Study the parameters related to replacement percentage and revenue obtained by maintenance of dairy cows through production system optimization

The aim of this study was to investigate the parameters related to replacement percentage and revenue obtained by maintenance of dairy cows through production system optimization. The optimum replacement decisions are known as one of the factors affecting the profitability of livestock which are directly affected by fluctuations in milk prices, the price of carcass and replacement costs. When the current value of future cash flows of cows and alternatives are calculated, the optimal decision is to maintain the animal which its current value is higher which represent the additional benefit from maintenance time till replacement optimum time. It takes almost two production years till an alternative cow return its production and breeding costs and increase revenue and profit. Long life reduces replacement costs in cattle. Furthermore, it increases the generation refresh interval, shifts the cattle age toward older cows, and consequently the cattle average production will be increased due to increasing cows with higher lactation periods.
In this study, using MATLAB programming language, a number of programs designed to simulate cattle bio-economic system then the revenues and costs were estimated in the system. In order to calculate the optimum life of the herd and the rate of replacement, possible dynamic programming method was used, as well. Dairy cow defined by state variables including lactation period, milk production capacity and different scenarios in late pregnancy. At each stage, dairy cows classified by condition variables including three production levels (low, Medium and high production) and reproductive performance in four levels with calving interval of 494, 454, 414 and 534 days. To evaluate the effect of changes in input values on model response, sensitivity test was used.
The results showed that by increasing the price of heifers, fewer cows were removed and optimal cattle life was increased and the replacement rate decreased. Milk price reduction resulted in increased cattle optimum life and less cow removal which was associated with low rates of replacement. By increasing the discount factor (discount rate reduction) the percentage of removed cows was raised and optimum life was decreased, in contrast, the replacement rate was increased. Model results in the uncertainty state of production system showed that each parameter that causes increasing the replacement percentage, resulted in the reduction of average revenue from RPO animal maintenance. Results showed that increase in the heifer price and feed average cost, on the contrary, the reduction in cattle average production, removed cow price, calf and milk price, the optimum life increased and the number of removed cows reduced. Therefore, the maintenance value of cows in the cattle were higher than the state of which the heifer price and feed costs were low and cattle average production, calf price, milk price and removed cow price were high.
Two major factors affecting the culling rate were average herd production and the cost of replacement heifers. Fluctuation in the cost of feeding and calves did not affected cow-culling rate, significantly. Optimal replacement policies mainly depend on breeding or purchasing costs of alternative heifers rather than residual costs of the cow (removed cow price). The high rate of heifer replacement causes that the ranchman to be deprived of one of the most important revenue sources (the sale of surplus heifers). Then, by increasing the rate of replacement in cattle, cattle average age will be reduced and most of the cows will be culled before reaching their maximum production capacity. Therefore, on condition that replacement of cows take place, not only no revenue will be obtained but also rearing cost will be added since calving.