309 --> 00:21:50.789 specific micronutrient specialty cheese plant. 00:21:50.990 --> 00:21:54.210 Exactly. A plant that has a custom contract effectively 00:21:54.210 --> 00:21:57.970 valuing protein at three times fat, which practically 00:21:57.970 --> 00:22:00.109 no commercial class three producer in the country 00:22:00.109 --> 00:22:04.529 has. You are being paid to maximize total component 00:22:04.529 --> 00:22:07.490 output. You're not being paid to reshuffle the 00:22:07.490 --> 00:22:10.150 ratio. Okay, so what does this all mean? If the 00:22:10.150 --> 00:22:12.269 math is this obviously broken for the farmer, 00:22:12.369 --> 00:22:15.809 I have to ask, who is actually benefiting from 00:22:15.809 --> 00:22:17.589 this? That's the million -dollar question. I 00:22:17.589 --> 00:22:19.789 mean, Holstein USA isn't a fly -by -night operation. 00:22:20.069 --> 00:22:22.589 They have teams of highly educated geneticists 00:22:22.589 --> 00:22:24.589 or economists. You're telling me they just mathematically 00:22:24.589 --> 00:22:27.609 blundered this. Whose economics are they actually 00:22:27.609 --> 00:22:29.990 looking at when they build this formula? To answer 00:22:29.990 --> 00:22:31.549 that, we don't even need to look at conspiracy 00:22:31.549 --> 00:22:33.470 theories. We actually just need to look inside 00:22:33.470 --> 00:22:36.589 Holstein USA's own published formula. Oh, this 00:22:36.589 --> 00:22:39.269 is the part that blew my mind. Right. This is 00:22:39.269 --> 00:22:42.089 where you find the most glaring, undeniable internal 00:22:42.089 --> 00:22:44.670 contradiction in the entire system. And frankly, 00:22:44.869 --> 00:22:47.150 it's the part that should make every commercial 00:22:47.150 --> 00:22:49.950 dairyman demand answers. You're talking about 00:22:49.950 --> 00:22:52.930 the feed efficiency dollar, or F -E dollar. Yes. 00:22:53.450 --> 00:22:55.609 For those who might not dig into the deep weeds 00:22:55.609 --> 00:22:58.890 of the index, the FE dollar is the economic engine 00:22:58.890 --> 00:23:01.789 that sits inside the TPI formula. It's supposed 00:23:01.789 --> 00:23:04.529 to calculate the actual profit a cow generates 00:23:04.529 --> 00:23:07.329 based on her feed intake and component output, 00:23:07.549 --> 00:23:09.809 right? Exactly. And according to Holstein USA's 00:23:09.809 --> 00:23:12.750 own published materials, the FE dollar formula 00:23:12.750 --> 00:23:16.710 currently values fat at $1 .86 per pound. Okay. 00:23:16.930 --> 00:23:20.339 And it values protein at $1 .75 per pound. Let 00:23:20.339 --> 00:23:21.720 me stop you right there so you and the listener 00:23:21.720 --> 00:23:25.039 can really process that. Holstein USA's own internal 00:23:25.039 --> 00:23:27.559 economics, the very numbers they use to calculate 00:23:27.559 --> 00:23:30.380 feed efficiency, clearly state that fat is more 00:23:30.380 --> 00:23:34.079 valuable than protein. Yes. $1 .86 for fat is 00:23:34.079 --> 00:23:37.099 more than $1 .75 for protein. The ratio between 00:23:37.099 --> 00:23:41.140 the two is 0 .94. Fat wins the economic argument 00:23:41.140 --> 00:23:44.349 inside their own house. Yet, the production slice 00:23:44.349 --> 00:23:46.589 of the TPI, which is the arbitrary weighting 00:23:46.589 --> 00:23:48.589 layered on top of those economics to rank the 00:23:48.589 --> 00:23:53.049 bulls, applies a 1 .71 multiplier favoring protein. 