Good Genetics Worth £24,000 In Extra Margins

UK - The economic value of Profitable Lifetime Index (PLI) has been confirmed by a new study which puts its value at £4.21 per PLI point at today’s milk prices. This equates to additional annual margin for a high genetic merit herd (top one per cent) of £24,839 for each 100 cows, when compared to a herd of average genetic merit.

14 July 2011

2 minute read

Europe

The study was undertaken by Promar International and used fully bank-reconciled financial data from users of Promar’s Farm Business Accounts (FBA). This was married up with data from either NMR or CIS milk recorded herds and independent genetic information supplied by DairyCo Breeding+.

It is the second UK study in the past five years to highlight the economic value of PLI – the UK’s main national breeding index which broadly weights milk production and fitness traits in a 45:55 ratio - and indicates the relevance of the index in a range of economic environments.

In the study, a Genetically Influenced Margin (GIM) was developed to identify all financially measurable factors of dairy farm income and costs that are influenced by cow genetics.

“These include income from milk, calf and cull sales minus the cost of all feed, herd replacements, vet and med, AI and semen,” says Promar consultant, Tim Harper, who undertook the analysis.

“Assuming there is no relationship between genetics and any other costs, this will translate directly through to pre-tax profit,” he says.

“The study gives a clear economic endorsement of PLI, but it is important to recognise that there are clearly other factors than genetics alone which also influence the bottom line.

“These include feed and forage quality, cow comfort, and other aspects of good herd management - most importantly the capability of the farmer and his staff.

“Higher genetic merit herds also tend to be larger, which in turn can impact on buying power and milk price, but none of these factors alone can account for their superior performance,” he says.

“The important part played by genetics is unambiguous in this study, and with some 400 farms included in the analysis it gives us even more confidence than before in the results.”

“The role of PLI in improving margins and profitability is overwhelming,” concurred geneticist, Marco Winters, from DairyCo. “This is partly because the higher PLI cows are more efficient converters of feed into milk, and partly because they possess other qualities which will positively impact on margins.

“The study reinforces our confidence that the index is fulfilling exactly the objectives it was designed to meet, and confirms that with any breeding strategy, PLI is an important starting point, which can be fine-tuned to reflect a herd’s specific needs.”