Discovering Hidden Feed Costs for the Milking Herd
DAIReXNET Webinar SeriesNovember 7, 2013
Dr. Mike [email protected]
785-565-3434
Sources of Hidden Feed Cost
Shrink or physical loss
Variation• Feedstuffs• Mixing
Refusals
Inventory – Interest
Brian Gould, Agricultural and Applied Economics, UW Madison
Cost Measures Based on Profit Groups
ItemAll
FarmsHigh 1/3
Medium 1/3
Low 1/3%
Difference high vs low
$ per Cwt of Milk
Feed $9.49 $8.61 $9.48 $10.37 -17%
Labor 3.40 2.44 3.13 4.60 -47
Vet 0.53 0.57 0.52 0.51 12
Dairy Supplies 1.44 1.40 1.28 1.62 -14
Marketing/breeding 0.44 0.50 0.41 0.42 19
Machinery 1.72 1.44 1.83 1.89 -24
Utilities and fuel 0.88 0.67 0.78 1.18 -43
Interest 1.68 1.41 1.65 1.99 -29
Other 0.42 0.36 0.35 0.56 -36
Dhuyvetter, 2011
Profitability Based on Profit Groups
ItemAll
FarmsHigh 1/3
Medium 1/3
Low 1/3%
Difference high vs low
Milk Production, lb/c
20,326 22,788 20,445 17,753 28%
Gross Income, $/cwt
17.87 18.11 17.94 17.57 3
Total Cost, $,cwt 20.00 17.40 19.42 23.13 -25
Net Return, $/cwt -2.13 0.71 -1.48 -5.56
Dhuyvetter, 2011
Key Factors in Determining Profitability
Variable Coefficient P-value
Cows, number of head
1.9 0.156
Milk Production, lbs/c/d
19.9 0.004
Milk Price, $/cwt 182.3 0.023
Cull rate, % -6.8 0.267
Feed, % of total cost 30.1 0.054
Labor, livestock % -8.5 0.209
Dhuyvetter, 2011
Production Cycle of the Dairy Cow
11%
5%
28%
28%
28%
Dry
Transition
Early
Mid
Late
Remove Production Barriers
Cow Comfort
Nutrition
Reproduction
Lameness
Milking Management
Know your cost!!!
Difficult economic times• Improved Management• Can’t manage, if it is not measured!!!
Rations on the farm Formulated Mixed Consumed
Can you Measure True Feed Cost?
Shrink - Amount DeliveredAmount FedDifference is Shrink
FactorsMoistureSpoilageLosses
Wind Animals
Typical Shrink Values
Uncovered Covered Closed
Ingredient Open Piles 3-sided Bay Bins
-------------------% Loss --------------------
Whole Cottonseed
10 - 20 5 - 15 ---------
Dry Meal 5 - 10 3 - 8 2 - 4
Soybean Hulls 12 - 20 5 - 10 2 - 5
Dry Distillers 15 – 22 7 – 10 3 – 5
Wet Distillers 15 – 40 15 – 40 ---------
Kertz, 1998
Feed Cost without Shrink - Formulated
Feeding Rate Cost Costlb/h/d $/ton $/h/d
CS 30 60 0.90
A Silage 12 120 0.72
A Hay 15 250 1.88
Corn 10 195 0.98
SBM 4 460 0.92
DDGS 3 225 0.34
Mineral 1.5 800 0.60
Cost 6.33
Feed Cost with Shrink
Typical Cost Reduced CostShrink, % $/h/d Shrink, % $/h/d
CS 20 1.08 10 0.99
A Silage 25 0.90 12 0.81
A Hay 10 2.06 5 1.97
Corn 6 1.03 3 1.00
SBM 8 0.99 3 0.95
DDGS 6 0.36 3 0.35
Mineral 4 0.62 3 0.62
Cost 7.04 6.69
Real Feed Cost
No Shrink Shrink Reduced Shrink
Series1 6.33 7.04 6.69
$5.88
$6.13
$6.38
$6.63
$6.88
$7.13
Feed Cost,
$/cow/d
Impact on Shrink on Feed Cost per CWT of Milk
80 70 60$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
No ShrinkNormal ShrinkReduced Shrink
Milk Production, lb/cow daily
Attitudes on Shrink Control
Lack of Data• “Can’t Manage What You Can’t Measure”
Cost of Doing Business
Out of Sight Out of Mind
Not Worth My Time
Potential Profit Opportunity
Potential Annual Change in Feed Cost
~$0.35/c/d change
• 100 cows - $12,775
• 500 cows - $63,875
• 1,000 cows- $127,750
