Benchmarking survey helps farms evaluate IOFC

Posted on January 3, 2023 in
2020 Nichols webBy Stacy Nichols
Because feed represents more than 50% of the cost of milk production, dairy producers often ask how their feed costs compare to those of other farms.  As markets change, it’s important to regularly evaluate feed costs, ask whether you’re getting acceptable returns on your farm’s feed additives and dietary strategies, and explore whether you have opportunities to save on feed costs or invest in milk production for a greater return.

With these questions in mind, Vita Plus dairy nutritionists recently conducted a benchmarking analysis survey of income over feed cost (IOFC) with 35 Holstein dairy herds in Michigan and Indiana (Vita Plus does not provide the nutrition formulation services for all the participating farms).  The average herd size was 452 cows with herd size ranging from 90 to 2,000 cows.  The survey included eight dairies with automated milking systems.

Feed costs were calculated by standardizing homegrown forages and grains to the 2022 raised feed prices published by Compeer Financial. Total feed costs reported included costs for both lactating cow and dry cow rations, not including shrink. Purchased feed costs were valued at the actual purchased prices, including contract values.  Ten-day averages of feed intake, feed costs, milk, and milk component production were calculated with data collected between October 15 and October 31, 2022. Feed intake and milk production were collected from farm records.  Milk component values were collected from samples of shipped milk analyzed by the farms’ milk processors.  October 2022 milk income was projected from the October announced Class III milk component prices and did not include any quality or volume premiums or PPD.

Results were as follows:

  • Milk production: average 84.4 pounds
    (range 60.5 pounds to 102.3 pounds)
  • Milk fat: average 4.08%
    (range 3.64% to 4.49%)
  • Milk protein: average 3.21%
    (range 3.05% to 3.44%)
  • Dry matter intake (DMI): average 56.2 pounds
    (range 48.7 pounds to 66.2 pounds)
  • ECM feed efficiency: average 1.65
    (range 1.32 to 2.01)
  • Total feed cost: average $9.23 per head
    (range $6.45 to $11.59 per head)
  • Purchased feed cost: average $5.62 per head
    (range $2.17 to $9.63 per head)
  • Projected milk income: average $20.66 per head
    (range $15.23 to $24.14 per head)
  • IOFC total: average $11.43 per head
    (range $8.14 to $15.24 per head)
  • IOFC purchased: average $15.04 per head
    (range $8.78 to $18.80 per head)
  • Lactating cow feed cost: average $0.151 per pound DM
    (range $0.123 to $0.176 per pound DM)

An overview of the data revealed some interesting relationships.   Not surprisingly, IOFC improved as milk production increased.  The same relationship was seen as pounds of combined fat and protein yield increased.  Combined milk fat and protein yield explain 75% of differences in IOFC per head.

DMI is strongly related to milk yield.  Several of the herds included in the survey would likely benefit from further investigation of both feed management strategies, focused on feed availability and bunk crowding, and nutritional strategies to improve DMI.

Feeding a dairy cow in October 2022 was expensive.  With lactating feed costs averaging $0.151 per pound of DM, it is interesting that feed cost per pound of DM does not have a statistical relationship to IOFC.  This survey included low-producing herds that spent a lot per pound DM and high-producing herds that did not.  The conclusion here is that return on investment for feed ingredients and additives should be evaluated on an ongoing basis.

Although we didn’t collect data for forage quality, the forage percentage of lactating cow rations was not related to IOFC.  However, in their narratives about the top herds ranked by IOFC, nutritionists did regularly mention good-quality forage as a factor in the farms’ success.

This IOFC survey highlighted many unique strategies that dairy producers use to improve milk IOFC.  These strategies included maximizing use of raised feedstuffs, focusing on milk components, employing feed contracting strategies, utilizing alternative feedstuffs, and minimizing the number of first-lactation animals in the herd.

With a focus on farm profitability, it is important for dairy producers and their nutritionists to regularly evaluate IOFC.  If you would like to better understand your data and how it relates to the metrics we found in this survey, please reach out to a Vita Plus dairy nutritionist.

About the author:  Stacy Nichols is a Vita Plus dairy technical specialist.  He grew up in northwest Illinois and finished high school in northeast Georgia.  He received his bachelor’s and master’s degrees in dairy science from the University of Georgia.  Nichols was the herdsman at Mississippi State University’s Bearden Dairy Research Center from 1994 to 1996.  He then returned to Georgia as the herdsman on a private 350-cow dairy.  Since 1997, he has been involved in the dairy feed industry on a local, national and global level.  Nichols has considerable experience in transition cow management, nutritional modeling and amino acid formulation. He and his wife, Melissa, have eight children and reside in northwest Indiana.

Category: Business and economics
Dairy Performance
Feed quality and nutrition
Milk production and components