University of Nebraska - LincolnDigitalCommons@University of Nebraska - Lincoln3rd World Congress on Genetics Applied toLivestock Production Animal Science Department

1-1-1986

Economic Evaluation of Breeding Objectives forMilk and Beef Production in TropicalEnvironmentsF. E. MadalenaIICA/EMBRAPA

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Madalena, F. E., "Economic Evaluation of Breeding Objectives for Milk and Beef Production in Tropical Environments" (1986). 3rdWorld Congress on Genetics Applied to Livestock Production. Paper 19.http://digitalcommons.unl.edu/wcgalp/19

SUO«C JNAIl1M'I~ OF BREIDlliG ~ F<R MI:IK All> BEEF

PR(Ilrl'I~ IN 'mOPICAL ~

1 F. E. ~IADALENA

BRAZIL

, fluence of sore elements of tropical milk production systems on ~ : 'ectives is discussed. Expansion of demand for milk and meat should

breSdi.119 J fran increased population and incane growth. Relative ccmrercial be ~lk fat may be strongly influenced by government policies regulating value 0 rtion of liquid milk consumed. calf production is an integral part of the P~rmance under the c::c.mron practices of hand milking and suckling. Milk COlI per rna be an inportant trait for milking in modern dairy parlours.' letdCJWnimen~ econanic evaluations have referred mainly to carparisons of breeds sxper crosses, indicating that European, x zebu c;:ro~ses <;>ut~rfo:rmed 'purebr~s in := environnents studied. An evaluat10n of nulk1ng hme 1n relat10n to nulk

'eld of crossbred groups is presented. Results fran a simulation study on tick ~l strategies allowed evaluation of genetic change in tick resistance.

INTRODUCTION

Man keeps cattle to obtain milk, meat and other products. ~t, and particularly milk, are products of high nutritional value, but their role in human nutrition depends on the complementary diet, including possible substitutes fran cheaper protein sources (Kon, :1972). Breeding goals should be related to human needs (Maijala, 1976) • Nonetheless, the production, transformation and distribution of cattle products generate econanic activities, the efficiency of ac:h can be irrproved by the use of animals capable of increasing product yield or quality per unit of resources (land, labour, capital) of a given production system. '!he objective of breeding plans may then be defined as the obtention of animal genotypes resulting in irrproved econanic performance of the system, thus providing a basis for decisions on such aspects as choice of breeds, crossbreeding strategy and selection of individuals within a breed.

Eoonamic evaluations of cattle breeding objectives in tropical countries have been scarce. This may be a consequence of there being few applications of IIIldern inprovement progranrnes, perhaps because artificial insemination and milk recording are used only on a small scale. In this paper, I would like to discuss acme socioeconanic and ecological aspects of tropical dairy cattle systems, as they .strongly influence the relative econanic importance of different traits. A very brief review of theoretical aspects is initially presented to provide a general framework for the subject.

1 13ICAlEMBRAPA, Centro Nacional de Pesquisa-Gado de Leite

6155 Coronel Pacheco-M;, Brazil

Economic performance of a production system (breeding objective) measured as a profit (P) obtained from the difference between total minus costs (e), P = R-e (Moav and Moav, 1966), or, as return n"p~rmpn. (cartwright, 1970) or its inverse e/R (Dickerson, 1970).

Because of costly recording of total receipts and expenses animals - or even of groups - selection is usually practised on a measurable traits - the selection criterium - which should be designed maximize genetic progress in the breeding objective (James, 1982). A evaluate returns from investment in a breeding programne, which nrv",rr"",,..·~"".

discounting of future genetic gains, was described by Hill (1971).

Hazel (1943) defined the breeding objective as the aggregate op:nnl-'~~ linear function of single trait genotypes weighed by their economic "the amount by which profit may be expected to increase for each unit improvement in the trait". For the more general situation of non linear functions, Moav and Hill (1966) used as economic weights the partial of profit on traits, evaluated at mean present value for each trait. (1983) suggested that this procedure would generally (but not· satisfactory approximations to maximize profit. Economic weights have derived experimentally from the partial regressions of measured profit on single traits (Andrus and McGilliard, 1975). Pearson (1982) and disscussed the properties of different methods of estimation of economic

Because genetic improvement must serve several industry sectors - I farmers, stud breeders, artificial insemination centres, milk processing several authors have stressed the need to define whose profits are to be (Harris, 1970; Moav, 1973). Lack of integration between sectors could conflicting interests which would reflect in divergent sectorial tives (Ponzoni, 1982). James (1982) pointed out that definition of jective as profit (R-e) or as an efficiency ratio (e/R) would lead to relative economic weights of traits. Brascarnp, Smith and Guy (1985) relative economic weights would become the same for any basis of evaLua~~ zero profit situation, that is, including "normal profit" as a part production cost. They argued that, in the long run, temporary ad'vaJ1t:lgE!f) sector over others would spread over all sectors and the benefits over to consumers. This may require perfect competition between ~p{'rr'r~ other theoretical economic conditions. However, the argument would apply to an agency responsible for genetic improvement at the national which should consider a profit equation for all sectors involved in the production system.

