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1007 PD: Controlling feed costs over the long haul

John K. Bernard Published on 27 September 2007

After several years of relatively cheap grain prices, corn and soybean prices have increased significantly. The increase is primarily due to greater demand for corn and soybeans to produce ethanol and biodiesel. Most economists suggest that these higher prices will be with us for the foreseeable future. Since other feedstuffs are typically priced to reflect the corn and soybean market, the cost of almost all feed ingredients has increased.

Since feed is the largest single cost in producing milk, most producers review their feeding program to see if there are ways to reduce these costs. Any changes made to rations should only occur after a thorough review of the feeding program and must take into account the impact a change could have on other aspects of the overall operation. This [article] will review factors that affect feed cost, methods for determining the value of byproduct feeds, review issues related to using byproduct feeds and provide some suggestions for dealing with feed cost over the long haul.

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Factors that affect feed cost

Rations are formulated based on animal requirements and the quality of feeds available. In regards to animal requirements, higher-producing cows have lower feed cost per cwt. This is because maintenance requirements, the amount of feed required to maintain basic body functions, are diluted by higher levels of milk production. Because of this, it is still more profitable to feed for high levels of milk production even when feed costs are high. The key is to use a realistic level of production for formulating rations.

Forage quality is one of the biggest factors affecting total feed cost. As forage quality increases, less concentrate is required to provide the additional nutrients needed to support maintenance, milk production, reproduction and health. Considerable advances have been made by seed companies as they work to identify hybrids that not only yield well but are more digestible, so that the cow can obtain more metabolizable energy in support of milk production.

We also have a better understanding of the importance of timely harvest and forage processing to get the most out of our forage. Research has also demonstrated the importance of managing the forage during storage and feeding to prevent secondary fermentation of silage or deterioration of hay once it has been baled.

The factor most producers watch and talk about most is the cost of supplements, especially corn and soybean meal, as they are used to establish the price for most ingredients. Fortunately, there are a variety of feedstuffs available that can supply energy and protein in rations for dairy cows besides corn grain and soybean meal. The list of possibilities includes traditional grains and protein supplements as well as numerous byproducts from the production of food, fiber or fuel. There are also other unusual byproducts available in some areas that can be fed if the producer is set up to handle those ingredients. The initial attraction of byproduct feeds is their lower cost, but there are other factors to consider in addition to cost.

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Most producers feed one or more additives which increase feed cost. Several additives have research data to validate their usefulness and document their potential to improve production or health. These additives when used according to directions provide a good return on investment and should be continued. However, there are additives on the market that do not have unbiased information to support their potential usefulness. Often these products are included in the ration because they may help solve a problem. The use of these additives should be critically reviewed as to their need and usefulness since they add to the cost of production and may not provide any return. No product, with or without research documentation, should be used as a Band-aid for poor management.

The same is true for certain ingredients as well. Remember:

•There are no magic bullets.

•If it sounds too good to be true, it probably is.

•No product can change the laws of science.

Determining the cost of feed ingredients

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There are several methods for comparing the prices of byproduct feeds. Many ration formulation programs calculate the value of each feed ingredient based on the nutrient requirements of the diet and the nutrients available from ingredients offered. This method provides specific information for that particular situation, but most producers do not have the software to perform these calculations.

More commonly, producers use programs specifically designed to compare the value of several feeds compared to a reference feed such as corn and soybean meal. One program commonly used is the FEEDVAL program available from the University of Wisconsin (http://www.wisc.edu/dysci/uwex/nutritn/spreadsheets/FEEDVAL-Comparative.xls). This program calculates the value (price/ton) based on the dry matter (DM), crude protein (CP), total digestible nutrients (TDN), calcium (Ca), and phosphorus (P) contents of each feed compared with the test feeds (shelled corn, 48 percent CP, soybean meal, limestone and dicalcium phosphate).

The nutrient composition of the feeds can be changed to match the products available in your area as well as the percentage feed loss. The values for forages are expressed on a dry-matter basis whereas all other ingredient values are expressed on an as-fed basis. A second version of this program (FEEDVAL4) is available that calculates the value of feeds based on undegradable and degradable protein, TDN, fat, Ca and P content using blood meal, urea, tallow, shelled corn, limestone and dicalcium phosphate as reference feeds.

Both programs allow the user to compare a wide variety of feedstuffs based on their primary nutrient content. The program can also be used to determine the feeding value of home-grown feedstuffs. There are other similar programs available as well as similar functions in many of the ration formulation programs available today.

Producers should compare similar types of ingredients when selecting those they will ultimately use. If you are not sure how a particular ingredient would fit into your ration, be sure and consult your nutritionist before you purchase any new ingredient. Most nutritionists keep up with ingredient cost and can provide a considerable amount of help when looking at any new ingredient.

