A Short Crop and Unexpected Feed Expenses

Posted on August 15, 2012. Filed under: David Kappelman |

Sometimes…despite all of your pre-season planning, proper tillage, precise planting, optimum fertility levels, weed control and pest management…your efforts to produce an adequate feed inventory for your livestock will fall short if you do not receive at least a minimum amount of moisture. The drought of 2012 may have left you short of forages and/or grain. Factor in the significant price increase in all of the grain markets, soybean meal, and other by-product feedstuffs, and  it is likely you will see your purchased feed costs reach a new level  that you have never experienced …and may not be ready for. Here are a few tips for dealing with a short crop and high feed expenses. 

  • Take an accurate inventory of your feed supply. Charts and tables are available on UWEX websites to calculate tons of haylage and corn silage in silos, silo bags, or bunkers. Add to your inventory a realistic estimate of what is growing out in the field. Make a worst case estimate as to your final inventory after the fall harvest.
  • Calculate your feed usage. Look at your livestock inventory and calculate how much you are feeding per day if you make no changes. Now estimate your shortage of each feed ingredient  and estimate the cost of filling your feed needs  if you make no changes in your ration and purchase everything you are currently feeding at current market prices. 
  • If you have enough liquidity in your checking account and operating line of credit to fund the increased costs you can probably ride this out. Keep in mind that it could well  be the 2013 harvest season before feed costs drop significantly.
  • You may find that your increased feed costs will exceed the credit available on your line of credit. If so, you may need to request and increase in your line or take out an additional short term note to cover your feed needs until  your crop insurance proceeds arrive and/or  milk prices catch up with the higher cost of production.
  •  If it still does not look feasible, start looking at some alternatives to the  status quo
    • Work with your ration to shift your forage  mix to maximize what you have
    • Consider planting some late summer planted forage oats or other fall forage crop
    • Consider feeding alternative commodities and by product feeds
    • Heavier culling on the bottom end of the herd will reduce your feed needs  put some cash in your checkbook
    • Keep your lender informed of where you are with your feed situation and what your plans are. There may be some special drought induced lending programs coming through FSA and WHEDA to help farmers with extreme feed shortages.

If you are a dairyman at heart and you are in it for the long haul, keep your spirits up.  The silver lining in drought of 2012 is the strengthening  of the milk price well into 2013. The most challenging of times have always made us stronger managers and remind us of the importance of the tools we have to maximize profit like feed testing, milk testing, good record keeping, and  financial analysis. Your support team of ag professionals is ready and willing to provide input as you meet yet another challenge.


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