Why Today’s Best Dairies Cull Healthy Cows That Could Produce for Years

Executive Summary: Wisconsin dairyman Eric Grotegut no longer culls cows in crisis—he replaces them strategically on “Monday afternoons,” capturing a $1,350 per head advantage that’s reshaping dairy economics nationwide. Despite cows being genetically capable of living 13 months longer than they did 20 years ago, the math now favors earlier replacement: while a third-lactation cow generates $234 in annual profit, her $350 genetic lag means a younger replacement creates $2,704 in value over three years. This shift, powered by genomic selection tripling genetic progress to $75 yearly, beef-on-dairy premiums of $370-400 per calf, and IVF technology approaching commercial viability, has created an unexpected crisis—heifer inventory down 18% with prices soaring from $1,720 to over $3,000. The optimization technology driving these decisions requires an annual investment of $26,000-78,000, achieving positive ROI only above 400 cows, accelerating consolidation that may reduce U.S. dairy farms from 26,000 to 15,000-18,000 by 2035. With environmental genomics launching in 2026-2027, producers face three paths: scale up to 600+ cows and embrace technology, develop specialized niches like organic or direct marketing, or exit strategically before 2030 while preserving asset value. The longevity paradox reveals a fundamental truth—in modern dairying, keeping cows longer often means keeping the operation shorter.

You know, there’s something that doesn’t quite add up when you really think about it. Our cows today are genetically capable of living 13.2 months longer than they did twenty years ago—that’s what the folks at CDCB showed us at the October meeting held during World Dairy Expo, saying we’ve gained about 4.7 months of productive life per decadethrough genetic selection. But here’s what’s interesting: many of the most progressive producers I know are actually replacing them earlier, not later.

Eric Grotegut, who runs 1,400 cows up in Wisconsin, said something at that meeting that really stuck with me.

“15 to 25 years ago, it seemed like I was selling cows every day for a lame cow, a mastitis cow, a pneumonia cow—something all the time. Now most cull cows are on Monday afternoon.”

Monday afternoon. That shift—from emergency culling to what Eric calls “Monday afternoon” strategic replacement—well, that tells you everything about how dairy economics have completely flipped in the last decade or so.

The Math That Changes Everything

So I’ve been digging into what the researchers call the Retention Payoff calculation, or RPO for short. Basically, you’re asking: does keeping this cow generate more profit than replacing her with a younger animal? And what I’ve found is…the numbers are surprisingly clear-cut.

Here’s how it breaks down in a real scenario that many of us face. You’ve got a third-lactation cow producing 68 pounds daily—decent production, no major health issues, right? She’s profitable, generating about $234 in annual profit above her direct costs, according to the Wisconsin Extension models. So, naturally, you’d think, why would anyone replace her?

Component	Mature Cow	Replacement Heifer (3 Years)
Annual Profit Above Costs	$234 (with $350 genetic lag at $75/yearprogress)	Year 1: $97Year 2: $720Year 3: $1,031
Genetic Opportunity Cost	$233/year (USDA analysis)	No lag—current genetics
Net Present Value	$1,353 (over 3 years)	$2,704
Bottom Line Advantage	—	$1,350 more value from replacement

Here’s what’s really happening, though. That cow carries genetics from roughly 4-5 years ago, which means she’s about $350 behind current genetic averages. We’re seeing genetic progress at $75 PTA Net Merit per year now—both CDCB and the Canadian Dairy Network have confirmed this. And that creates what Paul VanRaden at USDA calls a “genetic opportunity cost“—essentially $233 per year in lost value from not having current genetics in that stall.

“We’re not just looking at whether a cow covers her feed costs anymore. We’re evaluating whether she’s the most profitable use of that stall space given all available options.”
— Tom Overton, Cornell’s dairy management professor at the Western Dairy Management Conference

Three Technologies Converging to Change Everything

What’s driving this shift isn’t just one breakthrough—and this is what I think many folks miss—it’s three technologies hitting maturity at the same time, each reinforcing the others in ways nobody really predicted five years ago.

Genomic Selection Has Changed the Game Entirely

Since USDA launched official genomic evaluations for Holsteins and Jerseys back in January 2009, we’ve gone from experimental to essential. Today, 95% of U.S. AI bulls are genomically tested, and about 20% of heifer calves get tested within their first week of life, according to CDCB’s latest data.

