Discovering Hidden Feed Costs for the Milking Herd

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Dr. Mike Brouk of Kansas State University presented this information as part of DAIReXNET's webinar series on November 7, 2013. For more information, please see our archived webinars page at www.extension.org/pages/15830/archived-dairy-cattle-webinars.

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Discovering Hidden Feed Costs for the Milking Herd

  1. 1. Discovering Hidden Feed Costs for the Milking Herd DAIReXNET Webinar Series November 7, 2013 Dr. Mike Brouk mbrouk@ksu.edu 785-565-3434
  2. 2. Sources of Hidden Feed Cost  Shrink or physical loss  Variation • Feedstuffs • Mixing  Refusals  Inventory – Interest
  3. 3. Brian Gould, Agricultural and Applied Economics, UW Madison
  4. 4. Cost Measures Based on Profit Groups Item All Farms High 1/3 Low 1/3 Medium 1/3 % Difference high vs low $ per Cwt of Milk Feed $9.49 $8.61 $9.48 $10.37 -17% Labor Vet Dairy Supplies 3.40 0.53 1.44 2.44 0.57 1.40 3.13 0.52 1.28 4.60 0.51 1.62 -47 12 -14 Marketing/breeding Machinery Utilities and fuel 0.44 1.72 0.88 0.50 1.44 0.67 0.41 1.83 0.78 0.42 1.89 1.18 19 -24 -43 Interest Other 1.68 0.42 1.41 0.36 1.65 0.35 1.99 0.56 -29 -36 Dhuyvetter, 2011
  5. 5. Profitability Based on Profit Groups Item Milk Production, lb/c Gross Income, $/cwt Total Cost, $,cwt Net Return, $/cwt All Farms High 1/3 Medium 1/3 Low 1/3 20,326 22,788 20,445 17,753 % Difference high vs low 28% 17.87 18.11 17.94 17.57 3 20.00 17.40 19.42 23.13 -25 -2.13 0.71 -1.48 -5.56 Dhuyvetter, 2011
  6. 6. Key Factors in Determining Profitability Variable Coefficient P-value Cows, number of head Milk Production, lbs/c/d Milk Price, $/cwt Cull rate, % Feed, % of total cost Labor, livestock % 1.9 0.156 19.9 0.004 182.3 -6.8 30.1 -8.5 0.023 0.267 0.054 0.209 Dhuyvetter, 2011
  7. 7. Production Cycle of the Dairy Cow 28% 11% 5% 28% 28% Dry Transition Early Mid Late
  8. 8. Remove Production Barriers  Cow Comfort  Nutrition  Reproduction  Lameness  Milking Management
  9. 9. Know your cost!!!  Difficult economic times • Improved Management • Can’t manage, if it is not measured!!!  Rations on the farm    Formulated Mixed Consumed
  10. 10. Can you Measure True Feed Cost? Shrink  Amount Delivered  Amount Fed  Difference is Shrink Factors  Moisture  Spoilage  Losses   Wind Animals
  11. 11. Typical Shrink Values Ingredient Uncovered Open Piles Covered 3-sided Bay Closed Bins -------------------% Loss -------------------Whole Cottonseed Dry Meal 10 - 20 5 - 15 --------- 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
  12. 12. Feed Cost without Shrink - Formulated Feeding Rate lb/h/d 30 Cost $/ton 60 Cost $/h/d 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 CS Cost 6.33
  13. 13. Feed Cost with Shrink CS Typical Cost Shrink, % $/h/d 20 1.08 Reduced Shrink, % 10 Cost $/h/d 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
  14. 14. Real Feed Cost $7.25 $7.00 Feed $6.75 Cost, $/co $6.50 w/d $6.25 $6.00 $5.75 No Shrink Shrink $6.33 $7.04 Reduced Shrink $6.69
  15. 15. Impact on Shrink on Feed Cost per CWT of Milk $14.00 $12.00 $10.00 $8.00 No Shrink Normal Shrink Reduced Shrink $6.00 $4.00 $2.00 $0.00 80 70 60 Milk Production, lb/cow daily
  16. 16. 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
  17. 17. 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
  18. 18. 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%
  19. 19. Implications of Shrink on Silage Cost 95 85 75 $45/ton $ per ton 65 $55/ton 55 $65/ton 45 35 10 15 20 25 % Shrink 30 35
  20. 20. Tons and Acres Required for Annual Silage Shrink Amount of Shrink, % 5 Extra Tons Extra Acres 10 15 20 25 30 35 54.8 109.5 164.3 219.0 273.8 328.5 383.3 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
  21. 21. Estimated Annual Savings per 200 Cows by Reducing Silage Loss to 10% $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 45 55 65 15 20 25 30 Percentage Shrink 35
  22. 22. Impact of Feeding Spoiled Silage to Steers Item Intake, lb 0% 25% Spoiled Spoiled 17.5 % Reduction NDF Digestibility, % 63.0 16.2 7.4 59.5 50% Spoiled 75% Spoiled 15.3 12.6 56.0 14.7 16.0 51.0 7% Decrease in DMI = 3.5 lb of DMI = 10.5 lb of milk Bolsen, 2004
  23. 23. Additional Benefits  Reduced loss = Increased Forage Quality • 30 lb feeding rate 66 cows/ton $60.00 $50.00 $40.00 $ / ton silage $30.00 1 $20.00 3 2 4 $10.00 5 $0.00 10 12 14 16 $ / cwt of Milk 18
  24. 24. B. Perkins
  25. 25. B. Perkins
  26. 26. Where is the Shrink on Your Farms?
  27. 27. Cost Implications of Shrink Ingredient Base Uncovered Covered Closed Cost Open Piles 3-Sided Bay Bins ---------------------- $/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
  28. 28. 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
  29. 29. Reduced Shrink Initial Cost Inventory
  30. 30. Hay Storage Method and Losses 40 30 % Loss of DM 20 10 0 Inside Twine/Ground Plastic/ground Netwrap/ground Univ of WI
  31. 31. Got Birds? 100,000 birds eat 24 tons/month
  32. 32. Feed Component Selection by Birds % Reduction in Starch Flaked Corn/Alfalfa Hay 57 Rolled Corn/Alfalfa Hay 38 Flaked Corn/CS 58
  33. 33. 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 ~ $0.20/c/d  Refusals • Use • Sell
  34. 34. Other Sources of Feed Shrink  Rodents • Raised feedbunks • Silage and Feed Storage  Tires and Tracking • Wet surfaces and feeds
  35. 35. Feed Delivery Errors Target Wt, lb Loaded Deviation % Error Wt, lb Wt, lb Corn Silage 9,000 9,120 120 1.3 Alfalfa Hay 3,200 3,290 90 2.8 Corn 2,000 2,020 20 1.0 SBM 800 820 20 2.5 Premix 400 430 30 7.5 Molasses 100 120 20 20.0 150 Cow Mix
  36. 36. Cost of Delivery Error Deviation Wt, lb Cost/lb,$ 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 $0.227 cow/day $82,855 1000 cows/year $34.09
  37. 37. 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
  38. 38. Thank You

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