Fire in the belly with Nate Zwald

The Milk Check

Are you missing the biggest leap in dairy performance since the milking machine?

From fertility breakthroughs to Holsteins with 4.5% components/5% fat, today’s cows are not your grandparents’ cows.

In this episode of The Milk Check, we sit down with Nate Zwald, president and CEO of Progenco, to uncover how genetics is quietly reshaping the dairy industry.

We tackle:

• Why genetic progress is accelerating and how that changes your herd strategy
• The rise of gender-selected genetics and the fall of dairy bull calves
• What makes a cow “better” — and how to breed more of them
• Why embryo technology could be the next big leap

Listen now to the latest episode of The Milk Check to learn why cows engineered for fire in the belly could have improved lifespan, higher fertility, better fat composition and a better life.

Got questions?

Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the show.

Ask The Milk Check

Special Guest:

• Nate Zwald, president and CEO of Progenco

The Jacoby Team:

• Gus Jacoby, president, fluid dairy ingredients & dairy support
• Mike Brown, vice president of dairy market intelligence
• Ted Jacoby III, CEO & president, cheese, butter & dry ingredients

Intro (with music):

Welcome to The Milk Check, a podcast from T.C. Jacoby & Co., where we share market insights and analysis with dairy farmers in mind.

Ted Jacoby III:

Welcome, everybody, to the podcast. This month’s version we have a special guest. We have Nate Zwald, former CEO of ABS Global and current president and CEO of Progenco. Joining us from the Jacoby team is Mike Brown, our VP of Market Intelligence, and Josh White, our VP of Dairy Ingredients. Nate, we’ve asked you on this podcast today because you’re one of the foremost experts in bovine genetics out there, and we’ve been talking a lot about some of the changes in cow genetics and how it’s been affecting our dairy markets. It’s something we’d love to learn a lot more about. Why don’t you start us off? Tell us a little about your background, and we’ll go from there.

Nate Zwald:

Yeah, sure. Well, first of all, a pleasure to be here. I appreciate being asked and appreciate that introduction. I’ve had a long career in dairy genetics, starting with growing up on a farm and learning about dairy genetics from where it should be learned about, in a barn with my dad, thinking about milking cows and recognizing that the next generation of cows was going to be better than the current generation of cows. And that was a pretty fun thing to see firsthand. When you think about having a daughter of a cow out in the heifer yard, that’s going to be better than the cow you’re milking today. And I think that’s the whole idea that we think about when we think about genetics is making better animals faster and trying always to make sure that the next generation is going to be more productive, healthier, happier, better for the farmers, better for the community, and better for the world and the next generation than the cows are in this generation.

And we’ve seen tremendous progress through time in doing that compared to when I was a kid milking cows thinking, “Hey, I hope the heifer is going to be better than the cow herself.” Because here we are, we’ve gone through so many technologies like selection for fitness, longevity, and fertility, and then we went through genomic technology that’s had a huge impact on the industry. And then more recently, sex semen and the use of beef on dairy cows have all had substantial changes to the genetic progress curve compared to what seems like not that long ago from my standpoint, just milking cows in the barn with dad.

Ted Jacoby III:

So, currently, what are some of the major trends in genetics that the dairy producer is either utilizing or needs to be aware of, that are coming down the pike?

Nate Zwald:

Well, I think some of those things that I mentioned, I mean, when you start thinking about the early 2000s, we were going through this time and the shift from selection really for production, which was primarily fluid milk production, and how the cow looks. From a dairy judging perspective, the show cows must be better than cows that don’t look like show cows to thinking about the data and saying what makes a cow live a long, happy life and what makes cows be more productive for their owners? And does that mean that she’s got to be taller and sharper and milk more in terms of fluid milk production, or does that take on a little different thing? Is it the cows that just love to live?

If you think about today’s environment, everybody loves those cows that are first to the parlor. They want to get milked. And those cows that are just always happy, they’re the ones that go and they eat, they sleep, they milk, and they love their life and they love doing it for their owners every day. And then not only do they eat, sleep, and milk, but they do it most profitably and productively possible. That’s been through a series of genetic advancements, and really, that started with looking at those type characteristics and saying, is it type that makes a cow more profitable, or is it things like, does she get pregnant quickly? Does she have an easy calf? Does she live a long time? Is she that kind of aggressive animal that has that fire in the belly to live?

And I think it’s more the latter, those things that you can’t necessarily see physically and phenotypically in the cow. And that was probably the starting point to a whole series of things that kicked off a tremendous amount of genetic progress, where when we think about cows today versus cows 20 years ago, it’s amazing the amount of change we’ve had. And that doesn’t mean they all look like show cows today, but it means they’re more profitable animals. They’re producing a tremendous amount of more components, which is probably something that you guys and your listeners deal with regularly now. And that’s because of the selection, what we’re selecting for, it’s how we’re selecting for with genomics, but then it’s how you implement those things. And that’s probably the most recent thing, probably something that kind of came about quicker than what anybody was ready for, is how dramatic the impact of breeding your best animals to sex semen and your worst animals to beef semen would be in how dairy cows change and how quickly that happened.

Ted Jacoby III:

And so what are some of the results you’re seeing from your point of view on that subject?

Nate Zwald:

So the first thing is we reversed the trend from what was perceived 20 years ago as Holstein cows that were difficult to get pregnant and didn’t live as long as we wanted them to. And a lot of that came back to their health, their fertility rates, and ultimately then because of those things, their longevity. So we’ve changed that trend. That was the 30 or 40-year trend where we were making cows that milk more and looked better, but they were getting less and less fertile, especially Holsteins. Jerseys, to some degree, too. And so you think back to that time, many people thought they had to cross-breed to solve that fertility issue in Holstein cattle. Through genetics, we can make better cows faster. When you define better correctly, and you say better means they have to get pregnant and they have to live a long, profitable life.

When we changed that and implemented that and redefined what was better, we made that progress. And so we reversed that trend and now cows are getting more fertile every generation and producing more pounds of milk, but also especially more pounds of components. And I think that was a lot due to the genomic revolution. So not only did the AI companies and the genetic companies make more progress with the bulls and the genetics that they had for sale and offer, but then dairy farms started implementing the genomic technology on their females. They started testing those females and that allowed them to make decisions. Any information isn’t valuable unless you use that information for something. And so for a while, there were a lot of farms that did genomic testing and didn’t use the information correctly or in a way that advanced genetic progress, meaning better cows faster.

But more recently, with the advent of sex semen, people started doing what they should do, and that is breed the best of sex and leave the rest for beef. And so when you think about a bell-shaped curve of your dairy, whether you have 10,000 cows, 1,000 cows, or 100 cows, you’ve got this nice evenly distributed bell-shaped curve of animals. You got the best ones on the right-hand side of the curve, and you got the worst ones on the left-hand side of the curve. And when you think about using sex semen and you just think about, I can get a female replacement from all my best animals and equally importantly, I don’t have to get any dairy replacement from all my worst animals, the progress of genetic progress, the speed of genetic progress absolutely doubles if not triplicates, because bell shaped curve has a lot of variation in it. There’s a lot of spread between your best animals, your average animals, and your worst animals.

And you think about that genetically, there might be up to a thousand dollars of difference just genetically between your best and your worst animals in your dairy. And before the use of sex semen and beef semen, there was an equal chance that that worst animal was having a heifer calf, and your best animal was having a bull calf as the opposite of that. And today, you can ensure that your best ones have female calves and your worst ones do not have a dairy replacement. And that’s the part that even I underestimated the impact that would be on the breed and on the industry in terms of genetic progress. And part of that reason is why we see Holstein herds that are averaging well over 4.5% components, potentially in some months, at the time of the year, up to 5% fat.

When I was a kid, these were component levels that not even Jersey dairy sometimes met, and now we got Holstein herds that are doing it. Not only did we solve the fertility issue in the Holstein cow, but now we are also really making what some people call a black and white Jersey because they got the component levels of a Jersey and the health and fertility of those Jersey cows, too. And Jerseys have made a lot of progress too, just not quite at the same speed as Holstein because of the smaller population.

Ted Jacoby III:

You just shared a lot of information, but I heard you say earlier that you hinted at the possibility that dairy cows, probably especially the better ones in your herd, can probably be high producers with a longer lifespan today. Did I hear that correctly?

Nate Zwald:

That’s absolutely right. And more fertile through it as well. Part of that is because we’ve changed the definition or the selection goal. It used to be better looking and more productive, but now there’s this big component in the selection goal that is a healthier, more fertile, longer-lasting cow, and I think that’s good for the owners of those animals, but it’s also really good for the world. Consumers want to consume products that are produced sustainably, and there’s probably no better story in the industry than genetics for sustainability. When we make more production, first of all, that’s more sustainable per unit of whatever output. Still, there’s also a real story for making just animals that are happier and healthier and more productive, love doing what they do, their job every day, for example.

There’s no reason to breed animals that aren’t good at doing that. Right? I think that’s a real story in and of itself. The amount of progress we’ve made in terms of the average dairy cow in the industry today compared to 20 years ago, we’re making three times as much genetic progress for those categories of more productive, healthier and longer lasting and then more efficient, and it’s three times as much progress as we were making 20 years ago, and that’s really, really impressive to think about that rate of genetic gain, and we just changed the rate of progress that dramatically over 20 years.

Mike Brown:

I worked for Jersey for years on the milk marketing side. A couple of things that I saw in my career at Jersey were, first, a productive life. You discovered that some bulls that didn’t make cows at one fair may live longer. We call them constitution. They just were tough, and you had bloodlines you could track that in. They weren’t necessarily high-tight bulls.

The second thing is net merit, which kind of ties everything together to the way we look at bulls now, and you can even look at net merits depending on how you sell your milk, different net merits for different types of milk markets. But when you look at that and you look at what’s happening with Holstein, efficiency, some of the work that was done with Kent Weigel at Wisconsin was working across the country on feed efficiencies, and now we have that as part of our selection tools as well. You got into that profitability. How has that changed what the modern Holstein cows are going to look like versus that true type ideal that we had back in basically from the 50s through the 90s?

Nate Zwald:

Yeah, it’s a great question, Mike, and it’s a great insight. I think you’re leading there because what those cows look like has already changed. And you mentioned Kent. Kent was my major professor during my grad school at University of Wisconsin. We worked on some of these initial studies, and one of the things we worked on while I was there was how to evaluate health traits in dairy cattle. So that was one of my grad school projects, evaluating is there a genetic component for these traits like early metabolic health in dairy cattle and things like that that honestly Jerseys were better at than Holsteins as a breed at that time. Jerseys have some inherent breed advantages, components, health, and longevity, but Holsteins have caught up. Jerseys have continued to make progress, too, which is great to see. But going back to your core question, what do Holsteins look like today?

They look a lot different than they did 20 years ago, and cows 20 years ago looked different than those 50 years ago. So I think we kind of went through 50 years of making cows really, really pretty and good for type. They were very, very functional. One of the ways I like to explain this topic of type is type is still important. It’s important to have animals that are functional. We don’t want big swing bags. We don’t want cows that can’t walk on their feet and legs, all of those things. But the genetics for those traits that made big swing bags and cows and udders that couldn’t be milked, they’re no longer present in the breed, so the average cow now is way better than functional.

And so one of the questions is, once you get to this level of utility, what extra value do you have to be better than utility? So if you can do your job really well and you don’t get called or you don’t leave the herd because your udder is poor or because you can’t walk anymore or things like that, then we can focus on other traits, those feed efficiency traits, longevity traits, fire in the belly even. That’s a hard trait to measure of course, but you mentioned the jerseys kind of have, and even that one is associated with longevity.

Of course, cows that live a long time in today’s commercial environments, they got that fire in the belly. They love doing what they do and they’re first to doing it every day, whether that’s eating, drinking, lying down and sleeping or coming to the parlor and milking. That’s a huge thing. And then I think when it comes to what they look like, they’re going to be smaller, they’re going to be more efficient, they’re going to be healthier, and they’re going to live a long time and they’re probably going to produce a lot higher component level in their milk than cows did 20 years ago. That story is actually quite incredible how different Holsteins are in terms of their component levels than what they were 20 years ago.

Ted Jacoby III:

Nate, it almost sounds like what you’re saying is that even though we’ve seen right now, one of the big topics is our heifer replacement numbers are too low and we’re not going to be able to continue to replace the cows that we’re sending to slaughter. But what you’re saying is the genetics are so good right now that that’s an easy leap for us to keep those better cows in the herd. And so the average lactations on the national herd, that’s just going to go up as the better cows stay in the herd and we continue to breed the beef, the cows at the lower end of the bell curve. And so what’s going on right now? This isn’t just kind of a 2, 3, 4 year phenomenon. This is probably going to go on for a while. Am I reading that correctly?

Nate Zwald:

Yeah, I think that’s partially true. First of all, the price of beef is really driving producers to have a different mindset towards how they make their money, right?

Ted Jacoby III:

Mm-hmm.

Nate Zwald:

The amount of profitability that’s coming from the beef side of dairy producers right now is astronomical on a percentage basis and in a total quantum basis, and it’s driving people’s mindset to be different. Now that said, I think it’s also important to recognize if we had more dairy replacements, that is going to drive the turnover rate. If there’s 9.4 million cows in the US right now, we can only replace as many as what we have heifers for. So if we had three and a half million heifers instead of 2.5 million heifers, we’d turn over that national herd quicker because the average heifer is better than the average cow. In every farm that you go to, if you say, “Well, if you had more heifers, what would you do?” Well, you’d call more of your crappy cows.

And so I think that’s a real trade-off. So is it possible that you can keep more of your older cows that are later lactation and things? Sure. Are those cows better genetically than they were five years ago or 20 years ago? Absolutely, but there’s still this trade-off between making genetic progress and phenotypic progress, which both come from having more replacements available than what you can do if you short yourself on replacement. Everybody’s trying to dial that in right now and saying, “Well, I need exactly 318 dairy replacements a month, for example.” Well, is that the minimum? Is that the optimized number? Or is that the optimized number plus some extras, right? In case you have some challenges with your heifer operation or your calf operation or whatever. I’m a proponent of a few extras that allows you to do a couple things. It allows you to have options.

You can sell springers, you can sell first lactation cows, or you can cull more cows. It’s an interesting dynamic and choice to make right now. The CFOs love to have the cash that’s associated with more beef calves, but what that does is it cuts off the options that you have two or three years down the line with what extra replacements can bring you. And so you can sell dairy replacement heifers, you can sell first lactation cows, or you can cull more animals that are older in the herd and need to be replaced with the next generation of better genetics and better phenotypes. I’m a big proponent of having a few extra replacements available versus cutting that to the bone and saying, “We only need X. I’d like it to be x plus 10%.” The other component is everybody that thinks they’re not going to grow in this business tends to find a way to add a few cows or figure out how to milk a few extra cows in their current facilities, and if they don’t have those replacements available internally, they’re pretty costly right now.

Ted Jacoby III:

Are we at the bottom of the trend yet where everybody is breeding to beef because the money’s just too good to pass up? Have you started to see anybody start to switch back to breeding more and get that plus 10% or do you think that trend is still running away from us the way it’s looked the last couple of years?

Nate Zwald:

Definitely, I’ve seen some people that have moved back towards more sex semen, especially those that think that they’re going to be in a unique position to grow and they value the genetic quality and superiority that they can produce internally versus buying effectively an unknown animal or worse yet somebody else’s bottom 10%.

Ted Jacoby III:

Right.

Nate Zwald:

If you’re a smart dairyman today and you’ve got extra animals available, you’re not selling your average anymore. With all the tools you have available, you’re literally going to sell something that you don’t want. And I don’t know too many dairymen that say, “Well, what I don’t want is my average or my best.” They don’t want their bottom end. Now, your bottom end could be better than somebody else’s average. That’s always an option. But really when you think about the progressive producers that think in their future plans they’re going to grow and they’ve seen the impact of what better genetics does, they want to grow with known genetics, known animals, and also a known background in feeding program versus just buying springers from wherever they can find them for a pretty astronomical price right now.

Mike Brown:

The bottom end though changes. If you’re breeding two thirds your herd to sex semen and a third to beef, that means that even your bottom end genetically is better than it used to be. Genomics has had a huge impact because we know before a bull can produce viable semen what his genetic merit estimate is. If you’re a professional in this, I’m an interested cow guy. How much has that increased that generation? But what are we seeing now in annual improvement in genetic value versus what we saw before genomics?

Nate Zwald:

Right now it’s reasonable to say the Holstein breed is making about a hundred dollars of genetic progress a year.

Mike Brown:

That’s amazing.

Nate Zwald:

Interestingly, when you think about that, a lot of the credit goes to the genetic companies for embracing the technology, and that probably doubled the genetic progress trend from say, $30 a year to 60 or 33 to 66, something like that. But that last third of the inflection point of why we’re making so much progress right now all has to do with the dairy farm community and dairy producers and how they’re implementing that technology in their operations. So we’ve seen more dairy replacement heifers going to feed that aren’t good, that are on the low end of the bell shaped curve genetically and/or don’t get pregnant on time because again, you can earn a lot of money from feeding those animals out. But we also just have the implementation of sex semen and beef back to that bell shaped curve that I talked about. And that last third, or say 25 to $30 a year is all because dairy producers on the female side, which traditionally we haven’t made any progress on because every cow got bred for the hope or the plan to make a dairy replacement.

Half of them had males, half of them had females. That last third of the genetic progress that we’re making today to get to a hundred dollars a year is really because producers are breeding their poor animals to beef semen and not giving them an opportunity to have a dairy replacement calf and breeding their best to sex, ensuring that those best genetics have a dairy replacement female calf, and that’s really driven the genetic progress curve forward. To the degree that done correctly, a dairy producer can make more genetic progress because of how they implement that plan with genomic sex semen and beef semen in their dairy than they can through the bulls that they’re choosing from the AI organizations.

And what that means is if you get a good genetic partner, they’ve got their bulls and they’ve got some bulls that are better than poor bulls, but that group of bulls is all really genetically pretty elite and preselected from the population to be a bull that produces semen that they’re going to market semen on. So there’s not as much spread between a genetic companies vast and average as there is in a dairy herd where you’ve got maybe a thousand cows and that spread between your best animal and your worst animal is like a thousand dollars genetically potentially. So that last part of genetic progress has really come from how these technologies and tools have been put to work on the dairy farm level.

Ted Jacoby III:

Nate, are any of the semen organizations using technology in CRISPR is the one that comes to mind to identify that semen which will produce higher butterfat, higher protein or something like that, or is it almost purely just selective, these are the better producers, we’re going to breed to these versus the lower producers?

Nate Zwald:

Yeah, so that technology is available. And interestingly now, some gene editing technology with CRISPR in pigs has been approved by the FDA now. So that’s an interesting step in the progress of how gene editing could be part of genetic progress in the future. But today, when we talk about bovines and we talk about what’s been done for genetic progress, that’s completely due to traditional selection methods, helping us with those traditional methods with genomics and with sex semen and things like that. When we think about butterfat for example, and the amazing amount of progress we’ve had for that, it’s simply selection multiple generations of the best butterfat producing genetics both on the male side and the female side, putting those together and making a tremendous amount of progress. And so when you think about gene editing, that potentially is another stepwise component where you could potentially use genetics from Jerseys and Holsteins or make a synthetic breed that could do that.

Personally, I think that the impact of gene editing is, it’s really good to see how it’s been researched and how it’s been implemented to this point in the porcine side because they focus specifically on a disease, PRRS, which is a really bad virus for a pork producer, and they’ve gene edited the genome, so basically they’ve got a genetic vaccine for that disease. And so when you think about that from that perspective, if you can use genetic tools and technology to make animals healthier and happier and less likely to contract the disease or impossible for them to contract the disease, that’s a really good way to implement it. I like that application a lot better than trying to insert genes for productivity or longevity simply because it takes a long time to get disease resistance and potentially you’ll never achieve the ultimate disease resistance without a gene edit. But that’s exactly what they’ve been able to do in pigs, and it’s good to see that technology being used for that purpose versus some other potential applications.

Ted Jacoby III:

Everybody, we will be right back after these messages.

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Ted Jacoby III:

My next question for you is how much higher can butterfat percent in milk go based on genetics? You look at the graph over the last 25 years, it looks like a hockey stick. Is that hockey stick going to keep going up at the 2, 2.5% a year increase in butterfat or is there a plateau at some point? It’s just beyond a cow’s body’s ability to get any higher.

Nate Zwald:

Yeah, so I anticipated this question because I’m sure as we think about the amount of butterfat in the industry today and the fact that it takes a pound less of milk to make a pound of cheese versus what we all learned of 10 to 1 and things like this is really dramatic for the industry today, but as we calculate out or project out the next 10 years, it has a tremendous impact on what we do. And the short answer to your question, Ted, is that I think it’s going to continue, and if anything, it is likely to go faster versus slower over the next 10 years versus the last 10 because of everything I just talked about with genetics and genomics and the application of those things.

And also, the other component when we think about breeding cows and what we said makes a better cow today and what we say makes up that hundred pounds of genetic progress we make each year, because we’re thinking about that more focused on keeping cows healthy and fertile as well as productive, what we’ve seen is a bit of a shift inherently that cows that are healthier and longer lasting, they probably aren’t going to make 180 pounds of milk per day, but they can make 140 with incredibly high component levels.

And so we’ve seen more of the progress on production due to the component levels as opposed to the flow, what my western friends would call flow, which is just pounds of milk. So we’re actually making more progress to make a pound of fat or protein. It used to come from another pound of milk. Today, it’s coming from higher component levels in that milk, and that’s partially because we’ve really changed the selection goal in genetics to make cows healthier and longer lasting and more feed efficient. So when we think about more feed efficiency, a little bit smaller cow, a cow that’s going to drive that feed efficiency through, it’s potentially easier to make her more feed efficient by getting another pound of components through the component level in the milk versus another pound of fluid milk or water, and I think that’s having an impact.

Mike Brown:

Well, when you look at water for the majority of producers in the United States anymore, particularly in the growth areas, which we’re all manufacturing, water costs money. Every pound of water you make and don’t increase components, you’re basically wasting your money because you’re going to pay the hauler, you’re going to pay promotion on it, all these other things. It’s illogical. The market has sent signals to producers as well to focus on fat and protein, particularly fat with our strong butter markets. Another question I have is that we’ve had relatively low herd replacements. We continue to modestly grow our herd. We continue to see growth in overall productivity. How much of the genetic improvement are we seeing looking at lifetime merit, nighttime profitability, whatever you want to call it, how much of that is due to that improved longevity, and how much longer do you think genetically our cow is going to last compared to what they were 10, 15, 20 years ago, if you just look at the pure gains in productive life and other such things?

Nate Zwald:

So sometimes productive life, it’s a good topic to bring up, Mike, and it’s a good thing to think about because I do think that part of the reason we’re able to use so much beef semen is because cows can live longer, but how long they live is also a little bit of a choice, right? So of course cows can live longer.

Mike Brown:

For sure.

Nate Zwald:

Each individual dairy says, “Well, if she’s not pregnant, milking below this level of hopefully components, but too often it’s on fluid milk production, then she’s replaced with a new better cow.” If a herd expands, generally they lower that threshold and they keep more cows longer, and if they’re kind of full with lots of replacements, they’d raise that threshold and make their herd better quicker. I like to think about it as not only longevity, but fertility, longevity, health together, those things all kind of drive that longer lasting cow.

Mike Brown:

Productive life is a function of all those other things.

Nate Zwald:

That’s right.

Mike Brown:

Productive life is a decision. It’s the time the cow leaves the herd. Unless she dies, that’s going to be a dairy manager’s decision when she leaves, and we can continue to be able to have a smaller heifer population to keep the herds where they need to be. When you’ve got 15, $1,800 beef cows, you’ve got a thousand dollars bull calves right off the farm, the alternative source of income, particularly look at risk of raising a heifer versus that bird in the hand with that cash up front, it has completely changed. Select sex semen, and the beef market has basically given farmers a way to manage their milk supply. I think we have the genetic tools today that are helping them do that. We can continue to need less cows to maintain. If you’re one of these outstanding dairymen, we all enjoy so many of them now in this country. It’s just amazing. How many less heifers are they going to need to maintain that herd before we even grow? How many less are they going to need just to maintain their herds?

