What is interesting to see is that one dairy might have a lower feed cost than another, but on a cwt. of milk basis have a higher cost. This is due to milk production and the factors that affect feed conversion. As can be seen in Table 2, dairy H has a lower feed cost/cow/day by $0.13 compared to dairy R, but dairy R has a higher production per cow per day of 5 lbs. When we calculate the cost of feed per hundredweight of milk, we see that both are at $4.85. The difference in production however, allows farm R to have a better gross margin and their feed cost comprises only 40% of their milk revenue as opposed to the 45% of dairy H.
Last but not least, please note Figure 3, where we can see the inverse relationship of gross margin and the percentage of milk revenue that goes into feed cost. The higher the gross margin the dairies had, the lower their percentage of feed cost. In the same graph, we can also see the strong relationship between cow care/comfort score and gross margin. With very few exceptions, dairies with higher scores had higher gross margins. Since cost of feed per hundred weight of milk has to do with the cost of feed per ton as well as with factors that affect feed conversionthe pounds of milk produced from a given quantity of feedstuffs-- this suggests that cow comfort is one of those factors. The improved cow care probably helps to improve feed conversion and allows producers to get a better return on their feed dollars.
It is important to look beyond the cost of feed per unit of weight and focus on the return on your feed dollars. The dairy producer has to focus on feed conversion to increase milk production and improve gross margin. It is, of course, also important to be smart when purchasing feedstuffs as far as price, quality and utility is concerned. A cheaper feed program might not always be the most profitable. One must do some follow up to determine the results and take a look at the finance. On the other hand, there are dairies that have excellent cow comfort/cow care and have a high production of milk per cow, but the cost of their feeding program eats away too much of the revenue. In other cases, there are dairies that might have low feed cost, maybe even good rations but the cows are not in an environment conducive to good intakes and good feed conversion. The key is identifying the factors that drive profits and monitoring routinely.
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