The impact on genetic progress? Man, it’s been dramatic. Before genomics, we were seeing gains of about $28 PTA Net Merit per year. Now? We’re hitting $75 per year—nearly triple the rate.

The Canadian Dairy Network’s 2024 report shows even more dramatic shifts in specific traits. Production traits have doubled their rate of improvement, but here’s what’s really impressive: tough traits like daughter pregnancy rate have increased threefold to fourfold. That’s…that’s game-changing for our industry.

Kent Weigel at the University of Wisconsin, who’s been tracking this since the beginning, tells producers that “farmers typically cull the bottom 15 to 20% of calves based on genomic testing, but the exact proportion depends on the number of surplus heifer calves available on a given farm.” And he’s right—it’s all about finding that sweet spot for your operation.

Sexed Semen: Strategic but Still Limited

Now, sexed semen adoption in the U.S. sits at 25-30% according to NAAB statistics. Compare that to the UK, where they’re at 84% based on AHDB’s 2024 report. Why the gap? Well, the challenges are real, as many of you probably know.

Conception rates with sexed semen still run 15-20% below conventional, based on large-scale field data from Alta Genetics and Select Sires. The stuff costs 2.3 times more—you’re looking at $50-64 versus $18-28 for conventional. And during summer heat stress? Forget about it.

Peter Hansen’s group down at the University of Florida has shown that pregnancy rates can drop to 25-30% with sexed semen when the temperature-humidity index exceeds 72. Those of us dealing with hot summers know exactly what that means for breeding programs. July and August can be brutal.

But here’s what’s working: virgin heifers in fall and winter. You can still hit 60% conception rates with good management. Matt Lauber, working with Paul Fricke at Wisconsin, showed that with proper synchronization protocols, the fertility gap narrows to just 8-12%—making sexed semen far more viable in optimized systems. It’s not about using sexed semen everywhere—it’s about using it where it pencils out.

Beef-on-Dairy: The Revenue Stream Nobody Saw Coming

This might be the biggest shift I’ve seen in twenty years of watching this industry. We’ve gone from 200,000 beef-cross dairy calves in 2008 to 2.9 million in 2025, according to Rabobank’s analysis. These calves now represent 12-15% of the U.S. fed cattle supply. Think about that for a minute.

What’s driving it? Money, plain and simple. Day-old beef-cross calves are bringing $370-400 premiums over straight dairy bull calves based on USDA auction reports from Wisconsin and California. For a 1,000-cow operation breeding 60-70% to beef, that’s $222,000 to $280,000 in annual premium revenue that didn’t exist before 2015.

Glenn Klein, who manages 3,600 cows across multiple sites in Wisconsin, explained their approach at the Industry Meeting: “We’ve been doing beef-on-dairy since I think 2018 or 2019. We do it somewhat strategically based on the cow. We look at her genomics, see her past history, and basically decide whether she gets sexed semen or beef semen.“

The Constraint Nobody Planned For

But here’s where things get complicated—and it’s a perfect example of unintended consequences in our industry. This strategic shift toward beef-on-dairy has created the worst heifer shortage in 20 years.

CoBank’s August 2025 analysis shows national dairy replacement heifer inventory at 3.914 million head. That’s 18% below 2018 levels and the lowest we’ve seen since 2005. They’re projecting inventories will shrink by another 800,000 head before recovering in 2027.

The math is straightforward but painful. With 60-70% of the national herd now bred to beef—that’s per National Association of Animal Breeders data—we’ve essentially cut our replacement pipeline in half.

Heifer prices tell the story: from $1,720 in April 2023 to $3,010 by July 2025, according to USDA market reports. And I’ve seen high-quality Holsteins fetching over $4,000 at auctions in Turlock, California, and New Ulm, Minnesota.

This creates a real paradox, doesn’t it? While the RPO math strongly favors replacement, producers are actually reducing culling rates—down from 32.7% in 2019 to 27.9% in 2024, according to Canadian Dairy Information Centre data, which is the best North American dataset we have. They’re keeping marginal cows they would’ve culled five years ago when heifers cost $1,200.

