Contract heifer rearing a vital resource

Experts have calculated that, on average, using grazing systems it can cost around UK£1,800 per head to rear them. Research has shown that this figure can be reduced by managing the animals to calve down at 2 years old, at between 540kg and 580kg liveweight.

In addition to the baseline variable costs, the rearer will have to factor in an allowance for his or her own labour and the share of the fixed costs on the farm such as machinery upkeep and running costs, depreciation, electricity, and insurance. Land and building rental will also have to be factored in,”

Calving at this age can also mean the heifers have less calving difficulty, higher lifetime milk yield and are more likely to be milking at 5 years of age, than heifers calved at over 30 months.

Having someone else rear the replacement heifers not only releases a lot of time for the farmer and housing demand, the practice can also be essential on some farms trying to keep their farms under Nitrates Directives quotas. Photo: Chris McCullough

Staying within Nitrate Directive quotas

Having someone else rear the replacement heifers not only releases a lot of time for the farmer and housing demand, the practice can also be essential on some farms trying to keep their farms under Nitrates Directives quotas.

Moving heifers to another farm in another country in mainland Europe to reduce phosphate production levels is quite common.

Contract rearing used to spread phosphates quota

Take the Netherlands, for example, it has an estimated 1.7 million dairy cows on 18,000 dairy farms and only stretches to 41,500 square kilometres in size.

Having so many cows the country adopted its Nitrates Directive in order to comply with EU regulations that governed the amount of phosphates that can be used per farm with a base figure taken from stocking rates in 2015.

Dutch dairy farmers are having to move their young stock to other farms in different European countries in order to spread the phosphates quota restriction and comply with the regulations.

Benefits of sending heifers to a contract rearer

In general, sending heifers to a contract rearer benefits farmers who are restricted by a lack of land, labour and buildings or where the profit for the farm could be increased by concentrating solely on the milking herd with possible opportunities for expansion.

Delegating the responsibility for heifer rearing to an outside specialist provides the potential to gain from the rearer’s livestock experience and sole focus on this enterprise.

…a detailed written contract specific to the farms involved and to include key performance targets, should be agreed in advance of heifers moving. This will help avoid disappointment or disagreement between parties.”

Key to a successful contract rearing agreement

The arrangements in place for the rearing of heifers can vary from farm to farm depending on circumstances.

Gavin Duffy, a dairy development adviser at the College of Agriculture, Food and Rural Enterprise (CAFRE) in Northern Ireland, has looked closely at the benefits of contract rearing heifers.

He said: “Maintaining a good working relationship and having an agreed written contract in place are key factors for the success of contract rearing. Contracts allow for some of the day to day issues that may arise to be identified, discussed and agreed before the heifers arrive on the rearer’s farm. A contract will also reduce the possibility of disappointment and disagreement between parties.”

Delegating the responsibility for heifer rearing to an outside specialist provides the potential to gain from the rearer’s livestock experience and sole focus on this enterprise. Photo: Chris McCullough

Who does what?

Generally, the rearer will be responsible for looking after the stock on a daily basis and in most cases will provide housing, feed, water and electricity. However, in addition, it may be agreed that the rearing farmer will administer all medicines, wormers, vaccines and fly treatments according to protocols established with the owner.

Breeding management

A key task for the rearer is to ensure the heifers go in-calf early in the breeding season as per the owner’s instruction. This will require good breeding management, ensuring heifers reach target weights and are in the correct body condition at breeding.

Payment of health bills

Depending on the contract, it is common for the owner to provide and pay for the main veterinary work such as the main health treatments such as medicines, wormers and vaccines and hoof work. Where artificial insemination is used the owner would normally select and pay for semen and pregnancy diagnosis if carried out.

Supply and return of heifers

It is important to both the rearer and the owner that dates for the supply and return of the heifers are agreed up front because the number and age of animals and time present on the rearers farm will determine the payment rates and the total revenue expected. Deviations from this will also have to be factored into the agreement.

Performance targets

It is crucial that heifers are reared cost effectively to calve at an age and body size which will maximize lifetime performance. An example of the key performance targets for Holstein heifers calving at two-years-old are shown below which assumes a mature cow weight of 650kg.

• Target weight at 6 months old (30% of mature weight) = 195kg
• Weight at service – 15 months (60% of mature weight) = 390 kg
• Weight at calving – 2 years old (90% mature weight) = 585kg

Gavin added: “In order for these targets to be achieved, heifers need to be performing at an average daily liveweight gain of 0.75kg from a birthweight of 40kg to calving down at approximately 580kg.

“Achieving these targets on a consistent basis will require good housing, husbandry, and feeding management and an adherence to a good health management programme. The owner of the animals needs to satisfy themselves in advance that the rearer has the necessary skills, facilities and commitments for this to happen.”

Regulatory issues for contract rearing

In an ideal situation, farmers should agree a contract with a single rearing farm where no other stock are on site. Responsibilities regarding insurance of property and in particular the livestock should be agreed in advance.

Insurance

It is recommended that both parties should make their insurance providers aware of the agreement, so that all appropriate risks are covered either by the owner of the heifers or the rearers insurance. Provision of appropriate insurance against the theft of animals from the property of the rearing farmer should also be agreed.

Costs

An important component of any contract heifer rearing agreement is the payment to be made for the service. In order to give some guide to the costs involved, the typical average variable costs associated with rearing an autumn born dairy replacement to calve at 2-years-old are shown in Table 1.

“In addition to the baseline variable costs, the rearer will have to factor in an allowance for his or her own labour and the share of the fixed costs on the farm such as machinery upkeep and running costs, depreciation, electricity, and insurance. Land and building rental will also have to be factored in,” said Mr Duffy.

“It will be important from the rearers viewpoint that they have some knowledge of their own production costs. A heifer rearing contract has to be financially attractive to both the dairy farmer and the rearer as it should be a relatively long term arrangement and thus both parties need to be content with the financial agreements.

“Additional incentives may be built into the contract to encourage and reward above average performance in areas such as growth rates, fertility or health management. In contrast some thought also has to be given to situations where key performance targets are not achieved or how animal deaths are treated.”

Know the risks of contract rearing

There are potential risks associated with contract rearing including a loss of control over the day to day management of replacement heifers, the risk of disease outbreaks and the possibility of heifers performing poorly where the rearer may not have the system or husbandry skills to achieve key performance targets. There’s also a risk of disagreement between the owner and the contract rearer.

“However, contracting out the rearing of replacement dairy heifers may be an attractive option well worth considering for some dairy farmers,” added Gavin. “In short, a detailed written contract specific to the farms involved and to include key performance targets, should be agreed in advance of heifers moving. This will help avoid disappointment or disagreement between parties.

“Ideally heifers should be weighed regularly to closely monitor performance and identify under-performing animals quickly. Each heifer is an investment so it is important that both parties can work together smoothly to achieve the best results,” he said.