Effects of Selection and Crossbreeding Strategies on Industry Profit in the New Zealand Dairy Industry

Abstract

The effects of selection and crossbreeding on the New Zealand dairy industry net income were evaluated with a deterministic model over a 25 yr planning horizon. Several mating strategies involving Holstein-Friesian, Jersey and Ayrshire cattle were evaluated. These strategies were straight breeding, upgrading to Holstein-Friesian, upgrading to Jersey, upgrading to Ayrshire, use of the best bulls irrespective of breed and two- and three-breed rotational crossbreeding. Industry productions of milk, fat, protein, and lactose were calculated assuming that 12,000kg of dry matter per hectare was utilized from 1,224,911 hectares of pasture. Profitability was the difference between income (international sale of whole milk powder, casein, butter, and beef from salvage animals) and costs (farm expenses, milk collection, manufacture, and marketing). Casein and whole milk powder were valued at NZ$8.345 and NZ$3.306/ per kilogram, respectively, over 25 yr. Butter was valued at NZ$2.995/kilogram for base year production levels and NZ$0.45/kilogram for marginal increases in production. Upgrading to Holstein-Friesian resulted in the highest industry net income (NZ$1119million) followed by straight breeding (NZ$1086million) and two-breed rotational Holstein-Friesian × Jersey (NZ$1076million). However, if the marginal value of extra butter production was assumed equal to the average base value, then upgrading to Jersey resulted in the highest industry net income (NZ$1185million) followed by two-breed rotational Holstein-Friesian × Jersey (NZ$1177million) and use of the best bulls (NZ$1173million). Future costs and prices of dairy products have major impact on mating strategies.