“We know the economics favor replacement, but you can’t replace what you don’t have. So producers are keeping cows a bit longer than optimal while rebuilding heifer inventory.”
— Mike Overton, DVM, who directs technical services at Elanco

IVF: From Seedstock Tool to Commercial Reality

What’s fascinating to me is watching IVF technology move from the seedstock world into commercial dairies. Current pregnancy rates have climbed above 50-55% based on 2024 data from Trans Ova Genetics and other major providers—matching or even beating conventional AI in some cases.

The cost trajectory is what really matters, though. We’re at $350-450 per pregnancy today, but industry projections show that dropping to an estimated $200-300 by 2027-2029 as volumes scale and protocols improve.

Several technical improvements are converging here:

• Optimized FSH protocols during the voluntary waiting period increase oocyte yields by 51%—that’s from Wisconsin research
• Time-lapse embryo selection with continuous monitoring from fertilization through day 8 improves pregnancy rates by 15-25 percentage points, according to Animal Reproduction Science
• Vitrification technology—that ultra-rapid freezing technique—now allows frozen embryos to match fresh transfer success rates

Sean Nicholson, who runs 1,600 cows in Tulare County, California, shared his experience with the California Dairy Magazine: “IVF pregnancy rates markedly exceed what we see with conventional AI, especially during summer when heat stress hammers traditional breeding.” His operation now uses beef IVF embryos for 7% of pregnancies—producing purebred Angus calves from Jersey recipients that bring even higher premiums than regular beef-crosses.

For operations above 800 cows, IVF is starting to pencil out. You can take your elite donors—that top 3-5%—and produce 10-15 pregnancies annually versus one naturally. This creates what I call a three-tier system: elite cows produce all your replacements via IVF, middle-tier cows just make milk, and bottom-tier cows produce beef calves for cash flow.

Success Story: Minnesota’s IVF Innovation

Take a look at how one Minnesota operation is making this work. They’re running 850 cows, started genomic testing everything three years ago, and now use IVF on their top 25 females. Last year, those 25 cows produced 180 pregnancies—enough to cover all their replacement needs plus some to sell. Meanwhile, they bred the rest of the herd to beef and captured an extra $240,000 in calf revenue. That’s…that’s transformative economics.

What’s interesting is they’re not doing this alone—they’ve partnered with two neighboring farms, each running 400-500 cows, to share IVF technician costs and expertise. It’s the kind of cooperative approach that makes advanced technology accessible at smaller scales.

Environmental Pressure: The Next Wave Coming

Here’s something that hasn’t hit most U.S. producers yet, but it’s definitely coming. John Cole at CDCB revealed in October that methane emissions evaluations will launch in 2026-2027, with disease resistance traits following shortly after. When these environmental traits are integrated into selection indices, genetic progress could accelerate from the current $75 per year to an estimated $110-125 per year, depending on the heritability and economic weightings of these new traits. That’s a 47-67% jump.

The University of Wisconsin’s $3.3 million methane project has found heritability of 0.20-0.28 for residual methane traits. That’s moderately to highly heritable, which means we can effectively select for it. They’re using milk spectral data and even fecal microbiome profiles as proxies for rumen emissions, which would make large-scale phenotyping actually feasible.

What’s particularly interesting is looking at what’s already happening in Europe. UK and Irish producers are getting 2-4 pence per liter premiums for verified emission reductions, according to Arla Foods’ 2024 sustainability report. Every dairy bull calf they raise counts against their farm’s carbon intensity score. When similar pressures reach U.S. markets—and trust me, they will—cows with poor environmental genetics might become economically unjustifiable regardless of their production level.

The Reality Check: Who Can Actually Execute This?

Now, all this sophisticated RPO optimization sounds great in theory. But after talking with producers and consultants across the country, I’ve realized there’s a massive gap between what’s theoretically optimal and what most farms can actually implement.

The industry basically breaks into five distinct tiers based on what I’m seeing:

Elite operations—those running 1,000+ cows and producing about 45% of U.S. milk—they’ve got the whole package. Daily milk weights, genomic testing for every calf, activity monitors —the works. Eric Grotegut’s Wisconsin operation falls squarely into this category. They’re truly optimizing these RPO calculations daily.

Progressive commercial farms running 400-1,000 cows —roughly 30% of our milk supply —have most of the tools but use them monthly rather than daily. They’ll perform genomic testing on 60-80% of calves and run activity monitors on breeding-age animals.

