DairyNZ Supplement Research

The economics of using supplements on dairy farms. The cost effectiveness of dairy supplements and what tools you can use to do the figures to work out costs versus returns.

The rule of thumb, that it is worth adding supplements to dairy farming systems, provided the supplement can be sourced for a maximum of 5% of payout, is remarkably robust. This assumes best practice feeding systems and management.

Sharemilkers need to be careful that they really are making a profit from feeding supplement, because they usually shoulder all the cost of feeding it out.

In an ideal world, farmers would switch from high input to low input systems, and back again, depending on supplement prices relative to payout. However, infrastructure costs and stranded capital effects mean this tends not to happen to the extent that it should. For this reason a decision to go to a high input system must be considered fully as it is hard to reverse. Farmers should, therefore, favour supplementation systems that require the least amount of capital to implement.

It is possible that there are exceptions to the 5% rule: for example when feeding very hungry cows or when using supplements to lift cow condition score over the winter from say 3.5 to 4.5.

Two case study farms were tested with and without supplements over a range of supplement prices and payouts. The farms were modelled using Farmax Dairy, a computer simulation model that allows the user to set up a virtual dairy farm. Once the base farm model is set up and is correctly forecasting actual milk production, changes can be made to the model to predict what would happen if these changes were made on the real farm. This is called scenario testing.

In this project, we investigated the effects of farming with and without supplements at a range of prices and payout levels. Some account for the cost of feeding out supplement and utilization rates was included although the capital costs associated with high input systems were not included.

There are exceptions to the 5% rule; for example, when feeding very hungry cows (i.e. residuals less than 1,400 kg DM) or when using supplements to lift cow condition score (CS) over the winter from say 3.5 to 4.5. Research indicates that:

1. An extra CS as above is worth an extra 15 kg MS/cow with additional benefits due to improved subsequent mating performance. At a $6 payout, these benefits would be worth $120 over about a 12 month period.

2. It costs 150 to 200 kg DM (say 180) to lift cow CS from 3.5 to 4.5.

At a supplementary feed price of 35c/kg DM, the above 180 kg DM costs $63, thereby providing a 190% return on your money. In fact the breakeven price is about 55 c/kg DM which is considerably greater than 5% of payout. This applies to the current upper North Island drought situation.

Similarly, offering supplements to cows grazing to residuals less than 1400 kg DM/ha will result in profitable responses to supplements (assuming similar low wastage of feed) up to 6% of payout.