00:23:53.369 --> 00:23:57.809 Yep. It weights protein at 24 % and fat at 14%. 00:23:58.140 --> 00:24:01.119 It is a complete mathematical absurdity. The 00:24:01.119 --> 00:24:03.640 core economics inside the formula say fat is 00:24:03.640 --> 00:24:06.200 more valuable, but the subjective weighting applied 00:24:06.200 --> 00:24:09.660 on top of it values protein 71 % more. Those 00:24:09.660 --> 00:24:12.059 two things cannot both be mathematically right 00:24:12.059 --> 00:24:14.400 at the same time. You are looking at a formula 00:24:14.400 --> 00:24:17.119 at war with itself. And if you dig into the history, 00:24:17.220 --> 00:24:20.819 it gets even worse. Since April 2021, the FEDollar 00:24:20.819 --> 00:24:24.519 value of fat has jumped 20%. The value of protein 00:24:24.519 --> 00:24:27.200 has barely moved. So the formula's own internal 00:24:27.200 --> 00:24:29.500 economic data is drifting steadily toward fat, 00:24:29.700 --> 00:24:32.920 even as the new 2026 production weighting lurches 00:24:32.920 --> 00:24:35.640 wildly toward protein. So if the actual market 00:24:35.640 --> 00:24:38.359 data doesn't support the move and their own internal 00:24:38.359 --> 00:24:40.359 feed efficiency data doesn't support the move. 00:24:40.890 --> 00:24:42.890 What does? Why do this? We have to look at the 00:24:42.890 --> 00:24:45.769 processor demand argument. Holstein USA has stated 00:24:45.769 --> 00:24:47.690 publicly that part of the rationale for this 00:24:47.690 --> 00:24:50.130 shift is alignment with processor demand for 00:24:50.130 --> 00:24:52.710 casein. And look, if you step into the shoes 00:24:52.710 --> 00:24:55.170 of a cheese plant manager, this makes total sense. 00:24:55.410 --> 00:24:58.130 Oh, absolutely. Cheese plants absolutely want 00:24:58.130 --> 00:25:00.789 more casein in the vat because casein is the 00:25:00.789 --> 00:25:03.609 specific protein that drives cheese yield. More 00:25:03.609 --> 00:25:06.250 casein means more cheese per hundredweight of 00:25:06.250 --> 00:25:09.130 milk processed. Which means lower overhead costs 00:25:09.130 --> 00:25:11.869 and higher margins for the plant. Right. If you 00:25:11.869 --> 00:25:14.329 run a cheese plant, your dream cow produces high 00:25:14.329 --> 00:25:16.630 -protein milk that is perfectly tailored to your 00:25:16.630 --> 00:25:20.289 vat's efficiency. Exactly. But here is this straight 00:25:20.289 --> 00:25:22.970 -talking, no -BS reality check for every farmer 00:25:22.970 --> 00:25:26.809 listening today. You do not get paid on the processor's 00:25:26.809 --> 00:25:30.039 cheese yield. per vat. No, you do not. You get 00:25:30.039 --> 00:25:32.359 paid on the total pounds of fat and protein you 00:25:32.359 --> 00:25:34.640 sell to them at whatever the federal order grid 00:25:34.640 --> 00:25:37.099 says those pounds are worth that month. The Bullvine 00:25:37.099 --> 00:25:39.880 actually did a massive deep dive analysis on 00:25:39.880 --> 00:25:42.140 the component revelation recently, and the data 00:25:42.140 --> 00:25:44.220 showed that processors are already capturing 00:25:44.220 --> 00:25:48.400 a massive 12 .5 % cheese yield windfall from 00:25:48.400 --> 00:25:50.220 the higher components farmers have been breeding 00:25:50.220 --> 00:25:52.420 for over the last decade. They're already winning 00:25:52.420 --> 00:25:55.140 big. And this raises an