Dairy Excel: Reach that magic number for profit

Even when feed costs are much lower than the present market situation, monitoring herd feed costs is very critical for increasing farm profitability.


Total feed cost per hundredweight of milk sold is a measure of the effectiveness of management in controlling the largest cost item in producing milk.


This measure accounts for all of the feed provided to the lactating cows, dry cows and heifers since the sale of milk is the primary revenue stream for paying for all feed expenses.


Generally, 65 percent of the feed costs for a dairy herd that raises its own replacements will be for the lactating cows, 30 percent for the heifers and 5 percent for the dry cows.


When heifers are custom raised, the benchmark must be adjusted because the feed costs for heifers will be lumped into the costs associated with having the replacements custom raised.


Competitive level Based on somewhat present conditions, the competitive level for feed costs should be less than or equal to $7 per hundredweight of milk sold if replacements are raised on the farm. If heifers are custom raised by someone else, herd feed costs should be less than or equal to $5 per hundredweight of milk sold.


However, feed costs per hundredweight of milk sold can be quite variable among farms because of the variation in feed ingredient prices.


The table depicts how the feed costs per hundredweight of milk sold can vary based on different prices for corn and hay.


The market value for homegrown feeds fed to livestock should be used. Feed harvested by the cows or heifers from pasture can be valued based on the value of hay. Using the market value will give you a clearer picture of the competitiveness of your dairy enterprise.


Feed costs Many dairy farmers can purchase feed more cheaply than they can raise it. Comparing feed production costs with market prices will help you evaluate the efficiency of your cropping program.


The New York Farm Business Summary uses cost of cash crop inputs to represent homegrown feed costs, but this calculation does not include machinery costs. For this analysis, calculate all machinery costs and allocate a portion to the crops used as dairy feed.


Reducing cash outlay for purchased feed is not necessarily a good way to reduce feed costs. If purchased feed costs per cow are kept too low, milk production may be less than optimal and total feed cost per hundredweight of milk sold may still be high.


When you use market price or purchase most of your feed, feed costs will fluctuate with market prices.


Actions If feed cost is above $7 per hundredweight of milk sold, consider these actions:


Produce or purchase quality forages for all cattle. You cannot afford to feed poor-quality forages.


However, quality of feed should be appropriate to the animal’s nutritional needs. High-producing cows need the highest-quality forage, but that same quality would be wasteful for gestating heifers or dry cows.


Frequently balance rations for all groups based on current feed analyses.


Keep crop production input costs low by using manure nutrients, testing soil and purchasing carefully.


Keep purchased feed costs low by careful purchasing (e.g., feed commodity contracting) and efficient use of feed.


Keep crop equipment costs per acre low by using custom operators, purchasing expensive machinery with neighbors or purchasing feeds.


Feed for high production if cows have the genetic ability and you have adequate facilities.


Keep dry periods below 60 days.


Keep culling rates at 30 percent or less by managing reproduction and herd health to reduce replacement costs and keep mortality low.


Keep age at first calving below 24 months to reduce costs per replacement animal.


Investigate for management areas other than feed that may be limiting milk yield, such as housing, mammary health, disease, etc.


Reduce feed losses from storage, losses during mixing and delivery and refusals at the feed bunk.


Errors Farms can simultaneously have low feed costs per cow and extremely high feed costs per hundredweight of milk sold. This is frequently a result of feeding poor-quality forage and/or not balancing the ration for optimal production, resulting in low production.


Also, errors in feed mixing and delivery can have adverse effects on milk production and feed costs. Feed tracking software for total mixed rations mixers can help monitor accuracy of feed weighing and delivery.


Total feed costs will also be influenced by how calves and heifers are reared. Longer milk-feeding periods and feeding for higher rates of gain in the preweaned period will increase costs while restricted milk feeding and early weaning will decrease total costs.


However, overall health and performance must be considered as well as the targeted age at first calving when calf-raising strategies are considered.