Forage and Economic Considera0ons for Pasture-­‐based Dairies 10/1/10 Estimated cost of various forage
systems ($/acre), Georgia 2010
Something else to worry about
$250.00
$150.00
$100.00
$50.00
Broadcast
Conventional Drill
Rye+ryegrass
+arrowleaf+crimson
Ryegrass+arrowleaf
+crimson
Ryegrass+arrowleaf
Rye+arrowleaf
Oat+ryegrass
Wheat+ryegrass
Rye+Ryegrass
Ryegrass
Rye
$-
FORAGE &ECONOMIC
CONSIDERATIONS FOR
PASTURE-BASED DAIRIES
Southeast Climate Consortium indicates
strengthening La Nina pattern.
  Much of Southeastern US in the beginning of a
drought.
  Expected to continue till at least next spring or
summer.
  Major hope is active hurricane season for late
season moisture for fall forages.

$200.00
No-till drill
Dr. Curt Lacy, Extension Economist-Livestock
University of Georgia
Something else to worry about
Forages and Hay Summary





Dr. Curt Lacy, Extension Economist-­‐Livestock www.secaCleadvisor.com Slightly higher winter
pasture costs.
Larger hay stocks headed
into fall.
Expectations are for drier
and warmer fall and
winter.
Should have enough hay
supplies to get us through
the year.
Prices will be higher but
should not get out of hand.
Economics of Pasture
Supplementation
Forage and Economic Considera0ons for Pasture-­‐based Dairies Economics of Pasture Supplementation
Despite claims, can’t
graze year-round even
in the Southeastern US;
9-10 months more
realistic.
  Regardless of your
production system, still
get paid for pounds of
milk. Trick is producing
lbs. at lowest cost per
cwt.

Economic Considerations

Economics of supplementation depends on three
things:

  Response

of cows to supplementation (function of
forage quality and quantity).
  Cost of supplementation.
  Price of milk.


Most pasture supplementation work done for coolseason grasses.
  Very little on warm-season grasses  perhaps one
of largest research needs.
In other words
  1:7
  1:5
  1:3
Profit Maximizing Level


MFC = Marginal Factor Cost (the cost of the additional
input)
  Level
of the input
of the input
Keep adding the input until just before the additional
cost exceed the additional value
MVP=MFC
Dr. Curt Lacy, Extension Economist-­‐Livestock www.secaCleadvisor.com Bernard and Carlisle, 1999. Professional Animal
Scientist. Volume 15, pages 164-168.
Two-year trial conducted in West Tennessee.
Dairy cows grazed on Marshall Ryegrass and Crimson
Clover.
Four levels of grain supplementation based on milk
production
  0

  Price
  Price


Pasture Supplementation on Winter
Annuals
MVP = Marginal Value of the Product (the value of the
extra production)
of the product
  Input-Output response

Production Cost vs. Value of Production
10/1/10 Profits are maximized where MVP = MFC
In other words keep adding the input until JUST
BEFORE the additional cost exceeds the additional
value.
Forage and Economic Considera0ons for Pasture-­‐based Dairies Milk Response to Grain
Supplementation
10/1/10 Milk Response to Grain
Supplementation
Pounds of Milk Produced at Various Levels of Grain
Supplementation
Pounds of Additional Milk Produced at Various Levels of
Grain Supplementation
75.000
2.000
Additional Production (Marginal Physical Production)
70.000
Lbs. of Additional Milk
65.000
Lbs. of Milk
As we were saying,
60.000
55.000
Milk Production
50.000
45.000
40.000
1.000
0.500
0.000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
35.000
1.500
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30.000
Lbs. of grain supplementation
-0.500
Lbs. of grain supplementation
Profit Maximizing Levels of Corn Supplementation on Cool Season
Annuals at Various Milk and Corn Prices
Profit Maximizing Levels of Corn Supplementation on Cool Season
Annuals at Various Milk and Corn Prices
$0.60
Profit Maximizing Levels of Corn Supplementation on Cool Season
Annuals at Various Milk and Corn Prices
$0.16
$0.16
$0.11
$0.11
$6.15 corn
$0.50
$0.40
$3.50 corn
$0.06
$0.06
$16 milk
$0.20
$20/ milk
$24 milk
$30 milk
$12 milk
$16 milk
$0.01
$20/ milk
$24 milk
1
$0.10
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
$30 milk
$/lbs. of grain or milk
$12 milk
$/lbs. of grain or milk
$/lbs. of grain or milk
$0.30
$12 milk
$16 milk
$0.01
$24 milk
Pounds of grain
$(0.04)
$1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Pounds of grain
16
17
18
19
20
21
22
23
24
$(0.09)
Dr. Curt Lacy, Extension Economist-­‐Livestock www.secaCleadvisor.com $(0.14)
2
3
4
5
6
7
8
9
10
11
12
13
14
Pounds of grain
$(0.04)
At $3.50 corn can feed from 17.5 to
20.5 lbs. of grain depending on milk
price
$(0.09)
$(0.10)
$(0.20)
$20/ milk
1
$(0.14)
At $6.15 optimal grain feeding
declines to 13.75 to 19.0 lbs. of grain
depending on milk price
15
16
17
18
19
20
21
22
23
24
$30 milk
Forage and Economic Considera0ons for Pasture-­‐based Dairies Profit Maximizing Levels of Corn Supplementation on Cool Season
Annuals at Various Milk and Corn Prices
$0.16
So what?
Caveats/Key assumptions
$8.00 Corn
Milk Price ($/CWT.)
$0.11
Corn Price ($/bushel)
$3.50
$0.06
$/lbs. of grain or milk
10/1/10 $12 milk
$16 milk
$0.01
$20/ milk
$24 milk
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
$30 milk
$6.15

$8.00
$12
17.75
13.50
8.50
$16
19.00
16.00
13.00
$20
19.50
17.00
15.25
$24
19.00
17.00
15.25
$30
20.50
18.75
17.50


Pounds of grain
$(0.04)
At $8.00 optimal grain supplemental declines to 8.50 to 17.50
lbs. of grain depending on milk prices

$(0.09)
$(0.14)
Major Implications




Economics of pasture supplementation depend on
forage quality, quantity, input-output response, price of
milk and price of the supplement.
It appear that even at $12 milk some level of
supplementation is economical.
At lower feed costs differences in optimal amount are
small ranging from 17.75 lbs. of grain to 20.50
depending on the price of milk.
At higher feed costs the differences in optimal amounts
increase with a range of 8.50 to 17.50 depending on
the price of milk.
Dr. Curt Lacy, Extension Economist-­‐Livestock www.secaCleadvisor.com Recently purchased grazing dairy
in Florida, Uruguay. Spring 2010
Your grass (quantity and
quality) is similar to that
in this study.
Does this input-output
relationship hold up for
you?
Assumes grain and milk
prices are always
KNOWN.
Can you tune your
feeding system this fine?