There are several listings of ingredient prices that can be accessed by the internet including the University of Missouri site (http://agebb.missouri.edu/dairy/byprod/). These sites are good for information, but you will need to contact a broker to get a delivered price to your farm.

The true cost of a feed ingredient may be different from what we initially paid. There are additional delivery costs for byproduct feeds that may not be included in the initial quote. If you must receive a semitrailer load of feed that will be fed over an extended time, you should include an interest cost on the money tied up in inventory. Shrinkage varies from 3 to 7 percent for dry ingredients and 15 to 35 percent for wet ingredients. Sometimes special storage or handling is required, compared to using a complete feed, and these costs should be taken into account. The major cost in this analysis is typically shrinkage and delivery cost when the feed is used in a normal time frame.

Nutrient form and balance

Most feedstuffs provide a combination of nutrients but are classified according to the primary nutrient provided. In most situations, it is desirable to include a mix of feedstuffs in the ration to help provide a more desirable balance of nutrients to optimize ruminal fermentation and health. For example, high-fiber energy supplements are useful for reducing the starch concentration of rations based on corn silage and supplemented ground corn.

For diets containing high-quality legume silage or high protein grass silage, protein supplements that contain rapidly degraded protein would not be desirable. However, there are other situations in which the use of urea or another source of degradable protein should be fed even though it may not be the least expensive protein source compared with soybean meal.

When byproducts are included in rations, we must be aware of the amount of phosphorus these ingredients add to the ration. With greater attention on nutrient runoff and its negative effect on the environment, we must consider the impact of overfeeding phosphorus and other nutrients on the long-term aspects of whole farm nutrient balance. Several byproducts have relative high levels of phosphorus, which is one of the primary concerns. If multiple feeds with higher-than- average concentrations of phosphorus are fed, the phosphorus content of the ration will be well above National Research Council (NRC 2001) recommendations. The long-term impact may be a limitation in the amount of manure that can be applied to your land – which could reduce any future expansion plans with the purchase of additional land.

Nutrient variation

When producers make the decision to use a byproduct, they also assume responsibility for quality control of that ingredient. Variations in the nutrient contents of byproduct feeds occurs because of differences in the variety of grain used for processing, fertility of soil the crop was grown on, processing method used by the plant to extract the primary products, blending of multiple byproducts together by the manufacturing plant and storage conditions.

The expected variation for some byproducts is greater because of the different types of processing in the industry. The variation in nutrient content in a byproduct is typically much higher for the industry compared with that from a single source. Processing methods used by manufacturers have changed greatly during the last decade. These changes allow the processor to more effectively remove the primary product (starch, oil, etc.) producing byproducts that have a different nutrient profile than that listed in many references.

For example, the processing methods used to produce ethanol have changed greatly which produce distillers – dried grains with solubles (DDGS) – with a different nutrient content than previously available. Part of this variation is due to a new generation of plants that have come on-line in the past few years that produce DDGS that are reported to have higher nutrient value than DDGS produced by older, more traditional ethanol plants.

Processing technology is constantly being refined to improve the extraction of primary ingredients. Researchers are also looking at ways to decrease the amount of nutrients such as phosphorus in byproducts, so that their use in animal feeds will improve whole farm nutrient balance and maintain water quality. Some processing technology being developed will allow the production of custom byproducts for feeding in the near future, which will be advantageous for dairy producers. For these reasons, producers should sample feedstuffs on a regular schedule to keep track of the variation and any change in nutrient content that may impact the nutrient content of the diet.

Quality issues

Another aspect of quality control is safeguarding against potential contaminants in the byproduct feeds. Normally, the raw materials used for manufacturing food are screened for mycotoxins and other potentially harmful contaminants before use, and the byproducts are safe for animal consumption as long as they are handled properly after they leave the plant. There have been a limited number of cases in the past where byproducts from non-food industry sources were contaminated, resulting in either the death of numerous animals or condemnation of the animals. Producers should ask about the quality control measures used by the manufacturer to safeguard against contamination of the byproduct with mycotoxins or other harmful compounds. As the production of biofuels increases, there may be situations where treated seed or fermentation products from other industries are used to make ethanol or biodiesel. The byproducts from these products could potentially be fatal to the animals consuming them.

Occasionally, there are unusual byproducts that may become available for use. Some examples include: candy, cocoa byproduct, fruit pomace, fresh vegetables or fruits, vegetable residues or other products that are not typically fed. In some cases, there isn’t any information available on the nutrient content of these feeds and the producer must run analyses before they can be included in a ration. Many of these products have handling issues (ex, individually wrapped pieces of candy), but other products may have some compounds (either natural or added during processing) that would limit their use. In these cases, the producer should seek the assistance of a nutritionist with experience in this area.

