Comparing Costs of Individual Feeds - Agricultural Resources

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Sebastian County Agriculture
Agricultural Resources
Comparing Costs of Individual Feeds

The largest economic input in most livestock operations is the cost of feed. Consequently, rations must be formulated using the cheapest feed sources that will satisfy the needs of the animals. Frequently, however, the cheapest feeds are not the best to feed. The following procedure will allow you to determine which feeds are the cheapest. Your knowledge of nutrition, however, must be used to determine if the cheapest feed is also the best.

Feeds are priced in many different units. For example, grains are generally priced on a bushel basis, protein meals on a ton basis, premixes on a pound basis, etc. In addition, these prices are quoted on an as-is basis. As-is simply means that there is a portion of the weight of that feed that is water. Because the dry matter (DM) content of feeds varies tremendously, prices must be converted to a DM basis (after all, what we really want to purchase is dry matter, not water!). Nutritionists generally price feeds in dollars/ton on a DM basis.

Note: In order to make valid comparisons between feeds, the prices that you use must be the price of the feed delivered to your farm or ranch. Sometimes feeds can be cheap until you have to pay the freight charges to bring the feed to your place.

Step 1: Comparing Costs of Individual Feeds - As Is Basis

Feed	Price
Corn Prairie Hay Soybean Meal Corn Silage	$2.25 (Bushel) $60 (Ton) $180 (Ton) $25 (Ton)

To convert corn to price per ton:

$2.25 (bushel price of corn) ÷ 56 (56 lbs per bushel for corn) = $0.04 dollars per lb x 2000 (lbs per ton) = $80.40 per ton of corn (as is)

Now, the price of each of these feeds are expressed on the same basis: Dollars per Ton (as-is).

Step 2: Comparing Costs of Individual Feeds - Dry Matter Basis

From Step 1, It would appear that corn silage is the cheapest feed. Is it the best buy? The second consideration is the dry matter (DM) content of each feed. A ton of corn silage contains a lot of water compared to a ton of soybean meal. When you buy feed, do you want to buy water? NO, you want to buy nutrients such as protein of enegy that will be beneficial to your livestock. The next step is to convert these prices to a DM basis. For each feed, divide the as-is price by the %DM.

Example for Corn:

$80.40 / ton (as-is) ÷ 86% DM = $93.50 / ton (DM Basis)

This is the price of Corn/ton on a Dry Matter Basis (No Water).

Why divide? When you take out the water, you are paying the same money for less pounds of feed. Therefore the price per ton of DM must go up.

Feed	(As Is) Price / Ton		% DM		(DM Basis) Price Per Ton
Corn Prairie Hay Soybean Meal Corn Silage	$80.40 $60.00 $180.00 $25.00	÷ ÷ ÷ ÷	86% 90% 90% 35%	= = = =	$93.50 $66.66 $200.00 $71.45

Now you can compare the prices of these feeds directly because they are all on the same basis (dollars per ton on a dry matter basis).

Although corn silage appeared to be the cheapest feed on a $ per ton basis (as is) prairie hay is actually the cheapest feed, on a dry matter basis, followed by corn silage, corn grain and soybean meal.

Step 3: Comparing Costs of Individual Feeds - Nutrient Content Basis

Frequently, when we buy feeds, we must be concerned about the type of feed we are buying. For example, beef cows wintered on native range need protein supplementation. Consequently, we should try to buy the feed that is the cheapest source of protein. Considering the feeds in the previous example, which do you think is the cheapest source of protein? Prairie Hay? Are you sure?

To compare the cost of protein in various feeds, divide the cost ($ / ton) by the protein content (%) of that feed.

Example for Corn:

$93.50 $/ton (DM) ÷ 9.0% CP (DM) = $1038.89 per ton CP

This means that the price of Crude Protein (CP) on a ton basis is $1038.89.

(DM Basis)

Feed	(DM Basis) Price Per Ton	% CP	$ Per Ton of Crude Protein
Corn Prairie Hay Soybean Meal Corn Silage	$93.50 $66.66 $200.00 $71.45	9.0% 6.0% 47.0% 8.0%	(93.50 ÷ 9%) (66.66 ÷ 6%) (200 ÷ 47%) (71.45 ÷ 8%)	= = = =	$1038.89 $1111.00 $425.00 $893.13

Let me explain it this way.

±You would have to purchase 16.7 tons (33,400 lbs) of prairie hay for a total cost of $1111.00 to have 1 ton of protein. (16.7 tons x 6% protein = 1 ton of protein).

±In contrast, you would only have to purchase 2.13 tons (4255 lbs) of soybean meal for a total cost of $425.00 to have 1 ton of protein. (2.13 tons x 47% protein = 1 ton of protein)

In this situation, where you are interested in buying protein, the cheapest source of protein was soybean meal, not prairie hay. This is true even though the cheapest feed was prairie hay.

You can use this procedure to compare the cost of any nutrient for any feed. It will work for protein, energy (TDN), calcium, phosphorous, vitamin A, etc.

Okay, I’ll prove it. I will show you that soybean meal is the cheapest source of protein. Let’s suppose you needed to provide 1 pound of protein to those cows grazing that native grass in the winter. Lets look at how much it would cost to meet the protein needs for 50 cows (50 pounds of protein).

First, we need to determine how many pounds of each of these feeds it would take to supply this herd of cows 50# of protein per day. We determine this by doing the following:

Needed nutrients (lbs) ÷ Percent nutrients in the feed

This tells us how much of a particular feed will be needed to meet those nutrient needs.

Example for Corn:50# (Cow Requirements for CP) ÷ 9% Protein = 555.55# of Corn

It would take 556 pounds of corn daily to provide 50 pounds of protein to these 50
cows. (556# Corn x 9% Protein = 50# of Protein)

Feed	# of CP Needed	% CP	# of Feed	Cost / Day
Corn Prairie Hay Soybean Meal Corn Silage	50 50 50 50	9.0 6.0 47.0 8.0	555.56 833.33 106.38 625.00	$25.98 $27.77 $10.64 $22.34

Therefore, in this situation, feeding 107 lbs of Soybean Meal to the herd is the cheapest way to deliver the protein these cows need. Remember, on an as-is and a dry matter basis soybean meal was by far the most expensive feed. However, what we have done here is price it on a protein basis.

Note: Cost/Day = ($/ton ÷ 2000) x # of Feed

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Sebastian County Agriculture Agricultural Resources Comparing Costs of Individual Feeds

Sebastian County Agriculture
Agricultural Resources
Comparing Costs of Individual Feeds