In layman’s terms, what does IOFC mean? Producers and nutritionists use this formula (income over feed costs) to determine the farm’s profitability and identify changes to help increase efficiencies. Feed cost can be up to 65 percent of a dairy operation’s cost of production.
With much of a farm’s budget dedicated to feed cost, it is critical to continuously measure IOFC – the income a farm makes minus the total feed bill. Producers who know and understand IOFC are in a better position to evaluate for opportunities and efficiencies.
How is it measured?
IOFC is measured in dollars per cow per day, usually tracked on a monthly basis. It can be determined by taking the current milk price per hundredweight (cwt) – including component compensation – and multiplying it by a cow’s average daily milk production, then subtracting feed cost per animal. Feed cost should include all intakes (e.g., corn silage, hay, grain and supplements).
($ per cwt x X pounds per cow per day) - $X feed cost per cow per day = IOFC
What impact does it have on the ration?
The extreme variability of grain and feed costs makes an impact on what producers decide to feed their cows to stay profitable. A low IOFC indicates it is time for the producer to evaluate what is in the ration and look for ways to become more profitable.
For example, when choosing which silage corn to plant, focus on planting hybrids that deliver high fiber digestibility to increase milk production per cow, thus increasing IOFC.
Overall, a producer is looking for a ration that drives the highest IOFC. If milk is $16 per cwt, and the farm is averaging 85 pounds per cow per day, the farm is bringing in $13.60 per cow.
After subtracting the feed cost of $5.50 per cow, the producer is left with $8.10 per cow per day IOFC. A producer looking to bring up IOFC may need to look at ration and feed components to reduce feed cost or provide a ration that drives more milk production.
Increasingly, dairy producers are using technology and data analysis to make management decisions for more efficiency and better animal health. IOFC falls in that camp. Tracking feed decisions, costs and usage is critical.
For dairy producers who constantly evaluate cow performance, review rations closely and crunch the numbers to determine IOFC, they can gather a clearer picture of what is driving profitability on their farms and make adjustments accordingly.
What are some management strategies to control IOFC?
Producers can take a few steps to better manage or improve their IOFC:
- Work with your nutritionist to determine the farm’s breakeven point and track your IOFC over time. Then evaluate feed options accordingly.
- Look at forage quality and quantity of home-raised feeds. This can include all cropping possibilities and working with your agronomist, nutritionist and seed dealer to choose corn silage or forage options to fit your goals.
Evaluate your cow comfort and cow groupings to see if there are opportunities to change your overall feed rations and costs.
- Consider adjusting your feeding strategies to include higher levels of high-quality forage, especially corn silage.
