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Milk fat now worth more to farmers than protein


In what is the most significant change to global dairy trade in the past 20 years, milk fat will earn dairy farmers more than protein in the 2018-19 season.

DairyNZ strategy and investment leader Dr Bruce Thorrold said fat had been a low value milk component but had seen a steady rise in recent seasons due to consumer-driven market value.

”That’s a welcome change for New Zealand dairy farmers who are set to receive a strong 2018-19 milk price, buoyed by the value of milk fat.”

Milk price and the relative value of fat and protein are the biggest factors in the breeding worth (BW) of dairy cattle.

The changes in fat price have produced large shifts in BW both between and within breeds.

Of the top 200 bulls by BW in 2019 (BW2019), 70% are Jersey, 5% Holstein-Friesian and 25% Cross-Bred (Jersey and Holstein-Friesian), Dr Thorrold said.

On average, Jersey bulls are increasing by $23 BW while Holstein-Friesian decrease by $28 BW. Cross-bred and Ayrshire bulls are relatively unchanged (-$4 and -$3 BW).

Within breeds, individual bulls will shift up or down by as much as $40 BW relative to their breed’s average shift.

New Zealand Animal Evaluation (NZAEL), a wholly owned subsidiary of DairyNZ, administers a BW index, which is used to rank cows and bulls according to their ability to meet the national breeding objective of breeding dairy cows that will be the most efficient converters of feed into profit for farmers.

NZAEL has recently finalised the economic factors that will be used to calculate BW from February 2019.

Dr Thorrold said due to a sizeable shift in fat and protein value, BW2019 is being published early for all sires enrolled with NZAEL, this will give farmers insights into which bulls can add the most value to their breeding programme in a market where fat is a high value component.

The economic values for fat and protein are calculated by partitioning the milk solids price into a value for fat and protein, and then accounting for the cost of producing each component.

The value of fat relative to protein has been increasing for the past three seasons and this trend is forecast to continue.

New Zealand is uniquely positioned to take full advantage of strong demand for fat-based milk products due to the strong influence of Jersey genes in the national herd.

Dr Thorrold said the shift in consumer demand for fat and the consequent change in BW are big changes for dairy farmers.

” If current fat prices are maintained, then the shift in favour of high fat bulls will continue next year.”

 

Source: Otago Daily Times


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