CHOICES
A publication of AAEA
The dairy industry is a major source of income for the US economy. In 2024, its impact was estimated at $794 billion, accounting for 3.4% of its GDP and supporting 3.2 million jobs (IDFA, 2025). However, dairy farmers are currently grappling with high variability in net farm returns and farmgate milk prices, labor shortages and wage pressure (Son, Richard, and Lambert, 2022). More recently, a mutation of the avian flu capable of infecting dairy cattle has introduced further economic risks (Garcia-Covarrubias et al., 2025). As a result, many small- and mid-sized licensed herds, unable to cope with this turmoil, have opted to sell their assets and exit the industry (Peña-Lévano, Burney, and Beaudry, 2023).
Many of the remaining dairy farms—often referred as resilient farms—are actively exploring strategies to diversify their income streams. Notably, raising surplus crossbred bull calves in dairy operations has gained traction driven by their high sale price. This article discusses the economic implications of crossbreeding dairy cows with beef cattle for the dairy farms and cow-calf operations.
US dairy farms predominantly raise Holstein and Jersey cows (Olthof, Domecq, and Bradford, 2023). To sustain milk production, heifers—young female cows that have not yet calved—are reared as replacements for aging cows. Heifers are typically raised for 22–24 months before their first calving, incurring feed, bedding, labor, and veterinary costs estimated at $1,129 per head (Heinrich, Tozer, and Gabler, 2022).
Traditional dairy farms are not equipped to raise bulls (male dairy calves). Newborn (0–14 days) purebred bulls are sold at auctions or through direct sales for veal or beef production (Berry, 2021). Some dairy farms usesexed semen in artificial insemination to increase theproportion of female calves, thereby reducing the number of male calves born and optimizing long-term herd profitability (Hutchison & Bickhart, 2016).
Pure US beef breeds are predominantly Angus, Charolais, Brahman, or Simmental (Drouillard, 2018). Typically, beef production comprises three stages:
1. Cow-calf operations, where calves are initially raised alongside beef cows for about half year. Beef cows and calves are primarily grazed on grass and pastures, promoting muscle growth in calves until they are separated from the cow (Knight, 2025).
2. Once the calf is weaned, he may either replace older bulls kept for mating or become a steer (after castration) to enter a stocker operation, where the animal grazes on extensive grassland until achieving a certain target weight (Drouillard, 2018).
3. After 3–6 months, the steer enters the final stage of production, where he transitions into feedlots where he receives a grain-based diet (corn, wheat, or sorghum) to enhance marbling and meat quality (Knight, 2025). In addition to grain, oilseed meals (soybean, cottonseed, sunflower, and canola) are fed as traditional protein sources, with byproducts of wheat and barley being used as energy sources in Washington and Idaho (Greenwood, 2021).
There is a growing use of beef sire semen in US dairy farms. In California alone, the largest US milk producing state, about 81% of dairy operations reported using beef semen in a 2020 survey (Latack and Carvalho, 2024). This shift is further reflected by a sharp rise in domestic beef semen sales, which surged from 2.7 million doses in 2015 to 9.7 million doses in 2024. In the same period, there was a notable decline in purebred dairy sire semen, from 23.7 million doses in 2015 to 16.2 million doses in 2024 (NAAB, 2025).
Crossbreeding dairy cows with beef sires to produce beef-on-dairy offspring offers multiple benefits stemming from heterosis, defined as the superior performance of hybrid animals relative to the average performance of their purebred parents. Crossbreeding improves the reproductive performance and pregnancy rate of dairy cows (decreasing the need for heifer replacements) and yields better carcass weight and higher meat quality of dairy calves (Berry, 2021). As a result, crossbred calves are valued at a premium over purebred Holstein bull calves (Coleman et al., 2016). While purebred newborn bulls typically sell for around $50 per head, crossbred newborn calves are priced between $400–$600 per head (Torres, 2023). This significant price gap provides a clear incentive for dairy farmers to produce crossbred offsprings as a lucrative secondary income stream.
In this section, we present an economic framework that evaluates the potential profits from crossbreeding in a typical dairy operation. The model uses a decision tree framework (depicted in Figure 1) to simulate common reproductive management practices and assess their economic outcomes. It provides a structured approach for dairy farmers to make informed breeding decisions by balancing herd sustainability with potential revenue gains from crossbred calves.
The simulation model begins by addressing a fundamental question: Does the dairy farm have enough heifers to replace older cows and maintain herd sustainability? If the answer is yes, then farmers can consider crossbreeding surplus dairy cows with beef sires to produce higher-value crossbred calves. The decision on how much of the herd to crossbreed depends on the farm replacement rate and the success of producing a female offspring.
