Making money when milk is at $25 or feeder cattle are $230 per hundredweight is pretty easy. However, most livestock producers have figured out those levels are just going to be blips on the radar, which are quickly countered by much lower-valued blips. Volatile markets have forced the move to value added and a more margin-driven business model. Science and industry have helped push that bus.
At first glance, most people think of value added as getting more of the consumer retail outlay; however, there’s also a second way to add value — produce the same or more product at a lower cost. Some people call this efficiency, but the end result is no different than adding value or enhancing profit margins. Sometimes, but not always, this can be accomplished by getting bigger. In some cases, it’s also possible to do by getting (or staying) smaller. There is no “one size fits all” business model to capture added value.
As a forage industry, where do we fit in the value-added revolution? The answer: a lot of places, and here are just a few that come to mind.
Grass-fed: This is the ultimate consumer-driven, value-added product — 100 percent forage based. Beef is the leader, but grass-fed dairy is also gaining identity (certified organic or not) and fetching a price premium. I have been on several grass-fed operations this summer and one thing is very clear — if you’re not dedicated to rotational grazing and the production of high-quality forages (pasture and stored feed), this business model will be a disaster. It takes top-level management, record keeping, and genetics. The term grass-fed is a bit deceiving because for this system to work, legumes have to play a foundational role.
Reduced-lignin alfalfa: If you’re in the business of making milk or selling hay, anything — and I mean anything — you can do to improve forage quality while maintaining yield output is going to add value. No forage quality enhancement comes with greater value than improved fiber digestibility. True, the seed comes with a higher price tag, but the return in the form of a greater crop value or additional pounds of milk is a pretty easy math calculation.
Annual forages: Call them cover crops if you wish, but if you grow them and graze or harvest them . . . they’re annual forage crops by any definition. The popularity of annual forage crops has never been higher, serving a variety of purposes to add end-product value (improve margins) or, dare I say, improve soil health and quality as forage crops have been doing for generations. Apparently, few people noticed. Easily documented added value comes as extended grazing in the early spring, late fall, or winter; forage “slump busters” in the summer; an alternative to summer toxic tall fescue; and an additional high-quality stored feed source (often haylage or baleage) to help boost forage inventories.
Novel endophyte tall fescue: When you can improve gains by 30 to 50 percent during those periods when native fescue is the most toxic, what more needs to be said?
Forage crops have been adding value for a long time and with the help of science and technology, they will continue to do so into the future.
This article appeared in the August/September 2017 issue of Hay & Forage Grower on page 4.
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