Buckeye Dairy News: Volume 14 Issue 2
The Costs of Nutrients, Comparison of Feedstuffs Prices and the Current Dairy Situation
Dr. Normand St-Pierre, Extension Dairy Management Specialist, Department of Animal Sciences, The Ohio State University
Feed and dairy markets are quite uncertain as of mid-March. On the dairy side, milk appears to be plentiful in most regions of the country. As of the end of February, it was estimated that the cumulative national milk production was running close to 4% above last year (this is after accounting for the extra day in February). The number of cows (9.25 million) is up slightly from last year (about 1%), which indicates that the extra production is primarily due to additional productivity per animal (60 lb/day compared to 58 lb/day at this time last year). Exports have remained strong. Exports are in essence supporting U.S. domestic prices, but there is a real danger that our domestic prices might collapse later this spring. As I write these lines (March 21, 2012), the Class III futures for the next 10 months are trading between $15.55 and $16.83/cwt. These prices would equate to a blend price in Ohio between $16.35 and $17.63/cwt. At best, these are at break-even prices when one considers current cash feed prices. The latest reports from USDA and other private organizations indicate that U.S. farmers are planning to plant 94 to 95 million acres in corn this year. But a great many things can happen between now and harvest. And the high oil prices are creating additional demand for ethanol, hence pressuring the corn markets upward. I see little chance for a significant downturn in feed prices. The rest of the year should not be as bad as 2009, but dairy producers will have to be very vigilant. This includes the proper selection of feed ingredients to make up the dairy rations.
As usual in this column, I used the software SESAME™ that we developed at Ohio State to price the important nutrients in dairy rations to estimate break-even prices of all major commodities traded in Ohio and to identify feedstuffs that currently are significantly underpriced. Price estimates of net energy lactation (NEL, $/Mcal), metabolizable protein (MP, $/lb – MP is the sum of the digestible microbial protein and digestible rumen-undegradable protein of a feed), non-effective NDF (ne-NDF, $/lb), and effective NDF (e-NDF, $/lb) are reported in Table 1. Compared to its historical average of about 10¢/Mcal, NEL is now severely overpriced at 19.4¢/Mcal – which is near record prices. For MP, its current price (13.5¢/lb) is considerably less than its 6-year average (28¢/lb). Thus, we are currently in a period of very high dietary energy prices but low protein prices. This is even more evident when one is reminded that less than 10 years ago dietary energy (NEL) was priced at about 5¢/Mcal. The cost of ne-NDF is currently discounted by the markets (i.e., feeds with a significant content of non effective NDF are price discounted), and the discount of 11¢/lb is above its 6-year average (-9¢/lb). Meanwhile, unit costs of e-NDF are historically low, being priced at about -1.1¢/lb compared to the 6-year average (3.3¢/lb). Homegrown forages are generally the best sources of this important nutrient.
Table 1. Prices of dairy nutrients for Ohio dairy farms, mid-March 2012.
Economic Value of Feeds
Results of the Sesame analysis for central Ohio in mid March are presented in Table 2. Detailed results for all 27 feed commodities are reported. The lower and upper limits mark the 75% confidence range for the predicted (break-even) prices. Feeds in the “Appraisal Set” were deemed outliers (completely out of price). One must remember that Sesame compares all commodities at one point in time, mid March in this case. Thus, the results do not imply that the bargain feeds are cheap on a historical basis.
Table 2. Actual, breakeven (predicted) and 75% confidence limits of 27 feed commodities used on Ohio dairy farms, mid-March 2012.
For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the Sesame analysis.
Table 3. Partitioning of feedstuffs, Ohio, mid-March 2012.
Corn, ground, shelled
41% Cottonseed meal
Distillers dried grains
Alfalfa hay – 40% NDF
Brewers grains, wet
48% soybean meal
Soybean meal – expeller
44% soybean meal
As usual, I must remind the readers that these results do not mean that you can formulate a balanced diet using only feeds in the “bargains” column. Feeds in the “bargains” column offer savings opportunity and their usage should be maximized within the limits of a properly balanced diet. In addition, prices within a commodity type can vary considerably 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. In addition, there are reasons that a feed might be a very good fit in your feeding program while not appearing in the “bargains” column.