If the answer is no, then farmers need to assess whether they can enhance cow health and longevity to reduce the need for replacement heifers. If this is feasible, then crossbreeding can still be pursued, especially when combined with sexed semen—which almost guarantees a female offspring but at a higher cost (Hutchison and Bickhart, 2016). Through genetic prioritization, high-performing cows can be bred with sexed dairy semen to secure purebred replacement heifers, while the remainder of cows are crossbred to produce higher-valued beef-dairy calves.
However, if the farm cannot reduce its replacement rate and lacks enough heifers, crossbreeding is not recommended, as it could compromise herd sustainability, essential for long-term farm stability.
The model evaluates three key scenarios: the influence of lactation cycles, the use of sexed semen, and the effect of calving intervals on birth rates. The analysis is based on a representative US dairy farm with 100 cows (for simplicity), as the results can be linearly extrapolated. We make the following assumptions:
1. The cost of producing a crossbred calf is assumed to be identical to that of a purebred Holstein calf, allowing the model to focus solely on the incremental revenue generated by crossbreeding.
2. Each cow is expected to produce one calf in every lactation cycle, with a 50% heifer birth rate when using conventional (unsexed) semen.
3. The price premium between crossbred and purebred ranges between $250 and $500 per head, reflecting a more conservative markup than the values presented by Torres (2023).
The first scenario explores how extending the average herd lactation cycle influences the profitability of crossbreeding (illustrated in Figure 2). We assume a range of 2–4 lactation cycles, which reflects the 4.5–6 year average lifespan of dairy cows (De Vries, 2020), in which cows first calve in their second year and stay in production for about 3–4.5 years (Pinedo et al., 2014).
To understand the results of the model, start by assuming that the average lactation cycle of the 100dairy cows is only 2 years. This means that every year, 50 cows will be replaced with a heifer. Assuming a 50% chance of a heifer in a birth, the dairy operation would need all 100 lactating dairy cows to be mated with purebred dairy bulls to produce the 50-purebred female offsprings. This leaves no room for crossbreeding. This is reflected in the intercept of Figure 2.
Now, assume an average herd lactation period of 4 years; the dairy operation requires 25 replacement heifers annually (= 100 cows/4 lactations) to sustain its herd size. Given a 50% chance of producing a female offspring, only 50 dairy cows are necessary to generate the required heifer replacements. This leaves an additional 50 cows available for crossbreeding with beef bull semen, yielding 50 crossbred calves per year. If the price premium of a crossbred calf over a purebred dairy calf is $250, this breeding strategy would generate an additional $12,500 in annual revenue for the farm (Figure 2).
This means that extending the average lactation period allows for a greater proportion of the herd to be allocated to crossbreeding, thereby enhancing total farm revenue. Moreover, sensitivity analysis indicates that the financial benefits of this strategy increase with higher pricedifferentials between purebred and crossbred calves.
In this scenario, we assess the financial implication of employing sexed semen on crossbreeding dairy cattle. Sexed semen is a reproductive biotechnology that enhances the probability of producing a female offspring (Hutchison and Bickhart, 2016). However, this method is generally more expensive and typically results in lower conception rates (chances of impregnating the cow) compared to conventional unsexed semen (Ettema et al., 2017).
For this example, let’s assume an average of three lactations per cow (or 33.3% reproduction rate), which is consistent with industry patterns, and no differences in conception rate between insemination methods. We then vary the proportion of dairy of cows inseminated with sexed semen from purebred dairy bulls (Figure 3). We start with a lower bound of 45% success (birth) rate, which is slightly slower than the chances of producing a heifer using conventional insemination. Then, we increase the success rate up to 95% likelihood, which is the rate where almost all cows will produce a female offspring.
Using sexed semen to produce purebred heifersincreases the availability of cows for crossbreeding withbeef sires, thereby enhancing farm profitability through higher revenue from beef-on-dairy offspring. In our example, with a lactation cycle of 3 years, we need 33 purebred heifers. If the success rate is 75%, we need 44 cows to be inseminated with sexed semen. This leaves 56 dairy cows available for crossbreeding. When the price premium is $250, the profit is $14,000 (= $250/calf × 56 calves).
At low (45%) success rates, profits range from $6,500 to $13,000, whereas higher (95%) success rates raise profits to between $16,000 and $32,000, driven largely by the increased premium paid for crossbred calves. Thus, Figure 3 shows that increasing the success rate of the herd leads to substantial gains in profits, particularly when the price premium of crossbred calves exceeds that of purebreds.
