Income Over Feed Cost Tool

Dairy Extension Income Over Feed Cost Tool measures your herd against established benchmarks

PERSONAL HELP IS AVAILABLE:

We can help you start using the Penn State IOFC Tool. Simply complete the IOFC Request Form, found in the "How to use the tool" section, below, for personal assistance in getting started.

Monitoring income over feed costs, or IOFC, is a proven way to evaluate a dairy's profitability. When IOFC is monitored on a monthly basis, it can be a good barometer to gauge when the herd is profitable, when it is not, and when changes need to be made. The challenge faced by many Pa. producers is that they do not know how to monitor IOFC. This puts the industry at a disadvantage compared to producers in other states. Penn State’s risk management group, consisting of extension educators, faculty and staff, is focusing its efforts on this important topic for 2009-2011.

There are several strategic decision-making levels related to calculating IOFC. In order to make this process user friendly, a web-based tool is available that will allow the user to determine actual feed cost per cow, their IOFC, and compare it to industry benchmarks and to the IOFC index developed by Penn State’s Ken Bailey and Virginia Ishler.

The two charts on this page show reports generated by the new Penn State Income Over Feed Cost Tool. The sample farm in the first chart, below, is producing 80 lbs/cow/day and its most current gross milk price was $19.61. This chart demonstrates that, with their cash flow requirements, they are $0.44 below a break-even point. This chart is used to explore different scenarios, such as "What if I can increase milk yield by two lbs?" or "What if the milk price drops by $0.50?"

The second chart, below the first, reveals that, after entering ration information, milk lbs shipped, and the gross milk price, this farm discovered that they were enjoying a better margin than the rest of the market because their feed cost/cow/day was $0.80 less than the market costs. The two charts show how this dairy's IOFC compared to its break-even IOFC of $6.17.

How to use the tool

If you are interested in calculating your income over feed costs (IOFC) and comparing it to the benchmarks, you may use the Penn State IOFC Request Form to contact Virginia Ishler, nutrient management specialist with Penn State Dairy Alliance, for assistance in using the tool. The Penn State IOFC Request form is available in two versions:

In order to fill out the form, you will need to gather the following information:

your gross milk price
milk lbs shipped for three consecutive shipments
number of lactating cows in each group
batch weights for your TMR broken down by group and ingredient
cost/ton for ingredients in your ration that you purchased

If you are able to assign a price to your home-raised forages and concentrates (by using costs of seed, fertilizer, fuel, storage, etc.), there is a space to include that as well for the sake of comparison. If you do not have this information, we will use the market price of the forage if you were to sell the feed today. Finally, be sure that your milk price, lbs. shipped, ration, and costs correspond to the same time period.

If you have any questions or difficulty accessing the IOFC Update Request Form, please call Virginia Ishler at (814) 863-3912 (toll-free at 888-373-7232).