• 3,000 cows - $383,250
Implications of Increased Shrink on Silage Cost in Diet
Assumptions:• Feeding 1000 cows• Feeding 30lbs/c/d• Cost delivered, packed, covered
$45, $55, $65
• Losses in silo 10, 15, 20, 25%
Implications of Shrink on Silage Cost
10 15 20 25 30 3535
45
55
65
75
85
95
$45/ton
$55/ton
$65/ton
% Shrink
$ per ton
Tons and Acres Required for Annual Silage Shrink
Amount of Shrink, %
5 10 15 20 25 30 35
Extra Tons
54.8 109.5 164.3 219.0 273.8 328.5 383.3Extra Acres 2.7 5.5 8.2 11.0 13.7 16.4 19.2
200 cows fed 30 lbs silage per day
Acres estimated based on a yield of 20 ton/acre
Estimated Annual Savings per 200 Cows by Reducing Silage Loss to 10%
15 20 25 30 35$0
$2,000 $4,000 $6,000 $8,000
$10,000 $12,000 $14,000 $16,000 $18,000
45
55
65
Percentage Shrink
Impact of Feeding Spoiled Silage to Steers
Item 0% Spoiled
25% Spoiled
50% Spoiled
75% Spoiled
Intake, lb 17.5 16.2 15.3 14.7% Reduction 7.4 12.6 16.0NDF Digestibility, %
63.0 59.5 56.0 51.0
Bolsen, 2004
7% Decrease in DMI = 3.5 lb of DMI = 10.5 lb of milk
Additional Benefits
Reduced loss = Increased Forage Quality• 30 lb feeding rate 66 cows/ton
10 12 14 16 18$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
1
2
3
4
5
$ / cwt of Milk
$ / ton silage
B. Perkins
B. Perkins
Where is the Shrink on Your Farms?
Cost Implications of Shrink
IngredientBase Cost
UncoveredOpen Piles
Covered3-Sided Bay
ClosedBins
---------------------- $/ton ------------------------
SBM 460 529 497 469
Corn 195 224 211 199
Mineral 800 920 864 816
4lb SBM/cow daily x 500 cows = 1 ton per day x $28/ton x 365 = $10,220/yr
Example of Shrink in a Commodity Barn
Dry Distillers• 8.4%
Canola Meal• 3.5%
Whole Cotton Seed• 5.2%
Mineral• 1.6%
Flaked Corn • 2.7%
$0.13/c/day
4,500 cows
$213,525/yr
Reduced
ShrinkInitial CostInventory
Hay Storage Method and Losses
Netw
rap/g
rou
nd
Plastic/g
rou
nd
Tw
ine/G
rou
nd
Insid
e
0
10
20
30
40
% Loss of DM
Univ of WI
Got Birds?
100,000 birds eat
24 tons/month
Feed Component Selection by Birds
% Reduction in Starch
57
38
58
Flaked Corn/Alfalfa Hay
Rolled Corn/Alfalfa Hay
Flaked Corn/CS
Other Sources of Feed Shrink
Delivery Weight Errors• Delivered Feeds and Forages• Are you getting what you pay for????
Scale Accuracy• Calibration• Certification
Cow Toy• Tossed Feed• 2.5% more loss with post-rail vs headlocks• 3 lbs of feed/c/d ~ $0.20/c/d
Refusals• Use• Sell
Other Sources of Feed Shrink
Rodents• Raised feedbunks• Silage and Feed Storage
Tires and Tracking• Wet surfaces and feeds
Feed Delivery Errors
Target Wt, lb
Loaded Wt, lb
Deviation Wt, lb
% Error
Corn Silage 9,000 9,120 120 1.3
Alfalfa Hay 3,200 3,290 90 2.8
Corn 2,000 2,020 20 1.0
SBM 800 820 20 2.5
Premix 400 430 30 7.5
Molasses 100 120 20 20.0
150 Cow Mix
Cost of Delivery Error
Deviation Wt, lb
Cost/lb,$ Cost/Mix$
Corn Silage 120 0.027 3.24
Alfalfa Hay 90 0.125 11.25
Corn 20 0.095 1.90
SBM 20 0.225 4.50
Premix 30 0.400 12.00
Molasses 20 0.060 1.20
$34.09$0.227 cow/day
$82,8551000 cows/year
Key Issues in Hidden Costs of Shrink
Level of Production• Do you get what you pay for?• Remove milk production barriers
Measure and Control Shrink• Wet Feeds• Commodity Buildings• Feed Mixing• Refusals
Thank You