Dr. Mike Brouk of Kansas State University presented this information as part of DAIReXNET's webinar series on November 7, 2013. For more information, please see our archived webinars page at www.extension.org/pages/15830/archived-dairy-cattle-webinars.

1. Discovering Hidden Feed Costs for the
Milking Herd
DAIReXNET Webinar Series
November 7, 2013
Dr. Mike Brouk
mbrouk@ksu.edu
785-565-3434

2. Sources of Hidden Feed Cost
 Shrink or physical loss
 Variation
• Feedstuffs
• Mixing
 Refusals
 Inventory – Interest

3. Brian Gould, Agricultural and Applied Economics, UW Madison

4. Cost Measures Based on Profit Groups
Item
All
Farms
High 1/3
Low 1/3
Medium
1/3
%
Difference
high vs low
$ per Cwt of Milk
Feed
$9.49 $8.61
$9.48
$10.37
-17%
Labor
Vet
Dairy Supplies
3.40
0.53
1.44
2.44
0.57
1.40
3.13
0.52
1.28
4.60
0.51
1.62
-47
12
-14
Marketing/breeding
Machinery
Utilities and fuel
0.44
1.72
0.88
0.50
1.44
0.67
0.41
1.83
0.78
0.42
1.89
1.18
19
-24
-43
Interest
Other
1.68
0.42
1.41
0.36
1.65
0.35
1.99
0.56
-29
-36
Dhuyvetter, 2011

5. Profitability Based on Profit Groups
Item
Milk Production,
lb/c
Gross Income,
$/cwt
Total Cost, $,cwt
Net Return, $/cwt
All
Farms
High 1/3
Medium
1/3
Low 1/3
20,326 22,788 20,445 17,753
%
Difference
high vs low
28%
17.87
18.11
17.94
17.57
3
20.00
17.40
19.42
23.13
-25
-2.13
0.71
-1.48
-5.56
Dhuyvetter, 2011

6. Key Factors in Determining
Profitability
Variable
Coefficient P-value
Cows, number of
head
Milk Production,
lbs/c/d
Milk Price, $/cwt
Cull rate, %
Feed, % of total cost
Labor, livestock %
1.9
0.156
19.9
0.004
182.3
-6.8
30.1
-8.5
0.023
0.267
0.054
0.209
Dhuyvetter, 2011

7. Production Cycle of the Dairy Cow
28%
11%
5%
28%
28%
Dry
Transition
Early
Mid
Late

8. Remove Production Barriers
 Cow Comfort
 Nutrition
 Reproduction
 Lameness
 Milking Management

9. Know your cost!!!
 Difficult economic times
• Improved Management
• Can’t manage, if it is not measured!!!
 Rations on the farm



Formulated
Mixed
Consumed

10. Can you Measure True Feed Cost?
Shrink  Amount Delivered
 Amount Fed
 Difference is Shrink
Factors
 Moisture
 Spoilage
 Losses


Wind
Animals

11. Typical Shrink Values
Ingredient
Uncovered
Open Piles
Covered
3-sided Bay
Closed
Bins
-------------------% Loss -------------------Whole
Cottonseed
Dry Meal
10 - 20
5 - 15
---------
5 - 10
3-8
2-4
Soybean Hulls
12 - 20
5 - 10
2-5
Dry Distillers
15 – 22
7 – 10
3–5
Wet Distillers
15 – 40
15 – 40
---------
Kertz, 1998

12. Feed Cost without Shrink - Formulated
Feeding Rate
lb/h/d
30
Cost
$/ton
60
Cost
$/h/d
0.90
A Silage
12
120
0.72
A Hay
15
250
1.88
Corn
10
195
0.98
SBM
4
460
0.92
DDGS
3
225
0.34
Mineral
1.5
800
0.60
CS
Cost
6.33

13. Feed Cost with Shrink
CS
Typical
Cost
Shrink, % $/h/d
20
1.08
Reduced
Shrink, %
10
Cost
$/h/d
0.99
A Silage
25
0.90
12
0.81
A Hay
10
2.06
5
1.97
Corn
6
1.03
3
1.00
SBM
8
0.99
3
0.95
DDGS
6
0.36
3
0.35
Mineral
4
0.62
3
0.62
Cost
7.04
6.69

14. Real Feed Cost
$7.25
$7.00
Feed $6.75
Cost, $/co
$6.50
w/d
$6.25
$6.00
$5.75
No Shrink
Shrink
$6.33
$7.04
Reduced
Shrink
$6.69

15. Impact on Shrink on Feed Cost per
CWT of Milk
$14.00
$12.00
$10.00
$8.00
No Shrink
Normal Shrink
Reduced Shrink
$6.00
$4.00
$2.00
$0.00
80
70
60
Milk Production, lb/cow daily

16. Attitudes on Shrink Control
 Lack of Data
• “Can’t Manage What You Can’t Measure”
 Cost of Doing Business
 Out of Sight Out of Mind
 Not Worth My Time
 Potential Profit Opportunity

