Heifer Supplies Cap Expansion
July 18, 2022
For decades, dairy producers have raised replacement heifers at a loss, spending more on feed and care than it would have cost to purchase heifers at a sale. However, producers have had few options to avoid this expense, because they had to regularly produce calves to stock their barns with milk cows. Many of these calves were heifers, so regular calvings meant more heifers. USDA estimates that the number of dairy heifers expected to calve and enter the milk cow herd peaked at 3.12 million head in 2016.
In recent years, high beef prices gave producers the opportunity to calve cows regularly and produce significantly fewer dairy heifers. At last week’s calf sale in New Holland, Pennsylvania, producers sold young Holstein bull calves for $118 and dairy-beef crossbred bull calves for $274. Based on auction prices and typical breeding cycles, a 1,000-cow dairy could earn about $130,000 this year selling crossbred bull calves or around $68,000 selling Holstein bull calves. A growing share of dairy producers now crossbreed some of their cows with beef genetics to produce a more valuable calves and avoid the expense of raising unwanted dairy heifers. More widespread crossbreeding has pushed dairy heifer numbers to a 17-year low in January at 2.84 million head, a drop of 9% from 2016’s peak.
The lower heifer supply has slowed the potential for growth in the U.S. dairy herd. While year-to-date dairy cow slaughter is 3% behind last year’s pace, dairy producers have added very few cows this year. That’s partly because of high feed costs and supply management programs, but heifer numbers have also contributed. Together, these factors will continue to cap growth in U.S. milk output. As U.S. dairy processing capacity expands and feed costs retreat, dairy producers may want to significantly expand their herds, but heifer supplies will limit how quickly they’re able to do so. It takes about three years for a producers’ breeding decision to result in a dairy heifer ready to enter the milk-cow herd, so today’s low heifer supplies will have a longterm impact.