forage &economic considerations for pasture-based dairies dr. curt lacy, extension...

FORAGE &ECONOMIC CONSIDERATIONS FOR PASTURE-BASED DAIRIESDr. Curt Lacy, Extension Economist-Livestock

University of Georgia

Rye

Ryegr

ass

Rye+Rye

gras

s

Whe

at+ry

egra

ss

Oat+ry

egra

ss

Rye+ar

rowle

af

Ryegr

ass+

arro

wle

af

Ryegr

ass+

arro

wle

af+cr

imso

n

Rye+ry

egra

ss+ar

rowle

af+cr

imso

n $-

$100.00

$200.00

Broadcast Conventional Drill No-till drill

Estimated cost of various forage systems ($/acre), Georgia 2010

Something else to worry about Southeast Climate Consortium indicates

strengthening La Nina pattern. Much of Southeastern US in the

beginning of a drought. Expected to continue till at least next

spring or summer. Major hope is active hurricane season for

late season moisture for fall forages.

Something else to worry about

Forages and Hay Summary

Slightly higher winter pasture costs.

Larger hay stocks headed into fall.

Expectations are for drier and warmer fall and winter.

Should have enough hay supplies to get us through the year.

Prices will be higher but should not get out of hand.

Economics of Pasture Supplementation

Economics of Pasture Supplementation

Despite claims, can’t graze year-round even in the Southeastern US; 9-10 months more realistic.

Regardless of your production system, still get paid for pounds of milk. Trick is producing lbs. at lowest cost per cwt.

Production Cost vs. Value of Production

Economics of supplementation depends on three things: Response of cows to supplementation

(function of forage quality and quantity). Cost of supplementation. Price of milk.

Most pasture supplementation work done for cool-season grasses.

Very little on warm-season grasses perhaps one of largest research needs.

Pasture Supplementation on Winter Annuals

Bernard and Carlisle, 1999. Professional Animal Scientist. Volume 15, pages 164-168.

Two-year trial conducted in West Tennessee. Dairy cows grazed on Marshall Ryegrass and

Crimson Clover. Four levels of grain supplementation based on

milk production 0 1:7 1:5 1:3

)Lbs.Grain x (0.001- Grain) of Lbs. x 1.60 ( 44.98 YieldMilk 3

Economic Considerations

MVP = Marginal Value of the Product (the value of the extra production) Price of the product Input-Output response

MFC = Marginal Factor Cost (the cost of the additional input) Price of the input Level of the input

Keep adding the input until just before the additional cost exceed the additional value

MVP=MFC

In other words

Milk Response to Grain Supplementation

0 2 4 6 8

10

12

14

16

18

20

22

2430.000

35.000

40.000

45.000

50.000

55.000

60.000

65.000

70.000

75.000

Pounds of Milk Produced at Various Levels of Grain Supplementation

Milk Prod...

Lb

s.

of

Milk

Lbs. of grain supplementation

)Lbs.Grain x (0.001- Grain) of Lbs. x 1.60 ( 44.98 YieldMilk 3

Milk Response to Grain Supplementation

1 3 5 7 9

11

13

15

17

19

21

23

25

-0.500

0.000

0.500

1.000

1.500

2.000

Pounds of Additional Milk Produced at Various Levels of Grain Supplementation

Additional Production (Marginal Physical ...

Lb

s.

of

Ad

dit

ion

al M

ilk

Lbs. of grain supplementation

)Lbs.Grain x (0.001- Grain) of Lbs. x 1.60 ( 44.98 YieldMilk 3

As we were saying,

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

$(0.20)

$(0.10)

$-

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

Profit Maximizing Levels of Corn Supplementation on Cool Season Annuals at Various Milk and Corn Prices

$12 milk$16 milk$20/ milk$24 milk$30 milk

$/lbs.

of

gra

in o

r m

ilk

Pounds of grain

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

$(0.14)

$(0.09)

$(0.04)

$0.01

$0.06

$0.11

$0.16

Profit Maximizing Levels of Corn Supplementation on Cool Season Annuals at Various Milk and Corn Prices

$12 milk$16 milk$20/ milk$24 milk$30 milk

$/lbs.

of

gra

in o

r m

ilk

Pounds of grain

$3.50 corn

At $3.50 corn can feed from 17.5 to 20.5 lbs. of grain depending on milk price

)Lbs.Grain x (0.001- Grain) of Lbs. x 1.60 ( 44.98 YieldMilk 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

$(0.14)

$(0.09)

$(0.04)

$0.01

$0.06

$0.11

$0.16

Profit Maximizing Levels of Corn Supplementation on Cool Season Annuals at Various Milk and Corn Prices

$12 milk$16 milk$20/ milk$24 milk$30 milk

$/lbs.

of

gra

in o

r m

ilk

Pounds of grain

$6.15 corn

At $6.15 optimal grain feeding de-clines to 13.75 to 19.0 lbs. of grain depending on milk price

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

$(0.14)

$(0.09)

$(0.04)

$0.01

$0.06

$0.11

$0.16

Profit Maximizing Levels of Corn Supplementation on Cool Season Annuals at Various Milk and Corn Prices

$12 milk$16 milk$20/ milk$24 milk$30 milk

$/lbs.

of

gra

in o

r m

ilk

Pounds of grain

$8.00 Corn

At $8.00 optimal grain supplemental declines to 8.50 to 17.50 lbs. of grain depending on milk prices

So what?

Milk Price ($/CWT.)

Corn Price ($/bushel)

$3.50 $6.15 $8.00

$12 17.75 13.50 8.50

$16 19.00 16.00 13.00

$20 19.50 17.00 15.25

$24 19.00 17.00 15.25

$30 20.50 18.75 17.50

Caveats/Key assumptions

Your grass (quantity and quality) is similar to that in this study.

Does this input-output relationship hold up for you?

Assumes grain and milk prices are always KNOWN.

Can you tune your feeding system this fine?

Major Implications

Economics of pasture supplementation depend on forage quality, quantity, input-output response, price of milk and price of the supplement.

It appear that even at $12 milk some level of supplementation is economical.

At lower feed costs differences in optimal amount are small ranging from 17.75 lbs. of grain to 20.50 depending on the price of milk.

At higher feed costs the differences in optimal amounts increase with a range of 8.50 to 17.50 depending on the price of milk.

Questions? Recently purchased grazing dairy in Florida, Uruguay. Spring 2010