Feed inventory essential to producers facing record feed prices

Milk producers will be challenged to produce enough high quality forage and concentrate feeds for dairy cows this year due to drought. Dairy farmers should inventory feeds, develop feed procurement and cow culling strategies to offset these conditions.

The preliminary 2012 July milk-feed ratio was announced by U.S. Department of Agriculture at 1.29, down from 1.38 for June. If that preliminary number is accurate, it will be the lowest ratio on record. Some will challenge the validity of the milk-feed ratio, but it still serves as a good indicator of rising traditional feed costs as compared to milk price. Drought across many locations in the country has led to escalated prices for corn, soybeans and alfalfa forage.

Dairy farmers, who are fortunate enough to have received rainfall adequate to harvest forages and grains to feed their herds, should be in an excellent position to sell milk profitably. However, those short of feed will find its cost exorbitant. Farmers will be required to decide between selling cows or purchasing feed. Farmers will utilize alternative feed sources in the process of saving money, but alternative/by-product feeds increase in value as traditional feed prices rise.

Dairy producers should start calculating daily feed needs and total requirements along with current feed inventories to determine which feed items and when they will run short. The feed inventories will likely include corn silage still standing in the field. Producers needing to procure feeds should develop purchasing strategies that may include forward contracting and utilizing future price protection against rising feed costs.

Farmers short on feed inventory should consider culling into the herd, rather than buying feed. Every individual operation will need to evaluate their situation regarding cash flow and long term profitability. Market-ready cow prices are still respectable for good to excellent condition cows. Cow market prices are expected to decrease into the fall as culling will likely be higher with the feed shortage.

With expected high feed prices and uncertain milk value, dairy farmers should use animal feed requirements and feed inventories to calculate total feed needs. In doing so, milk producers can develop a plan to ensure adequate feed supply and increasing likelihood of profitability. For more information regarding feed inventories and procurement, contact Frank Wardynski, Ruminant Educator with Michigan State University Extension at wardynsk@anr.msu.edu.

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