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How to cope with rising feed prices

Good management has often been called “doing the usual things unusually well.” So, consider these five common-sense approaches as you deal with the coming “sticker shock” in feed prices.

How to cope with rising feed prices

Good management has often been called “doing the usual things unusually well.” So, consider these five common-sense approaches as you deal with the coming “sticker shock” in feed prices:

Key Points

Feed prices are likely to skyrocket going into 2011.

The No.1 tip of the five given here is to unload your freeloaders.

Alternative feeds, such as distillers grains, are cost-cutters.

No freeloaders on the payroll. Putting inexpensive feed into an unproductive or inefficient animal is one thing. Doing it when feed costs are out of sight is something else again.

Make sure open cows are identified and culled. Cattle with recurring health problems should sent on their way. Keep only those replacements you really need, and make sure they meet your quality standards.

Maximize feed utilization and minimize processing costs; grain processing (grinding, cracking, rolling, etc.) is a must for barley, sorghum, and wheat regardless of the situation. It may be optional for corn and oats.

As the grain level in your total ration increases, the need for a larger particle size increases. So, the rule of thumb is to process shelled corn if it makes up less than 50% of total ration.

Makeup of the total ration is also important. Whole dry corn could be the best alternative to feed with finely ground ingredients like bakery byproduct. Processing could reduce sorting of feed in the bunk, however.

Minimize feed waste. Do all that you can to minimize storage and feeding losses. Round-bale hay stored on the ground can easily lose 25% of its feeding value.

Grain bunks and hay feeders that minimize trampling losses, wind losses, and rain losses will pay big dividends. Avoid overfeeding, which encourages feed rejection and spoilage.

Investigate all feed alternatives: Admittedly, feed bargains tend to be few and far between as corn prices rise. But you can find them if you look.

Even coproducts derived directly from corn tend to be priced lower than corn when their true feed value is considered.

If you live within 100 miles of an ethanol or wet-corn milling plant, the wet form of the byproduct can be especially economical.

For brood cows, a rough energy replacement rate would be 3 pounds of wet distillers grains plus 2 pounds of wet corn gluten feed for every 1 pound of shelled corn.

Based on Iowa State University research, average-fleshed cows in the last third of gestation that were fed cornstalks for roughage, required 3 to 5 pounds of dried distillers grains, or 8 to 15 pounds of wet grains.

In early lactation after calving, those values rise to 6 to 8 pounds dry, or 20 to 23 pounds wet distillers grains.

Those feeding hogs and poultry are largely locked into corn and soy regardless of the price. Ruminants have the advantage of being successful with a tremendous variety of feeds!

Minimize environmental stress. Feed can substitute for shelter, and shelter can substitute for feed when it comes to cattle energy needs.

Wind chill is especially costly in cattle. For example, at 0 degrees F with a 20 mph wind, the wind chill is -20 degrees F.

To maintain body condition, this increases a 1,100-pound beef cow’s energy requirements almost 65%, over her needs at 30 degrees F.

That extra required energy may be cheap when corn is $3, but a whole different issue when it’s $6.

If buildings aren’t possible, anything that breaks the wind can be a huge feed-saver. Woodlots, fencerows or natural canyons can be effective means of keeping condition on cows in wintertime.

Harpster is a Penn State animal scientist and a beef cow-calf producer.

Back to the ‘high feed-cost’ future?

Will it be “déjà vu all over again”? For livestock producers, a return to the market conditions of the summer of 2008 would be no joke!

This fall, the corn markets went berserk! Corn futures shot up faster than you could say “What happened?”

The November election distracted Congress from renewing alternative fuel tax incentives. But there’s little chance that government-mandated and -subsidized ethanol production from corn will end any time soon.

That use “eats” roughly a third of the nation’s corn crop. And, our weakening U.S. dollar is makes our corn attractive on the export market. The net result is that in the coming year, we have the lowest domestic corn supplies seen since the mid-1990s.

With very tight cattle supplies, the beef business has been contemplating good profitability even though the slow economy has kept demand in check. Most forecasters expect record high cattle prices this year and next.

But sale price is only half the story. Cost of production is the other half.

That sudden corn-price rise just as suddenly spiked the average feedlot cost of gain from $75 per cwt. to $85. If $6-plus corn materializes for any length of time, costs of gain could jump to more than $90, and some aggressive forecasters are pegging corn at up to $7.50 in the near future!

This would cause yet another delay in expansion of the nation’s cow herd. Given the current unfolding scenario, it’s highly unlikely the cow herd will grow before 2012. That means beef supplies won’t grow meaningfully until 2014.

With beef exports steadily rising and imports declining, 2011 cattle prices may put feeders in the $115 to $125 per cwt. range, and feds hovering around the $100 mark.

That’s based on an expected corn price jump of 20% to 25% above last year. Remember, that’s just a prediction — not a sure thing at this point.

— Harold Harpster

This article published in the December, 2010 edition of AMERICAN AGRICULTURIST.

All rights reserved. Copyright Farm Progress Cos. 2010.

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