F eed is usually the largest expense on dairy farms. Purchased feed is often thought of first when discussing feed costs, however, as much as 80 percent or more of dairies’ total feed costs can come from the cost of producing home-raised crops.
Higher feeds costs in recent years have inspired livestock producers to raise more feed on farm with the goal of decreasing purchased feed. In many instances, a higher percentage of feed raised on farm will result in a more profitable operation. However, this is not always the case. Knowing when it may be more expensive to produce feed than buy it can support strategies for managing home-raised and purchased feeds.
In order to make informed decisions about cropping and feeding strategies, the Penn State Extension Dairy Team has released CropCents, a mobile app that will allow dairy, beef or crop producers to determine a standard cost of crop production that is specific to an individual operation.
The CropCents mobile app is based on the Know Your Numbers program where Penn State Extension educators work one-on-one with a dairy and/or crop producers to develop an annual cash flow plan. Part of the program determines the cost of raising each individual crop produced on the farm. This allows for specific financial and management analysis for each crop and determines the exact total feed costs —<\!q>purchased and home raised — for all animal groups such as lactating cow groups, dry cows and heifers.
Users of the app must track acreage and yields for each crop from previous years or use the Penn State Agronomy Guide as a reference for future cropping plans, as well as report the direct costs related to growing and harvesting: seed, chemicals, fertilizer, custom hire and land rent if applicable.
CropCents calculates each crop cost by adding the direct inputs — seed, chemicals, fertilizer and custom hire — for each crop and then allocates a percentage of the operating expenses such as fuel, taxes, utilities, etc., using labor hours, as shown in Figure 1 on Page E31, as a way to divide time between crops and livestock enterprises and between individual crops. CropCents uses default industry standards as a base but can be adjusted.
Once all this information is entered, CropCents will calculate yield in tons per acre and the cost per ton. Knowing the cost to produce a certain crop can help a producer determine which varieties may be more profitable, if custom hire is worth the price, what he or she can afford to pay in land rent, or if switching to a different seed or fertilizer for increased yield would be worth the extra expense. These numbers can be compared to the current market prices or they can be entered into the DairyCentsPRO mobile app to calculate a herd’s income over feed cost or milk margin using actual feed prices.
A large factor in the cost of producing crops is the yield. In Table 1, the costs per acre and per ton are listed for corn silage, grass hay, and soybeans by production level. For corn silage and soybeans, as yield increases, this is shown in an increase in cost per acre, however, the cost per ton decreases. While not always the case, this implies that at least to a point, increased inputs, such as seed, fertilizer, etc., will lead to increased yields, decreasing the overall cost to produce a ton of forage. The corn silage costs in Figure 2 demonstrate this trend where increased yields from higher input costs decrease the overall cost per ton of corn silage.
Determining the production costs is just one piece of the puzzle when evaluating a whole farm system. In 2013, the average grass hay projected production cost per ton was $100.60 with a wide range in production yields and costs. Of course, not all grass hay is created equal. Differences in quality are an important factor, but it doesn’t change the cost to produce it, only the value if sold on the market and the potential production gains when fed. With higher quality feeds, you would expect better gains from heifers or increased milk production.
Opportunities still exist to increase efficiencies, better utilize home-raised feeds and plan a cropping system that maximizes profits. Depending on weather or geography, double or triple cropping may not be an option and marginal land may not support 300 bushels of corn. Before these plans are implemented it is important to carefully evaluate the costs of each option. Storage, harvest windows and soil quality are all factors that must be carefully considered as well as the overall costs for the crops. CropCents can help bring each of these factors into perspective to help make profitable and lasting decisions on the dairy.
More information can be found at http://extension.psu.edu/cropcents.
Editor’s note: Rebecca White is a dairy team program manager with Penn State Extension.