Feeding high-quality forages is one of several important factors that will determine dairy producers’ profitability this year, says Mike Hutjens, University of Illinois professor of animal sciences emeritus.
Illinois dairy farmers need to get $17/cwt for their milk to cover costs with a modest return on assets, Hutjens says. "Currently, milk prices have been favorable, but dairy managers need a full year of these margins to replace lost equity in 2009-2010."
Milk prices will depend on supply and demand with more than 13% of current U.S. milk solids being exported. World demand is important to keep supply and demand balanced, and may be impacted by the financial problems in some European countries and unrest in the Mideast.
"Corn price will also impact profit margin," says Hutjens. "Late planting of corn in the Midwest, flooding along major rivers such as the Mississippi, and drought in the Southwest will impact corn and feed prices. Higher corn prices will raise the price of corn silage, forages and by-product feeds."
Dairy managers need to focus on areas that they directly control, he says. One is forage quality, which will be critical to reduce purchased feed costs. Alfalfa/grass forage should be high yielding, with more than 150 relative forage quality (RFQ), more than 55% NDF digestibility
and over 20% crude protein.
Hutjens lists these additional factors that will be important for Midwestern dairy farms to maintain a profit this year:
- Keep total feed cost per 100 lbs of milk below $7/cwt (for lactating cows, not dry cows and replacement heifers).
- Feed inventory should be calculated, planned and/or stored to meet 2011-2012 herd needs. If more acres of corn silage or a summer annual are needed, make that decision now.
- By-product feeds can be an economical source of nutrients. If you can buy them below the breakeven price, it is cheaper than nutrients provided by shelled corn, soybean meal and fat/oil.
- Maintaining high milk production results in more income, potential profit and feed efficiency. These guidelines can be used to evaluate a dairy herd: Feed cost per pound of dry matter, under 12¢; feed efficiency, more than 1.4 lbs of milk at 3.5% fat per pound of dry matter consumed; and income over feed costs greater than $10/cwt.
- Premiums for milk with higher milk protein and fat content and lower somatic cell counts can add 50¢ to $1.50/cwt.
- Getting cows pregnant will maintain milk production as cows remain at higher levels of milk production (target an average 170 days in milk).