Evaluate Total Diet Costs

December 14, 2018 10:30 AM
 
Here are tools to help improve your evaluation of total diet costs.

As we continue to improve and utilize nutrition technology to feed dairy cows, it is important to have the right tools to evaluate diet costs.  In the context of the savings we can attain with amino acid balancing, we have to evaluate the cost of the total diet to accurately show the savings of feeding a small amount of amino acids that are going to replace several pounds of protein grains.  The following guidelines can be used to evaluate different diets.

  1. Total Pounds of Dry Matter:
    1. When comparing a current diet vs. proposed, make sure you compare the same amount of dry matter.  If you are considering using amino acids, for example, you may be reducing canola by 2 lbs. and adding 0.045 lbs. of lysine in a diet of 55 lbs. dry matter, leaving 1.96 pounds of open space.  You now can fill in the space with another ingredient of lower cost than canola to get the savings.  Cows will continue to eat 55 lbs of feed, so it would not be an accurate comparison if you didn’t fill in the 1.96 lbs of space left with another feed.  If you leave that space open, the cow will just adjust by eating a little more of each ingredient, making the diet more expensive.  Also, if you didn’t fill in that space, the diet will seem cheaper than what it truly is.
  2. Cost Per Pound of Dry Matter
    1. If you are comparing diets at two different dairies where dry matter intakes are different, you can still do a comparison if you know the cost per pound of dry matter of each diet.  Take the cost per pound of dry matter of one diet and multiply times the other total dry matter intake at a second location for a total diet cost per head per day.
    2. Several factors can impact the cost per pound of dry matter across the U.S. including the use of byproducts available by region, amino acid balancing within low protein diets, low alfalfa hay inclusion rates and others.  By utilizing a variety of strategies, some diets can be under 10 cents per pound of dry matter, whereas diets that are not fine-tuned can be 12 cents per pound of dry matter or more.  In other words, diets on a 55 lb of dry matter basis can easily fluctuate between $5.50 and $6.60, which is a difference of $1.10 per head per day!  What are your costs per pound of dry matter?
  1. Feed Cost per hundredweight
    1. This is a step better than cost per pound of dry matter because it accounts for both cost of the diet AND milk production.  You may need to evaluate a diet that is higher cost per pound of dry matter that also yields more milk.  With current milk prices in my neck of the woods, 2 lbs. of milk are worth approximately 30 cents.  Every additional pound of dry matter over maintenance requirement of the cow (which typically yields 2 lbs. of milk) only costs 10-11 cents in a well-tuned diet.  Therefore, the most effective way to decrease cost per hundredweight, even with current low milk prices, is to increase marginal milk production.
  1. Profit per cow per quarter or per year
    1. This may be the best measure of the efficiency of the entire dairy operation. All costs vs. all incomes are included in this calculation, with feed costs likely around 50-60% of all costs and milk production obviously covering most of the income.  This is the reason why most economic studies show that one of the biggest correlations to dairy farm profit is total pounds of energy corrected milk per cow per day.  Other leading indicators of total profitability are 21 day pregnancy rates, low net herd replacement costs, low death loss, low SCC, and high heifer survival rate.

In summary, when evaluating feed costs, make sure you look at the total cost of the diet.  Focusing on cost per ton of specific ingredients can be deceiving and lead you to make poor decisions.

Enrique Schcolnik is a dairy nutrition consultant with Progressive Dairy Solutions. His work emphasizes improving overall herd health and production through sound ration design and proper implementation.

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