The Evaluation of the Impact of Income Over Feed Cost, Feed Management and Dairy Advisory Teams on Dairy Farm Success

Open Access
Buza, Marianne Helen
Graduate Program:
Animal Science
Master of Science
Document Type:
Master Thesis
Date of Defense:
June 27, 2014
Committee Members:
  • Lisa Holden, Thesis Advisor
  • Income over feed cost
  • feed management
  • dairy advisory team
  • dairy cattle
Today’s dairy industry is complex and continuously improving. A producer’s management of the operation is the most important item on the road to profitability. Since dairy farms are so complex, producers must master managing all of the areas of the business in order to achieve maximum profitability and productivity. Feed is the largest expense in producing milk. This makes proper management of feeding and nutrition pivotal to both profitability and productivity. Management of profit margins is necessary in order to make the best decisions for the dairy business. The effective use of different management tools, such as income over feed cost and dairy advisory teams, can lead to better profitability and productivity by helping dairy producers make the best management decisions. This thesis will discuss three studies that investigated 1) milk income and feed cost profit margins 2) current feed management on dairy farms, with an interest in by-product feed management 3) and the use of dairy advisory teams to improve overall farm success. With volatility in feed and milk markets, income over feed cost (IOFC) is a more advantageous measure of profit than simply feed cost per cow. The Pennsylvania State Extension Dairy Team IOFC tool was used to collect data from 95 Pennsylvania lactating dairy cow herds from 2009-2012 and to determine IOFC per cow per day. The data collected included average milk yield, milk income, purchased feed cost, ration ingredients, ingredient cost per ton, and amount of each ingredient fed. Feed costs for home-raised feeds for each ration were based on market values rather than on actual on-farm cost. Actual costs were used for purchased feed for each ration. Mean lactating herd size was 170 ±10.5 cows, and daily milk yield per cow was 31.7 kg ± 0.19kg. Mean IOFC was $7.71 ±$1.01 cost per cow ranging from -$0.33 in March, 2009 to $16.60 in September, 2011. Data was analyzed using a one-way ANOVA in SPSS. Values were grouped by quartiles and analyzed with all years combined as well as by individual year. Purchased feed cost per cow per day averaged $3.16 ± $1.07 for 2009-2012. For 2009-2012 combined, milk yield and IOFC did not differ with purchased feed cost. Intermediate levels (quartiles 2 and 3) of forage cost per cow per day between $1.45 and $1.97 per cow per day resulted in the greatest average IOFC of $8.19 and the greatest average milk yield of 32.3kg. Total feed costs in the fourth quartile ($6.27 or more per cow per day) resulted in the highest IOFC. Thus, minimizing feed cost per cow per day did not maximize IOFC. In 2010, the IOFC was highest at $8.09 for dairies that fed one or more commodity by-product feeds. Due to tight profit margins and volatility in feed costs, many producers incorporate by-product feeds into their rations. This study used an electronic survey to gather information about feeding management and the use of by-product feeds in rations for Pennsylvania dairy farms in 2013. The survey was sent to 200 dairy farms via email, and 41 surveys were completed. The survey was first sent out in November 2013 and the last response was received in April 2014. All data were collected for the month of September 2013. Survey responses showed that most (97.6%) of the responding Pennsylvania (PA) dairy producers fed a total mixed ration (TMR). Over half (58.5%) of the producers fed a 60:40 forage to concentrate ratio for the ration. Distillers grains and brewer’s grains and yeasts were the most commonly used by-product feeds. Producers analyzed dry matter weekly or biweekly (60.9 %) or when switching feeds (34.1 %). Most TMR and forage nutrient testing was done when switching feeds, except for by-product commodity feeds, which most producers never nutrient tested. Most dairy producers used PC Dart as a management tool. Dairy producers continuously seek ways to improve their farm, and many choose to form a dairy advisory team (DAT) to improve management. The objectives were: (1) to compare key measures before and after the team in order to determine if the use of a DAT was effective and (2) to compare a group of 24 herds with a DAT to Pennsylvania (PA) averages for key measures. Teams were formed between May 2008 through January 2013. The range for herd size was 32-608 with a standard deviation of ± 13.96 cows. Herd size, milk yield, somatic cell score (SCS), peak milk yield, age at first calving (AFC), days in milk (DIM), pregnancy rate and cull and mortality rates were key measures analyzed. The changes in key measures, after using DAT for at least one year, were analyzed using a general liner model and contrasts. After DAT use for one year, herds had significantly (P<0.05) higher percent of herd with SCS 1-3 of 76.92 vs. 73.79 and higher peak milk in the third plus lactation with 45.60 vs. 43.30 kg. After DAT use for more than one year, these herds had significantly (P<0.05) higher milk yields of 33.56 vs. 31.13 kg. The DAT also had a lower (P<0.05) AFC of 24.45 vs. 25.50 months and higher percent of herd with SCS 1-3 of 79.33 vs. 73.79 % after the team was in place for longer than a year. Herds using a DAT for more than one year had lower days in milk (DIM) of 173 vs. 187 and higher peak milk in the third plus lactation of 47.4 vs. 43.3 kg. The DAT herds’ January Dairy Herd Improvement Association (DHIA) test data were compared to Dairy Metric’s PA average for January 2014 using a one-sample t-test. Farms with a DAT had significantly (P<0.05) higher milk yield of 33.9 vs. 31.9kg and peak milk yield for lactation 1 with 36.1 vs. 33.9kg . Herds with DAT had significantly (P<0.001) lower AFC of 24.4 vs. 25.6 months and higher percentage of herd with SCS 1-3 79.85 vs. 73.4%. In summary, the management of a dairy farm is complex business. Profit margins, feeding management and continuously making improvements on the farm are all part of dairy farm management. Results of these studies indicated that intermediate levels of forage cost and higher levels of total feed cost per cow per day resulted in both higher milk yield and higher IOFC. Dairy producers were successful at feed management, but increasing the amount of nutrient testing on by-product feeds and use of dairy data analysis tools may increase their success. These studies also showed that the use of DAT led to greater milk yield, lower AFC and better SCS. Herds with DAT had higher milk yield, lower AFC and better SCS compared to PA averages. Use of a DAT was beneficial to dairy farms. Many management practices exist that can be applied to dairy farms to increase both production and profitability.