Recently we have seen a rapid increase in the cost of supplementary feed. Supplementary feed is defined as any feed not grown on the farm. Given the high milk or schedule prices, many have assumed that it’s profitable to keep buying in feed – but supplementary feed prices have increased too, so how profitable is it?
The first thing to understand is the true cost of feed. Using PKE as an example there is a cost per tonne, plus a delivery cost, an allowance for dry matter (DM) conversion and then a wastage component. So, a $400 quote price actually incurs quite a few additional costs. For example:
PKE $400 + Freight $25 = $425 cost
- Converted to DM equivalent at 90% means that for $425 you get 900 kgDM
- Your stock will waste 10-15% (be honest with yourselves here)
So, the utilized PKE is 765 kgDM for $425 which is 55c per kgDM. There are hidden costs too – if it’s bulk PKE, there are costs involved with taking it to the paddock – both vehicle costs and the time involved.
Some focus on the net dollars leaving their bank account so don’t buy PKE at the particular price, but the focus should be on what you lose from not feeding. This is why it’s important to know the real cost of your real return.
In a dry period, if you established your cows were 6 kgDM short of feed to maintain your round length (or extend) and continue milking, you would need 6 kgDM bought in the carry on milking, assuming body condition was fine. The figure above of 55c per kgDM, multiplied by 6kg is $3.50. If you assume your cows were doing 1kgMS per day, at an $8.00 payout you have a margin. However, a dry cow still needs 10-12 kgDM to live. The calculation for buying the extra 6kgDM to milk is a simple exercise, even allowing for the running costs of the shed and other associated costs like feedout costs at 50c per solid. This means it is costing you $4.00 to get $8.00 back. The disclaimer in all of this is that cow condition cannot be compromised or you will feel the effect in the following season. You need to understand your herd’s condition and what feed you need to maintain that condition or what levers you need to pull.
It’s usually at the end of May that people find they are short of feed to get through the winter, usually as they’re busy chasing the last few kgs of milk. Calculating a monthly feed budget towards the end of each month will help you see where you’re at and a 3 monthly feed budget at the change of season will help you take advantage of cheaper feed prices. You could buy in silage in February instead of waiting until May, if your feed budget calculations in February indicate you’ll need to. This allows you to buy at a cheaper price as you’ll be buying before everyone else does.
The same process can be applied to drystock, - know your daily weight gains and the cost to make those gains and what you earn per kg of liveweight gained - know your numbers!