Dairymen who can adapt to change will reap the rewards of their adaptation by maintaining a healthier business than those that do not adapt. Nutritionists are not exempt to this rule. If your nutritionist is not changing with the times, your business is paying the price.
We have found through our years of independent consulting that there are fundamental factors that we must have an understanding of in order to effectively balance the cost, efficiency, profit and return on investment equation while maintaining herd health, reproduction and milk flow.
It is absolutely critical that we focus on resources on and off the dairy to foster higher understanding of 1) the markets, 2) ingredients, 3) quality control opportunities and 4) our risk tolerance.
Understand the milk and feed markets.
There is no more ominous subject to focus on than the markets that dictate more than 60 percent of our total farm expenses (feed) and greater than 95 percent of our farm income (milk). Both nutritionists and dairymen have a responsibility to understand the markets. The learning curve of how we manage our feed expense has accelerated.
The tools we use to make the most informed decision when it comes to purchasing feeds have changed drastically. Using the web to get real-time information is critical. Websites such as http://cme.com and http://futures.tradingcharts.com offer real-time quotes.
These sites can be used for simple trend watching and can help focus the decision at the right time by understanding when changes in the market happen and the reasons why the changes occur.
The milk market is cyclic over the long term. Milk producers are not using the cycle to their advantage like they could. You and your nutritionist should know the breakeven price on your herd; knowing your breakeven allows you to make more informed decisions for your future milk income and grain contracts, ultimately locking in your profit.
Over the past 18 months there have been four major changes between canola and soybean meal position in the ingredient market. This type of volatility represented 3 to 5 cents per cow per day shift in cost. It is critical to capture these opportunities when the market changes if you are not contracted.
Risk-adverse dairymen, or producers who want to create more certainty, will lock in their ingredient position at a profit because they understand where their profit is.
Understand ingredients for lactating and non-lactating animals.
Misunderstanding of ingredients due to a lack of detailed knowledge of the ingredient and poor storage capability on-farm are two of many areas that can drastically affect ingredient purchase decisions and ration design.
Distillers grains, wet or dry, safflower meal, linseed, canola, corn silage, all have great qualities when used correctly and when misused have a negative impact on herd health and the bottom line. These are just a few of the major ingredients that you and your nutritionist need to understand.
Do not overlook the minor inputs and their cost – they can add up to major losses.
The use of tools like SESAME (developed by Dr. Normand St. Pierre from Ohio State) helps illustrate the true quality of these ingredients in your ration (Figure 1*).
Nutritionists can use this type of tool to help evaluate feeds on a much deeper level than cost per unit of protein or cost per unit of energy. Advanced rumen model ration balancing systems are other tools that can provide very specific information about the combination of ingredients in a ration and their interactions.
Using a high level of detail helps to adjust rations for metabolizable nutrients rather than percentage of nutrients in the ration. This level of information offers a perspective that can be used to effectively push ingredient biases/limitations previously thought of as absolutes.
For example, a herd feeding 12 pounds of dry distillers, producing 80 pounds energy corrected milk (ECM) and 3.55 butterfat can be achieved because there is attention to all the details. When you are considering feeds you need to consider the 1) availability and the source, 2) dry matter consistency, 3) time it will take to feed the load, 4) ability to keep it clean and free from mold, and 5) total moisture of the ration.
Ingredient cost per ton should not be your sole concern, rather the quality and effectiveness of the ingredient should be of higher concern. The price difference between safflower and canola may cause you to take a second look at feeding safflower in lactating rations; however, the amino acid combinations can hurt production and you may wind up losing more than you save.
Also, when using linseed meal in place of canola because of the discount linseed usually has over canola, your nutritionist needs to understand the micro differences between the two and adjust your ration accordingly. The true micro characteristics of safflower and linseed are not seen in standard tests, but show up very quickly when fed to lactating cows.
A thorough understanding of the physical, chemical and logistical components of each ingredient is critical to making the most informed decision for your ration and your bottom line. Wet feeds, like distillers grains and silage, need to be preserved clean or will have a negative impact on herd health and production.
Molds and toxins grow quickly, while silage is more stable than wet distillers grains. Both are high-risk areas for molds and toxins when the face or pile is poorly managed.
It is important to understand that the ingredients are not the only driving force in the ration design, rather it is 1) the interactions of ingredients, 2) cows’ ability to process ingredients, 3) the health of the rumen, 4) the presentation of feed, 5) bunk management, 6) pen stocking rate, 7) cow comfort, 8) heat stress, 9) irregular eating patterns or slug feeding and 10) sorting dry TMR.
Understand quality control on your dairy so that you can minimize losses.
Feed purchases can account for 70 percent or more of your total expenses, so it pays to manage feed with every tool possible. The use of feed management programs such as FeedWatch, EZ Feed and TMR Tracker are resources worth the investment. We have seen this type of investment pay back in as little as one month on a 1,500-cow dairy.
