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Cropping and Nutrition Strategies for Improved Milk Margins

Heather Weeks, Viriginia Ishler, Timothy Beck, and Robert Goodling

Summary

The volatility of milk and feed prices has left many producers unsure of how to manage these risks. Feed inventory and quality, cropping strategies, and different ration approaches to optimize home raised feeds can significantly improve milk margins. The Penn State Extension dairy team developed resources to assist producers in evaluating breakeven margins and the bottleneck for maintaining a cash surplus per cow annually.
Forty percent (n=184) of 2013 respondents implemented one or more management changes after creating a cash flow plan to help manage their business. Fifty-eight percent changed their cropping strategy and 23% of producers received lender approval for a loan. Forty-four farms in Pennsylvania were sampled twice between the fall of 2013 and the spring of 2014 for corn silage analyses, fecal starch and milk urea nitrogen. Using actual income and expense data, feed and crop costs ranged from an average of $10.04/cwt for farms with a breakeven milk price under $16.00/cwt to $11.44/cwt for farms averaging over $22.00/cwt breakeven milk price. Overall, farms with a lower breakeven milk price (=$16.00/cwt) averaged $4.46/cwt cash surplus over the higher breakeven farms (=$22.00/cwt). Farms that regularly monitor corn silage dry matters to drive ration formulation also saw benefits in higher test day milk production and lower breakeven milk price. The 29% of farms (n=38) that reported using batch weights and ration analysis to monitor dry matter intake (DMI) had a breakeven milk price of $19.87/cwt versus $21.25/cwt for the 18% that did not monitor DMI at all.

Details

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