The Costs of Nutrients and Comparison of Feedstuffs Prices

Dr. Normand St-Pierre, Extension Dairy Management Specialist, Department of Animal Sciences, The Ohio State University

Sometimes I wonder if I live on the same planet as some dairy economists.  I just read an article where an eminent dairy economist is confident of a dairy rebound ahead.  Let’s see: $18.66 Class III prices last December, February’s futures trading at $17.07 today, and March futures at $17.02.  On the feed side, corn prices have indeed rebounded from lows under $7/bushel with March futures at $7.42/bushel today.  I suppose that some prices are indeed rebounding, but to me they seem to be rebounding in the wrong direction…  However, regardless of the price outlook, feeding balanced diets based on economically priced feed ingredients can help maintaining positive margins or reducing financial losses.  The idea is to maximize the use of underpriced feeds and to minimize the use of overpriced ones.

Nutrient Prices

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 as of January 14, 2013.  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 6-year average of about 10¢/Mcal, NEL is still a highly priced nutrient  For MP, its current price (41.2¢/lb) is also greater than its 6-year average (28¢/lb).  Thus, we are currently in a period of very high dietary energy and protein prices.  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), but the discount of 5.6¢/lb is below its 6-year average (-9¢/lb).  Meanwhile, unit costs of e-NDF are historically high, being priced at about 4.7¢/lb compared to the 6-year average (3.3¢/lb).  So, dietary fiber, whether effective or not is currently highly priced from a historical standpoint.  Homegrown forages are generally the best sources of effective NDF.  The drought has reduced considerably the hay supply.  Consequently, hay prices are currently very high - $292/ton for Ohio alfalfa hay according to USDA.

Table 1.  Prices of dairy nutrients for Ohio dairy farms, mid-January 2013.
Figure 1

Economic Value of Feeds

Results of the Sesame analysis for central Ohio in mid January 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 January 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-January 2013.
Figure 2

Table 3. Partitioning of feedstuffs, Ohio, mid-January 2013.


At Breakeven


Bakery byproducts
Brewers grains, wet
Corn, ground, shelled
Corn silage
Distillers dried grains
Gluten feed
Meat meal
Soybean meal – expeller
48% soybean meal
Wheat middlings

41% Cottonseed meal
Whole cottonseed
Feather meal
Soybean hulls
Wheat bran

Alfalfa hay – 40 NDF
Canola meal
Blood meal
Beet pulp
Citrus pulp
Fish meal
Gluten meal
44% soybean meal
Roasted soybeans

For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the Sesame analysis.

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.  Also, there are reasons that a feed might be a very good fit in your feeding program while not appearing in the “bargains” column.