With tight margins in the dairy industry, we sometimes look to reduce feed costs as a method to improve margins. Since feed cost is 50% or more of the total cost of milk production, it is often a primary target. However, in most cases, higher quality forage is one of the most valuable things we can add to the ration to widen feed margins.
If the dairy has the cow comfort, cow health, and management to realize a higher level of production by feeding a higher quality forage, then the feed cost per hundredweight (cwt.) of milk produced will decline, resulting in a more favorable margin.
No substitute for quality
One common misconception is that if hay quality is poor, one can simply feed more concentrate and compensate for the lower quality forage. A published research study determined the impact of alfalfa hay quality on milk yield. Some of the results of this study appear in Table 1.
This University of Wisconsin study fed diets that contained 20%, 37%, 54%, and 71% concentrate and four different maturities of alfalfa hay. As you can see, feeding more concentrate did not fully compensate for the lower quality forage. In fact, the highest quality forage resulted in the greatest level of milk production. On average, feeding lower quality forage reduced fat-corrected milk production by 13% to 28%. Even feeding alfalfa hay that was just 10 points lower in relative feed value (RFV) resulted in significant losses in milk production.
This study only utilized hay as the forage source. In most cases, other forages will be included in a dairy ration so that the total reduction in milk yield by feeding a lower quality alfalfa may not be as great as realized in this study. However, even slight decreases in milk production may result in significant changes in milk margin.
If a dairy is feeding 8 pounds of alfalfa per cow each day, for example, then a ton would feed 250 cows. If the higher quality hay is worth a $40 premium in the market, then the daily feed cost per cow is increased by only $0.16 over feeding the lower quality alfalfa. If milk is worth $0.18 per pound, then less than 1 pound of higher milk production is needed to cover the additional daily feed cost.
It is not uncommon for dairies to experience 3- to 5-pound swings in milk production as the result of a change in the quality of the alfalfa hay. While the alfalfa hay is generally less than 15% of the total diet, it still has a significant impact on milk production.
Over a 3-to-1 return
More important than simply looking at the feed cost per cow on a daily basis, we should also evaluate the impact on the feed cost per cwt. of milk produced. Let’s assume that the daily feed cost, including the lower quality alfalfa hay, is $4.50 per cow with 80 pounds of milk production. With the higher quality hay, it is $4.65 per cow with 83 pounds of milk production. Feed cost per cwt. of milk produced would be $5.63 with the lower quality hay and $5.60 for the higher quality hay. Factoring in the value of the additional milk production at $0.18 per pound of milk, milk revenue improves by $0.54 per cow daily on an investment of $0.15, offering a return of over 3 to 1.
When considering the value of milk production lost due to feeding lower quality alfalfa, it often changes the discussion about the price per ton of hay. In most market situations, feeding alfalfa hay with an RFV of 180 or 200 compared to feeding a lower quality hay with an RFV of 150 will result in higher milk revenues and a lower feed cost per cwt. of milk marketed. Sometimes transportation cost and area market values change these relationships, but this can be a helpful exercise when determining the value of alfalfa hay in the dairy diet.
Many times, higher quality alfalfa hay will actually be priced at a bargain compared to lower quality choices. In determining the value of alfalfa, it is more than just the per-ton price. Dairies need to also consider the negative impacts on milk production when purchasing lower quality alfalfa.
A need for consistent quality
There is value in consistently producing high-quality hay. Dairies depend on the alfalfa grower to provide accurate analysis and consistent quality. A single load of hay may be fed before the hay analysis is returned. Thus, keeping careful track of hay lots and analysis is an excellent way to improve the relationship between a dairy and an alfalfa provider.
This article appeared in the April/May 2020 issue of Hay & Forage Grower on page 16.
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