Evaluating the effect of ration composition on income over feed cost and milk yield

Feed is generally the greatest expense for milk production. 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 objective of this study was to evaluate the effects of ration cost and ingredient composition on IOFC and milk yield. The Pennsylvania State Extension Dairy Team IOFC tool (http://extension.psu.edu/animals/dairy/business-management/financial-tools/income-over-feed-cost/introduction-to-iofc) was used to collect data from 95 Pennsylvania lactating dairy cow herds from 2009 to 2012 and to determine the 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-farm cost. Actual costs were used for purchased feed for each ration. Mean lactating herd size was 170 ± 10.5 and daily milk yield per cow was 31.7 ± 0.19 kg. The mean IOFC was $7.71 ± $1.01 cost per cow, ranging from -$0.33 in March 2009 to $16.60 in September 2011. Data were analyzed using a one-way ANOVA in SPSS (IBM Corp., Armonk, NY). 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 to 2012. For 2009 to 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 32.3 kg. 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 1 or more commodity by-products. Results of the study 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. This suggests that optimal ration formulation rather than least cost strategies may be key to increasing milk yield and IOFC, and that profit margin may be affected more by quality of the feed rather than the cost.