Wednesday, 09 December 2015 10:57

Supplement break-even price drops

Written by  Pam Tipa
John Roche, DairyNZ. John Roche, DairyNZ.

The break-even cost of supplementary feed is 3.5% of the milk price, says DairyNZ principal scientist John Roche.

This is revised down from DairyNZ's previously proposed 5% rule because this overestimated the response from the feed, says Roche in his paper 'Resilient farming systems – surviving volatility'.

The paper was put together with Irish scientist Brendan Horan and released earlier this year. Roche presented key findings at a recent Northland Agricultural Research Farm field day.

Roche told Dairy News that the cost of supplementary feed has represented a major change in the cost of production over the last decade.

Analysis in UK, Ireland and New Zealand to determine associations between feeding and cost of production indicate that for every 1c spent on feed, operating expenses increase by 1.3 to 1.6c, the paper says.

"This means that 1kg of supplement must be purchased for considerably less than the value of the milk it produces," Roche and Horan say in the paper.

"Under ideal circumstances, supplementary feeds result in 7.5g MS/MJ ME consumed (ie 80g milksolids/kg DM for a 10.5-11 MJ feed).

However, recent farm systems analyses indicate that onfarm responses are only two-thirds of those achieved in research experiments (~55 g MS/kg DM)."

DairyNZ proposed a '5% rule' to help farmers decide about supplementary feeding: to be profitable, feeds needed to be bought for no more than 5% of the milk price.

"This rule accounts for the increase in non-feed costs, but assumes a response of 80g milksolids/kg DM, 50% greater than the estimated response on the average dairy farm."

If instead the average milksolids response achieved onfarm is used, then the breakeven cost of feed is actually 3.5% of milk price. This means:

at a $6 milk price, supplements must be bought for no more than 21c/kg DM,

at a $5 milk price, supplements must be bought for no more than 17.5 c/kg DM.

Roche says it is also important to consider the amount of supplement the farm system depends upon.

In analysing the requirement for supplement – the risk of exposure to economic forces external to the farmgate – they proposed to limit the use of supplements to no more than 500kg DM/cow.

More like this

Turning data into dollars

If growing more feed at home adds up to $428 profit per tonne of dry matter to your bottom line, wouldn’t it be good to have a ryegrass that gets you there quicker?

Featured

Carrfields invests in new Ashburton R&D hub

The Ashburton-based Carrfields Group continues to show commitment to future growth and in the agricultural sector with its latest investment, the recently acquired 'Spring Farm' adjacent to State Highway 1, Winslow, just south of Ashburton.

Elite sheep dogs to go head-to-head at Ashburton A&P Show

A major feature of the Ashburton A&P Show, to be held on October 31 and November 1, will be the annual trans-Tasman Sheep Dog Trial test match, with the best heading dogs from both sides of the Tasman going head-to-head in two teams of four.

National

Machinery & Products

New pick-up for Reiter R10 merger

Building on experience gained during 10 years of making mergers/ windrowers, Austrian company Reiter has announced the secondgeneration pick-up on…

Krone EasyCut B1250 fold

In 2024, German manufacturer Krone introduced the F400 Fold, a 4m wide disc front mower, featuring end modules that hinge…

» Latest Print Issues Online

Milking It

Microplastics problem

OPINION: Microplastics are turning up just about everywhere in the global food supply, including in fish, cups of tea, and…

Job cuts

OPINION: At a time when dairy prices are at record highs, no one was expecting the world's second largest dairy…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter