Update to Economic Values in the EBI

Teagasc has updated the economic values, in its Dairy Farm Systems model, which are used in the formulation of the Economic Breeding Index (EBI). This work was last reviewed in 2014.  The new values reflect the changes in the marketplace, accounting for the large increase in butter price that has occurred in the dairy market and the increased labour costs.

The model was predicted with the help of Irish dairy processors and is based on current market returns, the short-term returns (i.e., within the year) and the long-term returns (i.e., within 5 years).

This has resulted in a projected milk price of 30.5c/litre and a Protein to Fat ratio of 1.7:1.

The cost of labour has also been updated from €12.44/hour to €15/hour. The cost of a caesarean section has risen to €235 with a call out fee of €90.  With the increase in labour cost, the cost of rearing heifers has risen from €1,545 to €1,570.

Table 1: Change in Economic Values 2018

Table 1 above shows the traits that have changed as a result of the update to the model. The most notable change includes the increase in fat and decrease in protein value. The model projects an economic value by taking the market return and subtracting the cost of production. The reason fat doesn’t have an even higher value, in keeping with the current market price, is because it takes almost double the energy for a cow to produce a kilogram of fat than it does to produce a kilogram of protein. The cost to processing a kilo of fat is also much higher than protein.

Therefore, this has resulted in Fat increasing in value by €1.04/kg to €2.08 and Protein reducing in value by €1.06/kg to €5.58.  From now on, it is planned to re-visit all these calculations every two years.

Other traits of note include lameness and mastitis which have a higher negative value now, more accurately reflecting the impact they have on the cost of production.

All these changes will be implemented in the next EBI evaluation which will be available on the 10th January (see Publication Schedule).