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Do you know the true cost of your calf program?

Tom Earleywine for Progressive Dairy Published on 30 October 2020
Calves

Your total cost to raise calves is an important metric, but it’s especially important when profit margins are tight.

Total feed costs or feed cost per weight gain are common metrics; however, those figures may be misleading because they don’t include the full picture.

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For example, it might pencil out to change diets solely based on feed costs. However, that calculation doesn’t include correlated changes like calf weight gain, feed efficiency, health and labour. If you add those factors into the equation, the lower- cost diet may actually be more expensive in the long run.

Follow these tips to get a more accurate picture of the cost per kilogram of gain in your calf program:

Gather data

By calculating a true cost per kilogram of gain, you gather more insight into the performance of your calf program than just analyzing the feed cost per kilogram of gain.

To monitor your true cost of gain, measure:

  • Calf weight and height at birth and weaning, at minimum – an additional check in between is even better.

  • Nutrition costs, including milk replacer or pasteurized whole milk, starter feed and hay.

  • Morbidity costs, including antibiotics, treatments and the labour to take care of sick calves.

  • Mortality costs (calves might die along the way, and there’s a development cost before their death, such as feed and treatments).

  • Labour costs, including time spent by you, family or employees caring for calves.

Many dairies often have difficulty separating calf non-feed expenses from the cow herd. The same antibiotics might be used to treat both calves and cows, or straw bedding might be used for calves and dry cows. But if you can put an estimate on the percentage of those resources going toward calf care, it can paint a more accurate picture of costs.

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Calculate cost per kilogram of gain

No matter which measurements you include in your calculation, the key to success is using those measurements consistently. Determine the best and easiest calculation for your calf program and then collect as much measurable data as you can.

Calculate true cost per kilogram of gain using this formula:

Total number of calves multiplied by (Total input costs + Death loss cost) = X

X divided by (Group weight gained multiplied by Remaining number of calves) = True cost per kilogram of gain

Death loss cost is the value of the calves that died.

Run this calculation monthly so you can adjust promptly.

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The lower your true cost per kilogram of gain, the more profitable your calf program. The resulting cost varies greatly based on factors like your location, calf breed, housing system and more.

Other factors to consider

When looking at your cost per kilogram of gain, consider these tips:

  • Capture height measurements between birth and weaning to monitor growth. Weight gain without height growth can be a sign that a nutritional adjustment is needed.

  • Watch your medication and labour costs. The cost to treat and re-treat calves can escalate quickly. Similarly, more labour spent on calf care can take away from time spent on other areas of the farm. When looking at the labour for treatments, it might make sense to calculate that expense into morbidity costs when treating more calves than normal. Decide if you want the labour for treatments measured in morbidity costs or labour costs and consistently calculate it.

  • Capture electrolytes as a medication expense. Electrolytes are often mistakenly categorized as feed costs, but they should be categorized as a medication expense. An exception is if you’re using electrolytes routinely for all calves during heat stress events. Then it would make sense to categorize them as nutrition.

Benchmarks for improvement

Once you have your true cost per kilogram of gain calculated (and all your measurables that went into the calculation), you can determine if there are areas for improvement.

Set a benchmark for your calf program and monitor against the benchmark. Is your cost per kilogram of gain steady or decreasing each month? If it’s increasing, what has changed to cause it? Is there a protocol drift or a spike in morbidity? What can you do next month to get the number back down?

The true-cost-per-kilogram-of-gain calculation can also help you compare two different feeding programs if you’re considering a change. For example, if you switch from pasteurized milk to a milk replacer, how will that impact cost per kilogram of gain? Be sure to use either the cost of production for pasteurized milk or the current milk price if it’s salable milk. If you’re switching to a more expensive feed, what else needs to be adjusted to make the change profitable for you?

If you want to compare two levels of milk or milk replacer nutrition, consider looking at what the additional or marginal cost is – that is, what is the added true cost versus the added benefit.

Focus in on nutrition

If you’re considering increasing the level of nutrition for calves, the added nutrition costs may be justified by more efficient calf weight gain. Plus, any time the level of nutrition increases, you can also enhance overall calf health.

If you only meet calves’ maintenance needs, or they are gaining weight slowly, there is the risk of significant morbidity and mortality. A higher level of nutrition gives calves more energy for the immune system to perform properly. Feeding a full-potential diet can lower calf morbidity and mortality costs and increase productivity as calves grow into lactating cows or, for bull calves, make a more efficient steer.

Feed costs are a big component of the true-cost-per-kilogram-of-gain calculation. However, the nutrition provided can influence other costs like morbidity, labour, mortality and feed efficiency. Feeding better nutrition often pencils out when you consider all calf-raising costs. Consult with your local calf specialist to evaluate the true cost per kilogram of gain of your calf program.  end mark

PHOTO: Focus calf-raising goals on cost efficiency to raise healthy calves for the future rather than focusing on the least cost. Photo courtesy of Purina Animal Nutrition.

Tom Earleywine
  • Tom Earleywine

  • Director of Nutritional Services
  • Land O’Lakes Animal Milk Solutions
  • Email Tom Earleywine

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