Cost of nutrients and relative value of feedstuffs for Pa. dairy farms

10/18/2014 7:00 AM

Dr. Ken Griswold

Technical Service Manager, <\n>Kemin Animal Nutrition & Health

Joanne Knapp

Fox Hollow Consulting, LLC, Columbus, Ohio

Normand St-Pierre

Dairy Management Specialist, Ohio State University

Right now, dairy farmers are enjoying record high milk prices. The Class <\n> III milk price for October is right around $24 per hundredweight. However, looking at the milk futures market, the trend going into 2015 is downward. The projected Class III milk prices from October 2014 through March 2015 by month are October $24.05, November $21.25, December $19.85, January $17.92, February $17.49, and March $17.35. So, dairy producers should prepare now for the coming reduction in margins.

One way to prepare is to look for more cost-effective feedstuffs for dairy cow diets. To assist in this endeavor, the SESAME program, developed by Ohio State University, determines the economic values of dairy feedstuffs by evaluating commonly used feedstuffs based on their content of five basic nutrients: net energy for lactation (NEL), rumen degradable protein (RDP), digestible rumen undegradable protein (d-RUP), non-effective neutral detergent fiber (ne-NDF), and effective neutral detergent fiber (e-NDF). These individual nutrients are valued on a megacalorie (Mcal) basis for NEL and a per pound basis for RDP, d-RUP, ne-NDF, and e-NDF. If you are evaluating your ration ingredients based on other nutrients, please be aware that there are differences and consult with your nutritionist on any potential ration changes.

The SESAM analysis of the Pennsylvania feed market uses 29 commonly fed commodities to determine the intrinsic value for each of the five basic nutrients in a feeding program. The intrinsic value is the price that the market is willing to pay for that particular nutrient. As an example, a Mcal of energy is currently worth approximately $0.143 (or 14.3 cents per Mcal) in the market, regardless of whether that energy comes from corn, cottonseed, bakery meal, fat, etc. So, if a high-producing Holstein cow needs roughly 42 Mcal to produce 100 pounds of milk, then the value of the energy in her daily diet would be approximately $6.01 based on the current market value for NEL. This is essentially unchanged from the value of energy last month. And so, based on the intrinsic value for each of the five nutrients within a specific feedstuff, we can determine the potential break-even price based on the book values for each nutrient in that feedstuff. The SESAME program has been upgraded to weight the value of different feedstuffs during the analysis so high-priced feedstuffs such as blood meal, fish Menhaden meal and tallow (fat) do not skew the results of the analysis. The calculated costs for the five basic nutrients are shown in Table 1.

Table 2 provides the actual prices for the feedstuffs that were evaluated in the current SESAME analysis along with their predicted prices based on nutrient content. In addition, the table includes the 75 percent confidence limits of prices for each commodity. A 75 percent confidence limit indicates that we are about 75 percent sure that the true cost of the feedstuff based on nutrient content is between the lower and upper limit prices. In reading the table, one should consider feedstuffs with an actual price below the lower limit as bargains in the present market. The feedstuffs with an actual price above the upper limit would be considered overpriced, and feedstuffs with actual prices falling between the limits would be priced at their approximate nutrient value.

Due to the volatility in the markets, the number of bargain-purchased feedstuffs to be had in Table 2 has been jumping up and down from month to month.

This month there are four protein sources: cottonseed meal, feather meal, distillers dried grains with solubles, and corn gluten meal currently at or below the lower limit price based on their nutrient profiles.

However, farmers should understand the limitations of different protein sources. Corn-based sources, such as distillers dried grains with solubles, are very low in lysine content and can have high fat content, which limits their use in dairy rations. Feather meal is low in lysine and methionine, the two most limiting amino acids for milk production in dairy cows. Therefore, these “bargain” feedstuffs need to be evaluated very carefully before incorporating them into the diet.

Among energy feedstuffs, corn grain and the by-product feedstuffs including bakery by-product meal, corn gluten feed, hominy, and wheat middlings are at or below the lower limit price. The market dynamics suggest that dairy producers should avoid soybean meal 44 percent as it is over its highest market value, and therefore, has virtually no value when compared to soybean meal 48 percent. If possible, avoid sugar beet pulp, citrus pulp, tallow, blood meal, and fishmeal as they continue to be overpriced in the market.

Given the extremely high price of animal-based RUP sources such as blood meal and fishmeal, rumen-protected amino acid supplements may be more cost effective for balancing for amino acids within a lactating cow diet. Based on the historic data within the SESAME analysis, the prices of blood meal and fishmeal are running at 142 and 195 percent of their predicted value, respectively.

Supplemental fat sources are another over-priced feed that need to be used judiciously if possible given the abundance of more cost-effective energy sources. However, because the prices used in the SESAME analysis are aggregated, approximate feed prices, the local prices for all feeds maybe different than those listed in Table 2. There are several warnings about the information presented in Table 2.

Warnings:

1. Actual Prices listed in Table 2 are approximate and represent aggregated prices for the State of Pennsylvania. Check with your local suppliers for actual delivered prices.

2. Prices are on a commodity basis, and represent farm-delivered, full tractor-trailer loads (TTL) prices. No services are included; commodity feeds have little or no nutritional guarantees.

3. Results do not imply that a balanced ration can be made solely with bargain feeds, or that over-priced feeds should be eliminated from the ration. Certainly, there is an economic incentive to maximize the use of bargain feeds and minimize the use of over-priced feeds.

4. The analysis is based on the five most economically important nutrients in dairy rations. For very high production herds, other nutrients such as amino acid content of the undegradable protein should also be considered. This would change the predicted price of some commodities such as blood meal.


Has the Food and Drug Administration done enough to revise its produce safety rule?

  • Yes
  • No
  • Unsure

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10/25/2014 | Last Updated: 11:16 AM