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Practical aspects of dealing with volatile feed markets

Jim Sullivan Published on 19 September 2012

Feed prices are at historic highs. Along with this, milk prices have not kept pace, causing extremely tight (many times negative) margins. High feed prices and variability in supplies have created the challenge of utilizing ingredients that give us the best return on the investment.

Feed efficiency has been a key measure for many in the livestock industry. The dairy industry has been slower to focus on feed efficiency and has primarily been driven to do so with higher feed prices. But now feed efficiency – or maybe a better term, feed conversion (feed converted to milk components) – has become a focus in the dairy industry.

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Recently, a group of independent nutritionists from across the country were part of a panel discussion at the Four-State Dairy Nutrition Conference in Dubuque, Iowa. The nutritionists participating included: Dr. Robert Stoltzfus of Lancaster Vet Associates in Salunga, Pennsylvania; Dr. Mike Conner, a dairy nutritionist in Hico, Texas; and Dr. Mike DeGroot of DeGroot Dairy Consulting in Visalia, California.

The panel was asked multiple questions including how they are handling volatile markets and high feed costs, what they have done differently (if anything) with their customers during these times and how they measure and monitor feed efficiency. Here are some of their responses.

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How have you dealt with these unpredictable markets with your clients?

Stoltzfus: The constant challenge of any business is to maximize margins, maintain cash flow and minimize risks. As markets become more volatile, this principle does not change. The same is true for a dairy enterprise. Feed costs are the single-largest expense to a dairy.

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Balancing rations based upon metabolizable energy and metabolizable protein has been a great step forward in my experience. We need to constantly evaluate results of formulation changes. Profitability and economic survival starts with healthy cows, reproductive efficiency, high-quality forages and good yields on home-grown crops.

We try to use home-grown, on-farm feeds as much as possible and strategically to maintain cash flow. Use appropriate professionals to help manage contracts for feed and milk to minimize risk in the markets. Track health and culling losses in the herd for areas of weakness that need to be corrected. And evaluate replacement programs for unnecessary expenses.

DeGroot: It is on a herd-to-herd basis and varies. We are using a program that we created that looks at feed value based on current market prices. We are not afraid to change ingredients as long as we have some measure on whether it worked or not.

Depending on herd logistics, I will try to maintain my fresh and high cows as long as possible and slowly cut the low rations to see where we end up. We utilize tools such as BCS and weight to make sure we are as accurate as we can be on our inputs in the program to ensure we can keep the ration cost down as much as possible.

Conner: The biggest challenge in my area has been the drought and the shortage of forages. It has brought home the need to raise as much of your own forages as possible. Given our dependence, in the past, on purchased forages, we have purchased additional land base to raise more of our own forage. The strategy for grain purchases hasn’t changed. I work with the dairyman in watching the board to decide when to contract.

We work closely with our suppliers and constantly compare one supplier with another, always keeping in mind the ability of the suppler to service our needs. We haven’t gotten to the point of using options given our level of education on this subject. I am in the process of bringing myself up to speed, and one of my clients has told me he’ll pay whatever is necessary for me to fully understand all the mechanisms.

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Do you measure feed efficiency, and if so, how and what are some of the things you are doing to increase feed efficiency?

DeGroot: It is one of several measurements I look at. I do think that income over feed cost (IOFC) goes hand and hand with feed efficiency. It is something we use within herds to see if things are changing. Based on herd logistics, it can vary by up to two-tenths of a point during certain times of year.

In addition, physical characteristics of the ration can be a huge factor in feed efficiency. Weigh-back or push-out is crucial to getting a good accurate number. Not too many of our herds do weigh-backs every day. However, I feel that is a good number to have and should be monitored.

We sometimes decrease the amount that we will let the feeder increase or decrease feed amounts on a daily basis. This will keep the herd from going through swings of dry matter intake where sometimes they are low and other times high. This is not good for feed efficiency.

Stoltzfus: We track feed efficiency to serve as a monitor of changes in nutrition and herd dynamics as conditions change over time. Know why feed efficiency is on the low or high side of a 1.4-to-1.6 ratio.

Look at the whole-herd management program. While the nutritional program is crucial, it’s not the only factor that caused fluctuations in feed efficiency and herd profitability.

Conner: Although I don’t closely measure feed efficiency, I do use a crude measure of how much push-off I have and this varies between dairies. Some dairies are intent on minimizing the push-off while others strive for a 2 to 3 percent goal. I personally strive for zero, though practically it is not always possible.

I believe that cows can have empty bunks without sacrificing milk production, health or reproductive performance. From a physiological standpoint, the cow will milk what she is capable of and, in the later stages of her lactation, will gain weight in preparation of her next lactation.

The critical aspect of feeding this cow is to ensure that what is placed in front of her is of the best quality possible, which will entice her to eat and not sort.

Sorting is what generates the push-off and, if the feed quality is good, the sorting/push-off will be minimal or non-existent. Watch the cows – milk production, body condition/health and reproductive performance are indicators to monitor. PD

Sullivan is a nutritionist with 20 years experience in nutrition consulting, feed manufacturing and technical service. He directs Novus’ technical service group in the U.S. and is based in Idaho.

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