The dairy and meat industries will need to work more closely if a permanent solution is to be found to ensure calf-rearers have a more viable future.
Such a solution may mean compromises and concessions from both industries but will be necessary if rearers are to survive. They are locked into a boom-bust cycle that is simply not sustainable, Silver Fern Farms chief supply chain officer Dan Boulton said.
They need to be protected and become a sustainable part of the supply chain. The meat company is exploring ways to reduce the risks rearers face.
“We are doing modelling at the moment around the costs to rear calves, what a rearing operation would need to see to be viable.
“We have a vested interest in that, as I’m sure does the dairy industry, who will want to see more calves reared to make sure we protect that part of the supply chain,” Boulton said.
A number of rearers have exited the industry this season because the financial risks involved in growing calves are outweighing the returns they would receive from finishers.
SFF has launched a programme that will look at how margins can be shared more equally and how a model can be built that can better protect rearers. That model will include how the beef industry can better get its genetics into the dairy industry among its farmers’ non-replacement calves and setting up those systems, Boulton said.
“We’re working actively with a number of dairy companies, we have done a lot of the modelling and we know pretty much how many of the calves can be reared in New Zealand before you start displacing land and other stock classes.”
SFF is trying to understand all of those sensitivities and then look at what kinds of systems can be set up.
“How do we get to a point where the dairy industry and the beef industry are working in harmony in terms of our replacements and deliver on our emissions goals?”
SFF will also work with genetics companies to create a more efficient dairy-cross animal that meets their needs.
“We can create a story around that and partner with rearers to be part of that supply chain so then they know they have work and supply year in, year out and they can invest in their part of the business.”
Boulton said calves with Jersey genetics need a viable value stream that ideally has appeal to finishers and reduces bobby calf collection numbers.
“That’s easier said than done,” he said.
“There are going to be compromises in both industries – dairy and beef. We just need to work together to work out a way not to forgo eating quality or push something into the beef industry that’s not sustainable from a productivity perspective.”
Federated Farmers dairy chair Richard McIntyre said it has almost become a moot point what genetics farmers use to mate their cows with.
“You can waste a whole lot of money mating your cows with some fancy breed, but you may not get the returns if the weaner calf market stays as it is, especially with rearing costs as high as they are.”
“Everything is really high for some really uncertain returns.”
McIntyre rears 600 replacement and beef calves, leasing a drystock block to run these animals on.
Anecdotally, he heard of a Hawke’s Bay stock agent who was buying a quarter as many weaner calves from Waikato because so many of the farms had been converted to forestry.
Also compounding the issue is the banning of live exports in early 2023, which will mean a home will have to be found for the 200,000 cattle that in the past have been shipped annually.
McIntyre fears these animals will end up as bobby calves because they cannot be finished.
AgFirst consultant Bob Thomson said dairy farmers have to consider what the value proposition is for the calf and what can be done to increase this animal’s value to make a finisher want to purchase them.
Thomson was involved in the Dairy Beef Progeny Test run by Beef + Lamb New Zealand Genetics, which looked at ways of improving the quality of dairy beef animals in the industry by identifying and enabling widespread use of superior bulls for dairy beef.
Of the dairy industry’s three main breeds, Friesians and Kiwicross had the best growth rates, while Jersey calves were at the bottom of the preferred calves for finishing.
He said a solution for farmers using Jersey genetics is to use sexed semen for their replacement heifers and use male-generating beef sexed semen for the rest of the herd.
It would mean a shift away from using sexed semen for the replacement heifers and natural mating using bulls for the rest of the herd.
He suspected many farmers choose bulls because artificial insemination is time consuming when there are other jobs to be done on the farm.
“The price they pay there is they will have a lower breeding value, which most thinking beef farmers won’t be interested in.”
There is a huge difference in performance between the average and top bulls – such as a 15% increase in growth rates.
“When you translate that to a farm scenario, that’s a couple of hundred dollars a hectare.”
Boulton said there is no specific timeline for SFF’s programme, and it will depend on the energy and the effort of both sectors coming together.
“There’s a lot of activity going on, but there’s no clear commercial pathway yet. I think in the next decade there’s going to be change, but it’s going to take leadership.
“There needs to be change, we need to reduce our emissions as an industry and part of that is working with dairy a lot more closely.”