There’s a new player driving up the cost of corn. And from the looks of it, Mr. Energy is here to stay.

As dairy producers, we have experienced rising feed cost in response to drought, export sales, and sheer supply-and-demand factors, but prices have usually waned with the next crop cycle. But now, with Mr. Energy in the market, no significant downturn in feed cost will be realized in the coming years. 

Purchased feed is the single-largest portion of the dairy’s operating budget. Weathering the storm of increased feed cost until the next year will not suffice this time. Each of us must fully evaluate our cost of production and determine how best to adjust our business in order to be successful in this new environment.

Take a hard look

Take a really hard look at your operation. It will require an energetic spirit and a positive frame-of-mind. If you are tired from day-to-day problems, you may not be fully prepared to think “outside the box.”  I suggest that you take a few days off work to evaluate these factors.

  • Evaluate all of the ingredients you feed. Find out what each ingredient costs and whether your operation is reaping the full benefit.   Look to see if non-feed factors (housing, lameness, mastitis) are contributing to the problem. 
  • Calculate storage-shrink for feeds and commodities and take action to remedy any problems.
  • Impress upon employees the importance of minimizing feeding errors. Perhaps your feeding team would benefit from a refresher course on how to correctly feed the herd without significant mistakes. If you have scales on mixer wagons that are not accurate, get them recalibrated.
  • Scrutinize all of your other expenses. Compare the cost of each expense to the economic benefit you receive in terms of milk production, milk quality, cull rate, pregnancy rate, and growth rate. Determine if you are getting your money’s worth.
  • Align yourself with other like-minded owners or managers and get their input. Do the same with your professional advisers.
  • Plan for the changes ahead.

New opportunities

When feed costs are low to moderate, one can have some degree of inefficiency and still be profitable. But things have changed. We must become more efficient and look outside of our traditional “box.” It begins by asking questions that you may not have previously considered.

  • Do you feed one TMR to all lactating cows? 
  • Do you have expensive additives in the TMR for the
    low group? 
  • What is the cost per pound of gain for your replacement animals?
  • Do you have pasture available that cows or replacement heifers could graze?
  • Are there any byproduct feeds available locally that you do not feed?

Going forward, we must look for opportunities. With more distillers’ grains coming onto the market, we will have to find new ways to use it. Can we feed more of it?  If a farm has cropland that produces more than the dairy needs, it should be able to profit from selling excess corn or wheat. This additional revenue could help reduce operational expenses for the dairy. Methane production on-farm will become commonplace to aid the farm environmentally and produce extra revenue.

New opportunities will arise as the marketplace adjusts to this new paradigm. Chart your best course going forward, but keep a sharp eye on the horizon. And remember, survival may very well depend on how well you think “outside the box.”

Paul Johnson is a veterinarian and dairy producer in Climax, Ga.