Managing Profitability in a Volatile Market

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Managing Profitability in a Volatile Market
Virginia Ishler Nutrient Management
Specialist Dairy Complex Manager vishler_at_psu.edu
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Take Home Messages

• Monitor income over feed costs.
• Its not hard to do.
• It lets you evaluate dietary strategies.
• Attention to details
• Basics related to
• Feed management
• Forage quality
• Nutrition

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Ken Baileys April 2008 Outlook
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Ken Baileys April 2008 Outlook
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What is the benchmark for IOFC?

• Income Over Feed Cost/Cow

• Based on a gross milk price of 13.50/cwt
• Average - 5.00 to 5.50
• Leaders - 7.00
• Goal - 6.00 or higher

Milk price of 21-23/cwt 11/cow IOFC
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Source Tim Beck, Capital Region Dairy Team, Coop
Extension
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PSU Dairy Herd - IOFC
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Penn States February IOFC
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Some strategies to maintain profitability

• High Forage Ration Excellent Forage Quality

DM lbs
As-fed lbs
As-fed lbs
DM lbs
55-58 Forage Dry Matter
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Bunk Corn Silage
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Bunk Corn Silage
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Alfalfa Haylage
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Some strategies to maintain profitability

• Reduced protein in rations balance using NRC
  model and for metabolizable protein

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Milk Urea Nitrogen LOL Bulk Tank
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Average income from SCC premium 1600/month
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Some strategies to maintain profitability

• Remove extra additives
• i.e. PSU removed bicarb and bentonite
• DO NOT remove all at once
• Pencil out how much extra they are adding to
  costs and decide if the benefits out weigh the
  expense.

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Some strategies to maintain profitability

• Monitor dry matter intake efficiency
• Maintain 1.40 -1.60 (energy corrected milk/DMI)
  for the herd.
• ECM (12.82 x lbs fat) (7.13 x lbs protein)
  (0.323 x milk lbs)
• Feed for 1 refusal or less.
• Still need to have adequate feed available to
  cows.

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Some strategies to maintain profitability

• Calculate IOFC if not already.
• DO NOT make decisions based on single ingredient
  prices alone?
• Cheap sometimes turns out expensive!
• Evaluate the big picture
• Why monitoring IOFC is so important.

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Some strategies to maintain profitability

• Monitor dry matter intake.
• Are cows eating more than formulated?
• If so, why?
• Calculate dry matter intake efficiency?
• (energy corrected milk lbs. / DMI lbs)
• Example 85/58 1.47
• Ideal 1.4 1.6
• What are the feed refusals?
• Are dry matters being monitored on high moisture
  ingredients weekly?

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Some strategies to maintain profitability

• Talk with your nutritionist
• Are there any additives that can be removed to
  lower feed costs?
• Is phosphorus still being fed? Is it really
  needed?
• Monitoring animal performance is essential
• Check that performance does not go backwards.
• Can cows be grouped?
• Maximize grain usage for the cows that need it.
• Higher forage rations for late lactation cows.

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Some strategies to maintain profitability

• Dont overlook feed costs on dry cows and
  heifers.
• There may be opportunities to control costs.
• Check grain and commodity storage.
• Minimize shrink and losses
• Keep the feed for the cows, not the birds!

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Impact of distillers on phosphorus, protein and
IOFC
Distillers at 7 of ration dry matter
2008 Prices Milk Income 14.63/cow IOFC
9.32/cow
CP 16
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Impact of distillers on phosphorus, protein and
IOFC
Distillers at 18 of ration dry matter
2008 Prices Milk Income 13.65/cow IOFC
8.64/cow
CP 17
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Impact of distillers on phosphorus, protein and
IOFC
Distillers at 7 of ration dry matter
Distillers at 18 of ration dry matter
2008 Prices Milk Income 13.65/cow IOFC
8.64/cow
2008 Prices Milk Income 14.63/cow IOFC
9.32/cow
CP 17
CP 16
P .35
P .39
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Current PSU Strategies

• Developed a low group
• Inside days limit fed TMR
• Pasture at night
• Feeding heifer rations and dry cow rations.
• All refusals are being incorporated into cull cow
  diets.
• Investigating mister system to avoid production
  drop in the summer.

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Summary

• For IOFC to be useful, need to monitor intakes
  and feed costs.
• Forage quality will determine how high the ration
  can be in forage.
• Monitor cow performance and IOFC to examine if
  this strategy is working.

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Questions/Comments?