Editor's note: This article ran in the April 2011 edition of Dairy Herd Management.
In early 2011, Sean Jones of Massey, Md., was looking to save money on his feed cost. Jones had the opportunity to purchase some wet brewers grain. Based on an evaluation he did with his nutritionist using CPM-Dairy, it appeared that they would lose a half a pound of milk per cow per day by feeding the wet brewers grain. Jones decided to go ahead with the ration change anyway due to the savings in the ration of 15 cents per cow per day.
What actually happened when Jones fed the wet brewers grain was a different story. Initially, dry matter intake and production went up; however, dry matter efficiency went down.
Because Jones evaluates his herd’s income over feed cost (IOFC) on a weekly basis, he could evaluate the true economics of what was happening and it showed him the wet brewers grain was a good decision. “Without collecting all of the data and running income over feed cost, it would have been difficult to evaluate the economics of this change,” says Jones.
The end result was a higher income over feed cost, and the herd has continued to consume wet brewers grain. This is just one of the reasons why Jones has calculated his IOFC for more than three years.
This ration change could quite easily have been a bad one had milk production gone down more than Jones had anticipated. Virginia Ishler, manager of the Penn State Dairy Research Complex, points out that any change that jeopardizes milk production will have more of an impact on income than a change in feed cost per cow ever could. IOFC is a tool that lets you be smart about making feed changes.
That said, “There are still too many producers who don’t know what their IOFC is and far fewer who know their cost of production,” says Gary Sipiorski, dairy development director for the Vita Plus Corporation. In today’s economy, everyone should be calculating IOFC.
The good part is IOFC sounds more intimidating than it actually is. “It’s a fairly simple calculation,” says Jones. Here’s what you need to know before you start.
Know the formula
First, know what the formula is to calculate IOFC.
IOFC ($/cow/day) = Pmilk x (DAMP/100) – DFC
You take your gross milk price (Pmilk) and multiply it by the daily average milk production (DAMP) divided by 100. Next, subtract the daily feed cost (DFC) to arrive at your income over feed cost per cow per day.
Daily feed cost is the daily cost of feedstuffs required to produce the amount of milk reflected in the daily average milk production or DAMP.