Higher beef prices and improved genetics are rewriting the dairy industry. With older dairy cows producing milk at higher numbers and dairy producers using younger cows to crossbreed with beef genetics, the dairy business has really changed.
Dairy producers have caught on and are now in the business of raising calves for beef. They are still in the milk business, but they are also using their heifers to crossbreed and raise calves for some good money.
In the past, dairy producers would cull underperforming or older dairy cows to sell on the canner market and raise as many heifers as they could to replace the milking herd. Most producers have changed management and jumped into the beef market.
Historically, a tight heifer inventory would raise red flags in the milk industry. However, no one is currently concerned as heifers are now used for different purposes, and the best part about keeping older cows longer is the U.S. milking herd is now the largest it’s been in over 30 years.
When it comes to profitability, dairy producers are now breeding their top heifers with the best milking genes in the industry for replacements, and they are breeding all of their other heifers to beef genetics.
Dairy producers are not too quick to cull their cows, and they are getting a beef-on-dairy calf, which is now worth more than just selling off the cow. Because producers are being much more selective with their breeding, the next generation of replacements is genetically superior to anything the industry has seen before.
These older cows are simply serving as surrogates, fulfilling a dual purpose for the terminal beef markets which really helps the bottom line on the dairy farm.
Crossbred beef-on-dairy calves weighing between 70 to 75 pounds are now selling for as high as $1,700 at cattle sales. These calves will take extra care with feed and health, but in the end, they will make money.
Dairy producers are fortunate in that the U.S. Department of Agriculture is currently buying $148 million in dairy products to supply food banks and federal nutrition programs.
Also, U.S. dairy products are now the third largest ag exporter behind corn and soybeans.
It looks like higher prices will stick around for a few years for both dairy farmers and beef producers. If they keep heifers for replacements, this drops the numbers in the feedlots and ultimately less cattle processed for beef products.
As a rancher, do I want to have less cows with a higher price tag or more cows with a lower price tag? I’ll take the less, higher-priced cows instead of higher numbers – this way, I’ll have less expenses. One can see why cattle producers are not in a hurry to expand their herds.
With record demands, beef will also stay high, but it doesn’t matter. I don’t think grocery stores are ever going to drop their prices by much, no matter what happens.
All of the politicians want cattle producers to expand their herds and get cattle numbers higher. This fast expansion happened close to 10 years ago and really dropped cattle prices in the early 2020s. We’ve learned our lesson.
Dennis Sun is the publisher of the Wyoming Livestock Roundup, a weekly agriculture newspaper available online and in print.
