Surviving High Feed Cost

Published on Fri, 04/24/2009 - 12:26pm

The current economic downturn has presented serious challenges for many Americans. Dairymen have certainly not been exempt. Rising grain prices have inflated the cost of many traditional feeds and spurred the conversion of grasslands to row crop farming. Competition with recreational users for “marginal” land has further reduced pasture availability. More recently, high feed costs have been coupled with lower milk prices, further squeezing producers.

 While grain prices have fallen a bit since last summer, “feed prices have not come down compared to where they were two to three years ago when milk prices were this low,” says Dale Thoreson, field specialist with Iowa State University Extension service. “It’s not pretty. These guys are really struggling.”
However, Thoreson believes producers who are willing to adapt to changing conditions can weather the current difficulties. “There are a lot of opportunities out there. But doing it like we did last year because that’s the way we’ve always done it-that will get us into trouble.”
Start with the Basics
The first step to reducing costs is to assess the efficiency of your feeding system. Feed that does not reach the cow or arrives in poor condition is a wasted expense. “Feed shrink is an area that a lot of Midwest dairy farmers haven’t looked at like they should,” Thoreson says.
Simple measures such as cleaning feed bunks daily, storing feed properly to eliminate mold and reduce damage by pests, and adding propionic acid to keep feed cool during the hot summer days help to minimize feed shrink while improving palatability and digestibility. Storing silage in a well-drained area and keeping a straight, even face on the silage pile also inhibits spoilage while reducing ground loss.
With silage, hay and haylage, harvesting at the right time makes a significant difference, notes dairyman Peter Poelma of Allison, Iowa. Due to dry weather and difficulty scheduling the silage chopper in 2007, Poelma ended up with corn silage containing about 59% moisture. 
“It was too dry, and we chopped it too fine,” Poelma says. “We had top-layer spoilage. It was heating up fast.” Last fall things worked out much better, with the silage coming in at 72% moisture. “Our pile was rock hard, with no spoilage at all.”
Although weather conditions are beyond the producer’s control and many are dependent on custom operators regarding timing for harvest, at least being aware of these issues increases the possibility of producing the best feedstuffs. “You have to have a little bit of luck and a little bit of wisdom,” Poelma believes.
Producers might also consider using traditional feeds in a novel way. For example, a University of Minnesota-Crookston study completed 20 years ago by George Marx demonstrated a 10% reduction in the number acres needed to support a herd when high-moisture ground ear corn was used instead of straight grain. “You’re just using more of what the corn cob produces,” Thoreson says. 
Thinking Outside the Box
Still, even the most efficient operations are struggling with the price of traditional feeds right now, Thoreson notes. “We’ve got to think out of this box called corn.” For while it’s difficult to get more energy per acre from any crop other than corn silage, Thoreson points out there are many other potential feeds available, often at a significantly lower price.
“Ruminant animals can utilize a wide variety of feedstuffs,” Thoreson explains. “We can feed protein, we can feed energy, from sources other than soybean meal and corn.” Non-traditional feeds utilized by some producers include bakery bi-products, candy, beet pulp, whole cottonseed, potatoes, almonds, corn sugar, canola meal, linseed meal, soy hulls, sweet corn silage and food-grade alcohol.
Options will vary depending on regional availability and the practicality of transporting various products. “We are fortunate in the Midwest to have cheaper sources than in other parts of the country,” Thoreson says. The growing ethanol industry, which many blame at least in part for rising feed costs, also produces a good feed alternative in distillers’ grain. Cheese producers in the upper Midwest often sell excess whey, while companies that process grain for human consumption produce a variety of usable byproducts.
Poelma is using whey in his feeding system, as well as a significant amount of wet corn gluten, dry distillers’ grain and cottonseed. He notes there is a little extra work involved on the front end in locating these feed sources, “but once you’ve got it all on the contracts, it’s not that hard.” 
The secret is utilizing whatever you have close by or can ship in at a reasonable cost, Thoreson says. “Don’t be afraid to ask anybody for a contact. There are lots of feed alternatives out there if you’re willing to look for them. You may have to spend more time on the phone or working with your nutritionist, and it may not look like what you’ve fed in the past. Think outside the box. Look beyond the traditional.”
Of course, sudden changes can decrease cows’ intake and utilization of feed. “New rations should be introduced gradually over the course of at least a week,” Thoreson cautions.
Little Things Matter Too
Another feed product that has increased significantly in price is milk replacer. Studies in Wisconsin and Pennsylvania have shown that pre-weaned calves are the most expensive replacement animals to feed and care for on a cost-per-day basis while calves just after weaning are the least expensive, according to information found on the ISU Extension web site.
