In recent years, the explosive changes around us — especially in the technological age we find ourselves — have been described as constant ripples of change or as “white waters” of change.
I’m sure all of you all have noted the white water as it splashes over rocks in the rapids of streams.
With respect to feed costs at this time, we are not in “white waters,” but amidst a tidal wave that just keeping coming.
Forces. The forces behind the prices have been raising energy costs and the demands of corn for ethanol production, but now we have the tides of rain resulting in flooding in the Midwest, where much of the cash grain is grown.
Corn and 48 percent soybean meal have especially increased in price since 2006 and with the present futures greater than $7.50 per bushel ($268 per ton) for corn (about 19 percent higher than the purchase price in April 2008) and about $16 per bushel ($533 per ton) for soybeans, prices are going to climb even higher.
The price ($/Mcal) of net energy for lactation in dairy diets has doubled since 2003. And, it is certainly too early to tell how the forage and grain crops are going to yield with the weather conditions that are lurking in the Midwest.
I know, you are thinking, “Tell me something that I don’t know. Tell me something that can help me ride this wave.”
Part of the problem is that this is a big wave and there is no end in sight. So, we have to “snoop out” all corners of the dairy operation to ride this wave.
Consider this. We need to consider the following points:
— From a financial perspective, what aspects of my operation are functioning at a competitive level and which ones are not? Can we make some changes in the non-competitive areas?
— Don’t make management changes just to cut costs. Will this change increase or decrease net returns? It’s not necessarily a time to change the nutritionist, change vets, stop forage testing or stop Dairy Herd Improvement.
— Some age-old approaches to improving profitability sometimes are still not adopted by farmers or they discontinue their use to cut costs.
For example, the 2007 study released by the National Animal Health Monitoring system revealed that 25 percent of the 1,294 dairy farmers surveyed still don’t use forage tests to balance feed rations. The proportion of farmers that tested forages was higher for larger (91 percent, more than 500 cows) than smaller (70 percent, less than 100 cows) herds.
— It is a time to manage intensely. Sharpen the pencil and know what the break-even costs of production are for your farm. Start by determining the feed costs per hundredweight of milk because this makes up the largest portion of the cost of producing milk.
— Harvest high quality forages so that:
-Purchased feed costs will be less.
-The efficiency of the land based relative to the costs for crop production can be maximized.
-Milk yield of the cows will he higher (there is no substitute for poor quality forage for optimizing milk yield).
— Determine your forage inventory needs now. If it is apparent that you are going to need to purchase hay, do it within the next couple of months while harvest is still occurring.
— Feed the cows. Some farmers think they have too much refusal and maybe they do. In the National Animal Health Monitoring System study, larger herds and herds with higher milk yield per cow were more likely to feed a total mixed ration.
However, only 51.1 percent of the operations fed a total mixed ration. Managing the feeding system, whatever the type used, is absolutely a must.
With the total mixed ration, refusals need to be cut to 1-2 percent, but at these levels for refusals, and especially with a slick bunk approach, the feed bunk must be checked more frequently than every 12 or 24 hours.
It must be checked every few hours and feed delivered when the cows need it rather than when the clock hand reaches 4 p.m., or whatever time was traditionally designated as feeding time.
Don’t worry. I know, some of you are still saying ,”Tell me something more.”
Well, here you go: Don’t worry about it; this wave, too, will pass.
However, the flood, the tornado, and the hurricane also pass and the devastation is left behind. Seek the encouragement and advice of the resources in the industry and try to brace for the long haul of tight margins.