Current Dairy Situation
We use the estimates of the nutrient costs to calculate the Cow-Jones Index (CJI), an index constructed here at Ohio State to measure the difference between milk revenues and the costs of providing the required nutrients at a production level of 65 lb/cow/day. The Cow-Jones is conceptually very similar to income-over-feed costs, but it is calculated without making reference to any specific diet. The reference cow used to calculate the Cow-Jones weighs 1500 lb and produces 65 lb of milk at 3.6% fat and 3.0% protein – which is about the average cow productivity in Ohio. This cow has daily requirements of 31.3 Mcal of NEL, 4.64 lb of MP, 10.15 lb of e-NDF, and 3.38 lb of ne-NDF. The cost of supplying these nutritional requirements has fluctuated in the last 6 years. Dietary energy is currently very expensive as it currently costs $6.09/day to provide the NEL required for the production of 65 lb/day (Figure 1). This means that on an average one has to pay $9.37 just to supply the NEL required to produce a cwt of milk.
Figure 1. Costs associated with the supply of 31.3 Mcal of NEL and 4.64 lb/day of MP from January 2005 through March 2012.
The change in the Cow-Jones index over time is shown in Figure 2. We cannot calculate the CJI for March yet because milk component prices will not be announced until April 6 by the Order administrator. As of February 2012, the cost of supplying all the nutrients amounted to $9.55/cwt, down from a peak of $11.40/cwt. last August. The milk gross income was $16.24/cwt. The difference is the Cow-Jones Index and was equal to $7.22/cwt. The break-even level for the Cow-Jones Index is approximately $8.00/cwt. A Cow-Jones in excess of $9.00/cwt is indicative of good profitability in the dairy industry. Thus in the month of February, Ohio dairy producers were operating below break-even levels using cash prices for feeds. Of course, some people are more efficient in feeding their cows; others achieve greater production levels than the State average of 65 lb/day; some have purchased their feeds timely. For these producers, their income over feed costs would be better than the Cow-Jones. The index, however, is a very good barometer for the average producer. The fact that the nutrient costs in February amounted to over 55% of the milk revenues is very troublesome and foreshadows a very difficult financial environment if either the current feed prices were to increase throughout the year or if milk prices were to fall even further from their current levels.
Figure 2. Cow-Jones Index from January 2005 through February 2012.
Although milk prices have been substantially above their 6-year average so far in 2012, the high feed prices have resulted in modest profit margins so far this year.
Dietary Phosphorus: Economics vs. Environment
Dr. William Weiss, Dairy Extension Specialist, The Ohio State University
Phosphorus (P) is an essential mineral, and when cows consume inadequate amounts of P, feed intake decreases which reduces milk yield. If the deficiency persists for months, cows are at much greater risk for bone fractures (note: reduced fertility or reproductive efficiency was not mentioned because it is not affected by P deficiency probably until cows start suffering broken legs). Clearly, we want to feed adequate P to our cows. Conversely, overfeeding P causes a linear increase in the amount P excreted in manure, and if this manure is not used correctly, manure P can contaminate surface water resulting in substantial environmental damage. Sources of supplemental P (e.g., dicalcium phosphate or monosodium phosphate) are expensive and can increase diet costs. The increased feed cost was an added incentive to formulate diets that met but did not greatly exceed the cow’s P requirement (approximately equivalent to diets with 0.35 to 0.40% P on a dry basis).
The mandated increase in ethanol production has affected several things related to feeding ruminants and that includes P nutrition. Byproducts such as distillers grains, corn gluten feed, and wheat middlings are often less expensive sources of nutrients than other feed ingredients (see the article on nutrient costs in this newsletter), but these ingredients also have high concentrations of P. A group from Virginia Tech (Stewart et al., 2012, The Professional Animal Scientist, Volume 28, pages 115-119) formulated numerous diets for a Holstein cow producing 90 lb/day of milk and concluded that high P diets were cheaper than low P diets. A diet with 0.35% P (usually adequate to meet requirement) costs approximately 4% less per day than a diet with 0.45% P (all other nutrients in both diets were similar and adequate to support 90 lb/day of milk). With the ingredient prices used in that study, feed costs were about $0.20/cow/day less for a diet with 0.45% P than for one with 0.35% P but only if dietary P increased because of the use of byproducts, not by adding supplemental P. For the higher P diets, distillers grains and wheat middlings were substituted for a portion of the corn grain and soybean meal. Feeding a diet with 0.45 vs. 0.35% P is cheaper, but it would increase manure excretion of P by about 25 g/cow/day (about 5.5 lb/day for each 100 cows). If this extra P in the manure can be used efficiently by crops without contaminating water or causing excessive P build up in the soil, then higher P diets are economically and environmentally sustainable.
