Does the Growing Beef x Dairy Trend Work for the Feeders

In the summer of 2019, two colleagues, Dr. Kevin Harvatine and Dr. Chad Dechow, and I submitted a grant to the United States Department of Agriculture (USDA). While these grants have a notoriously low acceptance rate, ours beat the odds and in March 2020 we received funding from the Critical Agricultural Research and Extension (CARE) [grant no. 2020-68008-31411] program from the USDA National Institute of Food and Agriculture.

Why did we get this grant?

As many readers of this publication know, I spent several years chasing ways to add value to the Holsteins contributing 20% of the supply of fed cattle slaughtered in the US. However, when that well began to dry up for a variety of reasons in 2017, dairy farmers were once again left with a calf that had little value to the beef supply chain. There are about 2.5 times the number of dairy cows as there are beef cows in the state of Pennsylvania. Thus, in our region, dairy cows represent a substantial supply of calves for the fed market. When those purebred Holsteins calves decreased in value, the dairy industry started to think about what the beef industry considered priorities.

At first glance, to the dairy industry, it appeared that simply a black hide was all the beef industry wanted. Roughly 60% of all fed cattle killed in the US are black hided. So, dairies began making black-hided calves. We all know that the first go around was not the best representation of what a beef x dairy calf should be. However, the industry rapidly evolved to begin examining terminal traits, for growth and carcass characteristics, in their bull selection processes. Now, most dairies still get their information for breeding decisions with beef semen from their semen sales representative. But, those companies realized if they did not start making calves that cattle feeders could profit from, they would quickly lose the growth in beef semen sales that they had garnered. In 2021 beef semen sales totaled a record high of 8.7 million units, up from a mere 2.5 million units in 2016.

In most systems, producers that are less familiar with the beef sire Expected Progeny Differences (EPD) or dairy Predicted Transmitting Abilities (PTA), can select an "index" to choose a sire that will produce a calf that will be profitable or maternal or balanced based on the genetic predictions for the breed. However, these predictions are based on the sire. Part of the challenge to a dairy semen sales representative is that they may be able to pick a calf from the $C index that Angus has, but 50% of that calf’s genetic potential still comes from a dairy dam. How those beef x dairy calves will actually perform though, is still a little bit of a mystery. The Angus breed, recognizing the increased attention to the Angus breed in beef x dairy systems, did develop their recommendations as indices. The Angus Association developed Angus x Holstein and Angus X Jersey indices, and semen companies began making selections for dairy herds based on those recommendations. So, we are seeing a shift from any black-hided bull will do to a more focused bull selection for these beef x dairy calves. But, the question remains: do beef x dairy calves work for the feeder?

The breeding programs are still gaining popularity among dairy producers because profit potential exists for the dairy (Bittante et al., 2020; Journal of Dairy Sci.). Our grant continues to research whether or not the profit potential exists for the cattle feeder. Across the systems, I have priced currently, the age-old university answer of "It depends!" continues to ring true.

Beef x dairy calves appear to work for the feeder when calf prices are negotiated directly with the dairy. Locking in these prices removes variability and allows feeders to manage calves based on break-even economics for any "exit point" in the system. That is if one grows day-old calves to 400 lbs. because they have feed resources but limited space and a feed capacity to take them to finish, that is a different exit point than if a "wet" calf grower sells those calves directly after weaning.

If we are honest in our pricing and really sharpen a pencil, in most systems, it will take somewhere around $900 to get a wet calf through weaning and available for sale as a 500 lb. feeder, using current economics. Last week, at certain auctions, you could buy 500 lb. beef feeder calves in for about the same price. Even "good calves" from Virginia could be purchased for just a few hundred dollars more. The question we have to ask as cattle feeders is: are these calves worth the same price as beef calves? Given that the packer is currently still paying between 2 and 10 cents less per pound for beef x dairy cattle, I would argue that they should not be worth the same amount as native beef calves. However, again, if you price the economics to get those beef X dairy calves to feeder weight, you are hard-pressed to accept a reduced price for them compared to native cattle if you’re being honest with your costs.

Where does that leave beef x dairy?

Currently, our data would suggest that some of these cattle, if bull selection was appropriate, still have a greater potential to put on muscle than purebred Holstein steers and they appear to grade as well as Holsteins. Because the beef cattle industry is focused on "saleable red meat yield", there appears to be potential in the beef x dairy calves. However, price paid for those calves and the costs to reach 500 lbs. will be determining factors in the longevity of these breeding programs.

Note: Published first in Keystone Cattlemen's Magazine. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the view of the U.S. Department of Agriculture.