Economic weights of traits depend on the role the breed has in the (Ponzoni, 1982): Different population breeding strategies were Mason (1974) and Cunningham (1979). Full advantages from crossbreeding progeny testing may be limited to the small fraction of herds under breeding, and improvement schemes may then require a layer of multipl provide bulls for natural service. Hill (1974) and Brascamp (1978) methods to optimize breeding plans in structured populations.

The establishment of breeding objectives requires a definition production system in which animals will perform (Harris, Stewart and 1984). Ecological and socioeconomic factors influencing the relative weight of traits should be specified. and f11rllrp rn'nnc: in nr;~o~ ~f'

ld be evaluated, since inprovement of future generations is sought -...:I iO?lts sh°2u) sane aspects of production and consumption are discussed below, 1II'" 198. 'd t' Arne' (pearson, , f rence to Brazll an la ln rlca. with spec:lal re e

'ta consumption of milk and meat is very low in tropical countries ~ caPl !.ON income is a major cause for it. Sere and Vaccaro (1984)

(f,ND, 1984~t the lowest income quartile of the population of major latin indi~ted ban centres spent 7 to 13 percent of total food expenditure in milk J!IIIeI'l~ ur oducts for which income elasticity of demand ranged between 0.87 and and dalry P\e and' Yamaguchi (1980) quoted income elasticity of 0.80 for the same 1.16. ~ two Brazilian studies. Data in Table 1 show the expansion in calorie ~ : beef milk and dairy products expected fran increased incame, for lJ:rt:ake ~ income' groupS in Brazil. Future demand of those products should be ~ to expand due to combined effects of population and incame growth (HrabOVszky, 1981).

_ Characteristics of calorie intake fran beef and milk in Brazil. 'JM[B 1 l\dapted from Gray (1982)

Mean ~ capita daily calorie intake, ca

PerceI'lt calorie intake provided by beef milk dairy products

:rncane elasticities for calorie intakes

beef milk dairy products total calories

Lowest 20 percent

1876

2.3 1.9 0.5

1.33 1.50 1. 16 0.37

Incame group

Middle 50 percent

2162

3.2 3.2 1.1

0.71 0.60 0.67 0.19

Highest 30 percent

2369

5.3 5.1 2.3

0.15 -0.06

0.21 0.05

Because of its high digestibility and biological value, milk protein is an CAltstanding nutrient (Kon, 1972) . Rendel (1979) suggested that protein pnXruction should be selected for, independently of prevailing pricing system. !biever, considered as a corrm::x:lity, milk is generally valued on fat content. ~ on market requirements for milk canponents, Jollans (1981) indicated increased fat production as a main breeding objective for EEC countries, where a1l.y 18 percent of milk is consumed liquid. He suggested the same principle might 8R>ly in developing countries. However, the value of fat would be lower in ~tries where a higher proportion of liquid milk is consumed, and may be SUbJected to strong governmental influence. For instance, in Brazil, 46 percent ~lk is consumed liquid (Table 2), the remaining 54 percent being manufactured

IOOre than 74 products, mainly cheese, dried milk powder, putter and ~ and fermented milks (Frensel; 1980). Processing plant receipts and

profits from dairy products are more than proportional to milk input manufacture, as exemplified in Table 3. Liquid milk - but not dairy prices are fixed by the government. The fat differential for the quinquenium was equivalent to 0.0043 1 of quota base milk per 0.1 nA',..",'",,,, base content of 3.3 percent. This compares unfavourably with a rY11r-l"<'''r'''' ....

figure of 0.0142 kg worked out from USA prices (Wiggans, Norman and

~ 2 - Utilization of milk in Brazil (1975/77). From Gemente and (1980)

Total production Liquid milk Dried milk Cheese Butter Other

Annual milk input 1000 tt

8958 4100 1070 1907 627

1254

Most pasteurized milk for liquid consumption in Brazil is standardized content of 3.2 percent, while fat content of milk received at the nrc"¥"<='''''' plant is 3.6 percent. At many farms milk is partially skimmed (in quantities) before being sent to the plant. Recent programmes of free distribution to schoolchildren would tend to reduce the commercial value

