Dairy cows produce the most milk at the beginning of their lactation. Therefore, they are potentially the most profitable in the earlier portion of the lactation as well. Even though cows that produce a lot of milk also eat more, their diets, when formulated correctly, will be more than paid for by the increased milk revenue.
The chart illustrates a dairy herd with over 80 pounds of average daily milk production. Each of the data points represents a 30-day interval during a lactation. The top line shows the value of the milk produced, with the milk price set at $20 per hundredweight. The bottom line shows typical feed costs over the course of a lactation during the spring of 2014. The space in between the lines is the income over feed costs (IOFC).
It’s readily apparent that the largest IOFC occurs during the early portion of a lactation for a well-managed herd of cows. When diets are formulated properly, the cows will respond with higher milk peaks that will be sustained for many days. Even though there is a higher cost to feeding the early-lactation cow, the reward in increased revenue is worth the investment. As a milk cow proceeds through her lactation, she becomes less profitable, as is illustrated on the chart. The lines merge closer together, indicating that the IOFC is decreasing.
The milk production data for all dairy herds will show that milk production tends to flatten out after 300 days in milk. There is little to be gained by having cows milking well over a year before drying them off. This means that cows must become pregnant again at less than 100 days into the lactation. Reproduction programs on dairy farms that don’t get cows bred on time are losing many dollars in milk revenue over the productive life of a dairy cow.
There are many areas on your dairy farm where you can spend money with the goal of increasing profitability. Improving the milking parlor so you can milk more cows will be more profitable in the long run. Other options include building a new calf barn to reduce calf mortality so there will be more replacements to freshen, or purchasing a new and more efficient TMR mixer.
These improvements, and many others, require capital investment, with the hope that the farm will be more profitable at the end of every year. However, for many conventional dairy farms, long-term positive cash flow and profitability ultimately depend upon consistent and maximum milk production per cow. With feed being the single largest expense on a dairy farm, understanding the importance of the IOFC and maximizing it is critical to maintaining profitability.
In the area of dairy cow nutrition, we always need to look at alternatives in the feeding program that will make it more efficient and more profitable. With the milk price now at a record high, it’s definitely worth the effort to get your cows to make as much milk as possible. Formulating diets that will improve milk fat and milk protein will add even more value to the milk. Feed prices, while still quite high, allow for a respectable return on investment.
Dairy farmers should be focusing more on the revenue that each cow generates as opposed to solely the price of milk. While the price of feed per ton is important to keep track of, the more meaningful evaluator of whether feed costs are too high is the IOFC. Maximizing the IOFC in the early part of the lactation, when milk production is peaking, is where the real profit is for dairy operations.
Yes, I know that big Holstein cows that eat over 65 pounds of dry matter cost a lot of money to feed every day. To support 120 pounds or more of milk at the peak of lactation, a cow must consume over 30 pounds of grains and byproduct feeds, and that much again of high-quality forages (corn silage and hay crop) on a dry matter basis. Diets like this are currently costing between $11 and $12 per cow per day. (Forage values vary from farm to farm.) However, those cows are producing $24 or more worth of milk at peak, and even more if milk components are higher. Remember, you really get paid for pounds of milk fat and pounds of milk protein.
Even though feed prices continue to keep the IOFC at bay for most dairy farmers, an IOFC of $12 per cow per day at peak is well worth the effort, in my opinion. Aggressive management of your herd for higher milk peaks and higher IOFC will make you more money in the long run.
The author is a dairy nutritional consultant and works for Central Connecticut Cooperative Farmers Association in Manchester, Connecticut.