If manure P cannot be used efficiently and correctly, options must be considered to reduce manure P at the farm level. An obvious option is to feed lower P diets to the lactating cows (but this can increase costs). Another option is to reduce P excretion by the replacement animals on the farm. Scientists at the University of Wisconsin (Bjelland et al., 2011, Journal of Dairy Science, Volume 94, pages 6233-6242) conducted a long term study with growing heifers to evaluate the effects of feeding a diet with no supplemental P (approximately 0.30% P) to a diet that contained 0.10% supplemental P (total diet was approximately 0.40% P). The experiment started when heifers were 4 months of age and ended shortly before they calved. Absolutely no differences were observed in growth rate (weight, height, girth, and length), reproductive measures (services per conception, age at first breeding, age when pregnant, etc.), health disorders, and first lactation production. The only thing that differed was that heifers fed high P diets excreted more P in their manure.
Assuming an average DM intake from 4 months of age until 22 month of 20 lb/day, feeding 0.10% unit more P would increase P intake by about 9 g/day and essentially all that would end up in manure. If a herd has 70 replacement heifers between 4 and 22 months of age per 100 cows, reducing dietary P from 0.40 to 0.30% for those heifers would reduce manure P excretion by about 630 g/day. This ‘savings’ in manure P excretion from heifers would allow you to increase dietary P in the lactation diet by about 0.03 percentage units (e.g., increasing from 0.40 to about 0.43%) without affecting total manure P excretion from the farm. A diet with 0.43% P could reduce feed costs compared to a diet with 0.40% P if the extra P came from byproducts. Environmental and economic sustainability can be achieved but often will require creating thinking.
2010 Ohio Dairy Farm Business Preview and 2011 Analysis Opportunities
The record high Class III average milk price of $18.37/cwt in 2011 was the only thing that stood between Ohio’s dairy farms and a sea of red ink, much like we experienced in 2009. Ironically, record high grain prices will have “eaten” much of the potential 2011 net farm income on many of Ohio’s dairy farms. What will actual net farm income be? Each dairy enterprise will be different, ranging from good to poor depending on a variety of factors.
Ohio’s Dairy Farm Business Analysis Program can help dairy farms get a handle on their farm’s numbers.
A look at data from 24 well-managed Ohio dairy farms that completed a 2010 business analysis clearly illustrates the range in profitability in the dairy business. While milk sold per cow and milk price received wasn’t substantially different, net return per cow averaged $555 per cow for the top 20% of the herds (5 herds, based on return to assets) compared to an average net return of (negative) -$187 per cow after labor and management for all 24 herds.
24 Ohio Dairy Farms Completing FINANs with enterprise analysis for 2010.
Average of 24 Dairy Farms
Number of cows
Milk sold per cow
Feed cost per cwt*
Milk price per cwt
Net return per cow
Net return per cow w/labor and management
*Feed costs for whole herd with raised forages uniformly priced at state average prices
The 2010 was still a challenging year for many dairy farms. Even before the labor and management charge, less than half, or 10 of the 24 farms, generated a positive net return per cow. The average net return for all farms before labor and management was less than $15/cow.
Only one third of the farms had feed costs less than $10/cwt. The top 20% of herds, averaging $8.74/cwt in feed costs, were 11.5% lower than the average feed costs of all farms at $9.88/cwt. Excluding the top 20% (5 farms), the remaining 80% (21 farms) feed costs averaged $11.13/cwt. Feeds were priced at: corn $3.92/bu, corn silage $42/ton, alfalfa hay $144/ton, mixed hay $112/ton, and grass hay $84/ton (remember this was 2010!)
Farms that participate in the 2011 Ohio Dairy Farm Business Summary will have the opportunity to calculate their farm’s business numbers and then compare them to similar farms, averages, benchmark reports, and the top 20%, and learn how to use them to identify opportunities to improve their businesses.
Grant funding from the National Farm Benchmarking project allows OSU Extension to offer the 2011 FINAN financial analysis, including enterprise analysis, to 100+ farms at no cost to the farm. Field crop, dairy, livestock, poultry, and horticultural crop farms are welcome to participate. Analyses will be completed by either Extension or Farm Business Consultants who previously worked with the Farm Business Planning and Analysis program. Farm data confidentiality is an important component of this program.
We invite and encourage you to participate in Ohio’s 2011 Farm Business Summary. This is a prime opportunity with the benchmarking grant covering the $600 per farm cost of analysis. Questions? Contact Dianne Shoemaker (email@example.com) at (330) 533-5538 to discuss this opportunity.
