Hidden Cost of Commodity Feeds

November 25, 2015 12:45 PM
Commodity Barn

Commodity or byproduct feeds are common ingredients in dairy rations today. There are several reasons for their inclusion in rations, but the primary reason is because they are considered a lower cost source of
nutrients than other ingredients.

However, pricing a commodity only on nutrient content does not consider the real cost of feeding a commodity and the lingering effect on the dairy’s total feed cost. With commodity feeding, there are several other feeding and management cost considerations to factor in. Before deciding whether a
commodity feed ingredient is a good buy, consider the following:

Commodity storage and shrink on farms. Both how and where the feed will be stored on the farm must be considered. Loss of both feed and feed quality can be substantial if supplies are not protected from the
weather—especially wind. Shrink of dry feeds can be minimized by storing them in upright bins (as low as 2%) or in a covered commodity shed.

Cover wet commodity feeds to minimize shrink. Also, contain any leachate from wet feeds. Any new storage facility or renovation of an existing facility for commodity feeds adds to the cost of feeding a commodity.  

Will the commodity replace homegrown feed? If lowering the ration cost is the only reason for feeding the commodity, what current feed(s) will it replace in the ration? If it replaces some or all of a homegrown feed, what are the options for the replaced feed?

The cost of growing, harvesting and storing homegrown feeds has already been
incurred and replacing these or another already purchased feed increases the dairy’s total feed costs.

What nutrients are being added to the ration? Inclusion of the commodity feed in the ration should add or enhance nutrient content of the ration. Adding a low-digestible (usually high-fiber) byproduct feed to the ration can lower milk production and cost more than any feed savings.

Feeding management. Will feeding the commodity increase the number of ingredients in the ration and the time it takes to add and mix an additional ingredient? The added labor cost and time to feed a commodity can significantly impact the dairy’s overall cost and efficiency—and it almost never shows up in the ration’s feed cost.    

Price volatility. There is both an upside and downside risk with commodity feeds. Price volatility can be large and the feed can go from a good buy to high-cost feed ingredient in a short period. Timing of purchase or contracting is critical to making a commodity a good buy. Feeding and inventory control can help buffer price volatility, but remember cows like consistency and not frequent changes in their diets.  

Milk and milk component changes. With no change in production and displacement of a homegrown feed, ration cost savings have to be substantial by adding a commodity feed. Lower feed cost and increased production are the goal in feeding commodities, but not all achieve the goal.

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