Producers raising their own replacement heifers have alternatives to minimize this cost. One is to wean calves earlier. A 1994 Penn State study showed that the majority of calves offered free-choice, high-quality starter by one or two days of age could be weaned by as early as four weeks. Another option is to use whole milk. Feeding salable milk was once discouraged as not being cost-effective. However, given current low milk prices and high replacer costs this may no longer be true for many operators.
“We wean at six weeks in the summer, in the winter, eight weeks,” Poelma says. “We feed three times a day using whole milk.   We’ve been really successful with it.” Thoreson cautions, however, that feeding unpasteurized milk does increase the risk of spreading Johne’s disease. Using test-negative cows and paying strict attention to hygiene helps to moderate this risk. 
Beyond Feed
Of course, dairymen struggling with profitability can also overcome feed costs by increasing efficiency elsewhere in their operations. “At the end of the day, it doesn’t matter where the savings come from, as long as it doesn’t hurt cow productivity,” Thoreson says. “Income minus expenses-that’s the bottom line.”
Thoreson encourages producers to boost productivity by keeping cow comfort at the forefront. Providing cooling systems, offering adequate bunk and resting space, and minimizing time away from feed during the milking process all help to keep cows comfortable, and thus productive.
Bedding costs, particularly for kiln-dried sawdust, are also on the rise. While Thoreson discourages scrimping on bedding, he does note there are non-traditional options available here as well. Ground soybean stubble, corn stalks or cobs, rice, fescue, flax, oat hulls and even dehydrated manure are among the options. “More producers have gone to using sand in the summer,” Thoreson says, “although it needs to be free of pebbles.” As with alternative feeds, dairymen may need to do some research to find out which alternatives are available and practical in their area.
While dairy cows have traditionally been milked twice daily, about 20% of herds are now on a three-times-daily regimen. “It lowers somatic cell count and normally results in about 10 lbs. more milk per cow per day,” Thoreson says. Whether this system will work on a particular dairy is dependent upon the availability and cost of labor, as well as the adequacy of its milking facilities. However, for Poelma the increased productivity and improved milk quality seems to more than offset the additional cost.
Regardless of the milking strategy used, careful monitoring can help dairymen to maintain the efficiency of their herds. Poelma does so using the Dairy Herd Improvement Association (DHIA) system. Through this computerized registry he is able to track milk production and quality from individual cows and in his herd as a whole via monthly reports. This allows him to recognize animals in need of additional attention as well as to identify those that should be culled from the herd. “At a time like this (of lower profit margins) you might want to pull up your milk production cutoff” for culling, Poelma says. “You may want to replace them (low-yielding cows) with a good cow that’s going to produce.”
Thoreson encourages producers to utilize DHIA reports. However, both he and Poelma caution that dairymen must take the time to understand the system and its reports as well as be diligent regarding proper data entry. “Like most things, it’s garbage in, garbage out,” Thoreson says. “It’s a good tool, but you have to know how to work with the tool,” Poelma agrees.
Poelma also likes to stay abreast of new innovations in the dairy industry. Currently he is in the process of installing a water ozonation system. He believes providing the treated water to cows will increase their intake, while spraying it through his sprinkler system will reduce flies and other pests. He also hopes to use it in place of copper sulfate and formaldehyde in his foot baths and iodine for cleaning teats.
Thoreson would like to see how the technology works in practice before recommending it to other producers. However, he notes Poelma is eager to research and fully consider any novel approach that might enhance his operation. “Peter likes to be out front on some of these things,” Thoreson says.
Hope for the Future
Ninety five percent of milk produced in the United States is consumed domestically. As such, relatively small increases in production or decreases in demand can have a significant impact on prices. Thoreson believes dairymen will increase their cull rates during the current down market, resulting in higher prices down the road. “I think four to five months is going to see us a long way through this,” he predicted in late February.
Still, finding ways to improve an operation will ensure the producer can survive today’s difficulties and be in a position to maximize return when milk prices rebound. “Farmers can’t wait for milk prices to change,” Thoreson cautions. “They must reduce costs today.”


Dale Thoreson
Iowa State University Extension. Dale is a Field Specialist in Dairy, Beef and Forages. He serves 15 counties in Northeast Iowa. Dale has been with Extension for 36 years and for the last 16 he has been the Northeast Area Field Specialist. Dale received his BS from North Dakota State University, and his Master’s of Science is from Oklahoma State University in Dairy Science. Dale did a field trial 5 years ago on free stall surface options. Six different bedding materials were tested, including 2 types of sand and 4 types of mattresses. He recently completed a corn silage hybrid trial, the first done by Iowa State University. His Extension work is primarily in milk quality, dairy facilities and dairy nutrition. He teaches at an average of 40 programs a year and has had opportunities to present dairy information in The Netherlands and in neighboring states.