Dairy Cow Feeding Economics


Financial stressors experienced in the dairy industry since late 2008 have sharpened dairy producer interest in maximizing income over fed cost (IOFC.) However, much confusion exists throughout the industry as to the relationship between reducing feed cost and net revenue generated. At the end of the day the only thing that matters is whether a business generates a loss or a profit. So, when does a savings, in fact, become a sacrifice?. We know from USDA survey data that dairy producers tend to pull back on the amount of feed offered to cows during tight economic times with the resulting reduction in milk production. However, a savings or reduction in expenses doesn’t automatically translate into an increased margin; the difference between income and expenses. To do so requires income level to remain at least equal or to not decline as quickly as the reduction in cost. This is rarely the case with milk production because a decrease in the quantity or quality of feed fed almost always results in lower milk production. Even when the result is only a one lb milk response per lb of feed fed, milk is typically worth 2-3 times the value of feed. Even when milk is priced at its lowest and feeds at their highest levels, milk is still worth 1.4 – 2.0 times that of feed. It therefore takes a lot more feed savings to offset even a minor decline in milk production!.......................click for more

 

 

Source Web Page: UW Cooperative Extension


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