Nate Zwald:

Is it comprehensible that we could have less in the future years than we have today? I think that’s going to be driven by the beef prices. So if the beef price stays really, really high like it is today, and those producers that you’re talking about, Mike, continue to get upwards of 15% of their revenue from beef, they’re going to continue to drive that number as low as they can. I think the balancing point is if beef price moderates and goes down a little bit, then it’s going to be more advantageous for them to have a few extra heifers and replace a few more of those cows. What they can get by with and what’s optimized is a different question. So could we get by with even less heifers than we have right now, which is at an all time low, right? 2.5 million heifers expected to calve this year, that would basically tell us that we’re going to only be able to cull 2.5 million cows from the dairy herd if we stay at 9.4 million cows, and that would be an all time low for culling rates.

Now, is that partially because of genetics? Absolutely. But I would contend it’s more because of the incredibly high beef price that those replacements didn’t get created, and therefore we can only replace 2.5 million cows. We’ve only got 2.5 million heifers there. Is it conceivable that we could go to 2.2 or 3 million heifers that calve in the next year? It’s conceivable. I wouldn’t say it would be a great plan because I think what ends up happening then is you just heat more cows that really should be replaced. To drive profitability of an operation, I want to have a certain turnover rate so I can continue to replace my worst producers or the animals that are the least productive in my herd with ones that are at least average productivity, if not better coming in as a virgin heifer.

Mike Brown:

Isn’t part of that, Nate, because of the improvements in fertility? All the things we’ve done, we have less involuntary culling.

Nate Zwald:

That is true.

Mike Brown:

You have less cows that have to leave the herd and you have more cows that you decide need to leave the herd.

Nate Zwald:

There’s no question that we get to make a lot more choices on what cows leave the herd than we used to, and that’s where that threshold comes in for pounds of milk or pounds of components where our herd manager or owner is deciding which cows to cull versus literally needing to cull certain cows because of functionality or because they’re just not a profitable production unit. So it’s a good situation to be able to say, “Well, we’re replacing a cow that had a certain level of profitability with a cow that we expect will have a higher level of profitability versus probably before where we had to cull some cows because they just weren’t profitable for one reason or another or weren’t healthy for that matter.”

Mike Brown:

Right.

Nate Zwald:

There’s also that component that we sometimes forget about. I mean, as a kid, there was more animals that just didn’t get through that post-fresh period, had larger calves. I mean, lots of problems that we’ve really bred some of that out of animals by extreme amount of genetic progress that we’ve made.

Mike Brown:

When I was in college, it was all about feed rations, and during the 80s, cow comfort really became a bigger part of the equation because we realized at some point only so much you could do to ration the cow, again, that happy healthy cow that you talked about, Nate. It’s so many different things, but to me, that’s been a big part of it too. We’re breeding healthier cows that people know how to take better care of.

Nate Zwald:

That’s exactly right. It’s the management cows get to live in today that do make them happier and healthier. Large scale production doesn’t always get held in the best light, but frankly, cows love living their life. If they’re in a great operation, they get to lay on sand bedding. They get feed all day. They get water all day. And we’ve done a lot of management as well, not only in the housing and the feeding part of it that you mentioned, Mike, but also in the knowledge side of things. You look at things like synchronization systems that give cows the best chance to have another calf on time and live another lactation. Those things extend the cow’s lives and that turnover rate as well.

Ted Jacoby III:

Nate, there used to be a saying among dairy farmers that you can only increase protein in the milk by increasing lactose in the milk. Is that still true today or has some of this new technology started to break that relationship?

Nate Zwald:

Some of it has started to break the relationship a little bit. The old saying was probably because the way to get more protein was to get more milk, and so more fluid milk came with more lactose, but now we’re seeing the component levels of protein go up. That doesn’t necessarily come with the lactose component level going up. So I think that’s broken a little bit, and it goes back to the same thing we see with fat. Pounds of milk used to have a higher correlation with pounds of fat and pounds of protein than they do today.

