Feed Price Impacts on Dairy Profitability and Nutrition: Part I

Last year, 2006, will probably be remembered as one of the most challenging years for financial performance on dairy farms. Unfortunately, 2007 is not starting off much better. Feed costs are soaring and milk prices are very slowly creeping up. All the talk about ethanol plants and the current high corn and soybean prices has producers legitimately asking how they can manage the current scenario?

It's during these times producers should avoid the knee jerk reaction of making major ration changes. For example, do not take out all additives or remove the most expensive ingredients, without thinking through the impact this will have on animal performance and ultimately milk income and income over feed costs (IOFC). Consider the following:

1. Calculate your current IOFC. An achievable goal is $6.00 or higher. In cases where milk prices are low and feed costs high a range of $5 to $5.50 should be attainable.

2. If the current IOFC falls below the recommended level, relay this information to the nutritionist. The nutritionist is the best person to decide the appropriate action(s) to bring feed costs down to a manageable level for the producer.

a. There may be additives that can be removed. It is not recommended that all additives be eliminated at one time. An assessment should be made and individual ingredients eliminated one at a time. Constant monitoring of animal performance is necessary to ensure that production or performance is not adversely affected.

b. There are protein and energy sources that are required to help maintain condition and performance. This is where the consultant can be instrumental in deciding if any of these ingredients can be reduced or eliminated. Removing the most expensive ingredients may cheapen the ration, but if production or components are adversely affected, this can result in a worse situation related to IOFC.

3. Don't expect the nutritionist to carry all the responsibility related to feed costs. How rations are implemented on farm can impact feed costs. There are feeding management practices that can be fine-tuned to help keep costs down.

a. If you aren't already, consider grouping cows based on stage of lactation or milk production. Late lactation animals can be fed a much higher forage ration and nutrient levels more appropriate to their production. This can help minimize or eliminate higher cost ingredients from late lactation diets.

b. Evaluate the level of feed refusals. This may be a time to reduce refusals to 0-2 percent.

c. Don't overlook the costs to feed dry cows and heifers. You don't want to short change these animals, but there may be opportunities to control feed costs in these groups.

d. If you aren't checking dry matter regularly, this would be a great time to invest in a microwave oven or Koster tester and a scale. Ensuring that cows are getting the ration formulated on paper will help avoid overfeeding purchased feeds.

e. Examine grain and commodity storage on the farm. Keep as much feed for the cows as possible instead of feeding birds and rodents. Monitor shrink and usage so that if problems are arising from lost feed, they can be caught early and changes can be made.

These are just a few of several strategies that can be used to improve IOFC. No one really knows how ethanol production and higher grain prices will impact our industry. This is new territory for many of us. One thing we do know, you can't go wrong sticking with the basics.

Virginia Ishler,Penn State Dairy Alliance Extension Associate*

and Tim Beck, Dairy Extension Educator, Lancaster County, PA.

*Penn State Dairy Alliance is a Penn State Cooperative Extension Initative