Know your feed cost
If you are buying very much feed from off farm sources, you are well aware of higher feed prices. But what is your feed cost per cow per day or feed cost per hundred weight? What is a reasonable cost in today's market? Is there anything you can do to alleviate some of the tightening of margins?
Below is a feed cost calculator worksheet. It is a guide to calculate the cost per head per day for any animal on your farm whether they are a lactating or dry cow as well as calves or heifers. This worksheet is also available as an Excel spreadsheet on the dairy extension website (www.umn.edu/extension/dairy). You may want to bookmark this site for future reference.
One of the difficult factors in calculating feed costs is coming up with an accurate cost or value of your home-grown forages. Your cost to produce your forage may have little to do with current market price of hay or corn. You may be able to grow corn for silage or alfalfa and grass for forage at a lower cost than you would have to pay in today's market. This is one advantage to upper Midwest dairies. You are choosing to make your crops a cost center, not a profit center, thereby putting the profit potential in your dairy operation or in the net farm profit if the dairy is your main enterprise. Being in the dairy business does not allow us a lot of flexibility of enterprises or rotations.
What is a reasonable cost to feed a cow today? If we break it down by category, we figure that our home-grown forages should be the lowest cost per unit and forage should make up about half or more of the dry matter intake for a milking cow. The remaining portion is typically corn, soybean meal, cottonseed and perhaps corn distillers, other proteins along with salt and minerals, additives, and fat. Some ranges for the various feed categories are listed below. Your costs may vary depending on forage quality, land costs and milk production.
|Forages||$2.00 to 2.50|
|Grains and by-products||$1.50 to 2.00|
|Proteins||$0.50 to 1.00|
|Minerals and vitamins||$0.25 to 0.50|
|Fats||$0.20 to 0.50|
|Additives||$0.10 to 0.35|
Generally, higher milk production may lead to higher daily cost per head but may be lower cost per hundred weight. We want to optimize milk production while controlling feed costs. If your feed is costing 6 to 7 cents per pound and milk is worth 18 to 20 cents per pound, we don't want to lose milk production trying to save on feed costs.
Published in Dairy Star May 2, 2008