So genetically, we’ve broken that relationship where you don’t need to breed for more milk to get more fat or more protein pounds, and of course, there’s always been this negative relationship with component levels, percentages, and pounds of milk genetically on an individual cow basis. So yeah, I think the short answer is we’re starting to break that, and that’s all comes back to because we’re focused in selecting specifically on those pounds of fat and protein in combination with that health and longevity that kind of drives a certain type of cow that is going to be more efficient at producing pounds of fat and protein through component levels than just flow or fluid milk.

Mike Brown:

You’re letting me live my old life. I’m enjoying this immensely. This is a great conversation. I’m back at Jersey. I feel like I’m talking with you if I’m enjoying it.

Josh White:

I figured this group would really enjoy, Nate. Nate, I really appreciate you taking the time to be on this call. It’s really fascinating stuff. You see it from afar from where we’re at, we talk about it, but having you drill down a little bit on this podcast today was, I think a lot of fun.

Nate Zwald:

Yeah, very good. Well, I enjoy it. I love talking about this stuff. It’s fun. It’s fun to see the impact of genetics firsthand, whether I’m a little kid thinking about the next generation versus the current generation or in today’s world where you think about the amount of progress we can make and how much better next generation is going to be than this generation and kind of quantifying that and thinking about how the definition of what a better animal is today is quite a bit different than what it was 20 years ago. So that’s all exciting stuff, really good for the industry. It’s a very sustainable message as well. When you think about what genetics is able to do, it’s always great to be able to say, “We’re making better animals faster.”

Josh White:

Right. It’s-

Ted Jacoby III:

All right, Nate, one final question. From the seat that you sit in, is there anything, any technology, any trend that you see evolving that maybe the general population in the dairy industry isn’t seeing that’s going to really affect dairy cows and milk production in the next 10 years?

Nate Zwald:

The next step, honestly, Ted, is seeing this progress from this bell shaped curve where dairy producers have bred their top half to sex semen in their bottom half to beef, and how that’s transformed the genetic progress curve and really just put us on a different playing field. The next step of that is using embryo technology where instead of getting all their replacements from the top half of their dairy herd, they start to get all their replacements from the top 5% and that technology is coming and it’s being implemented by more and more farms because the embryo technology has gotten better. And so this is a technology that can be implemented both to make better beef calves, which is pretty valuable as well.

When you think about the impact of beef on the dairy herd, putting beef embryos that are not half beef, but potentially full blood beef, but also in the dairy replacements, so now you don’t need half of your cows to breed to sex semen to make your dairy replacements. You think back to that bell shaped curve. When you’re talking about the best 5% of your dairy cows, those are really elite compared to your average or your 50th percentile. So that could put genetic progress on a whole different playing field again, if that technology gets cost-effective enough to really be implemented across the industry on a wide scale basis like sex semen was.

Ted Jacoby III:

How far away from that do you think we are? How many years?

Nate Zwald:

We’re not that far. It’s probably the biggest threat to sex semen is embryos. There’s a lot of companies, including Progenco, my current company that’s working on that. You’ve got the long history companies as well that are doing that. And the key is that it’s being looked at now as less of a niche product than a niche system and more of a commercial opportunity to really embrace the embryo technology, I would say today. And so each form has to make their own decision on when it’s profitable to do so. But some really large scale producers have already been doing it for five plus years, and actually that’s the majority of the way they’re making their next generation of replacement. Something to think about today as opposed to how many years in the future.

Ted Jacoby III:

Wow.

Mike Brown:

It’s mind-boggling how quick you can make genetic progress, particularly with genomics, that you can identify at a very young age which animals have the most potential.

Ted Jacoby III:

Yeah, absolutely right. That’s pretty cool.

Well, Nate, hey, this was an absolutely fantastic conversation. Thank you so much for joining us today. Really appreciate it. Really enjoyed the conversation. Thank you.

Nate Zwald:

Well, anytime guys, I appreciate and I enjoy the opportunity to talk about this kind of stuff.

Mike Brown:

Well, thank you very much.

Josh White:

Right. Thank you, Nate. Appreciate it again.

Outro (with music):

We welcome your participation in The Milk Check. If you have comments to share or questions you want answered, send an email to [email protected]. Our theme music is composed and performed by Phil Keaggy. The Milk Check is a production of T.C. Jacoby & Co.