Managing feeding and production costs: What does it cost to reduce your cost?
07 February 2022
The typical dairy operates in a constant state of need to control production costs. It’s a fact of life. Over the last few months (years now), we have seen increases in almost every on-farm cost. This is subsequently compounded by the supply chain difficulties everyone is dealing with.
Based on the ongoing covid situation, constantly arguing politicians and general discourse in the country, the current economic situation is not likely to ease anytime soon. So this may be a good time to revisit the topic of managing costs and a reminder of what the costs can be when we get aggressive with reducing costs.
Most dairy producers know that major expenses include facilities and upkeep, labor, fuel, energy (electricity or gas), land preparation, seed, fertilizer, herbicides, harvesting, animal costs (replacements, health, reproduction) and feeding and nutrition. Of these, day-to-day, nutrition is generally the greatest variable expense. As we have seen, over recent months almost every feed component has increased, many significantly. We will focus on these feeding and nutrition expenses.
We’ve got to cut something
Every nutritionist has gotten this phone call or had this discussion on the farm. The farm must reduce expenses, and one of the first places many producers look within the feeding program is in the mineral/vitamin/additive or other premixes. While there are a variety of perspectives out there, my response to the producer is, “OK, recognize the need to reduce costs – so what do you want to give up?” Generally, the answer is, “Well, we can’t give up anything on production or components; we certainly can’t compromise health or reproduction.”
Most nutritionists will balance nutrients in the diet as cost-effectively as possible. This will include the minerals and vitamins and various additives. Minerals and vitamins are critical to basic metabolism and function of the mammary gland; they are heavily involved in reproduction and immune response and health of the animal. While reducing mineral levels to some degree may not affect immediate milk production or components, it will affect the general metabolism of the animal and can affect milk volume and components at some point. It may not be immediately apparent.
Making changes (reductions) in the macrominerals can have significant implications, especially in fresh and high-producing cows since navigating transition and supporting high production levels is critical at this point and highly dependent on minerals like calcium, phosphorus, magnesium and potassium. Further on in milk, this is not quite as critical, but is important nonetheless. However, this is a good time to review mineral levels at all stages of production and ask why the various minerals are formulated where they are and whether any are being over-formulated for one reason or another.
Trace minerals are very important to reproductive function and immune response, as are the basic vitamins (A, D and E). Evaluating the levels of all these trace minerals as well as the sources used are an important question. Many nutritionists use one type of trace mineral source (inorganic, organics, hydroxychorides, etc.) simply because they are comfortable with them. During these challenging economic periods, it is good to ask, “Is the source we are using the best product to improve absorption and status for the money?” Since there are numerous trace mineral sources available, this is a broad research task. There are differences in the biology and the absorption coefficients of fed trace elements, so it is important to evaluate, as best possible, the cost of a unit of a given trace element in the diet. While these are small cost differences, it can certainly add up, especially on larger farms.
This exact process should be undertaken with any of the various additives typically used in the diet of the cow at all stages of production and all age groups. This applies to buffers, yeasts (and other DFMs), essential oils/plant extracts, enzyme sources, fat products, bypass fats, amino acids, etc. Each category has multiple sources, and it makes sense at this time to go step back, take a hard analytical look and ask, “Is this truly the best product for the role it plays?” Hopefully, everything in the diets the producer is using truly has a specific role and has been evaluated for cost effectiveness. The question needs to be at the forefront: “Which product works best on this particular operation to perform that job, and is it cost-effective?”
A final question in this category is to ask about the suppliers of these products and premixes. Are they the most cost competitive, how good is their quality, customer service, delivery, attention to issues? If the farm has not been asking for bids on these products, it’s time to start.
Cost and value of ingredients
The base of the dairy diet is forages. These are grown or purchased or a combination of both. Since these make up almost 50% (potentially more) of the diet, quality forages are a must. If the farm grows its own forages (hay, haylage, silage, etc.), it is important to focus on value. Remember, these are sources of nutrients and thus need to be evaluated in terms of the value of the protein, energy, fiber components, etc., in the diet. This is a longer-term effort but something to consider as we get into 2022 and planning efforts are in place to produce the forages for the coming year and potentially into 2023. What varieties are being planted, how are crops managed and harvested to optimize nutritional value? This year, fertilizers are exceptionally expensive, so fertilization needs to be carefully strategized. If soil testing is not regularly used, this is a perfect time to start.
Grains, proteins and byproducts are higher-priced compared to recent years and difficult to source in some cases. A consistent supply is important, and having conversations with suppliers and brokers about their expected ability to keep the farm supplied is important. At this point, it is also critical to develop contingency plans if certain ingredients become harder to procure.
Finally, the question needs to be asked: “Is the diet we are feeding really the best and most cost-effective given all the conditions?”
Effects on health and reproduction
Health and reproductive performance is critical on the dairy. There are many factors that can affect animal health and repro, not just nutrition. Stress levels can depress both of these and can be related to animal handling (Is the farm short-staffed?). Have facilities fallen into disrepair? Are milking systems operating optimally? Is cow comfort and cooling adequate? Are pens overstocked? Are cows fed in a timely fashion and feed pushed up regularly, etc.? Recognize that stress reduction is important to production, health and reproduction. It is not uncommon for these and other areas on the farm to get neglected when economic challenges are ongoing. Even small areas of neglect can lead to increases in mastitis, respiratory or other health challenges. Given the cost of various medications and vet bills, this can add up rapidly.
Dairying is challenging economically, no matter what. The current conditions have only made operating in the black more difficult. And while producers need to be asking all the questions listed above on an ongoing basis, now is even more critical to see where operational and feed costs are and where opportunities exist for improvement. Simply cutting various components out needs to be done carefully and not without a lot of evaluation. Cutting costs seldom occur without cutting production or performance in some way. If these cuts can be made without any implications, then why weren’t these cuts made before?