So, although, not a new twist of events in the economy unlike what we have seen before, we just experienced a very low fuel price followed by a major increase in prices.
Due to a family situation, I have made a few trips to Oklahoma recently. On a recent return to Ohio, I paid $2.17/gallon for 87 octane fuel in Oklahoma with no discounts. I almost could not believe it, wishing I had a reserve tank somewhere on the van to fill. Within two days of returning to Ohio, I was paying about 72 cents a gallon more. Of course, we fully understand that this was caused by a refinery issue — I believe this like all of the other justified fluctuations in gas prices.
OK, by now you are probably wondering what does this have to do with fuel economy. The $2.17/gallon of fuel should burn with the same efficiency as the $2.89/gallon fuel if it is the same octane, percentage of ethanol, etc. However, this price difference certainly affects my wallet and it changes my perception of the importance of fuel economy (efficiency) with the difference in prices.
The fuel economy for the Chevy Silverado, Ford F-150, or Dodge Ram becomes more of a focal point as fuel prices climb. However, the economics of these changes are the same whether fuel goes from $2.17 to $2.89 or $2.89 to $3.61/gallon. OK, I do have a truck but I’m not going to tell you what it is because it doesn’t have all the horses of those aforementioned makes and models. But hey, I can haul small amounts of hay and the receipt at the gas pump is likely a little lower than for one of the “big dogs.”
All of this has been said just to get your attention. The fuel that cows consume to furnish that amazing biological system for milk production also must be monitored for economy (efficiency).There has been an enormous volatility in feed prices in recent years, and relatively speaking, feed prices have softened, including feeds for energy (e.g. corn) and protein (e.g., soybean meal).
Now, we are entering a time of the year when prices may soften even more because of the encroaching harvest. Therefore, it will be time to evaluate prices at which to contract cereal grains and protein sources for the year. Unfortunately, milk prices are lower than they were a year ago, so marginal income over feed costs (IOFC) are going to be lower this year compared to last year. With this in mind, we really need to be managing IOFC and feed efficiency on dairy farms.
With cows, we are not measuring efficiency with miles per gallon or liter of gasoline, but in terms of milk per lb (MPLb) of feed. Overall for a herd, whether we use actual milk or fat-corrected milk, MPLb should be 1.4 to 1.6. First-lactation heifers may be at 1.2 to 1.4 because they are still growing. Fresh cows should be at 1.6 to 1.8 because they are producing some milk from body reserves; less than this range indicates low efficiency but higher is not advised because intake is low and milk yield is not likely sustainable.
A one unit change in feed efficiency (0.1) could mean an equivalent increase in IOFC by $0.45 to 0.50/cwt of milk. It is a time of the year when changes in MPLb may be occurring and management needs to be watching for the following:
- The daytime environmental temperature but especially the dropping evening temperature. Feed intake may increase, but does milk yield go up?
- New silage may be fed without adequate fermentation. Both intake and milk may decrease or feed intake may remain about the same with a decrease in milk yield.
- With the heat stress of the summer, reproduction efficiency may have suffered and average days in milk for the herd increased. With this scenario, MPLb will decrease; a decline in milk occurs without a proportional decline in feed intake.
- If greater loads of springing heifers are brought on the farm at the end of summer, this may shift the herd toward a higher proportion of first-calf heifers and thus decrease herd overall MPLb.
So as we transition from summer to fall and the harvest season arrives, you are encouraged to closely monitor commodity prices for forward contracting and the feed efficiency (fuel economy) with the cows for maximizing IOFC. Although the 2016 new models of trucks may not be on the lot very soon, be prepared to compare the fuel economy and sticker price — improving fuel economy in the herd now can make that new truck more affordable
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