Editor’s note: The following answer is provided by Gary Sipiorski, dairy development manager at the Vita Plus Corp.
Q: What feed cost decisions should nutritionists focus on when everything is high?
A: As every dairy nutritionist knows, the March 2011 Class III milk price closed at $19.40. Some may not have realized yet that $19.40 milk is not what $19.40 milk used to be when looking at the larger numbers on all of the bills to be paid on a dairy.
To add another challenge at this point, the future months’ Class III is lower at this time. I had a discussion the other day with a Western dairy producer who told me, “Every feedstuff I buy cost me $300. My cottonseed is $300; corn cost me $300, and soybean meal is higher. It looks like even my hay is going to run me $300 this year!” The question then shouts out, “now what do I do?”
Feed nutritionists are scrambling to help their customers keep the Income Over Feed Cost as high as possible. They are the one adviser that a dairy producer has the most contact with. They “feel the pain!” They not only know the dairy producer as a business person, but they have become friends. The dairy producer’s struggle is the feed nutritionist’s struggle. Feed cost is the number one expense on dairies, with heifer-raising running number two and labor on third base. Now, if we can only convince the cow what the feed bills are looking like, maybe she will be a little more efficient! Oh, yeah, then we have the accountant and the banker on my case regarding the feed bill.
So, where does a nutritionist turn to help his or her customers? Current commodity prices are not going to make this any easier on anyone. Corn usage and exports are setting a heated pace for the price of all major feedstuffs including byproducts. There are no cheap hidden ingredients in an undisclosed warehouse somewhere that one knows about but you.
Make sure you are not missing some of the overlooked feed wastage areas. Dairy producers and their feeders do the same thing hour after hour, day after day. The jobs just become routine and producers do not consider the shrink. Placing high-priced ingredients on piles rather than in concealed bins can be a huge waste when the wind is blowing. Double-checking the accuracy of the TMR loading and feed monitoring software can save money. Approach the employees with an urgency of need to “look at everything,” rather than criticism of the job they are doing. When is the last time all of the scales were checked on the dairy including the drive on scale when feed is brought on the farm along with the TMR?
Take another look at the pre- and post-freshening areas on the dairy. Is this a bottleneck where fresh animals could get off to a better start? A sick cow will eat something but she does not add to the bulk tank. Even a lender could be convinced that dollars borrowed to improve this area of the dairy would be money well spent in keeping cull rates lower or getting cows off to a better start. From a long-term vantage point, there was an interesting session at the Western Dairy Management Conference in Reno, Nev., last month that showed how calf nutrition before 60 days of age adds milk to the first and second lactations.
Taking another hard look at the feed additives in the diet is a must. Nutritionists that have been in the field for a while know what works in what situation. Separate group feeding of pens can help the bottom line. Keep monitoring the latest research on protein and energy needs in diets. Can lower levels work; how about amino acids or energy substitutes?
Forage quality is always the anchor to any nutrition program. Now is the time of year something can be done with capturing as many nutrients as possible from forage grown or purchased. When you bunk it or pile it, make sure it is inoculated for better fermentation. Cover the feed quickly to preserve what is there. Feed wastage of 15 percent to 25 percent is way too common and way too often just accepted as, “that’s just the way it is.” Western dairy producers who buy most of their feed shake their heads at the feed waste coming from stored forage in the Midwest.
Help producers with forage contracts this time of year. With the extremely high price of shelled corn, local dairy producers will need to convince corn growers to let the corn crop be sold as corn silage. Use double-cropping of small grains for forage crops where possible. Get the crop specialist around the table to discuss what more can be grown on the fields.
No one knows where the 2012 Farm Bill is going to end up or if any of the proposed milk programs will be accepted. Dairy producers should be looking at some type of a risk-management program to capture margin when possible. It appears volatility is not going away, and new thinking will have to be applied to this complicated area for many producers.
Helping producers think through financial decisions will become more important. In the late 1970s, the expense rate of most dairies was 50 percent. That meant a dairy producer had 50 percent of the milk check to do most anything they wanted to do with it. Today, the expense rate is at least 85 percent. Capturing margins and knowing all of the financial numbers is a must. Thinking through decisions from here on out with high feed costs may be just the way it is now and in the future.