Dairy Farm Culling Decisions: How do milk price, heifer price and carcass price effect optimal replacement decisions?

This study investigates the optimal replacement policy for dairy herds, considering changes in price parameters and their impact on the percentage of cows with a negative Cow Value. The Cow Value calculates the value of a cow and its replacement based on a Markov Chain model. Simulations explore how milk, heifer, and carcass prices influence replacement decisions in 181 Swiss herds of different breeds. Results indicate that external factors significantly affect optimal replacement rates, with lower milk prices and lower replacement costs favoring more frequent replacement. Brown Swiss and Holstein have higher optimal replacement rates compared to Simmental, Swiss Fleckvieh and Original Brown. Additionally, average milk yield plays a crucial role, suggesting that farms with high yielding cows should consider lower replacement rates to increase revenue.