~ 3 - Utilization of milk by two dairy plants in Brazil, processing and B, 73.88 tt milk/day

Plant A od . 1 Pr uctlon, tt

Milk input, % Receipt from product/ total plant receipts, % Product price3 in milk equivalent, kg/kg Plant B Production2, tt Milk input, % Profit from product/ total plant profit, %

Liquid milk

4054 66.7

57.5

1.6

21164 95.5

75.6

Product

Butter Cream

33 200 31.5

4.4 34.6

15.1 19.8

69 33 87 0.4 0.2 3.9

18.6 2.3

1. Annual 2. Ten month period 3. Price paid to farmers per kg

Projections of milk fat offer should consider the decreased fat expected from improved milk yield resulting from better husbandry Madalena et al. (1982) reported fat percentages of 3.82 and 4.15, for farms-grouped in two management levels with 2689 and 1517 kg average lactation yield. Protein percentage, however, was similar for both levels, 3.11 and 3.17, resoectivelv_

t of milk increases transport and processing costs and it is wateroconten pricing systems (Pearson and Miller, 1981). These costs will

penalized ~n s~ southern Minas Gerais they have been estimated at 5.1 percent vary locallY:lk n eceipts (A.T. Gomes, personal communication). of farmers I ~ r

° I recently that management practices for tropical dairy herds It ~~ ~ Yesearch attention. Machine milking and artificial calf rearing

have rece~"\}I be ~dOPted a priori just because they are widely used in developed shOOld ° not Hand milking may be chos~n in r~ions ° where capital is scarce and ccuntr~~t From a national po~nt of v~ew, ~t may be preferable to favour labOUOC I t - even if same efficiency is lost - to diminish migration to ~a~ities. For an individual farm manager, lack of train~ o~ra~ors

° tenance/repair services - or even energy - may rule out machlne mllklng. and mun se may of course, be true for more developed regions. '.lhe rever '

The choice of milking technique may also be influenced by the type of cattle 0lable Many zebu and Criollo cows and low grade crosses of these with ~ breeds need the calf suckling stimulus for milk letdown (Mahadevan, ~iSCO and Abreu, 1981) and they cannot be milked in modern parlours where ther~ is no space for cal~es. In same populations calf removal has caused a high ° °denCe of short lactatlons (AMZ, Hayman, 1974; AFS, Reason, Clark and ~ild 1979; Holstein x Brahman , Alvarez and Saucedo, 1982), whereas in other popuLatiO~S this has not been the case (Holstein-Friesian x Gir, Madalena et al., 1980, 1983). Poor management reduces lactation length, particularly of high grade European crosses (Madalena et al., 1982). Divergent results may be due to genetic differences between zebu populations. In the new Australian breeds -which originated from a very small zebu sample - incidence of short lactations was rapidly reduced by selection. Stokoe and Waldron (1982) reported that variation in this trait in the AFS breed was higher among Sahiwal than among AFS sires.

CALF PRWOCTIOO

Tropical milk production systems vary widely in their degree of specialization, even within the same country (Wilkins et al., 1979; Madalena, 1981). In southern Minas Gerais, for example, sales ofimilk and dairy products make up 70 to 73 percent of farm receipts from cattle (A.T. Gomes, personal' cammunication). Sales of cattle are not very important because most male calves are sold at an early age. In other regions there are extensive beef ranches where milk is "extracted" from a fraction of the cows, milked once a day during the favourable season. Paladines (1980) quoted two studies in which milk sales accounted for 13 to 33 and 22 to 50 percent of farm receipts, the lower values corresponding to the larger ranches. Plessow (1985) reported receipts from milk ranging between 17 to 48 percent of total receipts in Venezuelan farms. ~iate situations, characterizing dual purpose systems are also found (Palad~nes, 1980; Ruiz, 1982; CUbillos, 1982; Sere and Vaccaro, 1984). Preston (1977) showed the economic advantages of dual purpose systems and pointed out that sys~ specializing solely in milk or beef production would only be ~le ln countries still having large areas for extensive beef production. ~ and Vacca:o (1984) indicated narrow beef/milk price ratio as the main reason or ~ pred~nance of dual purpose systems, coupled with flexibility to vary

relatlve outputs from milk or animal sales, to adjust to fluctuations in that

ratio. Farmers control the amount of milk left for the calves by milking, by milking once or twice a day (or still milking twice a day high· yielding cows) and by the time interval the calves are left with

calf rearing by suckling has also been advocated for tropical avoid expensive milk substitutes and to reduce calf mortality and ~,.~~\~~~ mastitis. Detrimental effects on cow reproductive performance may restricting suckling periods (Preston and Ugarte, 1971; Alvarez and 1982). calves are predominantly reared by suckling even at farms milking and high grade European crosses in South Central Brazil, cows do not need the calf suckling stimulus for milk letdown. Thus, in majority of tropical dairy systems, calf production is an integral part performance (Vaccaro, 1982; Vaccaro, Vaccaro and Perez, 1983). Large recording of weaning weights would however be extremely difficult, so criteria based on milk yield and calf survival may have to be developed.