incredibly important 00:25:55.140 --> 00:25:57.700 question for your farm's future. Are you getting 00:25:57.700 --> 00:26:00.220 your fair share of that value creation? Because 00:26:00.220 --> 00:26:03.720 if the new TPI steers the breed toward protein 00:26:03.720 --> 00:26:07.039 at the direct biological expense of fat, the 00:26:07.039 --> 00:26:09.500 processors get more of the exact component they 00:26:09.500 --> 00:26:12.519 want to maximize their cheese yield. While you, 00:26:12.700 --> 00:26:15.200 the farmer, end up with fewer total component 00:26:15.200 --> 00:26:18.309 dollars per cow. Under your actual class three 00:26:18.309 --> 00:26:21.069 grid. It's the GPS metaphor all over again. Yeah. 00:26:21.170 --> 00:26:24.609 TPI 2026 is optimizing the genetic map for a 00:26:24.609 --> 00:26:28.170 processor's ideal breed. It is quietly sacrificing 00:26:28.170 --> 00:26:30.690 the farmer's total component dollars to get there. 00:26:30.849 --> 00:26:33.710 It's a processor's index masquerading as a farmer's 00:26:33.710 --> 00:26:36.269 index. And I want to be clear, that isn't a conspiracy 00:26:36.269 --> 00:26:38.470 theory. We aren't guessing motives here. It's 00:26:38.470 --> 00:26:40.750 just reading the plain math of the index against 00:26:40.750 --> 00:26:43.589 the plain math of your milk check. TPI is serving 00:26:43.589 --> 00:26:45.579 the cheese vat, not your bank account. Which 00:26:45.579 --> 00:26:47.539 brings up an incredible contrast, and honestly, 00:26:47.720 --> 00:26:49.920 a bit of a lifeline for the industry, because 00:26:49.920 --> 00:26:52.779 TTI isn't the only index in town. Other major, 00:26:52.819 --> 00:26:54.799 highly respected genetic indexes are looking 00:26:54.799 --> 00:26:57.319 at the exact same market data, the exact same 00:26:57.319 --> 00:27:00.259 USDA pricing reports, and coming to wildly different 00:27:00.259 --> 00:27:03.099 conclusions. We need to look at what I call the 00:27:03.099 --> 00:27:05.660 tale of three indexes, and what this means for 00:27:05.660 --> 00:27:08.009 the future of the breed. This is where you realize 00:27:08.009 --> 00:27:10.829 how much of a solitary island TPI is on right 00:27:10.829 --> 00:27:13.869 now. Let's look at the USDA's Net Merit 2025, 00:27:14.269 --> 00:27:17.549 or NMDollar. Okay, break down Net Merit for us. 00:27:17.690 --> 00:27:19.950 Net Merit is built by the Council on Dairy Cattle 00:27:19.950 --> 00:27:23.630 Breeding, the CDCB, using current data from AGIO, 00:27:23.670 --> 00:27:25.430 the Animal Genomics and Improvement Laboratory. 00:27:25.900 --> 00:27:27.940 Right. These are the government scientists whose 00:27:27.940 --> 00:27:31.039 entire job is to analyze the U .S. dairy economy 00:27:31.039 --> 00:27:34.319 and build an index that maximizes lifetime profit 00:27:34.319 --> 00:27:36.440 for the farmer. Same industry, same market as 00:27:36.440 --> 00:27:39.119 Holstein USA. What did Net Merit do in their 00:27:39.119 --> 00:27:41.700 latest update? It went the exact opposite direction 00:27:41.700 --> 00:27:45.640 of TPI. Net Merit 2025 actually dropped protein 00:27:45.640 --> 00:27:49.319 share in the index from 19 .6 % down to 13%. 00:27:49.319 --> 00:27:51.700 And it bumped fat share up significantly from 00:27:51.700 --> 00:27:55.519 28 .6 % to 31 .8%. Think about the magnitude 00:27:55.519 --> 00:27:59.059 of that divergence. USDA economists looking at 00:27:59.059 --> 00:28:02.160 real -world farm data said, the market is telling 00:28:02.160 --> 00:28:05.740 us to drop protein emphasis and boost fat emphasis. 