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

There is no question that corn planting was a challenge throughout the corn belt this year.  But, American farmers got it done and the corn is coming up nicely.  Of course a lousy fall, with early frost could ruin the party, but right now, it looks as if the feed markets, especially energy feeds, will see a substantial drop in price this fall.  Lower feed costs, coupled with the reasonably good milk prices that are in the forecast until December, should bring good positive margins for a few months.  After a tough year for our industry, this will be welcome.

For now, feeding balanced diets based on economically priced feed ingredients can help maintaining positive margins.  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 July 21, 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 obscenely priced at 19.7¢/Mcal.  This is important because a cow producing 70 lb/day of milk requires in the neighborhood of 33 Mcal/day of NEL.  For MP, its current price (40.3¢/lb) is also greater than its 6-year average (28¢/lb).  Thus, we are currently in a period of very high dietary energy and high 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), and the discount of 13.7¢/lb is above its 6-year average (-9¢/lb).  Meanwhile, the unit cost of e-NDF is about at its historical average, being priced at 1.1¢/lb compared to the 6-year average (3.3¢/lb).  So, dietary fiber, whether physically effective or not, is currently not a significant cost factor from a historical standpoint.  Of course, this may depend on how bad your crops were affected by the drought last summer and how well you managed to harvest the first cutting. 

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

Economic Value of Feeds

Results of the Sesame analysis for central Ohio in mid July 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.  We don’t have good market prices for a few feeds, so we assigned them an actual price of $0.01/ton.  One must remember that Sesame compares all commodities at one point in time, mid July in this case.  Thus, the results do not imply that the bargain feeds are cheap on a historical basis.  Some are just cheap relative to others.

Table 2.  Actual, breakeven (predicted), and 75% confidence limits of 27 feed commodities
used on Ohio dairy farms, mid-July 2013.

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.

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