The beef/milk price ratio also affects future milk production at national level by influencing the number of heifer calves retained Diniz (1976) reported that the crossed elasticity of Brazilian milk year t with beef price on year t-4 was 0.957.

A few economic comparisons of cattle breeds and crosses have been Ram and Singh (1975), Patel et al. (1976), Parmar and Dev (1978) and Tanar (1984) used cost per lITre of milk as a measure of economic perfl::Jrr~ Sales of milk and manure were the only inoome sources considered - the being deducted from cost of milk production. Reddy and Bassu (1985) profit function which also included receipts from sales of calves and Items included in costs varied among studies. In the comprehensive of Patel et al. (1976) information was obtained at fortnightly visi householdson quantities and prices of the following: green and dry concentrates, milk for calves, mineral mixture, veterinary aid, utilization of cattle manure, repairs, interest on loans and taxes. conclusion from these studies has been that European x zebu crossbreds better economic performance than purebreds and buffaloes, grades above European being preferable to those below that fraction. Heterosis for value was 28 percent of estimated parental mean (Parmar and Dev, 1978).

'12\8LE 4 - Milking traits of Holstein-Friesian (HP) x Guzera crosses.

1/4 1/2 5/8 3/4 7/8 HP

value H = Ym - Tl, where Y = milk yield and T = milking time from breed additive + heterosis model), m = gross margin for milk and 1 = cost of 1 min labour. (a) present values, m = 0.48, 1 = 0.03, both in kg milk equi (b) m = 0.48, 1 = 0.12. From Madalena et al. (1986).

Daily Daily Avg. rate N milking milk of milk

time yield flow min kg kg/min

17 9.41 5.11 0.64 1.9 32 10.89 9.37 0.91 4.0 19 9.31 6.59 0.71 3.0 25 8.94 8.28 0.95 3.5 31 8.19 7.15 1.03 3.3 18 8.12 7.53 1.01 3.0

Ani eoonanic ' c:JeterIIIi.ni and utili Alternati Uvaeight specifyin< paraaeter: levels co: sane of tl resistano genetic i.J since sma. 1985) and inp>rtant

cattle t~

Non resif

Resistant

1 bour costs were evaluated for six Holstein-Friesian x Guzera Milking a at 27 farms in Brazil (Madalena et al., 1986). Groups with

crossbr~ gro~p~ds were not the ones with higher milk flow, but the benefits from higher ~lk Ylee than outweighed the increased milking time (Table 4). E!)Ct.ra Yleld mar

, tl' ng study was conducted by Sutherst et al. (1979), allowing An lnteres , "k' Th ed , 1 ation of genetlc change ln tlC reslstance. ey us a

~c,ev~ usimulation model to study the effects of dipping, pasture spelling det~n~st~~ n of resistant cattle, in various combinations, on tick control. and utll~za l~rategies were compared on the economic loss from tick damage on Alter~tlve ~n and cost of tick control. The results were based on previous data li~~ g~~ck damage (0.26 kg liveweight/tick/year) and tick reproductive speclfYl~~ c~ntrolling population growth in different seasons. cattle resistance paramete esponded to those of European breeds and 1/2 European x zebu crosses. levelsf~~ir results are reproduced in Table 5. The value of genetic tick ~ 0 is of course, dependant on the control strategy chosen. Further resls~~ro~ements in tick resistance should probably come from selection, ~l~ll differences exist between 1/2 and 3/4 zebu crosses (Lemos et al., Sl~ and decreasing European grade below 1/2 would reduce performance in other ~rtant traits (Madalena et al., 1982).

tftBLB 5 - Estimated losses from tick damage and tick control costs (A$/head) on first year of application of three control methods, with an initial population of 100 000 eggs/animal in pasture. From Sutherst et al. (1979) .

cattle type Dipping Pasture spelling

Rotational Single

tGl resistant 4.585 4.35 3.25

Resistant 1.63 1 3.70 1.20

5, 1 : optimal number of strategic dippings.

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