Turning bobby calves into a valued product

Friday, 19 August 2016

We often refer to the latent potential of 'NZ Inc.' and the fact we do not tap into the full value of what New Zealand farmers produce and the way that they produce it.

Are bobby calves an opportunity that could add millions to our sector? I recently completed the Kellogg Rural Leadership Programme and my research project set about answering this question.

The potential of bobby calves

There is significant potential for New Zealand to grow more bobby calves into finished beef animals – animals that are worth a lot more than bobby calves. Furthermore, it is important we have a sustainable, viable and ethical value chain. NZ Inc. needs to get this right to maintain farmers’ “social licence” to farm and maintain the country’s positive worldwide image.

While difficult to calculate accurately, the full value of under-utilised bobby calves is estimated at more than $1 billion.

Leadership needed

Farmers operate different policies with different values, so it is near impossible to make a recommendation that will suit all producers, processors and resources. However, there is a range of options which will lead to more prosperous returns for farmers, processors and the overall sector. But more leadership is needed at all points of the industry supply chain.

Dairy farmers are at the start of the value chain, so it is critical that these options are easy for them and do not affect their primary objective of producing milk at the highest margin possible.

Bobby calves: current scenario

There are about 5 million lactating dairy cows in New Zealand and most produce a calf each year. Typically, dairy farmers keep 20% as replacements for future years. Accounting for losses, this leaves 75% of calves surplus to requirements. Information gathered from Beef + Lamb New Zealand and DairyNZ suggests that 2.3 million head are processed as bobby calves. This is where the opportunity lies: to maximise the value of these animals to farmers and the whole supply chain.

Around 60% of dairy-origin calves born in New Zealand are either reared for beef purposes or they join the milking herd. Over time, the number of calves going into the dairy-beef industry has steadily increased. Through improved practices and careful selection of replacement stock, this trend is likely to continue.

Strategies to increase returns from bobby calves

My project highlighted five strategies to increase the return from excess calves:

Increased use of beef genetics across dairy herds.
Increased use of sexed semen across dairy herds.
An integrated dairy beef “profit partnership” supply chain model, where everyone captures the value of the end product.
Introducing a tool which measures beef performance through the supply chain to allow a feedback loop.
Increased farmer education on options available.

I’m heartened to hear – albeit anecdotally – that a lot more beef semen is being used in dairy herds. With improved technology around sexed semen, hopefully it won’t be long until we see increased uptake in this area as well.