Not only do you reduce shrink but you also improve individual feeder accuracy, which leads to a more consistent ration and healthier rumen. We have seen a 15 percentage point improvement and greater accuracy in more than 75 percent of the dairies that implement feed management programs.
Quality control is not only about managing feeds, it is also about understanding how much you are feeding versus how much you should be feeding. For example, if your heifers, which represent 25 percent of your feed costs, are eating 120 percent of their formulated ration, you are overfeeding and increasing your cost without a full return on your investment.
In some cases over the last 12 months we have started a new herd and fed heifers at 90 percent of requirements and have saved up to 18 cents per head per day when hay was over $250 per ton. However, if you are going to try this approach to cost savings, you need to monitor stocking density, environment, body condition and growth rates. These monitoring points are critical to the success of this type of alternative feeding program.
Overfeeding energy can leave you with short, fat heifers. Overfeeding starches or soluble proteins can cause loose manure, and overfeeding minerals can just cost you more money. Understanding and managing quality control of your ingredients and intakes is not rocket science – it is relatively easy and is often last to be looked at.
It is important to understand mixing order of ingredients, particle size and length, mixer box limitations, and knife-changing routines. Lack of understanding in these areas can result in increased slug feeding or irregular eating patterns.
If there is high risk of slug feeding that cannot be overcome by management adjustments, we are predisposing the cow to lower butterfat production and the ration should limit the high unsaturated fat sources, which lead to further risk of milk fat depression if not correctly accounted for. Pushing the envelope by feeding alternative ingredients may not be a risk you want to take.
By understanding what the animals are actually eating we can fine-tune the ration to maximize its efficiency. The use of benchmarks for dry matter intake, feed efficiency, and feeder accuracy are areas you should focus on to maximize profitability and/or minimize losses.
Benchmarking needs to have information from outside the nutritionist’s group. One nutritionist can benchmark his or her own performance, but needs to bring in results from other professionals for a broader perspective. You should compare benchmarks with like-size and situated dairies.
Benchmarking should at least include measurements of milk production, butterfat, protein, feed efficiency, turnover rate, ration cost per pound of dry matter, income over feed costs and pregnancy rate. We use benchmarking as a tool to motivate and engage the entire management team so that we can all focus on the most limiting parameter holding the dairy from the success they can achieve.
Understand risk.
Each dairyman needs to understand his or her risk tolerance. In the financial crunch, dairymen tend to be more risk tolerant or riskier.
As nutritionists, we emphasize that every adjustment has a negative and a positive attribute. All adjustments need to evaluated as a management team to understand the risks and benefits.
We work with dairymen that have taken years to enhance their rolling herd average over 30,000 pounds of milk. These dairymen are less tolerant to risk and make changes that may decrease milk production or sacrifice herd health to save 10 cents.
Whole cottonseed is a great example to illustrate risk this year. From a nutritionist standpoint, whole cottonseed did not work economically in the diet all year. However, there are a lot of risk factors that need to be discussed when removing it from the diet.
Whole cottonseed has a physical characteristic that plays a large role in the rumen function of high-producing dairy cows. This characteristic can cover up weak points in the feeding management on the dairy. This is why some dairies can remove cottonseed with no apparent negatives and others see a decline in performance.
One of the most common question we are getting asked this year is, “Do I need to feed a mineral to my cows?” This tests your risk tolerance. Can you afford not to feed minerals?
It has been our experience and volumes of research support the fact that you cannot afford to take minerals out of your ration. Removing them from the diet will have huge negative effects short-term and even more long-term.
However, every dairyman needs to make sure that they are not over supplementing their minerals and vitamins by simply benchmarking dry matter intake of individual pens. Using mineral typically saves 20 to 30 cents per cow per day through feed efficiency gains.
We can typically find other cost-savings areas or adjustments in your rations that would have less of a negative affect on your herd’s performance and equal cost savings to your ration. Your current production level, feeding management plan, feed quality control program, equity and cash flow all will determine how risk-tolerant you are or how risky you can afford to be.
The dairyman with a tight financial condition should take less risk than a dairyman with greater equity. Both the dairyman and his or her nutritionist have an obligation to each other to understand the milk and feed markets, how they move, and how they can help capture more certainty of profits.
When there is an understanding of the markets you can then have a deeper understanding of the ingredients available and how such ingredients can help or hurt your profit based on the unique features of your herd. Once you choose ingredients that fit your goals and needs, through complete understanding of quality control on your dairy, you can then use each ingredient to create the highest return on investment.
Finally, with a full understanding of markets, ingredients, and quality control you can now develop your strategy for risk management and risk tolerance. Your risk tolerance will drive the decision you and your nutritionist make for your herd during economic crunch time. PD
*References and figures omitted but are available upon request at editor@progressivedairy.com
Luciana Jonkman
Nutritionist and Consultant
Progressive Dairy Solutions
ljonkman@progressivedairysolutions.com
