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Making a profit with low prices

Dan Undersander for Progressive Forage Published on 27 February 2019
Bales of hay

On the surface, agricultural profitability looks dismal for 2019 – corn and especially soybean prices are down; milk price is low; and while beef prices look steady from 2018, supply is high.

Additionally, a weak El Niño event is expected for 2019, which will raise temperatures over most of the central U.S.

However, there are opportunities for forage. Hay prices have remained around or above $200 per ton for Premium quality hay. It is important to remember, whether feeding your own animals or selling hay, animals respond to the quality of the feed. Animals eating forage with higher digestible fiber will have higher forage dry matter intake and be consuming forage with higher energy content.

The combination of intake and quality will result in higher total energy intake to produce either greater milk or average daily gain (ADG) and body condition score.

I believe the following can provide opportunities for greater profitability in 2019:

1. Increased animal performance

Feeding a good supply of high-quality forage will increase average daily gain or milk production. When grazing, do you keep at least 1 ton per acre of dry matter in front of cattle? This will allow the animal to take bigger bites and consume more forage, resulting in more milk or meat. I have seen cattle gain as much as 4 pounds per day on pasture. Higher average daily gain means the animal is ready for market earlier, possibly for higher prices but also with less daily maintenance cost.

Similarly, a higher-producing milking dairy cow has similar maintenance requirements to a lower-producing dairy cow but will be more profitable due to greater marketable product.

The same is true for animals being fed stored feed where there is an expected gain of 0.4 and 0.6 pound of 4 percent fat-corrected milk production for each percentage unit increase in fiber digestibility.

Note as well that mother cows fed to maintain body scores of 4 to 5 tend to have larger, healthier calves that gain weight faster.

2. Lower production costs

When sale prices are low, cutting production costs can increase profitability. There are several opportunities with forage. One is to focus on high production from less land; without considering land charges, the cost of harvesting varies little with yield (i.e., mowing a 1-ton-per-acre yield costs the same as mowing a 2-ton-per-acre yield). Thus, concentrating on fertilization and management of lesser acreage can reduce the cost per ton of forage produced.

Additionally, determine how much forage is needed, and only produce what you will feed or can sell. I had one farmer call last year in August and ask what would happen if he simply didn’t harvest the alfalfa again that year. He said he had all the forage he needed and the contract harvester would charge $10,000 for harvesting. Obviously, the answer was not to harvest. The same applies if harvesting for yourself – you will have the fuel, labor and other harvesting costs whether or not you need the forage.

3. Focus on quality forage

As noted, animals need energy and protein, not tonnage of forage. Therefore, you can harvest higher- quality forage and haul more milk or meat away, or with lower forage quality, you will haul more manure away with less milk or meat. Focusing on quality also means cost per unit of energy or protein is reduced since less labor, fuel, twine or plastic, etc. are needed per Kcal of energy or pound of protein.

4. Minimize storage and feeding losses

After forage is made, appropriate storage will minimize the loss of forage. Hay bales should be stored off the ground (and covered); baleage must be wrapped with six to eight layers of plastic and monitored for tears, which need to be repaired immediately. Silage must be packed well and covered. In all cases, storage losses can range from a low of 5 percent to a high of 30 percent or more.

Additionally, consider factors that reduce feeding loss. Are bales fed in a cradle feeder (5 to 10 percent loss) or just placed on the ground (40 percent loss)? If feeding baleage, is the bale consumed in one day? If longer, the bale should be fermented (harvested above 50 percent moisture) and treated with hay preservative to prevent heating losses. Is 1 foot of haylage fed from the face of the bunker or tube each day? If not, mold growth and heating will occur. Heating is a loss of energy that could be fed to animals.

While some farmers can utilize forage with as little as 25 percent dry matter loss, some are losing 75 percent of harvested forage between harvest and feeding. It is hard to imagine how a farmer could lose 3 of every 4 pounds of forage harvested and remain profitable.

5. Increase feeding efficiency

The way we feed forage can affect intake and animal production. With hay bales, are they fed in a manger with sufficient space per animal (1.4 to 1.6 feet per animal)? Too little feeding space at certain ages may result in high sickness and treatment rates, slow growth rates or excessive variation in size among heifers of the same age. Boss animals tend to push smaller animals away from feeders, restricting their feed intake and growth. Round feeders reduce this problem compared to linear bunks or feeders.

Consider that bales made with a baler that has a precutter to reduce forage length will tend to increase feed intake and animal gain. Additionally, precut forage will mix easier in TMR mixers and have less separation when feeding.

Pushing up feed regularly to encourage animals to consume silage and reduce exposure to oxygen will reduce dry matter loss and refusal. If forage is left in mangers by milk cows, these forages can be fed to heifers or dry cows.

6. Marketing versus selling

Consider marketing your product rather than just selling it. Marketing means to plan ahead for the sale rather than just looking for a buyer when you want to sell. This means to be prepared to sell when prices tend to be higher, to package in a form desired by the buyer (e.g., square versus round bales), to look for markets that value quality and to look for value-added possibilities.

This year will be difficult for producers due to low sale prices of agricultural commodities, but good management can reduce production costs and increase sale value.  end mark

PHOTO: As noted, animals need energy and protein, not tonnage of forage. Therefore, you can harvest higher-quality forage and haul more milk or meat away, or with lower forage quality, you will haul more manure away with less milk or meat. Staff photo.

Dan Undersander
  • Dan Undersander

  • Forage Professor Emeritus
  • University of Wisconsin