00:28:06.119 --> 00:28:08.779 While Holstein USA, looking at the exact same 00:28:08.779 --> 00:28:12.519 market, said, boost protein massively and drop 00:28:12.519 --> 00:28:15.599 fat. And net merit went even further to protect 00:28:15.599 --> 00:28:18.140 the farmer's bottom line. It added a massive 00:28:18.140 --> 00:28:20.160 negative body weight composite. Yeah, that's 00:28:20.160 --> 00:28:23.180 huge. It acts like a $57 weight tax per point. 00:28:23.619 --> 00:28:26.180 NetMerit is actively trying to build a smaller, 00:28:26.279 --> 00:28:28.960 high -component, incredibly feed -efficient cow 00:28:28.960 --> 00:28:31.980 that maximizes total fat and protein yield per 00:28:31.980 --> 00:28:35.240 pound of dry matter consumed. It is heavily penalizing 00:28:35.240 --> 00:28:37.640 those big, fluid -style, high -maintenance cows. 00:28:37.980 --> 00:28:40.460 Which biologically and economically is perfectly 00:28:40.460 --> 00:28:43.440 internally consistent with current USDA component 00:28:43.440 --> 00:28:46.000 pricing and sky -high feed markets. NetMerit 00:28:46.000 --> 00:28:47.740 is trying to build the dense component maker. 00:28:48.039 --> 00:28:50.279 TPI is drifting back toward the water park. Yeah, 00:28:50.279 --> 00:28:52.359 let's look north. What is happening in Canada? 00:28:52.500 --> 00:28:54.559 Because this is an argument you will hear from 00:28:54.559 --> 00:28:57.119 semen reps defending the TPR. Oh, you will hear 00:28:57.119 --> 00:29:00.180 this all the time. Lactonet, which manages Canada's 00:29:00.180 --> 00:29:02.920 genetics, just shifted the LPI, their primary 00:29:02.920 --> 00:29:06.700 index, to an aggressive 60 % protein and 40 % 00:29:06.700 --> 00:29:10.000 fat. Right, so people say, uh -huh, TPI isn't 00:29:10.000 --> 00:29:11.759 crazy, Canada is doing it too, the whole world 00:29:11.759 --> 00:29:13.920 is moving to protein. Exactly, so why shouldn't 00:29:13.920 --> 00:29:16.000 we? Hold on, this is a crucial distinction, and 00:29:16.000 --> 00:29:17.779 if you don't understand this, you will get fleeced. 00:29:18.619 --> 00:29:22.480 Canada operates on a strict national quota -based 00:29:22.480 --> 00:29:25.420 pricing system. They do not operate on an open 00:29:25.420 --> 00:29:27.680 market federal order system like the U .S. That's 00:29:27.680 --> 00:29:30.539 a massive difference. Lacton, its own bulletin, 00:29:30.539 --> 00:29:33.420 explicitly states the genetic shift is intended 00:29:33.420 --> 00:29:35.900 to better reflect anticipated changes in their 00:29:35.900 --> 00:29:38.720 specific regulated milk pricing and processor 00:29:38.720 --> 00:29:41.299 demand within that quota system. The Canadian 00:29:41.299 --> 00:29:43.559 system is internally consistent with its own 00:29:43.559 --> 00:29:46.279 unique quota pricing math. Right. In a quota 00:29:46.279 --> 00:29:48.900 system, your incentives on fluid volume versus 00:29:48.900 --> 00:29:50.759 solids are tightly controlled by the government 00:29:50.759 --> 00:29:52.759 board. You cannot just copy Canada's protein 00:29:52.759 --> 00:29:54.980 pivot if you don't have Canada's pricing logic 00:29:54.980 --> 00:29:57.259 protecting your downside. It's like trying to 00:29:57.259 --> 00:29:59.200 play American football with a baseball bat because 00:29:59.200 --> 00:30:01.559 you saw a guy in another stadium hit a home run. 00:30:01.720 --> 00:30:04.240 The rules of your field are fundamentally different. 