Running the NRC Dairy Cattle Model Software on Windows 7 64-bit Operating System
Lucien McBeth, Ruminant Nutrition Graduate Student, The Ohio State University
The National Research Council's (NRC) website clearly states that the NRC Dairy Cattle Model Software program is not compatible with 64-bit operating systems. This is not true; you can still use this program if you upgrade your computer. It will take a few steps and some virtual elbow grease to get there.
To download the NRC Dairy Cattle Model Software onto Windows 7, you will need to create a Virtual PC with Windows XP on it. To do this, you will need Windows 7 Professional, Ultimate, or Enterprise. If you are not sure what version you have, you can check by:
- Click the start icon in the bottom left corner and go to the control panel.
- Go to the System and Security link.
- Under the System heading, there will be a link that says "See the name of this computer", follow this link.
- At this panel, you will see what edition of Windows 7 you have. Make sure that it is Professional, Ultimate, or Enterprise. If not, you will need to purchase one of these upgrades. You will not be able to download the NRC program on the Home edition.
- You may want to keep this panel open to refer back to while installing Windows XP Mode.
If you have one of these editions, you can continue on with these steps to install Windows XP Mode:
- Print these instructions out; you will be restarting your computer.
- Go to http://www.microsoft.com/windows/virtual-pc/default.aspx and click on the link in the orange box that says "Get Windows XP Mode and Windows Virtual PC now".
- Select your edition of Windows 7 and the preferred language in the dropdown boxes under the heading "Select your edition of Windows 7 and desired language for installation".
- Click on the "Download" box under Window XP mode.
- Click "Continue" when a box comes up that asks for a Window Validation, and click "Continue" when the validation is successful.
- Select "Save File" when the option comes up. This is the execution file that will install Windows XP mode and is a large file that will take some time to fully download.
- Once finished, double click on the file to run it, and then click continue on the installation panel that comes up.
- Select a location for the file (suggested location is the best) and click next. This installation is setting up a "hard drive" on your computer's actual hard drive.
- Once this installation is complete, click finish and return to the website that should still be open (if you closed it, return at http://www.microsoft.com/windows/virtual-pc/download.aspx).
- Click on the "Download" box under "Step 3" on the website.
- Select the "open with" option with "Windows Standalone Installer..." and click "ok". This should download a file.
- Once this file is downloaded, another box will come up with "Do you want to install the following Windows software update?", click "Yes" and eventually "I Accept". This will install the Virtual PC.
- Once this is installed, a prompt will come up asking to restart the computer and click yes.
- If you have Window 7 Service Pack 1, skip this step (you can find out by returning to the panel telling you the edition that you have). If not, after restarting the computer, return to the website and click on the box in "Step 4" labeled "Update" and follow those prompts.
- You are finished creating a Windows XP Mode. Now you will need to install the NRC program on this "machine" - refer to the steps below.
To install and run the NRC program, follow these steps:
- Go to the Start icon, all programs, scroll down and find the folder named "Windows Virtual PC" and click on the "Window XP Mode" program.
- The first time that you use this program, it will ask you to agree to the terms, create a password, choose whether to install Automatic Updates (suggested to choose "yes"), and to share the files (suggested to choose "yes"). This will set up Windows XP on the Virtual PC and will not need to be done again. This will take some time though.
- Once this is finished, a program screen will come up that will look like the home screen of the old Windows XP. This is your "Virtual PC"; it is essentially a whole new computer on your existing physical computer. I suggest installing an antivirus protection program on this "PC" if you will be using the internet or any other programs that you do not trust. Windows does offer a free one that can be downloaded from their website (use the Internet Explorer Icon that is on this screen).
- Insert the NRC Program Installation CD, or find the program on the NRC website http://www.nap.edu/catalog.php?record_id=9825 (you must go to this link on the web browser on the Windows XP window, and choose "Save" but not "Run").
- If using the CD, click on the "My Computer" icon on the start menu of the Windows XP screen, and select the CD-ROM drive.
- Choose the "NRC- Nutrient Requirements of Dairy Cattle (Setup)" Icon, and choose "Yes" to install.
- Install the NRC Program as if you were installing any other program.
- Install a printer on this Virtual PC; just insert any printer CD-ROM and install it in the same manner that you installed the NRC (steps 5 through 7; this will take care of the old glitch in the program that will not let you view a report of the diet if a printer is not installed).
- Whenever you want to run the NRC Program, you will need to "Start Up" your Virtual PC (just go to the start menu and select the Windows XP Mode). Clicking on the "x" box at the top of the screen will "Hibernate" your Virtual PC, as if you were turning it off. DO NOT "Log Off" on the Start Menu; this will do you no good.
