Co-op News > Mitigating Volatile Markets on your Dairy Farm

Mitigating Volatile Markets on your Dairy Farm

Mar 15, 2021

Dairy cows

How good are you at feeding cows?

This last year has brought out the most volatile times that any of us in the business of milking cows, processing milk, selling food, manufacturing feed or providing nutrition services have witnessed so far in our careers. I’ve spent 27 years as nutrition consultant to farms and this past year witnessed some things for the first time, along with market instability getting more volatile with quicker peaks and valley’s than ever before. We saw dumping milk in manure pits with no demand, and then 3 months later record prices for milk.  We saw $2 and some odd cent corn in August and now we are pushing $6 corn.  $290 soybean meal in August to now over $500 a ton. I could go on and on with other ingredient disruptions, erratic prices and limited or no availability as those are just the beginning. I’d like to think that we won’t see this again but these times might be here to stay.  How does your farm handle this volatility?  I don’t think there is a magic answer in how we manage this, however, there are multiple tools available that we can use to help mitigate the variables.   

Managing the expenses for the dairy business has always been a challenge and the new era of volatility magnifies it. When we look at the income and expense categories of a dairy farm, it’s easy to see the #1 income is milk and the #1 expense is feed (overwhelmingly). As consultants, we are always talking to producers about how you can get more milk. It’s fairly well established that the more production you get, the higher your Income Over Feed Cost (IOFC) will be.  Stating the obvious it takes exceptional management to master that expense side of a dairy business.  However, there are also several key areas that I observe and work with every day that steal profits from your dairy businesses and most reside right inside the feed division on your dairy.   These next number of things can reduce the expense side significantly on a dairy, they are all simple and all of them should be discussions you can have with your Premier Nutritionist regularly.  Its never too early to get started.

Feed Inventory 
How much feed do you need to feed the herd for the whole year, including shrink?  The most expensive feed to buy is the feed you don’t plan on buying and are forced to buy it versus planning.  It does not cost anything to plan. Do you have enough acres for forage and grain?  Are you planning your needs and being strategic in purchasing? The basic need for dairy is forage and the largest part of the diet is forage.  The most economical feed stuff to grow and feed is corn silage followed by haylage, and in my opinion corn silage is king. If you have winter kill in alfalfa, the biggest bang for the buck is to replant with corn for corn silage if it fits your NRCS plan.  Sorghum sedan or Italian rye grass is immensely inferior to either corn for silage or established alfalfa.   In my unfortunate previous observations, Italian rye grass is very poor yielding forage when interseeded into alfalfa and sorghum sudan is difficult to harvest and doesn’t yield as advertised.  

Contracting or Hedge Positions on Feed Ingredients 
These can be as simple or as difficult of tools as you want to make them.  A simple physical contract through Premier has no upfront cash outlay and is by far the best way to level out the high prices.  The hard part is watching the trends, the best advice is look for value.  If your trying to hit the low, only thing guaranteed is you wont hit it, and probably will be left not getting anything covered as if you just looked for value.   Talk with your Premier nutritionist to see how easy it is.

TMR Software
There are a number of these on the market in varying levels of price and complexity.  These are the best tools to help feeders feed cows. As well as the best tools to manage feed inventory, bunk management, feed shrink and dry matter corrections on farms.  
Bunk Management
Are you over feeding and wasting feed?  Under feeding and causing herd health issue’s along with leaving milk on the table?  Or are you subtly adjusting your feed amount daily based on the amount the cows are eating to maximize milk yield and minimize costly feed refusal?

Feed Shrink
This is a monster of an invisible expense. Is your feed area tidy and cleaned up daily, with unused feed put back and saved for next feeding? Without TMR software there is no tool to measure if you’re over or underfeeding ingredients.   

Dry Matter corrections
The most basic practice to mitigate variation when feeding, and if you don’t have a process to check on farm its easy to implement. 

Does the feed division on your dairy practice these simple procedures? Or utilize the TMR software available to its fullest capability?  It’s never too late to start any of these.  We are always quick to make diet or ration changes, and I’m as guilty as anyone to want to change diets to save some feed costs.  All too often we have numerous savings sitting under our nose by the way we manage the feeding on the dairy and we just don’t spend enough time to evaluate those. Take time to consider some of these tools and have the discussion with your Premier nutritionist on how to start to monitor some of those areas that may be stealing revenue from your business.

Fill out the form below to contact a Premier nutritionist and learn more about mitigating volatile markets on your dairy farm. 


Brian Reilly

Feed Sales Manager


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