Editor's note: This Practice Builder was contributed by Timothy Johnson, of Animal and Dairy Nutrient Management Services, in Noblesville, Ind.
The rapid drop in milk price caught many dairy producers wondering "what should I do to make ANY take-home income under this price scenario?" These producers are trying to do the right things in response to low, often less-than-breakeven milk prices.
What has occupied much of my time has been working the other side of the equation — feed prices.
I believe that before diving completely into least-cost ration formulation, it is important to get two points straight with your dairy-producer clients:
- Ration changes that result in decreased milk production or component yield will not help the dairy's bottom line.
- There are long-term considerations that the owner of the dairy must make. Changes in nutrient intake can also be reflected in cow body stores of labile (available) protein and energy contained in body tissue stored for the next lactation. In addition, dairy cattle research has shown that feeding some ingredients containing omega-3 and omega-6 fatty acids can help minimize early embryonic loss and regulate proper ovarian function.
With those points established, I have used software tools to calculate income-over-feed cost (IOFC) developed by Penn State University and by the University of Wisconsin-Madison.
Penn State Dairy Alliance's Income Over Feed Cost Excel spreadsheet program goes much deeper into farm financial management than what most dairy nutritionists need to use. In mid-February, after I had first started using this program, I talked to two practicing dairy nutritionists at the Indiana Cattle and Forage Symposium 2009. They showed interest in the IOFC software, but little interest in getting bogged down in the program's third and fourth spreadsheet pages that require you to enter the farm's short-term, intermediate and long-term debt status. So, I began use of the first two pages of the spreadsheet program, and I found it very useful with the inputs you provide and the benchmark and break-even prices updated every two weeks at Penn State University. (Please see the Research Nugget in this month's issue titled, "New tool for your clients," which includes an electronic link to the Penn State program.)
The University of Wisconsin-Madison has a similar Income Over Feed Supplement Cost program.
Both the Penn State and University of Wisconsin spreadsheets work well. I personally prefer the Wisconsin spreadsheet because of the ease of data entry and the information that can be calculated from the data you input into the program on a per-cow basis.
For one of my dairy clients, I found that it would be profitable to replace two-thirds of the ground corn he had been purchasing with corn hominy feed. The corn hominy feed is available to him with a small delivery fee. (Be sure to include all cash charges of processing, delivery and storage to get an accurate comparison.) He has maintained feeding one-third ground corn to keep total diet starch levels at 19 to 20 percent of ration dry matter. This particular producer made some other changes, as well, that resulted in an immediate cost savings, with no drop in milk production or change in average body condition score.
Did we need the Penn State or University of Wisconsin templates to make these decisions? Not absolutely — other software, like The Ohio State University Sesame program that calculates break-even cost of feeds supplying nutrients like energy, protein, and minerals, is also available. Yet, the Penn State and Wisconsin IOFC software packages are truly "farmer friendly" and they consider the level of income being received for milk, as well as several different feed-cost scenarios that can be used to calculate IOFC.
Both these programs supply good information — the kind dairy producers want to see.
These programs help answer the question, "what is this change going to do both to my cost of operations (as influenced by feed costs) and my expected returns during this challenging time?"
Finding those kinds of answers for your clients is truly a practice-builder.