By Matt Stockton, UNL Farm and Ranch Management Economist and Roger Wilson, Farm Management Analyst with contributions from Kathleen Brooks, UNL Livestock Market Economist
Understanding both animal requirements for production and the economic value of nutrients in purchased or raised feed fundamentally improves ranching operations capacity to be economically profitable and use resources wisely. Knowing the economic value of nutrients is one method used to determine which feed/s delivers needed nutrients most efficiently. The article discusses the economic value of nutrients which in turn leads to better cost control and reduced production risk which in turn helps fortify profits or reduce losses.
The Feed Cost Cow-Q-Lator, found at http://www.agmanagerstools.com and developed by the University of Nebraska (Stockton and Wilson), is used to make a comparison of the costs of feeding a representative beef cow Crude Protein (CP), Total Digestible Nutrients (TDN) and Dry Matter (DM) including the costs and losses associated with purchasing, transporting, storing, and feeding two types of grass hay. The description of the hays characteristics used in the “Cow-Q-Lator” for this analysis are listed in Table 1 (http://go.unl.edu/ed3k). Hay 1 (H1) is representative of a good quality hay with a CP content of 16% and a TDN value of 0.69 and a DM content of 88%. (For consistency the nutrient values will always be stated on a dry matter basis unless otherwise noted.) The second hay, Hay 2 (H2), is of lesser quality with a CP of 8% and a TDN of 0.59 and a DM content of 89%. Hay types are packaged as large round bales of the same approximate size and weight with similar binding. These bales are to be transported 100 miles at a charge of $5.00/loaded mile for a 20 ton load. Each is expected to have an identical 1% hauling loss. Feeding costs are also the same at $5/ton, “as fed” basis, with percent waste differing by quality due to cow sorting, tromping or refusal. H1 is estimated to have a 10% feeding loss while H2 is set at more than double that amount, 22%. Both hays are expected to have a 2% loss due to storage (Rutz and Muck, 1994).
With the above information along with current expected hay prices entered into the Feed Cost Cow-Q-Lator, estimates for the cost per pound of the three nutrients CP, TDN and DM for four points between purchase and consumption can be made. These four points occur: 1) At the time of purchase, 2) At the time of delivery, 3) At the time of feeding, and 4) At the time of consumption. Table 2 (http://go.unl.edu/d9nc) is taken from the Feed Cost Cow-Q-Lator Per Pound tab at point 4, the time of consumption.
H1 and H2 are priced at $100/ton and $83.10/ton, respectively, making the cost of consumed DM $0.088 per lb for both types of hay (Table 7 http://go.unl.edu/scju). In this case, these purchase prices were chosen to balance consumed DM prices making them equivalent to illustrate the difference in value created by quality. This quality difference has two effects; the density of nutrients per unit measure and palatability. In this instance H1 is more palatable and nutrient dense then H2. The percentage of fed hay that is expected to be consumed by the cows is 90% “as fed” for H1 and 78% “as fed” for H2. Hay purchase price with consideration for transportation losses and costs, storage losses and feeding costs and losses each pound of CP consumed costs about $0.55/lb for H1. This compares to nearly a $1.10/lb of CP for H2 (Table 2). TDN, when valued in a like manner, costs about $0.13/lb for H1 and nearly $0.15/lb for H2, about a $0.02/lb difference (Table 2). This value difference for TDN seems almost insignificant until you consider the possible number of pounds consumed annually by a herd of cows as shown and discussed below.
To illustrate the impact nutrient value has on herd profitability, it is necessary to first identify cow nutrition requirements. The representative cows used in this example are assumed to be mature at least 60 months of age, weigh 1200 lbs, have a peak milk production of 30 lbs, and have a 6 month old calf at their side. The National Research Council (NRC) guidelines from 1996 indicates that such cows require about 16.56 lbs of TDN and 2.625 lbs of CP daily.
Multiplying the costs per pound for the nutrients CP and TDN, from Table 2, times the required daily nutrient needed for maintenance per animal times the number of animals in the herd results in a costs per day for a herd. Tables 3 (http://go.unl.edu/99xb) and 4 (http://go.unl.edu/vp7f) list herds ranging in size from 10 to 800 animals. These tables also show the costs of feeding the various sized herds over a 60 day period. From these two tables, it can be seen that feeding 200 cows with the stated requirements results in a $273.93 per day advantage for H1 versus H2 for supplying the daily recommended CP and a $64.25 per day advantage for the same feed when feeding for the TDN requirement. Extending the feeding period to 60 days increases cost savings to $16,435.60 for feeding CP and $3,854.74 for TDN. These values are not insignificant and indicate that applying knowledge about nutrition and knowing the nutrient value of a feed potentially pays large dividends.
An alternative use of the Feed Cost Cow-Q-Lator is to make value comparison among feeds. This is simply done by adjusting the purchase price of one of the feeds until the consumed values of the valued nutrient for the two feeds are equal. This requires one of the feeds to be the base, (have a fixed price). The base feed is generally the feed that is felt to reflect most accurately the current market conditions.
In this example H1 is used as the base feed against which adjustments are made in the purchase price of H2. Using a market price of $100/ton for H1 and retaining all of the previous assumptions and factors, H2 would be priced at $24.20/ton to be of comparable value, when CP is the valued nutrient (Table 5 http://go.unl.edu/0nzt). Note that while the CP value of H2 is half that of H1 it is consider to be less palatable, thus having more waste at feeding, making its value much lower than the expected half value of H1. This fact demonstrates the importance of making accurate estimates of nutritional content of available feeds. If a hay buyer were purchasing hay as a CP source, H1 hay would be the better buy unless H2 hay could be purchased for about $24 per ton. In the case where TDN becomes the valued nutrient, H2 would be priced at about $62/ton (Table 6 http://go.unl.edu/fc2t) to have equal costs.
This methodology can be easily adapted and used to value home produced hay given an established value of the market hay and nutrient qualities of both hays. The resulting value information may be useful as a bargaining point in purchasing or selling hay. In addition to this application the Per Pound tab can be used in like manner to value any number of alternative feed materials.
From this simple example come some very powerful points: Knowing cow nutrient requirements and the value of nutrients in the feedstuffs after it has been transported, stored and fed can have big impacts on a producer’s productivity and bottom line. What may seem like an insignificant amount of differences in hay quality may amount to sizable sums of money or changes in productivity when the total amount of feed fed over a period of time is considered. Those guessing at feed value and nutrition requirements will likely find it difficult to consistently control cost or meet production goals. The nutrient density and palatability of harvested forages and other feeds can quickly impact a feed’s economic value and productivity. Using accurate feed analysis and a tool such as the Feed Costs “Cow-Q-Lator” can assist producers in making wise feeding and feed purchasing choices.
The Feed Costs “Cow-Q –Lator” is a powerful tool, potentially saving individual producers thousands of dollars annually in feed costs and additionally providing information needed to properly develop a feed regime that fits a producer’s operation, budget and production goals.
Source: University of Nebraska