Does it Pay to Increase Milk Components at Current Prices?

Dr. Joanne Knapp, Principal Technical Consultant, Fox Hollow Consulting, LLC, Columbus, OH (top of page)

Yes!  If you’re a believer, you can quit reading now and go do something more important.  If you’re a skeptic, let’s keep going.  With current component prices of $1.5810/lb milk fat and $2.1449/lb milk protein, fat is worth more than protein in terms of income over nutrient costs (IONC; Table 1) on a herd basis.  However, every point of protein is worth more than the same point of milk fat.  Generally, it is easier to achieve larger improvements in milk fat than protein.  Fortuitously, quite often nutritional and feeding management changes aimed at improving milk fat will also result in increases in protein.

Table 1.  Income and nutrient costs of milk components per month for a herd of 100 Holstein cows producing milk at 75 lb/day with 3.70% milk fat and 3.00% true protein.  Income based on April Federal Milk Marketing (FMM) prices and nutrient costs from SesameIII analysis (below).

Currently, in FMM 30, herds are shipping milk with 3.73% milk fat and 3.06% true protein.  There is substantial herd-to-herd variation.  Figure 1 shows the increase in milk income for the fat and protein components at approximately 1 standard deviation above and below the average.  What if your herd is above that average?  In this situation, the IONC is $816/100 cows/mo more than the average herd at the same production level.  Note that this accounts for the extra nutrients and feed required to produce the higher level of components.  There are multiple nutritional and feeding management approaches to increase milk components.  You should work closely with your nutritionist and feed company representative to implement these changes.

Figure 1. Income over nutrient costs (IONC) varies as a function of milk components at the same level of production (MF = milk fat, blue bars; TP = true protein, red bars; prt = protein; income and costs in Table 1 are provided.

The cost of the key nutrients was estimated using SesameIII software and break-even prices of commodities and forages used in dairy rations were predicted (Table 2).  Net Energy increased from March’s value.  Metabolizable Protein (MP) at 44.9¢/lb is down from March.  This is the lowest we’ve seen it in the past year.  It reflects the decrease in prices of ingredients with high rumen undegradable protein content, such as feather, meat-and-bone, and corn gluten meals.  Non-effective neutral detergent fiber (neNDF) and effective NDF (eNDF) are relatively unchanged at –9.0 and 4.0¢/lb, respectively.  It is common for neNDF to be negative, as feeds that have high levels of this nutrient, such as by-products like distillers’ grains, corn gluten feed, etc., are discounted in the market relative to other feeds.  Good- to high-quality, home-grown forages continue to be an excellent and inexpensive source of eNDF.  Overall, feed prices continue to have little change this crop year, unlike what has been seen in the past.  The observation that corn and soybean prices have changed little despite the fast pace of corn planting and the very good Brazilian soybean crop this spring may indicate that these commodity markets are still being distorted by hedge fund investments.

Based on early May wholesale prices for central Ohio, feed commodities fall into three groups:

The usual caveats with SesameIII™ results apply.  You cannot formulate a balanced diet using only the feeds in the Bargains column.  These feeds represent savings opportunities and can be utilized in rations to reduce feed costs within limitations for providing a balanced nutrient supply to the dairy cow.  Prices for commodities can vary because of quality differences as well as non-nutritional value added by some suppliers in the form of nutritional services, blending, terms of credit, etc.  Feeds may also bring value to a ration in addition to their nutrient value, e.g. tallow as a “carrier” and dust suppressant in vitamin/mineral pre-mixes and molasses as a source of sugars. 

The detailed results of the SesameIII™ analysis are given in Table 2.  The lower and upper limits give the 75% confidence range for the predicted Break-Even prices.  Feeds in the “Appraisal Set” are either those that were completely out of price range (outliers) or had unknown prices, such as the alfalfa hays of different nutritional quality.   

Table 2.  Prices of dairy nutrients and actual wholesale, breakeven (predicted), and 75% confidence limits for feed commodities used on Ohio dairy farms.