Lower milk prices mean revisiting feed costs

By Jim Paulson, University of Minnesota Extension

ST. PAUL, Minn. (3/18/2009) —With the big drop in milk price since mid-2008, profitability is going to be a challenge in 2009. With feed costs representing 40-50 percent of the costs of producing milk, now is a good time to revisit your feed costs.

A simple form can help you compute feed cost per cow per day. It’s available on our dairy extension web site at www.extension.umn.edu/dairy. Click on “dairy management,” then “nutrition” and look for “Feed Cost Calculator.”  It’s a free downloadable spreadsheet. 

Once feed cost per head per day has been determined, we can calculate daily milk income and income over feed cost or IOFC. We expect to see the IOFC in a range of $5 to $7 per cow per day. Additionally, we still have to account for the feed costs of dry cows and heifers. This makes the margin shrink even more.

Where will IOFC be for you in 2009? What is your strategy for dealing with the lower milk price in 2009? One of the first things we usually look at is purchased feeds. Is there anything we can cut out? If so, why have we been feeding it in the first place? Most likely, it is there for a reason.

Maybe some of the ingredients were used for a specific feeding problem that has now changed. But reducing feed cost will not necessarily increase IOFC if it reduces milk production. The lowest cost ration may not necessarily be the most profitable.

What can you do to either reduce costs, increase milk production or both? Here are some things to consider:

1. Always strive for maximizing dry matter intake. One more mouthful may mean another pound of milk. This means fresh, palatable feeds, feed pushed up often so they can reach it, no sorting, mangers cleaned daily, cool comfortable cows, and the list goes on.
2. Watch days in milk. Really work at getting cows pregnant. Our target for days in milk is 150. Late lactation cows just don’t milk as much. With margins squeezed, we may want to cut vet checks and breeding programs, but that can come back to haunt us.
3. Concentrate on feeding high quality forages. That may start with your cropping plans. What is your cost for corn silage and haylage? Should you look at a different forage mix? Work with your nutritionist as you consider different options.
4. Look at all other costs and purchases in addition to feed. Are there other costs that are out of line?

Any use of this article must include the byline or following credit line:
Jim Paulson is a dairy educator with University of Minnesota Extension.

Media Contact: Catherine Dehdashti, U of M Extension (612) 625-0237, ced@umn.edu

URL: http:// www.extension.umn.edu/extensionnews/2009/lower-milk-prices.html  This page was updated April 9, 2009 .
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