17. Potential Annual Change in Feed Cost
 ~$0.35/c/d change
• 100 cows - $12,775
• 500 cows - $63,875
• 1,000 cows - $127,750
• 3,000 cows - $383,250

19. Implications of Increased Shrink on Silage
Cost in Diet
 Assumptions:
• Feeding 1000 cows
• Feeding 30lbs/c/d
• Cost delivered, packed, covered

$45, $55, $65
• Losses in silo

10, 15, 20, 25%

20. Implications of Shrink on Silage Cost
95
85
75
$45/ton
$ per ton 65
$55/ton
55
$65/ton
45
35
10
15
20
25
% Shrink
30
35

21. Tons and Acres Required for Annual
Silage Shrink
Amount of Shrink, %
5
Extra
Tons
Extra
Acres
10
15
20
25
30
35
54.8 109.5 164.3 219.0 273.8 328.5 383.3
2.7
5.5
8.2
11.0 13.7 16.4 19.2
200 cows fed 30 lbs silage per day
Acres estimated based on a yield of 20 ton/acre

22. Estimated Annual Savings per 200 Cows by
Reducing Silage Loss to 10%
$18,000
$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
45
55
65
15
20
25
30
Percentage Shrink
35

23. Impact of Feeding Spoiled Silage to
Steers
Item
Intake, lb
0%
25%
Spoiled Spoiled
17.5
% Reduction
NDF
Digestibility, %
63.0
16.2
7.4
59.5
50%
Spoiled
75%
Spoiled
15.3
12.6
56.0
14.7
16.0
51.0
7% Decrease in DMI = 3.5 lb of DMI = 10.5 lb of milk
Bolsen, 2004

24. Additional Benefits

Reduced loss = Increased Forage Quality
• 30 lb feeding rate
66 cows/ton
$60.00
$50.00
$40.00
$ / ton
silage $30.00
1
$20.00
3
2
4
$10.00
5
$0.00
10
12
14
16
$ / cwt of Milk
18

25. B. Perkins

26. B. Perkins

28. Where is the Shrink on Your
Farms?

30. Cost Implications of Shrink
Ingredient
Base Uncovered
Covered
Closed
Cost Open Piles 3-Sided Bay Bins
---------------------- $/ton ------------------------
SBM
460
529
497
469
Corn
195
224
211
199
Mineral
800
920
864
816
4lb SBM/cow daily x 500 cows = 1 ton per day x $28/ton x 365 = $10,220/yr

31. Example of Shrink in a Commodity Barn





Dry Distillers
• 8.4%
Canola Meal
• 3.5%
Whole Cotton Seed
• 5.2%
Mineral
• 1.6%
Flaked Corn
• 2.7%
$0.13/c/day
4,500 cows
$213,525/yr

32. Reduced
Shrink
Initial Cost
Inventory

35. Hay Storage Method and Losses
40
30
% Loss of DM
20
10
0
Inside
Twine/Ground
Plastic/ground
Netwrap/ground
Univ of WI

37. Got
Birds?
100,000 birds
eat
24 tons/month

38. Feed Component Selection by
Birds
% Reduction in Starch
Flaked Corn/Alfalfa Hay
57
Rolled Corn/Alfalfa Hay
38
Flaked Corn/CS
58

39. Other Sources of Feed Shrink

Delivery Weight Errors
• Delivered Feeds and Forages
• Are you getting what you pay for????

Scale Accuracy
• Calibration
• Certification
 Cow Toy
• Tossed Feed
• 2.5% more loss with post-rail vs headlocks
• 3 lbs of feed/c/d ~ $0.20/c/d
 Refusals
• Use
• Sell

40. Other Sources of Feed Shrink
 Rodents
• Raised feedbunks
• Silage and Feed Storage
 Tires and Tracking
• Wet surfaces and feeds

42. Feed Delivery Errors
Target
Wt, lb
Loaded Deviation % Error
Wt, lb
Wt, lb
Corn Silage
9,000
9,120
120
1.3
Alfalfa Hay
3,200
3,290
90
2.8
Corn
2,000
2,020
20
1.0
SBM
800
820
20
2.5
Premix
400
430
30
7.5
Molasses
100
120
20
20.0
150 Cow Mix

43. Cost of Delivery Error
Deviation
Wt, lb
Cost/lb,$
Cost/Mix
$
Corn Silage
120
0.027
3.24
Alfalfa Hay
90
0.125
11.25
Corn
20
0.095
1.90
SBM
20
0.225
4.50
Premix
30
0.400
12.00
Molasses
20
0.060
1.20
$0.227
cow/day
$82,855
1000 cows/year
$34.09

45. Key Issues in Hidden Costs of Shrink
 Level of Production
• Do you get what you pay for?
• Remove milk production barriers
 Measure and Control Shrink
•
•
•
•
Wet Feeds
Commodity Buildings
Feed Mixing
Refusals

46. Thank You