Farm Progress

Dailey Discussions: With improved feed list on internet, University of Missouri specialists help feeders cut costs.

December 19, 2016

5 Min Read
FINDING FEED: Farmers and ranchers can cut costs by searching for the best deals on feed ingredients. The University of Missouri is offering a new and improved feed listing free of charge.

As livestock margins shrink when selling prices drop from record highs, the penny-pinching on costs becomes vital for profit success.

The finding and pricing of byproduct feeds has become easier from the digital feed finder on the University of Missouri Agricultural Electronic Bulletin Board (AgEBB).

It’s an old service, which keeps improving in making comparison pricings of byproduct feedstuffs.

“It allows Missouri feeders who can handle semi-trailer loads to act like large corporate buyers,” says Marcia Shannon, MU Extension swine specialist.

Feed prices have become more volatile in the current uncertain supply and demand climate.

In olden days, farmer-feeders checked prices on a few nearby dealers. The byproduct website allows comparison pricing across Missouri and nearby states.

$40-per-ton difference
On a recent look, Shannon found a difference, from a high of $145 to a low of $105 per ton. “That’s an easy $40 difference,” she says.

The weekly byproduct feed price comparison was started in the late 1980s by John Travlos, who started the dial-in MU AgEBB. Barry Steevens, former MU Extension dairy specialist, expanded the comparison for dairy farmers. Now, the internet makes it available to everyone.

The service on AgEBB became more convenient with an alert service. By signing up via email, users get an e-notice when the list is updated.

Judy Burton, a secretary in the animal science division, makes calls to vendors, listing their latest prices. Those are posted on the website to be downloaded by producers.

Burton has retired, but continues the calling chores. Her day spent calling relieves farmers from making lots of calls. Producers study the list, then call to buy.

Over time, the feed list has expanded, Shannon says.

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FINDING FEED: Farmers and ranchers can cut costs by searching for the best deals on feed ingredients. The University of Missouri is offering a new and improved feed listing free of charge.

Hogs, beef join dairy
At first, it was strictly for dairy producers. Now, swine and beef feeders use the list. Feeds have grown beyond just byproducts from ethanol or soy fuel plants. Range cubes, vitamins and even mixed feeds are offered.

Horner says there are price advantages to buy in bulk. However, paying more from a local dealer has benefits.

When buying direct from a product source, buyers need their own quality control. “Local feed dealers have liability for safety and quality as listed on the label,” says Joe Horner, MU Extension dairy economist. “Buying in bulk, farmers take responsibility for checking the feed as it arrives. They must be prepared to make spot tests, just like the local mill, before unloading arriving truckloads of feed.

A feed may contain molds, mycotoxins or damage from processing or storage. Potential risks can be costly, especially for dairy and hog farms. Buyers must educate and prepare themselves. They must understand quality control or buy from a source with quality controls, Horner says.

Vendors charged, not users
In the past, listings were free to vendors. Now, to sustain the system, MU charges a fee to keep Burton working part-time.

“We had some drop-off in suppliers when the fee was added, Horner says. But many vendors returned when their volume buyers dropped off after the change.

The service remains free to the users doing comparison shopping.

Shannon, a swine nutritionist, says her calls have increased. With more feedstuffs available, producers call for advice on substituting their usual ration with something new.

The producers must not only look at the cost of products, but also factor in the cost of transportation.

Hauling may be cheaper
Some producers found surprises. In some cases, they can buy from afar at a lower price than paid locally, even with the added hauling cost.

Further, they found that sometimes truckers hauling product north to a mill will cut costs to bring a byproduct on the backhaul.

Scott Brown, MU livestock economist, tells producers there is more to the economics than tonnage price. Brown asks, “Does the substitute provide the same gain? Some feeds are worth more than others.

The feeds service gives managers more variables to use in cost-cutting.

For more information, visit agebb.missouri.edu/dairy/byprod/listing.php. New users can subscribe for free.

Farmers control costs better than revenues
Producers have more control over costs than revenues. Low-cost producers have a better shot at making a profit.

Economists who study large numbers of farm records find differences in profitability between low- and high-cost farms. Low-cost producers win.

Price shopping leads to managed costs.

At the Kirksville Livestock Symposium in December, MU Extension economist Scott Brown told of a USDA study. It shows $100-per-acre differences between averages for the lowest third and highest third in farm records.

“Watching costs makes a difference between profit and loss — survivability,” Brown said.

Management makes the difference.

Low-cost farms gain revenue
While farmers have less control over prices received for their products, the USDA study showed low-cost managers tend to have higher revenues. Attention to details works across the board.

While falling livestock prices have slowed, there are still downside risks, Brown said. That boosts the value of cost control and cost accounting. “If you don’t know the cost of producing a calf, you can’t do risk management,” Brown said. “You might lock in a loss.”

In another part of his talk, Brown said there is economy of scale at play in farm profits. Buying and selling in large lots makes a difference. That’s a long-known economic impact.

Help is available from regional MU Extension specialists, Brown said.

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