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April 2008

Can You Afford to Cut Feed Costs?

When feed costs are high, it can be tempting to feed less or consider cheaper alternative feeds. Sometimes saving money on feeds can mean losing money on milk sold, though. Figuring out the true cost of feed involves considering dry matter content and how much protein and usable energy is in the feed. When milk prices are low, you can afford to lose a little milk production for a substantial savings in feed costs. However, when milk prices are high relative to feed costs, you are usually better off focusing on how to produce more milk rather than on how to cut feed costs. This article offers case examples for several different alternatives.

Michael J. VandeHaar
Dept. of Animal Science

What do you do when corn exceeds $5 per bushel? You might be tempted to feed less or decide that it’s time to look for cheaper alternative feeds. However, with alternative feeds, you must consider what you get for your money. Figuring out the true savings of such feeds is not always easy. This article addresses how to evaluate potential alternative feeds comparing their dry matter (DM), energy and protein contents, and Corn-Soy Values. Comparisons of some common feed alternatives are in Table 1.

The first thing to evaluate is the DM or moisture content of alternative feeds. There is no point in paying for water. Compare all feeds on a 100% dry matter (DM) basis. For example, corn distiller’s grains with 90% DM at $160/ton calculates to $178/ton of DM ($160/0.90) or 8.9¢/lb of DM. Wet corn distiller’s grain with 30% DM at $50/ton is $167/ton of DM or 8.3¢/lb of DM. Corn grain at $5/bu ($179/ton) and 88% DM is 10.1¢/lb of DM. At these prices, the distiller’s grains cost 12 to 18% less than corn grain.

The second consideration is how much useable energy is in the feed. For lactation rations in the U.S, Net Energy for Lactation (NEL) in mega-calories (Mcal) is used. The NEL values of feeds cannot be measured accurately, but there is no question that energy intake is a major determinant of the amount of milk a cow will produce. Thus, the feed cost per Mcal of NEL is a better way to compare feeds than simply the cost per pound of DM. If a new ration can be formulated that costs less per Mcal NEL than the ration currently being fed, and if cows eat the same amount of NEL per day and produce the same amount of milk with the new ration, then profit also should be greater with the new ration. Corn grain at $5/bu ($179/ton) and 0.88 Mcal NEL/lb costs 11.5¢/ Mcal of NEL. Dried corn distiller’s grains at $160/ton and 0.82 Mcal NEL/lb cost 10.8¢ per Mcal of NEL. With these prices, the distiller’s grain is 6% cheaper than corn grain.

The third consideration is protein. This is where it gets complicated because feed protein supplies both energy and digestible protein for the cow, so we cannot simply consider the cost per pound of protein. One way nutritionists have evaluated the cost of feeds for both energy and protein is by asking “How much corn and soybean meal could be replaced by this feedstuff?” The resulting “Corn-Soy Value” of a feed is calculated based on the economic value of energy and protein using the current prices for corn and soybean meal. If you can purchase an alternative feed for considerably less than its calculated Corn-Soy Value, you probably should consider buying it. For example, using prices for corn at $5/bu and 48-soybean meal at $340/ton, the Corn-Soy Value for dried distiller’s grains is $242/ton (Table 1). If it can be purchased for $160/ton, then it costs only 66% (160/242) of its Corn-Soy Value. In other words, it is 34% less expensive than a corn and soy blend providing the same amount of energy and protein.

The limitation with using Corn-Soy Values is that we often choose feeds in ration formulations for several reasons other than just the economic value of energy and protein.

  • How much feed must the cow eat to obtain the energy and protein?
  • How much long fiber is in the feed?
  • What is the source of the energy (starch, sugar, fiber, fat, or protein)?
  • How much of the protein will be degraded in the rumen? How much will bypass?
  • Does the feed contain valuable minerals or vitamins?
  • Will the feedstuff alter appetite?

Most of these questions can be included in our assessment of the economic value of an alternative feed by including the new feed into the formulation of a new, well-balanced diet. This can be done using a computer ration evaluation program such as the MSU Spartan Dairy Ration program. However, even checking the value of feeds in a ration program is not a complete and accurate answer.

Because we cannot predict accurately the impact of most ration ingredient changes on feed intake and partitioning of nutrients to milk, it is often difficult to predict whether an alternative feed will be profitable. For example, if you feed a diet with less corn grain and more corn distiller’s grains, the diet will be cheaper per pound using the prices given in Table 1. If the cows produce the same amount of milk, you will make more profit. However, if the cows eat less and produce less milk, this potential profit might not be realized. Thus, it is essential to monitor feed intake and milk production responses before and after a diet change. Without monitoring actual intake and milk production, you will never know if the new feed ingredient was profitable, or not. Corn distiller’s grains may look like a great buy on paper, but it has 10% oil, and higher ration oil content often reduces feed intake, and in the end may decrease profits.

Let’s go through a case example. I balanced two diets to meet the nutrient needs of cows producing 80 lb of milk/head per day (Table 2, page 11). The “Current” diet contains home-grown forages, corn grain and supplements. The second “Alternative” diet includes distiller’s grains and malt sprouts, and costs about 10% less on an NEL basis. Table 3 shows calculated changes in profitability for three dry matter intake responses when switching to the “Alternative” diet from the Current diet. If the cows consume the same amount of energy (which requires 0.9 lb greater DMI) and produce the same amount of milk, profitability goes up 38¢/cow per day. If however, the cows consume the same amount of feed, then they will consume less energy and produce less milk over time, and the diet change will increase profits only about 19/¢/cow per day if milk is $18/cwt. And, if feed intake is decreased, then the increased profit disappears, especially if milk prices are high. Note that when milk prices are higher, the maximum savings from feeding a cheaper diet is the same as when milk prices are lower, but the risk is greater – if milk production drops, the lost milk is of greater economic impact when milk price is high.

Conclusions

So, what could happen when replacing expensive corn grain with an alternative feedstuff? It’s not easy to know for sure. Chances are that the cows will not eat more of a ration with the alternative feedstuff. It’s possible, though, that they might eat the same, or even eat less. The only way to know for sure is to monitor what happens before and after the ration change. Feeding a ration that is cheaper may lower feed costs, but if it lowers milk yield, that could be an expensive mistake! When milk prices are low, you can afford to lose a little milk production for a substantial savings in compared feed costs. However, when milk prices are high relative to feed costs, you are usually better off focusing attention on how to produce more milk rather than on how to cut feed costs.

 

 

 

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