00:30:04.420 --> 00:30:07.339 That's a perfect way to put it. Copying the genetic 00:30:07.339 --> 00:30:09.559 pivot without the underlying pricing structure 00:30:09.559 --> 00:30:12.839 is exactly how you end up selecting for the wrong 00:30:12.839 --> 00:30:16.039 cow in the wrong market. And this leads us to 00:30:16.039 --> 00:30:20.099 the 10 to 15 year breed direction trap. This 00:30:20.099 --> 00:30:22.480 is the danger of social pressure in the dairy 00:30:22.480 --> 00:30:25.420 industry. Social pressure. Yeah. When a bull 00:30:25.420 --> 00:30:28.079 starts climbing the TPI lists because of this 00:30:28.079 --> 00:30:30.740 new formula, he's going to be all over social 00:30:30.740 --> 00:30:33.160 media. The semen reps are going to be pushing 00:30:33.160 --> 00:30:34.920 him hard. He'll be on the cover of the glossy 00:30:34.920 --> 00:30:37.420 magazine. It feels like you are making a mistake 00:30:37.420 --> 00:30:40.359 or falling behind if you don't use him. Oh, he's 00:30:40.359 --> 00:30:42.240 a top 10 TPI bull. I have to have him in the 00:30:42.240 --> 00:30:45.240 tank. My neighbor is using him. Right. But if 00:30:45.240 --> 00:30:47.980 he is only climbing that list because a formula 00:30:47.980 --> 00:30:51.839 arbitrarily changed its leverage to favor a ratio 00:30:51.839 --> 00:30:54.700 that your specific market doesn't pay for, that 00:30:54.700 --> 00:30:57.500 isn't a valid genetic signal. That is mathematical 00:30:57.500 --> 00:31:00.359 noise. And if you keep buying these bulls, you 00:31:00.359 --> 00:31:02.640 are accidentally steering your herd back toward 00:31:02.640 --> 00:31:05.200 those fluid -style cows. Think about history. 00:31:05.960 --> 00:31:09.759 We spent 50 years doubling Holstein milk production 00:31:09.759 --> 00:31:13.759 by applying intense concentrated sire pressure 00:31:13.759 --> 00:31:17.400 based on indexes. If we apply that same immense 00:31:17.400 --> 00:31:22.220 pressure blindly to this new flawed TPI, we will 00:31:22.220 --> 00:31:25.000 reshape the entire national breed in a way that 00:31:25.000 --> 00:31:27.779 permanently bleeds our margins. OK, I can feel 00:31:27.779 --> 00:31:29.980 the tension building here. A farmer just finished 00:31:29.980 --> 00:31:31.880 the morning milking. They've heard all this math. 00:31:31.980 --> 00:31:33.519 They're driving to the feed store right now and 00:31:33.519 --> 00:31:36.480 they're thinking, my nitrogen tank is full of 00:31:36.480 --> 00:31:38.920 high TPI bulls. What do I do? How do I fix this 00:31:38.920 --> 00:31:40.539 without throwing my whole breeding program into 00:31:40.539 --> 00:31:43.720 chaos? Weed actionable insights. Exactly. We 00:31:43.720 --> 00:31:48.119 have put together a 30, 90 and 365 day playbook 00:31:48.119 --> 00:31:50.680 to get your farm out of the TPI protein ratio 00:31:50.680 --> 00:31:52.890 trap. Let's start with the immediate action. 