Momentum growing to add value to beef-on-dairy calves

Feeders are looking at these cattle in terms of health, growth and efficiency, while packers are looking at carcass quality, yield and cutout.

December 30, 2019

5 Min Read
Texas AgriLIfe dairy beef.jpg
A beef influence in the breeding program of dairy operations for some of their cows can increase the marketability, according to Texas A&M AgriLife Extension Service.Texas A&M AgriLife photo by Kay Ledbetter

Interest in the use of beef sires on dairy cows to increase calf value is rapidly gaining momentum across the dairy industry, according to Texas A&M AgriLife Extension Service specialists.

AgriLife Extension beef cattle specialist Dr. Jason Smith covered the topic at the Southwest Dairy Day in Snyder, Texas.

It’s estimated that traditional dairy cattle make up approximately 20% of the beef market through finished cattle and cull cows. Traditionally, the best heifers are kept as replacement females, while the remaining dairy heifers and bull calves enter the beef supply chain, AgriLife said.

Changes in packer demand for finished straight-bred dairy calves have driven a decline in their value, Smith said. A beef-on-dairy breeding program can add value to these calves by improving traits that directly affect the cost of gain and carcass value.

“It’s a hot topic right now in both the dairy and beef industry,” he said. “With tight milk margins, dairy producers are looking for a way to add value and generate additional income in their system. With tight feeding margins, the beef industry is looking to determine exactly how and where these cattle fit into the production chain and what their value is.

“As adoption of the practice grows, we expect a greater number of these cattle to enter the supply chain in the very near future,” Smith added.

AgriLife Extension dairy specialist Dr. Juan Piñeiro noted that most progressive dairy farmers have already adopted the practice.

“They are using sexed dairy semen to build their heifer supply and beef semen to add value to the rest of the calf crop,” Piñeiro said. “The use of sexed semen and improvements in reproductive efficiency have led to a surplus of replacement heifers. Since [dairy producers] have more dairy heifers than needed, they started utilizing the beef semen with a proportion of the herd to capture the added value.”

As the interest grows, basically two things are happening: “The dairy industry is trying to figure out how to strategically use the practice, and the beef industry is in the process of determining the value of these cattle,” Smith said.

Dairy producers have said there is currently a substantial price differential between straight-bred and beef-on-dairy calves — where beef-on-dairy calves have an advantage of up to 7-10 times that of straight-bred Holstein calves, Piñeiro said. The crossbred calves require less time on feed than straight-bred dairy cattle to reach a target end point, thus reducing the use of natural resources and improving the sustainability of the production system.

Feeders are looking at experiences with these cattle in terms of health, growth and efficiency, while packers are looking at carcass quality, yield and cutout.

“These experiences will dictate the calves’ value, which is being determined as we speak,” Smith said. “There are already beef-on-dairy cattle in the supply chain, and there have been for a long time, but we certainly expect that number to grow substantially in the future, especially in this region, where large dairies, calf ranches, backgrounders and feedyards coexist.

“This presents a great opportunity to build relationships across the production sectors,” he added.

There is currently a lot of focus on identifying certain beef breeds that work better than others on certain dairy breeds in a dairy/beef crossbreeding system, Smith said.

While this may work for the average animal within a breed, emphasis should be placed on trait complementarity — utilizing beef genetics that complement the weaknesses or limitations of straight dairy-bred cattle.

The introduction of beef traits is expected to address issues with mature size, growth performance, average daily gain and feed efficiency as well as carcass muscularity and yield.

“The focus shouldn’t just be on the fact that they now have beef genetics but, rather, that they have the right beef genetics,” Smith said. “That’s because there is as much variation within a breed as there is across breeds for a number of traits that are economically relevant.”

On the flip side, one of the positive attributes of the dairy genetics is that retail products from dairy carcasses tend to be very uniform, whereas traditional beef cattle tend to be more variable, he said.

“The uniformity and predictability of retail product characteristics and cutout add value,” Smith said. “The dairy production system also provides a good opportunity for age and source verification.”

He also said genetics is only one part of the equation.

“From a management standpoint, health needs to be a priority,” Smith said. “We can have a huge impact on growth performance and feeding outcomes through preventative health management. Colostrum timing, quality and quantity as well as other management factors during that calf’s first few days of life are key.”

Typically, a dairy sells male calves to a calf ranch, which later sells them to a backgrounding yard and, finally, to a feedyard before the calves are sold to a packer.

“Dairies could consider retaining ownership of the calves throughout the live production chain,” he said. “There is certainly some economic risk involved, but if handled properly, that would allow a dairy to realize the added value of their beef-on-dairy calves and diversify the operation.”

Smith said while it seems like the market has not yet settled on a value, that value will be driven by experiences with those calves. Some beef-on-dairy calves have sold near the top of recent feeder calf markets, while some have sold toward the bottom of the market.

“Genetics and calf care, as well as other value-added attributes, such as age and source verification, seem to be driving that difference,” he said.

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