The times of tight profit margins have returned. And forecasts call for this challenging situation to be with us for a while as rising feed cost and prolific production put the squeeze on producers.
Although you can shield yourself from some of the negative price risk via milk futures and options, expense control is always an excellent management area to explore. That means sharp managers are keeping a close eye on feed cost, since it's one of the biggest expenditures on a dairy.
Fortunately, dairy managers have choices when manipulating feed inputs and cost, asserts Mike Hutjens, University of Illinois extension dairy specialist. And those choices can have a big payoff. For every 25-cent savings in feed cost per one hundred pounds of milk produced, operations with a 20,000 pound rolling herd average can expect an additional $50 per cow per year increase in income.
With that in mind, "It's time to sharpen your pencils, look for alternatives and keep high producing cows milking," he notes.
To do that, here's what Hutjens suggests:
1. Be sure to calculate your future hay needs, forage procurement strategy and quality requirements. Keep in mind that drought conditions and other weather-related issues throughout the country will affect forage prices, quality and availability. Therefore, it may make economic sense to add more corn silage to your supplies this year. Keep an eye out for drought damaged corn though, as growing season stress can lead to lower starch content, reduced digestibility and palatability problems.
2. Check forage quality of homegrown feeds. If quality is high, increase forage intake and diet proportion so that you can reduce your purchased feed cost. If quality is questionable, dilute it out with corn silage or economical byproduct feeds.
3. Soybean meal prices are up considerably from months past. Therefore, consider corn distillers grain as a ration option if it's available near you. With several new plants coming online, access to this byproduct feed has expanded. Just be sure to adjust your ration and handling abilities accordingly.
4. Soy hulls and corn gluten feed are other byproduct feeds that provide economical sources of digestible fiber and energy. This is true even when these are an out-of-pocket feed cost. Again, if your forage quality is marginal, shifting to byproduct feeds can be an economically correct decision.
5. Review feed additives to insure a favorable benefit-to-cost ratio. However, don't drop yeast culture or sodium bicarbonate from your ration to lower feed cost. When used correctly, both additives result in a $4 to $6 return for each dollar invested in either feed additive.
6. Review fat and oil levels and sources. Prices vary from about 4 cents a pound for high oil corn to 12 to 15 cents a pound for soybean seed or fuzzy cottonseed. Animal fat will vary up to about 25 cents a pound and inert commercial fats can swing as much as 40 cents a pound. Target the amount you need to insure an economic milk production response, maintain reproductive efficiency and optimize health benefits from these ration ingredients.
7. Don't fire your advisors to save money. Your feed consultant, veterinarian or feed company or cooperative nutritionist represents another feed cost that remains an excellent investment. Often, rash moves in this area end up costing you milk and income.
8. Remember that cows don't read dairy market reports, and don't care what you're paid for their production. High producing cows require the same amount of protein, energy and other nutrients to produce a pound of milk regardless of milk price. Don't cut corners or underfeed cows and plan to obtain the same milk output with a lower nutrient intake.
9. Finally, monitor cow body condition score and adjust your ration accordingly. Make sure that you are not borrowing from cow body reserves since you may encounter breeding difficulties with cows that are too thin. And, negative nutrient balance lowers the cow's immune system. Drawing off too much body condition this lactation has negative consequences for next lactation's production performance.