00:31:52.990 --> 00:31:55.490 The next 30 days, the rule here is simple. Stop 00:31:55.490 --> 00:31:57.250 digging. Stop digging. Okay, what's step one? 00:31:57.390 --> 00:31:59.089 The first thing you do when you get back to the 00:31:59.089 --> 00:32:01.190 farm office, grab a coffee and pull a genetic 00:32:01.190 --> 00:32:03.990 audit on your top 5 to 10 heavy use bulls from 00:32:03.990 --> 00:32:06.430 the last year. You need to calculate their specific 00:32:06.430 --> 00:32:09.430 protein to fat ratio. And how exactly do they 00:32:09.430 --> 00:32:11.930 do that? Keep the math simple for me. You literally 00:32:11.930 --> 00:32:15.269 just take the bull's PTA protein number and divide 00:32:15.269 --> 00:32:17.829 it by his PTA fat number. That's it. Just simple 00:32:17.829 --> 00:32:20.470 division. Yeah. If you look at your list and 00:32:20.470 --> 00:32:23.210 you see a lot of your heavily used bulls sitting 00:32:23.210 --> 00:32:27.210 at a ratio of 0 .65 or higher, and they aren't 00:32:27.210 --> 00:32:30.730 in the absolute elite top tier for total combined 00:32:30.730 --> 00:32:32.970 fat and protein pounds, meaning they're just 00:32:32.970 --> 00:32:35.789 ratio specialists, you need to freeze those semen 00:32:35.789 --> 00:32:37.529 orders immediately. Because you are leaning right 00:32:37.529 --> 00:32:40.509 into the trap. Exactly. So filter first. When 00:32:40.509 --> 00:32:43.130 your rep drives up the lane next week, what exactly 00:32:43.130 --> 00:32:45.740 do you say to them? You tell them that Net merit 00:32:45.740 --> 00:32:48.680 or cheese merit or just total combined fat and 00:32:48.680 --> 00:32:51.599 protein is the new boss on this farm. TPI is 00:32:51.599 --> 00:32:53.599 just a secondary filter now if you use it at 00:32:53.599 --> 00:32:55.519 all. Tell them you want to keep your bulls in 00:32:55.519 --> 00:32:59.779 a sane, profitable P over F band of 0 .50 to 00:32:59.779 --> 00:33:02.700 0 .60. And while you're sitting at that desk 00:33:02.700 --> 00:33:04.839 doing the audit, do the break -even math we talked 00:33:04.839 --> 00:33:07.279 about earlier. Check the check. Pull your last 00:33:07.279 --> 00:33:10.400 three milk checks. Take your protein price, divide 00:33:10.400 --> 00:33:13.609 it by your fat price. Prove to yourself, with 00:33:13.609 --> 00:33:16.190 your own farm's actual revenue data, that the 00:33:16.190 --> 00:33:19.069 number is nowhere near 3 .0. Once you see that 00:33:19.069 --> 00:33:22.029 0 .8 or 1 .1 sitting there in black and white 00:33:22.029 --> 00:33:24.609 on your own settlement sheet, it becomes much, 00:33:24.630 --> 00:33:27.190 much easier to confidently ignore the glossy 00:33:27.190 --> 00:33:29.569 sire catalogs pushing the high protein ratio. 00:33:29.910 --> 00:33:31.849 It really does. It opens your eyes. Okay, that 00:33:31.849 --> 00:33:34.609 stops the bleeding today. What about the medium 00:33:34.609 --> 00:33:37.569 -term strategy? The next 90 days, we call this 00:33:37.569 --> 00:33:39.809 the rebalance phase. This is where you get out 00:33:39.809 --> 00:33:42.400 of the office and walk the pens. Do a visual 00:33:42.400 --> 00:33:45.420 and data audit of your replacements. Look at 00:33:45.420 --> 00:33:47.720 your freshest group of first lactation heifers. 