Cost of nutrients, relative value of feedstuffs for Pa. dairy farms

5/17/2014 7:00 AM

Dr. Ken Griswold

Technical Service Manager, <\n>Kemin Animal Nutrition & Health

Dr. Joanne Knapp

Fox Hollow Consulting LLC, Columbus, Ohio

Dr. Normand St-Pierre

Dairy Management Specialist, <\n>The Ohio State University

Spring is slowly coming to the Northeast, such that winter forage harvest and corn planting are both behind compared to normal years. Yet, with the coming of spring, and the advent of cropping, the tendency is to forget about the current rations being fed to the dairy herd. Right now, with high milk prices and reasonable energy prices, dairy producers should really focus on those rations to optimize their margin between milk price and feed prices. To do this, a focus on cost-effective feedstuffs for the dairy ration is useful.

Using the SESAME program, developed by The Ohio State University, our program evaluates commonly used feedstuffs based on their content of five basic nutrients: net energy for lactation (NEL), rumen degradable protein (RDP), digestible rumen undegradable protein (d-RUP), non-effective neutral detergent fiber (ne-NDF), and effective neutral detergent fiber (e-NDF). These individual nutrients are valued on a megacalorie basis for NEL and a per pound basis for RDP, d-RUP, ne-NDF and e-NDF. If you are evaluating your ration ingredients based on other nutrients, please be aware that there are differences and consult with your nutritionist on any potential ration changes.

The SESAME analysis of the Pennsylvania feed market uses 29 commonly fed commodities to determine the intrinsic value for each of the five basic nutrients in a feeding program. The intrinsic value is the price that the market is willing to pay for that particular nutrient. As an example, a megacalorie of energy is currently worth approximately $0.123, or 12.3 cents per megacalorie, in the market, regardless of whether that energy comes from corn, cottonseed, bakery meal, fat, etc. So, if a high-producing Holstein cow needs roughly 42 megacalories to produce 100 pounds of milk, then the value of the energy in her daily diet would be approximately $5.17 based on the current market value for NEL. This value has increased sharply from last month by roughly $0.06 per megacalorie in the last month, which moved the value of energy in the diet up by $2.25 per day. Given the intrinsic value for each of the five nutrients within a specific feedstuff, we can determine the potential break-even price based on the book values for each nutrient in that feedstuff. The SESAME program has been upgraded to weight the value of different feedstuffs during the analysis so high-priced feedstuffs such as blood meal, fish Menhaden meal and tallow do not skew the results of the analysis. Based on the historic data within the SESAME analysis, the prices of both fish meal and blood meal are running at 162 and 127 percent of their predicted value, respectively. The calculated costs for the five basic nutrients are shown in Table 1.

Table 2 provides the actual prices for the feedstuffs that were evaluated in the current SESAME analysis along with their predicted prices based on nutrient content. In addition, the table includes the 75 percent confidence limits of prices for each commodity. A 75 percent confidence limit indicates that we are about 75 percent sure that the true cost of the feedstuff based on nutrient content is between the lower and upper limit prices. In reading the table, one should consider feedstuffs with an actual price below the lower limit as bargains in the present market. The feedstuffs with an actual price above the upper limit would be considered overpriced, and feedstuffs with actual prices falling between the limits would be priced at their approximate nutrient value.

Due to the volatility in the markets, the number of bargain purchased feedstuffs to be had in Table 2 has been jumping up and down from month to month. This month, only two protein sources, cottonseed meal 41 percent and distillers dried grains with solubles are currently underpriced based on their nutrient profiles. However, farmers should understand the limitations of different protein sources. Corn-based sources, such as distillers dried grains with solubles, are very low in lysine content and can have high fat content, which limits their use in dairy rations. Among energy feedstuffs, corn grain and the byproduct feedstuffs including bakery byproduct meal, corn gluten feed, hominy, and wheat midds are at or below the lower limit price. The market dynamics suggest that dairy producers should avoid soybean meal 44 percent as it is over its highest market value, and therefore, has virtually no value when compared to soybean meal 48 percent. If possible, avoid sugar beet pulp, citrus pulp, tallow, blood meal and fishmeal as they continue to be overpriced in the market. Given the extremely high price of animal-based RUP sources such as blood meal and fishmeal, rumen-protected amino acid supplements may be more cost-effective for balancing for amino acids within a lactating cow diet. Supplemental fat sources are another over-priced feed that need to be used judiciously if possible given the abundance of more cost-effective energy sources. However, because the prices used in the SESAME analysis are aggregated, approximate feed prices, the local prices for all feeds maybe different than those listed in Table 2. There are several warnings about the information presented in Table 2.

Warnings:

1. Actual prices listed in Table 2 are approximate and represent aggregated prices for the State of Pennsylvania. Check with your local suppliers for actual delivered prices.

2. Prices are on a commodity basis, and represent farm-delivered, full tractor-trailer load prices. No services are included; commodity feeds have little or no nutritional guarantees.

3. Results do not imply that a balanced ration can be made solely with bargain feeds, or that over-priced feeds should be eliminated from the ration. Certainly, there is an economic incentive to maximize the use of bargain feeds and minimize the use of over-priced feeds.

4. The analysis is based on the five most economically important nutrients in dairy rations. For very high production herds, other nutrients such as amino acid content of the undegradable protein should also be considered. This would change the predicted price of some commodities such as blood meal.


Will the new Dairy Margin Protection Program eventually pay off for farmers?

  • Yes
  • No
  • Unsure

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9/22/2014 | Last Updated: 4:17 AM