Comparative Profitability of Purebred and Crossbred Holstein Herds in Venezuela

¹ Cornell University, Ithaca, NY 14853-4801

The objective was to compare the profitability of dual purpose systems (beef and milk) with Holstein crossbred cattle in lowland ecozones with those in highland dairy systems using purebred Holsteins. Data were variable costs for feed, labor, health, and reproduction; gross incomes from milk and beef from surveys of 157 farms in 1987 to 1988; and records of dairy performance. Profit measures were milk income over feed cost for lactating cows and net margin for all cows (gross income from milk and beef minus variable costs per year). Least squares methods were used to estimate costs and profit measures from a model containing effects of breed, ecozone, herd size, reproduction system, interviewer, and milk yield as a covariate. Milk income over feed cost for daily systems was greater than for dual purpose systems, but this was a misleading profit measure because it ignores beef sales and other costs and relevant animal categories (e.g., dry cows). When these factors were considered, dual purpose systems with crossbred cows (lowest cost) and dairy systems with Holsteins had similar net margins. However, greater profits were indicated for dual purpose systems when the average milk per cow for these systems was considered to earn similar profits, eliminating the concentrate feed subsidy and the preferential exchange rate, beef production, transport costs, and fixed costs of capital. Thus, the most economical production system for Venezuela at this time is dual purpose herds with crossbred cattle in the lowland ecozones.

Key Words: net margin • dual purpose • tropical dairying

Submitted on August 7, 1989
Accepted on December 1, 1989