John Fetrow
University of Minnesota
School of Veterinary Medicine

The Technology of rbST

Posilac®, Monsanto’s recombinant bovine somatotropin (rbST), is a new compound approved for use in lactating dairy cows beginning in the ninth week of lactation. It is to be administered by subcutaneous injection once every 14 days. It has been shown in repeated research trials and under practical conditions to increase milk production in healthy, well-managed cows. Milk production responses typically rise in the first few days following injection and then gradually decline across the 14-day treatment period. When averaged across the 14 days of the treatment period, the typical response in well-managed herds appears to be an increase of 8 to 12 pounds of milk per treated cow per day. Since its approval by the FDA more than a year ago, Posilac has been used throughout the United States on all types of dairy farms in all regions, climates, and seasons.

The milk production response of a dairy cow to Posilac depends on several factors. The extra milk is not produced from nothing. To respond, the cow must be in good health, cow comfort must be adequate, and the cow must consume additional feed to provide the nutrients needed for higher production. Typically, the cow will compensate for higher production by increasing her dry matter intake. In some herds, the composition of the ration may need to be enhanced to support the higher production. Additional attention may be needed to be sure that the cows have access to feed and time to consume it. Heat stress can play an important role in determining the level of response if dry matter intake falls off under hot or humid conditions. Cows with individual health problems, particularly lameness, may not respond well to the product. In addition to the nutritional status of the herd, herds will respond best if they have good management programs for mastitis and reproduction.

rbST Economics

In its simplest form, the profit from the use of rbST can be calculated by subtracting the cost of the product and the cost of additional feed from the value of the additional milk produced. For the typical small, owner-operated farm in the upper Midwest, this may be the only needed calculation. For some farms, particularly where extra labor is hired or other labor outlets are available, the cost of added labor for ordering, administering, and keeping records relating to rbST may need to be considered. More subtle possible costs such as effects on days open, culling, or somatic cell counts are far less clearly defined and probably too small to be significant on most farms.

When calculating the financial impact of rbST on a given dairy, data specific to the dairy are necessary. For the purposes of example in this paper, the following assumptions are made:

Milk price: the example models three prices: $10.50, $11.50, and $12.50 per hundred pounds net to the farm.

Model Assumptions:

Herd size, ration, and rbST costs:

• 100 cows in the herd
  
• 80% percent of eligible cows are treated with rbST
  
• 0.33 Meal energy per pound of milk
  
• 0.78 energy density of ration per pound DMI
  
• $0.07 price of ration per pound of dry matter
  
• $5.80 price per dose for rbST

Reproduction and overall rbST usage rate:

• 120 days open
  
• 70 days dry
  
• 63 days in milk at start of rbST
  
• 400 day calving interval
  
• 267 days of rbST use/lactation (assumes continuous use to the end of lactation)
  
• 67% of the herd will be receiving rbST at any given time
  

Labor:

• 2.0 hours spent each two weeks for labor
  
• $7.00 wage rate per hour
  
• $365 cost for labor per year

Other:

• $0.00 other rbST related costs/cow/year
  
• $10.00 cost/cwt to produce milk in the herd, without the use of rbST
  
• 18,000 lbs production/cow without rbST
  

Table 1 illustrates the profit and return on investment in rbST for the example dairy herd. To be profitable (breakeven), the response to rbST must be at least six pounds of milk, except at a milk price of $12.50/cwt, where five pounds is sufficient to become profitable. Once profitability is established (past breakeven), the profit and return on investment mount swiftly. Figure 1 illustrates the profit for the three milk prices and each level of response. Figure 2 illustrates the return on investment. At typical response levels (10 pounds, underlined in Table 1), annual profits range from more than $5,000 for the herd at $10.50/cwt up to more than $10,000 at $12.50/cwt. Return on investment at a 10-pound response level ranges from 77 to 125 percent, certainly an excellent rate compared to the typical overall rate of return for dairy farming (usually below 10 percent).

Because the return from the use of rbST is based on milk production and on milk price, at any given response level the profit from rbST will decrease as the milk price decreases (see Figure 1). This does not mean, however, that as milk price drops the farm should stop using rbST. If the production response is beyond breakeven, rbST remains a valuable investment even if the magnitude of profit is decreased. In situations where milk price is decreased, total farm profit will decrease, with or without the use of rbST. As the milk price drops, the profit derived from using rbST will account for more and more of the total farm profits. As Table 2 and Figure 3 show, at low milk prices the profit derived from rbST may account for as much as one half or more of total farm profit. In our example, if milk price were $10.50 and the level of response were 10 pounds, 41 percent of total farm profits would be derived from rbST use.

Figure 1
Percent of Farm Profit Due to POSILAC®

Figure 2
Return on Investment in Posilac®

Figure 3
Percent of Farm Profit Due to POSILAC®

Summary

The adoption of rbST technology is fundamentally no different than the adoption of any other new technology. There are several issues to consider before initiating its use. Field experience has shown the product to be very effective in well-managed, well-fed herds. With typical levels of response, the return on investment will reach or exceed 100 percent. As the milk price declines, the rbST use may contribute a very large proportion of the farm’s total profit. The benefits of rbST, as for any new technology, will go to the early adopters who learn to use it effectively in their herds.

Presented at the St. Cloud Dairy Expo 95, St. Cloud, Minnesota

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