However, it is important to note that this analysis does not incorporate the genetic gains from selectively breeding the healthiest and most productive cows (those with higher milk yields and fewer issues such as mastitis or calving difficulties), which could further enhance long-term herd performance and overall farm profitability.
In this last scenario, we assess how performance (length of time between pregnancies) impacts farm profitability. We maintain our initial assumption that the average herd lactation cycle is 3 years. Regular semen is used, with a 50% probability of producing a heifer.
Calving intervals are varied from 11 to 14 months, corresponding to annual calving rates from 1.08 to 0.83 calves per cow (depicted in Figure 4). As the calving interval increases, the total number of calves produced per year declines, reducing the pool of animals available for either replacement or crossbreeding with beef sires. This reduction limits the potential for generating revenue from beef-on-dairy crossbred calves. The difference in annual revenue between cows with shorter versus longer intervals ranges between $180 and $70 per cow, which provides clear financial incentives to optimize reproductive efficiency.
Crossbreeding beef sires’ genetics on dairy cows improves the carcass traits and growth potential of the dairy bull calves, fetching higher prices in the beef market (Tsiligianni et al., 2024) and reducing dairy replacement costs (Buckley, Lopez-Villalobos, and Heins, 2014). Crossbred calves are well-suited to commercial beef systems and typically follow a consistent production pathway (Lynch, McGee, and Earley, 2019): (1) raised initially in cow-calf operations until weaning, which typically occurs at 10 weeks of age, (2) entering a backgrounding phase at a stocker operation where the animal is fed until achieving a certain weight, and (3) transitioned to a feedlot for 16–18 months (Berry, 2021).
On average, crossbred offsprings have higher calf-weaning rates (Fraga et al., 2016) and are over 46 kg heavier than purebred beef calves (Coleman et al., 2016), which could be attributed to heterosis (Fraga et al., 2016). The net effect depends greatly on the genetics of the sire. Research indicates that European breeds such as Charolais and Simmental produce heavier offspring when bred with beef-dairy cows compared to Angus-sired calves from the same cows (Coleman et al., 2016).
Integrating crossbred animals in cow-calf operations under proper management strategies have also been shown to lower their carbon emissions, fossil energy use, and water consumption (Baber et al., 2020). However, research shows no major differences in environmental impact per kilogram of carcass weight of producing beef-on-dairy animals compared to purebred beef (Berry, 2021). Thus, additional research is needed to understand the environmental impact of crossbred animals (Shiddieqy, Rofiq, and Widiawati, 2022).
Retail prices for fresh milk and ground beef in the United States have steadily risen since 1995, with ground beef surpassing milk in price by 2013 and maintaining that lead through 2023 (Figure 5). This growing beef price premium underscores the economic potential of crossbreeding beef sires with dairy cows. Raising a 500-pound steer incurs an estimated cost of $5.32 per pound, with an additional $750 in processing costs. Retail prices vary widely: Lower-end cuts like ground beef and chuck roast range from $2.77 to $7.99 per pound, while premium cuts such as New York strip and T-bone steaks command $8.48 to $11.81 per pound. On average, 30% of the carcass weight (150 lb) yields higher-value cuts, while the remaining 70% (350 lb) consists of lower-end products. By sourcing beef-on-dairy crossbred calves, beef producers benefit from a more uniform and higher-yielding animal compared to traditional dairy bull calves, improving feed efficiency, carcass quality, and overall profitability in the beef supply chain.
This study highlights the economic rationale for crossbreeding dairy cows with beef sires as a viable diversification strategy in US dairy farms. Given volatile milk prices, labor shortages, and rising disease threats, resilient operations must rely on alternative revenue
streams. Our decision-tree model shows that strategic use of reproductive tools, such as sexed semen and shorter lactation cycles, can improve the financial benefits of crossbreeding. Shorter lactation cycles lead to greater capacity for crossbreeding part of the herd. Use of sexed semen increases the likelihood of a purebred heifer being born, and thus greater availability of surplus cows to be crossbred with beef sires. Finally, the length of periods between calving adversely affects the returns from crossbreeding. Thus, the replacement rate of the dairy herd is of primary concern. Crossbreeding beef-on-dairy makes sense if the herd produces surplus heifers.
While financial gains are driven by the premium prices of beef-on-dairy calves, the benefit extends beyond the dairy sector. Beef producers receiving crossbred calves gain access to more uniform, heavier-yielding animals that perform better in feedlot and processing stages. Thus, beef-on-dairy systems enhance overall supply chain efficiency. Future research should further assess the genetic, environmental, and market dynamics to optimize integration and sustainability across dairy and beef systems.
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