Association of sire net merit with farm profitability for Minnesota dairy farms.

Lifetime net merit (NM$) is a genetic selection index based on the weighted average of economically relevant traits to the dairy cow. It is measured in dollars as the expected lifetime profitability of a cow. The objective of this study was to evaluate the association between average sire net merit management decisions and farm profitability for Minnesota dairy farms from 2012 to 2018 using a unique herd-year dataset (n = 227) containing production data for dairy cows, sire NM$, and the respective financial information for the farm. We extended the net merit and profitability analysis by analyzing the individual net merit traits that might be driving profitability. Ordinary least squares models were estimated for 4 profitability measures: operating profit margin, rate of return on assets (RROA), net farm income (NFI), and NFI per cow. Results indicated that herd sire net merit has a positive and significant relationship with RROA, NFI, and NFI per cow. A $100 increase in the herd's sire net merit was associated with an 18% (0.6 percentage point) increase in RROA, $12,100 increase in NFI, and $87 increase in NFI per cow, all else equal. Although the genetic association was significant, it explained 3.62% or less variation, highlighting that herd genetics were not the primary factor driving profitability. A few of the individual net merit traits held a significant relationship with profit, but most of the individual net merit traits did not. We concluded that it is not individual traits that influenced profitability, but rather the collective group of traits. The results from this study suggested that decisions related to genetic selection are valuable for a farm's profit and confirmed that when selecting genetics, it was most effective to select sires based on an economic index, rather than specific traits.