Mainstream operations—150-400 cows, about 20% of milk—they operate on rules of thumb. Kristen Metcalf, running 360 cows in Minnesota, described improving health through “implementing more frequent hoof trimming and rubber mats in the barn.” That’s good management, absolutely, but it’s not sophisticated RPO optimization.

Smaller operations with fewer than 150 cows, which produce about 5% of our milk, simply don’t have access to these tools. At $26,000-78,000 annual investment for full RPO infrastructure—genomic testing, monitors, software, consultants—it only achieves positive ROI above 400 cows.

You know, research from ETH Zurich published in the Journal of Dairy Science found that suboptimal culling decisions cost 1.55 Swiss francs per cow monthly. And here’s the kicker: losses from keeping cows too long were three times greater than premature culling losses. But that analysis required dynamic programming models with detailed farm data—exactly what most mid-size operations lack.

Practical Strategies by Farm Size

What farmers are discovering varies dramatically by scale, and honestly, there’s no one-size-fits-all answer here. Let me break down what’s actually working:

For Large Operations (800+ cows):

Go all-in on the technology. Full genomic testing runs about $40-50 per calf through companies like Zoetis or Neogen—that’s $12,000-20,000 annually for a 1,000-cow herd, but it pays back quickly.

Consider IVF programs for your top 3-5% once you’ve identified them genomically. Keep beef-on-dairy at 60-70% to maximize that revenue stream while beef premiums stay high.

And start preparing for environmental compliance now. Methane measurement infrastructure is projected at $50,000-100,000 based on current equipment costs, though specific U.S. regulatory requirements are still being developed.

For Mid-Size Operations (200-600 cows):

Focus on what I call the 80-20 approach—capture 80% of the value with 20% of the complexity:

• Definitely genomic test all your heifers and cull the bottom 15-20% before spending $2,900 to raise them
• Use your monthly DHIA test to identify cows below 75% of herd average production who are also open past 120 days
• Put beef semen on your bottom 50% by either genomic merit or production
• The key decision: can you scale to 600+ cows in the next 3-5 years? If not, start developing a niche strategy now
• Consider cooperative approaches—some 400-cow operations are exploring shared IVF programs with neighbors to access technology at a viable scale

For Smaller Operations (under 200 cows):

Your economics are fundamentally different, and that’s okay. Focus on:

• Reducing involuntary culling through better fresh cow management and hoof health
• If you’re in the right location, organic certification can capture $7-12/cwt premiums that offset scale disadvantages
• Direct marketing through on-farm stores or agritourism might work
• But let’s be honest here—if you don’t have a clear competitive advantage like paid-off land, unique market access, or family labor, start planning your exit strategy for 2027-2030 before technology requirements intensify

Regional Realities Shape These Economics

It’s worth noting that these dynamics play out differently across regions. California’s massive operations—many running 3,000-5,000 cows—they’re already deep into IVF and sophisticated optimization. Meanwhile, Vermont’s pasture-based systems face entirely different economics where land constraints and organic premiums create alternative value equations.

The Upper Midwest sits somewhere in between, with operations like Grotegut’s finding that sweet spot of scale and technology adoption. Texas and New Mexico operations? They’re dealing with water constraints that trump genetic optimization. Each region has its own version of this story, you know?

And seasonally, everything shifts. Summer heat stress in the Southeast makes sexed semen nearly unusable from June through September. Wisconsin producers might have a solid eight-month breeding window, while Arizona dairies face reproductive challenges year-round. These aren’t minor details—they fundamentally change the economics.

The Consolidation Nobody Wants to Talk About

Here’s the uncomfortable truth: we need to face it directly. Every trend we’re seeing—RPO optimization, IVF scaling, beef-on-dairy, environmental genomics—creates economies of scale that favor large operations.

Based on current trajectories and what we saw from 2000-2020—a 54% decline in farm numbers while production increased 16%—I expect we’ll see U.S. dairy farm numbers drop from today’s roughly 26,000 to somewhere between 15,000 and 18,000 by 2035. That’s a 30-40% reduction.

These aren’t just business decisions—they’re family legacies facing new realities. Farms that have been in families for generations are weighing whether the next generation can make the economics work. And that’s…that’s tough to watch.

