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Help! High feed costs are killing me

Jim Salfer, Regional Extension Educator

Published in Dairy Star November 10, 2012

Feed costs have increased about 30% in each of the past two years. The change in milk price has not kept pace with the rise in feed costs. To put this in perspective, from 1985 to 2011 the Milk:Feed ratio has averaged 2.78. For 2012 the Milk:Feed ratio has averaged 1.45. The July 2012 Milk:Feed ratio was the lowest ever calculated at 1.29. Historically when the ratio is below 2.0, the industry is unprofitable.

Many producers call me with questions about what alternative protein sources or feeds can help them lower feed costs. Unfortunately, with the fast pace at which information now travels, "good" buys are few and far between. The exception might be for wet by-products from processing plants in close proximity to your farm.

Below are some controllable items I regularly see on farms that cause higher than average feed costs.

  1. Minimize waste and shrink. This is the biggest and likely the easiest way to reduce feed costs on many farms. For forages stored in bunkers or piles, this is an insidious cost because you don't write a check for it, but it is lost feed just the same. Table 1 shows the effect of two different shrink levels on actual daily feed cost using current feed prices. In a year, a 100-cow dairy can save $51,100 by reducing the shrink from high shrink to low shrink. It is not uncommon to have shrinks of 30% on forages in bunkers and piles and 10% shrink on concentrates with commodity sheds.
  2. Optimize bunk refusals in cows and heifers. With excellent bunk reading and feed management, many farms have been able to successfully reduce bunk refusals to 2% or below for lactating cows. As long as no moldy or unpalatable feeds (such as thistles) are fed to replacement heifers, the goal should be a refusal level of 0%. Again, good bunk reading and feeding management is required.
  3. Avoid overfeeding nutrients. All classes of animals should be fed at nutrient requirements but not much above. I often see heifer diets balanced considerably above National Research Council (NRC) recommendations. A review of research at this summer's national dairy science meetings indicated that feeding at NRC levels is adequate for excellent growth. Review all additives and determine if they are still needed in the diet.
  4. Cull non-productive cows and heifers. Research has shown that heifers treated for respiratory disease early in their life were more likely to never have their first calf. Cull heifers early if they have multiple treatments for pneumonia, and save the raising cost and later disappointment in performance. Make smart treatment and cull decisions on cows. With the high cull prices, many times it is more profitable to cull a cow early instead of treating her.
  5. Minimize non-productive days. Cows dry longer that 60 days (research supports cows can even be dry considerably fewer days than this) and heifers older than 22 to 24 months at first calving constitutes non-productive days. Work to minimize the percent of animals in these categories. Table 2 shows the effect of non-productive days on profitability.

Feed costs are not likely to decrease anytime soon. Examine the factors listed above. Those are the biggest items that can be changed with minimal effect on performance in most herds.

Table 1. Effect of feed shrink on actual daily ration cost1
Ration amount, lb No shrink Small shrink Large shrink
Total feed cost $7.23 $7.77 $9.17
1 No shrink = actual ration cost; large shrink = 30% shrink on forage and 10% shrink on concentrates; small shrink = 10% shrink on forages and 5% shrink on concentrates.
Hay ($225/ton) 4 $0.45 $0.50 $0.64
Haylage - 50% DM ($110/ton) 29 $1.60 $1.77 $2.29
Corn silage ($65/ton) 53 $1.74 $1.93 $2.48
HM corn grain ($6.86/bu) 10.4 $1.14 $1.15 $1.20
Protein supplement ($502/ton) 9.2 $2.30 $2.42 $2.56
Table 2. Cost of non-productive days on profitability1
Percent of heifers older than 24 months age at first calving2
1 Cost per cow for all cows in herd.
2 Assumes a 36% cull rate and that the average heifer that calves over 24 months old, calves at 26.5 months of age with an average daily cost of $2.50/head/day.
3 Assumes that the average cow dry longer than 60 days is dry an average of 80 days with an average daily cost of $2.50/head/day.
Percent of cows dry longer than 60 days 20% 25% 30% 35% 40%
10% $30.00 $35.63 $41.25 $46.88 $52.50
15% $33.75 $39.38 $45.00 $50.63 $56.25
20% $37.50 $43.13 $48.75 $54.38 $60.00
25% $41.25 $46.88 $52.50 $58.13 $63.75
30% $45.00 $50.63 $56.25 $61.88 $67.50
35% $48.75 $54.38 $60.00 $65.63 $71.25
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