00:33:47.740 --> 00:33:49.579 Really look at them. What are we looking for? 00:33:49.740 --> 00:33:52.680 Are these new genetics creating big, tall, long 00:33:52.680 --> 00:33:54.700 -framed, high -maintenance fluid -type cows? 00:33:55.180 --> 00:33:57.700 Or are they creating moderate -sized, highly 00:33:57.700 --> 00:34:00.599 efficient component makers? Your index choices 00:34:00.599 --> 00:34:02.799 today are physically determining what your pens 00:34:02.799 --> 00:34:05.200 look like and how much feed they consume a decade 00:34:05.200 --> 00:34:07.559 from now. And when you were sitting down to plan 00:34:07.559 --> 00:34:10.619 your next breeding cycles, re -tier your sires 00:34:10.619 --> 00:34:13.460 by their actual economic role rather than just 00:34:13.460 --> 00:34:15.940 taking the top five from a list. Right. Our playbook 00:34:15.940 --> 00:34:18.820 suggests making 60 to 70 percent of your matings 00:34:18.820 --> 00:34:21.280 from what we call core sires. These are your 00:34:21.280 --> 00:34:25.579 high CFP, sensible ratio, solid net merit bulls. 00:34:25.880 --> 00:34:28.340 Then maybe 10 to 20 percent are your specialty 00:34:28.340 --> 00:34:31.900 bulls. Maybe those are the luxury high TPI bulls 00:34:31.900 --> 00:34:34.659 you use intentionally on specific cows to correct 00:34:34.659 --> 00:34:37.579 a trait or extreme type bulls, but you do not 00:34:37.579 --> 00:34:40.079 use them across the board. Exactly. And the rest 00:34:40.079 --> 00:34:42.480 are clean outsires. Finish off the ratio heavy 00:34:42.480 --> 00:34:45.260 straws you already own on lower value cows or 00:34:45.260 --> 00:34:47.760 just use beef crosses to generate immediate cash. 00:34:48.219 --> 00:34:50.360 You can also take control of your genomic testing 00:34:50.360 --> 00:34:53.260 software. Almost every major genetic provider 00:34:53.260 --> 00:34:55.760 allows you to compute a custom index just for 00:34:55.760 --> 00:34:58.460 your herd. This is a huge tool. Sit down with 00:34:58.460 --> 00:35:00.719 your advisor and build a simple score. Something 00:35:00.719 --> 00:35:05.239 like 1 .0 times fat plus 0 .8 times protein plus 00:35:05.239 --> 00:35:07.239 some heavy credits for fertility and productive 00:35:07.239 --> 00:35:10.619 life. Use that specific custom score to prioritize 00:35:10.619 --> 00:35:13.320 which heffles you keep and breed, rather than 00:35:13.320 --> 00:35:15.820 relying on an external one -size -fits -all index 00:35:15.820 --> 00:35:18.579 that clearly doesn't fit your market. And finally, 00:35:18.699 --> 00:35:23.360 long -term positioning. The next 365 days, data 00:35:23.360 --> 00:35:25.559 -driven independence. This is where you transition 00:35:25.559 --> 00:35:27.940 from playing defense to playing offense. This 00:35:27.940 --> 00:35:30.460 is how you prove the math on your own farm, under 00:35:30.460 --> 00:35:33.179 your own management, set up a split test, tag 00:35:33.179 --> 00:35:35.280 and track. Yeah, take a group of daughters from 00:35:35.280 --> 00:35:38.880 high TPI ratio bowls. Call them Group R. Then 00:35:38.880 --> 00:35:40.860 take a group of daughters from High Total CFP 00:35:40.860 --> 00:35:44.300 Bowls Group C. Track their actual physical pounds 00:35:44.300 --> 00:35:47.400 of fat and protein shipped over a standard 305 00:35:47.400 --> 00:35:50.900 -day lactation. The ultimate proof. The Buy Sire 00:35:50.900 --> 00:35:53.730 Milk Check Sanity Check. Yes. When those records 00:35:53.730 --> 00:35:56.309 come in, multiply their actual component yields 00:35:56.309 --> 00:35:58.409 by your actual historical milk check prices. 