Technologies providing 10-20% efficiency improvements only achieve positive ROI at 400-800+ cow scale. Operations below these thresholds aren’t “behind”—they’re structurally excluded from the tools that enable optimization.

What to Watch in 2026

Looking ahead, here’s what I’m keeping an eye on:

• Methane genomic evaluations launching mid-2026, according to CDCB’s timeline
• Heifer inventory beginning recovery late 2026 into early 2027, per CoBank’s projections
• IVF costs potentially hitting that $250-300 sweet spot—watch Trans Ova and other providers
• Environmental regulations in California are potentially creating templates for other states

The Bottom Line for Your Operation

The longevity paradox—cows that can live longer but shouldn’t economically—it’s just one symptom of a broader transformation. What really matters is understanding where your operation fits in this changing landscape.

If you’re above 400 cows, the math increasingly favors aggressive adoption of advanced technologies and strategic culling based on genomic merit. That $1,350 RPO advantage? It’s real, and it compounds over time.

If you’re between 200-400 cows, you’re at a crossroads. Either develop a clear path to 600+ cows or find a niche that offsets your scale disadvantage. There’s no shame in either choice, but indecision…that’s what’s costly.

If you’re under 200 cows, be realistic about your options. Unless you have structural advantages—debt-free land, unique market access, off-farm income—the economics are working against you. A well-timed exit in 2027-2029 might preserve more value than struggling through 2030-2035.

The dairy industry is experiencing what economist Joseph Schumpeter called “creative destruction“—old systems giving way to new ones that are more efficient but also more capital-intensive. Cows built to last longer are leaving sooner, not because they can’t produce, but because the math increasingly says they shouldn’t.

Understanding and adapting to this reality—rather than fighting it—that’s what’ll determine which operations thrive in the next decade. The genetics exist for cows to live longer. The economics increasingly say they won’t. That’s not a bug in the system—it’s become the system itself.

But you know what? Within these constraints lie opportunities for those willing to adapt, whether through scale, specialization, or strategic partnerships. And there’s innovation happening at every scale—I’m seeing 200-cow operations finding profitable niches, 500-cow farms forming cooperative IVF programs, and yes, larger operations pushing efficiency boundaries we couldn’t imagine five years ago.

The key is making clear-eyed decisions based on your specific circumstances, not industry averages or what your neighbor’s doing. Because at the end of the day, the best strategy is the one that works for your land, your family, and your future.

Key Takeaways: 

• The $1,350 replacement advantage is real and compounds annually: Even profitable third-lactation cows generate less value than younger replacements due to $75/year genetic progress—making strategic culling more profitable than longevity
• Your scale determines your future: Operations need 400+ cows for optimization technology ROI, 600+ for sustainable competition, or a clear niche strategy (organic, direct marketing) to survive below these thresholds
• Maximize beef-on-dairy NOW before 2027: With current $370-400 premiums and 60-70% breeding to beef optimal, this revenue stream won’t last—heifer inventory recovery and beef cycle correction will compress margins within 24 months
• Technology adoption isn’t optional, it’s existential: Genomic testing ($40-50/calf), IVF (dropping to $200-300), and environmental compliance ($50,000-100,000) will separate survivors from casualties when methane regulations hit in 2026-2027
• Decision time is 2026, not 2030: Whether scaling up, specializing, or exiting, waiting means competing against operations that have already optimized—make your strategic choice while you still have options

Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.

Learn More:

• December 1 Deadline: How Cutting 15% of Your Herd Could Add $40,000 to Your Bottom Line – This tactical playbook provides a 90-day plan for executing the strategic culling decisions discussed in the main article, revealing how to immediately cut costs, optimize components for premiums, and layer in beef-on-dairy revenue.
• Decide or Decline: 2025 and the Future of Mid-Size Dairies – For producers at the 200-600 cow “crossroads,” this article analyzes the strategic choices. It details the financial realities of scaling up versus the operational pivots required for successful specialization and technology adoption.
• The Methane Efficiency Breakthrough: How Smart Breeding Cuts Emissions 30% While Boosting Your Bottom Line – This piece is a deep dive into the “next wave” of environmental genomics. It explains the hard economics of why genetic selection for methane efficiency offers a permanent, cumulative ROI that feed additives cannot match.

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