- If you would like to minimize your Virtual PC and return to your main computer but do not wish to turn it off, you can minimize this window my selecting the minimize symbol at the top of the screen. To pull the XP Mode window back up, just click on the icon at the bottom that looks like a monitor with a square coming out of it.
Milk Production for Ohio Dairy Herds
Dr. Maurice Eastridge, Extension Dairy Specialist, The Ohio State University
It is always important to monitor the yield of milk and the composition of milk, especially for the individual farmer, because the income of the dairy farm depends on this source of revenue. The yields of protein and fat are the primary determinants of the price received by farmers. The proportions of fat and protein are useful in monitoring cow health and feeding practices within a farm.
The average production of milk, and proportions of fat and protein by breed for Ohio dairy herds in 2011 using the Dairy Herd Improvement (DHI; http://www.dhiohio.com) program are provided in the Table 1. Not all herds on DHI are included in the table below because of the different testing options offered by DHI, some herds opt for no release of records, lack of sufficient number of test dates, and given that some of the herds consist of other breeds than the ones shown.
Table 1. Number of herds, milk yield, milk fat, and milk protein by breed for Ohio herds on DHI during 2011.
Number of Herds
Milk fat (%)
Milk protein (%)
4-H Dairy Program Updates
Bonnie Ayars, Dairy Judging Teams Coach and Extension Youth Specialist, The Ohio State University
Spring Dairy Expo
Spring have arrived much sooner than expected weather wise, but Spring Dairy Expo will be held on March 29th-March 31st at the Ohio Expo Center in Columbus. The daily schedule is available at www.springdairyexpo.com.
If you have any interest in dairy, it is a wonderful event that includes sales, shows, the Ohio 4-H and FFA Dairy Judging Contest, showmanship classes, displays, and a time to socialize after a unique winter. If you are a judging enthusiast, plan on attending the Ohio PDCA Judging Conference on Thursday. Cash awards are provided, and Larry Schirm will serve as the facilitator/teacher. All those participating will have their names added to an approved judges list for Ohio junior and open dairy shows (http://www.springdairyexpo.com/PDF/2012%20PDCA%20Judging%20Conference%20and%20Contest%20%282%29.pdf).
Youth Dairy Judging Clinic
In an amazing turn out of participants, a dairy judging clinic was held in the OSU Animal Science Arena on March 17th. Despite many other activities also hosted on this day, attendance included just about 125 youth and adults. All came to prepare for the State 4-H and FFA dairy judging contest on March 31st. Clermont County brought 11 4-H dairy members, and it has been 24 years since they last attended a State 4-H event! Photos are on our Facebook page, Ohio 4-H Dairy Program. Why not take the time to look us up and “like us!” The 2012 Dairy Palooza plans are moving along, and we have a list of many donors who will assist in bringing this program to life on April 28th at the Wayne County Fairgrounds. More information, the promotional pamphlet, and a group registration form can be found at www.4hansci.osu.edu/dairy. We also will have pamphlets available at Spring Dairy Expo! Many thanks are extended to Farm and Dairy for printing our brochures.
Midwest Dairy Challenge
Dr. Maurice Eastridge, Extension Dairy Specialist, The Ohio State University
The eighth annual Midwest Dairy Challenge, which ran January 31 - February 2, 2012 and was hosted by Kansas State University, attracted 78 students from 18 universities and colleges. This year’s contest was held in St. Joseph, MO, and the 16 teams of students were divided between two dairy farms (one Holstein and one Jersey) located in northwest KS. In the regional dairy challenge programs, all students are placed on aggregate teams. Students from The Ohio State University participating in the program were: Laura Gordon, Kevin Jacque, Melinda Miller, Emily Stayduhar, and Katie Stevens. All of the OSU students went to the Jersey farm, except for Melinda Miller. Among the eight teams that went to the Jersey farm, Laura’s team placed first, Kati’s team placed second, Kevin’s team placed third, and Emily’s team placed fourth. Melinda’s ream placed third among eight teams. These five students represented The Ohio State University very well, and it was a tremendous learning experience for them.
The 2012 National contest will be held March 29-31 in Roanoke, VA and will be hosted by Virginia Tech University. The following students will represent OSU at the contest: Kevin Jacque, Melinda Miller, Emily Stayduhar, and Katie Stevens. Dr. Maurice Eastridge is the coach of the dairy challenge program. The 2013 and 2014 National contests will be jointly hosted by The Ohio State University, Purdue University, and Michigan State University at the Grand Wayne Center in Ft. Wayne, IN.
Pictured (left to right): Dr. Maurice Eastridge, Emily Stayduhar,