Influence of Production and Prices on Optimum Culling Rates and Annualized Net Revenue

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Abstract
Dynamic programming was used to make optimum insemination and culling decisions for a dairy enterprise. Monthly costs and revenues for cows were calculated from milk and fat yields, calf values, feed costs, veterinary costs, housing and equipment costs, and interest. Cows were described in the dynamic programming model by lactation number, month in lactation, milk production during the present and previous lactations, and time of conception. The model considered variation in milk yield, replacement heifer costs, carcass values, involuntary culling, genetic improvement, conception rates, semen costs, and interest. Prices and parameters were chosen to represent the Holstein population in the US. Optimum average yearly culling rate was about 25% (optimum average herd life was 47.8 mo) and the yearly annuity of net revenue for a replacement heifer over a 15-yr planning horizon was $443 in the base situation. Various average mature equivalent yields, replacement heifer prices, milk prices, and feed prices were used in a sensitivity analysis. The yearly annuity of net revenue was sensitive to changes in all these parameters. Milk yield, milk prices, and feed prices had major effects on yearly annuity. Optimum culling decisions were sensitive to changes in replacement heifer prices. Average mature equivalent milk yield, milk price, and feed price had small effects on culling.