What is the real rate of return upon registry fees?

I have yet to see anyone calculate this according to economic reality.   Lets give it a shot.   Say it costs $10 to register a calf in fees, and $2 in time (AJCA forms are the simplest in the purebred industry).   Lets say further that only one in four heifers raised in your herd will be sold as a surplus replacement (three of four will spend their lifetime on your farm and be sold as culls).   This means you will have a $48 investment per surplus heifer calf in the purebred business.

As I mentioned earlier, the order buyers are buying Jersey herds in our area for $1200 to go to commercial dairies, but the Jersey Marketing Service (dispersals and consignment sales) is averaging $1500 annually.   This is a $300 premium per head for a good dairyman to get involved in the purebred Jersey business.

Of course, registry is front-end loaded, you pay the fee on calves, you sell them as cows two to three years later.   If we add some interest to those fees, we might have $60 per surplus replacement invested at time of sale.   How often, even when the stock market was going crazy in the 1990s, could you turn $60 into $300 in two years??   That is an annualized rate of return of 225%.   All you have to do to earn it is to do the same good job with feeding your cows and raising your calves as you did before you decided to go purebred, plus start keeping the breeding records that will support accurate identity.. and every couple of months, fill out some registry applications.

This example proves the real rate of return is dependent upon developing skills as a stock breeder.   If your herd culling rate is in the 40% range, and it takes all your replacements to keep your barn full, registration becomes less of a profit center and more of an expense, more like term life insurance premiums (you will only "collect" when you disperse your herd at retirement).   If you milk cows thirty years, then disperse your herd at JMS auction to earn the $300 per head premium, you might average eight generations of registry fees per cow sold-- at $16 per generation in fees (because 40% of your registered cows were culled annually), plus thirty years accumulated interest--  you will have $150+ per cow invested.   This is still profitable (as long as we can be sure the demand for Jerseys will stay strong compared to other competing dairy breeds) but it is not 225% annualized, it is more like 2.5% annualized.   Right now, even that low a positive return is better than bank interest.   (All it would take to boost this higher is to sell a few 4H project calves each year and capture the premium then.)

The real profit in "purebred" cattle comes from breeding functional longevity

It is as simple as this.   The average grade commercial cow lasts 2.4 lactations according to National DHIA.   That means the average cow calves three times.   That means statistically, the average cow produces 1.5 heifers.   By the time we deduct for stillbirths, scours and pneumonia, freemartin twins, injuries, and infertility/inbreeding effects, the average cow just replaces herself.   This is obviously true whether they are registered or not.   Registry by itself will not change the basic population herdlife statistics.   Furthermore, your banker will not be impressed if all you do is the "average" at generating replacements.. 

Adopting a purebred breeding attitude-- mating cows for more uniform and functionally correct replacements, selecting from sires with superior inherited ability in your focus traits, selecting genetically in the direction you believe meets needs of a changing dairy industry-- is the first step, and it may involve a change of attitude in what kind of sires you use.   Adopting a traditional animal husbandry attitude-- that cows are a living breathing being, over whom we exercise a responsible dominion, worth our daily attention in caring for their welfare-- that is the second and equally vital step called "herdsmanship".   Learning how to market yourself and your cattle as useful to buyers is the third and last step, and your reputation depends upon the first two..

For a herd to progress genetically, you have to produce a functional surplus of animals, after the replacement of worn out cows, that will allow you to "cull" genetically.   This is impossible until your involuntary cull rate gets below 40%.   At a 30% annual cull rate, you will be able to sell one of every four replacements you raise IF you have an annual calving interval and 5% or lower calf loss.   At a 25% annual cull rate, it obviously gets much easier.   If we equate these cull rates to cow herdlife, it will look more like this:   2.4 lactations = 40% cull rate.   3.5 lactations = 30% cull rate.   4.0 lactations = 25% cull rate.