The latest economic values for different traits in milk and dairy livestock indicate a settling down of the value component ratio (VCR) in the range of 1 to 1.2, he said.
A new VCR of 1.16, published by NZ Animal Evaluation and Dairy NZ to take effect from February 21 means milk fat is 16% more valuable than milk protein.
The new actual economic values are $4.25/kg for milk fat, up 22% from 2019, and $4.26 for protein, down 3%.
The VCR incorporates those EVs and reflects the fact all breeds and crossbreeds of dairy cows produce more fat by volume of milk than protein, hence the 1.16 ratio and not parity as the EVs would indicate.
Ellis said the movement of VCRs over the past decade has been steady and reflects the rehabilitation of fat in western diets.
For decades previously protein was two and even three times more valuable than fat and Holstein Friesians had come to dominate the national herd because they offer higher protein and greater milk volumes.
Then six years ago fat started its relative rise in value and for the past two seasons the Fonterra VCR showed fat as more valuable than protein.
“We have watched with interest the shift to parity and then beyond,” Ellis said.
“That trend has positively impacted Jersey and Jersey-cross genetics, such that 26 of the top 30 on the ranking of active sires list are now Jersey bulls.
“We had envisaged such movement, by watching international demands, and have been operating our internal indexes in breeding schemes with a VCR of 1 to 1.2 for two years now.
“We hold the view that the new normal is now parity to 1.2.”
Ellis said dairy cattle breeders asked him whether the retreat from the peak as indicated by the latest EVs by Animal Evaluation would continue till protein is again considerably more valuable than fat.
He said either sugar or fat is required to add taste to a food product and the reputation of fat has completely changed from a dietary perspective.
“I think a VCR of parity to 1.2 will be the long-term relationship and we should be breeding our dairy cattle to reflect that.”
Ellis said LIC has to use foresight when managing its breeding schemes and it believes high VCRs in recent years were an overshoot that has now corrected.
The Animal Evaluation calculations of economic values account for milk production, historical, current and forecast milk prices, income from culls, surplus cows and bobbies, the cost of generating replacements and general dairy farm expenses.
They are combined with breeding values to calculate an animal’s Breeding Worth.
Milk fat will make up 24% of the Breeding Worth index, being the largest component, while protein is 17% and milk volume is 13%.
On average, BW for AE-enrolled bulls will increase by $7 in 2020, with minimal changes in relativity between breeds and crossbreds.
The Animal Evaluation VCR is an average of five years – three historical, the current year and one year forecast.
Fonterra also calculates its own VCR, updated before the start of a new season, using a moving average of product prices over the past three years.
It signals to farmer-suppliers what the differential payments for fat and protein will be at the margin.
Typically, differences in milk composition move the final milk payout by only 10c/kg either way, rewarding high fat or high protein.
Animal Evaluation was poised to introduce an enhanced genetic evaluations system from February 21, underpinning the national breeding objective and informing the decisions farmers make on breeding.
The objective is the breeding of cows that are more efficient in converting feed in into milk and profit, Animal Evaluation manager Brian Wickham said.
Breeding companies LIC and CRV are collaborating on the project, which will replace genetic evaluation software with a nationally consistent, independent genetic evaluation system for dairy cattle.
The software will be called NZAEL 2.0.
Two of the changes are better recognition of trait differences between breeds, in particular for fertility, and the removal of the effect of inbreeding on breeding values.
Wickham said the update is the biggest change since the introduction of Breeding Worth in 1996.
The new system incorporates LIC’s latest software and models and the Animal Evaluation research work.
A scientific advisory committee with animal genetics experts from NZ, Australia, Ireland and the Netherlands has peer reviewed and endorsed the upgraded system, which has been rigorously tested.
Ellis said LIC has software that can compute larger quantities of data and give greater insights into animal performance.
More accurate predictions of genetic merit are the foundation of the breeding of bulls for NZ conditions, CRV Ambreed sales and marketing manager Jon Lee said.
