Optimal replacement and ranking of dairy cows under milk quotas

The usual criterion of optimality to be used in dairy cow replacement models has typically been the maximization of total discounted net revenue per cow. In a situation with herd individual milk quotas, however, the theoretically correct criterion is the maximization of net revenue per kg of milk produced. Optimal replacement policies, future profitabilities and rankings under the two criteria are compared. It turns out that culling should be less intensive under milk quotas because of a smaller variation in future profitability. Considerable differences in future profitability and ranking are found, and it is concluded that it is important that the correct criterion is used when milk quotas are in effect.