Energy supplements other than corn grain

Either you have already looked at replacing some or all of the corn in the diet or you will in the near future. Corn is fed primarily as a source of fermentable energy. The energy is primarily in the form of starch which is digested at varying rates depending on how finely it has been ground or how it has been processed. There are several byproducts that can be used to partially replace corn grain in the diet. Some of the primary byproducts to consider include: hominy feed, soybean hulls, bakery byproduct, citrus pulp, molasses, wheat middlings, brewers grain, corn gluten feed or distillers grain. The energy in many of these byproducts is primarily in the form of digestible fiber, but some byproducts contain processed carbohydrates or sugar in the case of bakery byproduct and molasses, which should be handled differently in the ration.

Another source of energy is to feed more fat from sources such as whole cottonseed, whole soybeans, tallow, animal-vegetable blends or inert fat supplements. When multiple products that contain higher concentrations of fat are fed, the total amount of fat in the diet must be limited to avoid any negative effects on fiber digestion, animal health and milk fat depression. Considerable research has been conducted on each of these and each has advantages and disadvantages. The amount of corn that can be replaced by one or more of these byproducts depends on the quality and type of forage fed, production level and feeding system constraints.

Distillers grains have received a lot of press recently because this is the primary byproduct from the production of ethanol. As pointed out previously, there is a good deal of variation in the nutrient content of distillers grains. Some plants have taken extra steps to produce a more consistent product and typically collect a premium for their distillers grains. Research has demonstrated that distillers grains can provide up to 40 percent of the total ration DM, but this is not practical for most dairies.

Besides containing relatively high concentrations of fat, distillers grains also contain high levels of phosphorus. Like other byproduct feeds that contain higher concentrations of phosphorus, high feed rates increase the amount of phosphorus in the manure which builds up in the soil. The long- term implications include lower application rates of manure to land and limitations on herd expansion without purchasing additional land.

Suggestions for dealing with higher feed cost

It is important to review all aspects of your feeding program from time to time, independent of feed prices. This review should address several questions including: what are the primary weaknesses of the current feeding program? Often the primary weakness is related to forage quality, feed bunk management or some other aspect that is preventing your cows from being as productive as possible rather than the ration formulation.

If cow comfort is not as good as it should be, the cows will not respond completely to any change in the feeding program. The same is true for all of the little things that should be done to make sure each cow has feed when she is ready to eat, cows have plenty of bunk space, unrestricted access to water, water is cleaned each week and there is a good preventative health program in place.

The DM content of any wet feeds (silage or wet byproducts) should be measured routinely and rations adjusted as needed. This will reduce some of the variation in the nutrient content of the final ration and keep cows on a more consistent diet. Sample forages and other home-grown feed and have them analyzed. Use the analysis to fine-tune your rations. Home-grown forages commonly have greater variation than purchased feeds, so it is very important to sample and analyze frequently. Fine-tuning the ration can make a difference not only in milk production but also the amount of purchased feed needed and total feed cost.

Review mixing procedures and information used for mixing rations with the feeder to make sure that the rations mixed are the same as those formulated. A misplaced decimal or transposed number can be very costly in both feed cost and lost production. Too often the feeder doesn’t understand (or forgets) the importance of adding the correct amount of each ingredient and the impact of a mistake on cow health and production on the bottom line.

Manage feedbunks to optimize intake. Old feed should be removed each day to prevent spoilage of new feed and encourage consumption. Feed should be pushed up several times a day so cows have access at all times. Provide adequate bunk space for each cow. Normal recommendations are for a minimum of 2 linear feet per cow and more for fresh cows. Adjust feeding amounts to minimize refusals. Normal recommendations are for 3 to 5 percent depending on how well you can time feed delivery. If feed refusals are primarily the fractions that are sorted out by the cow, the amount of feed offered probably should be increased, and there are opportunities for improving feed mixing and processing.

Dairy efficiency, the pounds of milk produced for each pound of DM consumed, is a good tool to help evaluate the effectiveness of a ration and economics. High-producing cows should have a dairy efficiency greater than 1.6, whereas the majority of the herd should average 1.5. Dairy efficiency is lower for late-lactation cows and during heat stress. Supplemental cooling should be optimized to maintain production and dairy efficiency.

Establishing production groups, when possible, allows different rations to be formulated according to need, reducing total feed cost. It may be enlightening to determine the value of the milk produced by each cow, either current daily milk or lactation average, and compare that with the current feed cost to see which cows are profitable.

Summary

As we look for ways of controlling feed cost in light of increasing corn and feed prices, it is important to remember the basic factors that contribute to total feed cost. A careful analysis of the total feeding program that includes forage quality, availability and cost of byproduct feeds, feeding management and cow comfort should be conducted routinely to determine where cost can be trimmed and feed utilization can be improved. Given the current push for developing alternative fuels from corn and soybeans, producers must fine-tune their feeding management to maintain profitability. PD

References omitted but are available upon request at

—Excerpts from 2007 Kentucky Dairy Conference Proceedings

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