Short communication: Milk fat payment affects the relative profitability of Jersey and Holstein-Friesian cows at...

Choice of stocking rate and breed of cow are 2 strategic decisions that affect the profitability of pasture-based dairy farm businesses. This study sought to analyze the effects of a range of fat and protein prices on the profitability of the Jersey (J) and Holstein-Friesian (HF) breeds at 2 comparative stocking rates (CSR): 80 kg of body weight (BW) per tonne of dry matter (DM) of feed (CSR80), and 100 kg of BW per tonne of DM of feed (CSR100). Data were obtained from a recently published study, and equations constructed to determine the values for fat and protein at which each breed broke even (profit = NZ$0/ha; at time of writing, NZ$1 = US$0.69 or €0.60), returned equal profit, and exceeded the other breed by 1% or 5%. At CSR100 there were few combinations of fat and protein prices for which HF were more profitable than J. At CSR80, J and HF were equally profitable at a fat price of NZ$5.67 ± NZ$0.20 per kilogram, depending on protein price. The study also highlighted the importance of including volume adjustments in milk price calculations when differences in milk composition exist, as the fat price at which the profitability of HF and J were equal was NZ$1.23/kg lower when volume adjustments were included. The recent increase in the value of fat relative to protein favors J. Farmers should consider the medium- to long-term outlook of fat price when evaluating breed choice for their farm system.