Dairy Focus: Choosing alternative feedstuffs in a fickle marketplace

Farm Forum

Despite lower feed costs in recent months, declining farm-gate prices for milk will have dairy farm managers sharpening their feed-planning pencils in search of cost-effective rations for 2015. Well-balanced rations are critical to the health and well-being of the cow and the dairy enterprise.

The cost of feed can represent anywhere from 55 to 70 percent of the cost of producing milk in most milking herds. To continue providing milk (and meat) efficiently for a growing world population, making sure the family farm remains healthy financially is critical.

The declining milk prices and corn prices that are likely to be volatile in the next several months will be influenced by forthcoming decisions on how many acres to plant and complicated by weather uncertainty in the Corn Belt. These are the makings of a fickle market.

One tool for managers looking for help to compare the relative value of the many feeds and byproducts available today is just a couple of clicks away on the Web at http://dairymgt.info/tools.php. FeedVal 2012 is a free computer model from the University of Wisconsin-Madison. It is designed to help farmers make better economical decisions when purchasing and using the feed ingredients.

The program computes the nutrient value of common feed ingredients such as shelled corn and soybean meal. Then, factoring in the price of the ingredients, it indicates whether the ingredient is considered a bargain.

The program starts out with default values that reflect current prices in the Midwest, but users can put in their own prices.

FeedVal 2012 calculates the predicted value and the actual price as a percentage of the predicted value (%) of all ingredients (rows) available in the table. The predicted value of an ingredient is the multiplication of its nutrient contents by the individual nutrient value ($/unit; columns in table). The actual price as a percentage of the predicted value of an ingredient is the division of the entered actual price by the predicted value expressed as a percentage.

Using December 2014 regional prices, some of the feed ingredients that are listed as bargains or best buys include distillers dried grains, corn gluten feed, wheat middling and soy hulls. However, that may very well change as the price of corn changes.

Corn carries a lot of weight in determining the relative value of other feed ingredients. A rise or fall in corn price will change the rankings, and some ingredients that are considered bargains now could drop out of the “green,” or favorable, category. Of course, others could drop in.

This is a very nice tool, and thanks to the information highway, very accessible and not just to look at historical data. The opportunity here is that someone could go online to this program, enter his or her lower (or higher) expected corn price and start scouting ingredients that have a good relative value under such circumstances.

As another example of its usefulness, remember last fall, when a lot of late-corn silage was created and people wanted to know what a fair price was. They could have gone into the program to include actual test values for protein and total digestible nutrients (once entered, the total digestible nutrients were adjusted to net energy for lactation) and compare them to corn and soybean meal to get their answer.

Enter your information online and download the results as a spreadsheet or document file. Give it a try. It won’t change the price of commodities, but it will assist you in making the decision of whether to purchase a particular commodity or select another commodity.