00:35:58.670 --> 00:36:01.769 If Group C makes $20 to $30 more per cow than 00:36:01.769 --> 00:36:05.070 Group R, you have undeniable local on -farm proof 00:36:05.070 --> 00:36:07.250 that the breed association formula is mathematically 00:36:07.250 --> 00:36:09.960 wrong for your specific dairy. At that point, 00:36:10.019 --> 00:36:12.619 you formalize your custom index, you trust your 00:36:12.619 --> 00:36:15.340 own data, and you never look back at the national 00:36:15.340 --> 00:36:17.920 rankings again. Never. You know, the genetics 00:36:17.920 --> 00:36:20.340 revolution over the last half century built the 00:36:20.340 --> 00:36:23.860 incredible productive cows we have today. But 00:36:23.860 --> 00:36:26.519 it was driven by farmers demanding better output 00:36:26.519 --> 00:36:28.739 for their operations. Right. Let's make sure 00:36:28.739 --> 00:36:30.880 the concentrated sire pressure we apply today 00:36:30.880 --> 00:36:34.500 is paying us, the farmers taking the risk, and 00:36:34.500 --> 00:36:37.179 not just padding the cheese yield at the processing 00:36:37.179 --> 00:36:39.440 plant down the road. That is the core of it. 00:36:39.539 --> 00:36:42.079 Your milk check has to dictate your genetic index. 00:36:42.679 --> 00:36:45.119 not the other way around. Do not let a breed 00:36:45.119 --> 00:36:48.199 association's mathematical quirk or a desire 00:36:48.199 --> 00:36:52.800 to appease processors bleed $17 ,500 out of your 00:36:52.800 --> 00:36:55.659 operation every single year. You work way too 00:36:55.659 --> 00:36:58.039 hard for those tight margins to just give them 00:36:58.039 --> 00:37:00.800 away to a flawed ratio on a piece of paper. Absolutely. 00:37:01.139 --> 00:37:03.420 That brings us to the end of our analysis for 00:37:03.420 --> 00:37:05.690 today. This has been another deep dive from the 00:37:05.690 --> 00:37:08.590 Bullvine podcast. If you want more straight talking, 00:37:08.809 --> 00:37:11.429 no BS industry analysis, and if you want to look 00:37:11.429 --> 00:37:13.769 at the full article and all the math and case 00:37:13.769 --> 00:37:15.969 studies we discussed today, you can find it all 00:37:15.969 --> 00:37:20.050 at www .thebullvine .com. And make sure you subscribe 00:37:20.050 --> 00:37:24.110 to our deep dives as we are out with new actionable 00:37:24.110 --> 00:37:27.090 insights every single day. But before we go, 00:37:27.210 --> 00:37:29.289 I want to leave you with one final thought to 00:37:29.289 --> 00:37:31.329 mull over while you're out on the tractor finishing 00:37:31.329 --> 00:37:34.119 up chores today. Oh, this is a good one. We started 00:37:34.119 --> 00:37:36.360 this by talking about how that GPS might be routing 00:37:36.360 --> 00:37:38.739 you for someone else's benefit. Well, if the 00:37:38.739 --> 00:37:40.880 national organizations setting the genetic standards 00:37:40.880 --> 00:37:43.079 are becoming increasingly misaligned with the 00:37:43.079 --> 00:37:46.219 economic reality of the farm gate, at what point 00:37:46.219 --> 00:37:49.139 do commercial dairymen need to bypass the traditional 00:37:49.139 --> 00:37:52.619 breed association indexes entirely and pool their 00:37:52.619 --> 00:37:55.960 data to create a fully open source farmer -owned 00:37:55.960 --> 00:37:58.659 genetic evaluation system? One built entirely 00:37:58.659 --> 00:38:01.530 on farm gate profitability. Exactly. Keep the 00:38:01.530 --> 00:38:03.329 wheels turning on that one, and we'll see you 00:38:03.329 --> 00:38:04.210 on the next video.