Milk from forage and relationship with costs

Published 27 September 13

Milk from forage and its relationship with feed cost and total cost of production

We know from analysis of the Milkbench+ dataset (Figure 1) that average milk yield per cow is not a driver of profit. However, while milk from forage is an important driver of feed costs (figure 2), the benefits resulting from a higher use of forage can be eroded due to unnecessary expenses related to harvesting and feeding silage.

Figure 1  Net margin and milk yield in Milkbench+ 2012/13 dataset

graph 1 version2

 

Figure 2  Relationship between feed and forage variable cost and milk from forage in Milkbench+ 2012/13 dataset

Graph 2 v 2

 

If we look at an example, Farm A (see box 1), we can see that it increased milk from forage by 1620 litres per cow (20%) in a year. Farm A did this by increasing both the proportion of forage in diet – and improving its forage quality from 10.5 MJ ME/kg DM to 11.5 MJ ME/kg DM. The result of more forage in the diet was that feed costs fell by £156/cow thus saving £31,200 for the whole herd over the year.

Box 1

Farm   A

Year 1

Year 2

Herd size

200

200

Average yield

(litres per cow per year)

8500

8500

Non-forage feed

(kg DM per cow per year)

2940

2300

Forage (% MJ/kg DM)

(kg DM per cow per year)

3200 (10.5)

3600 (11.5)

Milk from forage (% of milk yield)

(litres   per cow per year)

900 (10)

2520 (30)

Feed and forage variable cost

(pounds per cow per year)

874

(concentrate   @ £270/t, forage @ £25/t)

718

(concentrate   @ £270/t, forage @ £27/t)

Feed and forage variable cost

(pence per litre)

10.3

8.4

Saving   in feed cost

(pounds per enterprise)

£31,200

 

Although milk from forage is a strong driver of feed cost, its relationship with total production cost and net margin is more complex. For the same level of physical performance as farm A in its second year, there are two distinct options relating to the production and feeding of forage. 

Under option 1, the farm runs a simple system with forage produced by a contractor, fed through a second-hand forage box with straights on top as needed, plus a cake top-up in the parlour. Under option 2, the farm has its own silaging kit and a new mixer wagon.

Box 2

Option   1

Machinery   and contract charges for forage making and feeding:

Contracting charge (forage)

17,000

Forage box (second hand)

5,000

Loader

18,000

Tractor (second hand)

10,000

Total

50,000

 

Box 2

Option   2

Machinery   for forage making and feeding:

Rake

4,000

Forager

16,000

2 trailers

12,000

2 tractors

70,000

Loader

35,000

Mixer wagon

12,000

Total

149,000

Box 3

Resulting   difference in Fixed cost between Option 1 and 2

 

Resulting difference in Fixed cost (£ per enterprise)

99,000

Additional depreciation (pence per litre)

1.36

Additional Power and machinery   variable cost (less lower contracting charge) (pence per litre)

1.10

Additional labour (pence per litre)

0.80

Total difference in Fixed cost  (pence   per litre)

3.26

Total difference in Fixed cost (£ per enterprise)

55,500

 

Under option 2, the farm has significantly higher machinery investment. It has increased both its depreciation and machinery running costs.  So, while the farm benefits from including more, good quality forage in their cows’ diets, under option 2 it has eroded this by high fixed costs leading to lower overall profitability.

 

Notes: For more information on how to improve forage quality and increase yields from forage see Feeding+ and Grass+.