And, it’s something that shouldn’t be a chore to update — 10 to 15 minutes once you have the Excel file set up, says Tim Beck, Penn State extension educator in dairy business management. (See Library corner to find where you download an Excel spreadsheet to calculate IOFC.) The best time to calculate IOFC is right after the monthly milk check is received.
Jones says he finds it advantageous to calculate IOFC on a weekly basis. “A weekly IOFC calculation allows me to make better decisions and be able to evaluate changes faster.”
The bottom-line is herds that do a good job monitoring their IOFC have a higher likelihood of sticking around longer.
Cheap can be expensive
As we move through these volatile times, feed prices are changing rapidly. But, Virginia Ishler, manager of Penn State Dairy Research Complex, cautions against making decisions based on single ingredient prices alone.
Often, a knee-jerk reaction when a commodity gets expensive is to automatically remove it from the ration, notes Ishler. Next, you start bringing in all sorts of ingredients because they are cheap. But, Ishler says, cheap can get expensive really fast.
“Maybe an ingredient is more expensive, but if you don’t lose milk production, and your income over feed cost is within the benchmarks you set, then you are still OK,” she says. “I’ve seen more disasters from this cheap-feed strategy than success.”The Next step
Once you have calculated your income over feed cost (IOFC), it’s time to put it to use. Knowing your IOFC enables you to:
• Make informed decisions about feed purchases.
• Know when to lock in milk price.
• Know when to adjust your ration to accommodate price volatility.
Penn State University offers several resources on calculating income over feed cost. Here is a list of available resources.