Optimal Forage and Supplement Balance for Organic Dairy Farms in the Southeastern United States

Project Director: Kenneth Burdine, University of Kentucky

Project Overview

Feed costs represent one of the largest expenses on a dairy farm, and farmers must decide how to balance forages grown on the farm and supplemental feed purchased from off-farm sources. Organic feed costs can represent an even larger portion of an organic dairy farm’s enterprise budget. While organic dairy herds must receive at least 30% of their dry matter intake from grazing on pasture, farmers can integrate other feed sources based on forage availability, economic factors, milk production, and other considerations.

Research to understand these whole-farm factors could provide guidance for organic farmers making complex decisions about ration management. Economic modeling to find the optimal balance of grazing, hay, and purchased feed can help farmers plan for the relative costs and returns of each approach across an entire organic dairy operation.

In 2020, researchers at the Universities of Kentucky and Tennessee designed a whole-farm economic optimization model to determine the outcomes of different ration balances for a model organic dairy farm in the Mid-South United States, including data from a small plot field trial of different pasture species mixes and an organic milk price sensitivity analysis.

Farmer Takeaways

  • Dairy operations with higher levels of milk production (lbs milk/cow/day) observed larger net returns, despite requiring additional on-farm production of corn silage (in place of alfalfa hay) and off-farm feed supplements.
  • Organic milk production was found to be profitable across a range of pasture species mixes, ration balances, milk prices, and milk production levels.
  • The profitability of organic dairies can be challenging during the organic transition period; as such, growers should ideally keep farms in organic production for at least 20 years to justify the economic risk of organic transition.

Project Objectives and Approach

Identify the economically optimal forage mixture, including grazed forage, hay and silage produced on-farm, and supplemental feed produced off-farm, under varying organic milk production levels

  • Researchers created an economic cost and return model for a representative organic dairy farm in the Mid-South United States. Using a linear programming approach, they compiled production values related to feed costs, farm resource allocation, and enterprise mix problems.
  • Researchers assumed that growers would be producing typical forage crops for an organic dairy in the Southern U.S., in addition to milk.
    • Hay crops: alfalfa-grass mix hay, corn silage, sorghum-sudangrass, annual ryegrass.
    • Grazed pasture mixes: two warm season grass-legume mixes, one cool season grass-legume mix, and one warm season grass-legume-brassica mix. Forage yields for these mixes were evaluated in small plot trials in Tennessee and Kentucky across three years.
  • Model assumptions were based on a 50-head Holstein herd with 125 acres total of pasture and hay land.

Understand the trade-offs of different whole-farm approaches for organic dairy feed management

  • The cost and return model was used to quantify how much feed could be produced by growing different types of hay and forage at different ratios, how much each of these scenarios would cost, and how much additional feed would be required to maintain a healthy ration for the entire herd.
  • Researchers used the model to ensure appropriate feed availability throughout the year, adjusting hay and forage production seasonally and in response to dynamic feeding needs. This included assuming a 65-day dry period for milk production each year.
  • The researchers also evaluated the model with different market-based scenarios for hay prices and other supplemental feed prices, both to understand how growers’ costs would increase when buying more feed and how much money growers could earn by selling feed.

Evaluate milk production levels and the sensitivity of farm net returns to milk price changes, including an evaluation of farm returns when using organic practices but not receiving organic price premiums

  • Researchers evaluated the economic model under different milk production and pricing scenarios.
  • Importantly, the model was run at four different levels of milk production, each necessitating different amounts of feed. These levels were 40, 45, 50, and 55 lbs of milk per cow per day.
  • The study used a baseline organic milk price of $30 per hundredweight, but also evaluated returns for different price levels by performing a sensitivity analysis.

Key Findings

Organic dairy farms were profitable across a range of production scenarios, but increased milk production led to larger net returns

  • All of the evaluated scenarios ultimately led to a profitable organic dairy farm operation. Growers largely have flexibility to substitute between different feed sources, including grazing and supplemental feed.
  • Out of the pasture mixes evaluated in this study, the cool season mix was found to be optimal. This mix included alfalfa, red clover, orchardgrass, and tall fescue, which are all perennial species.
  • The highest level of milk production in this study more than doubled whole farm net returns, despite the need to purchase more off-farm feed. Increased milk production requires trading some alfalfa hay production with higher-yielding silage production, but primarily increased the need to purchase shelled corn.

Organic dairy production has profit potential at all levels of assumed organic milk price levels

  • Break-even milk prices for all scenarios were achieved at around $20 to $25 per hundredweight, which is lower than the assumed baseline price of $30.
  • Organic transition is a critical period for all organic operations, and organic dairy farmers may be operating below their break-even price before they are able to receive an organic price premium.
  • To mitigate the economic risk of organic transition, dairy farms should plan to stay in certified organic production for at least twenty years.

Resources

Allison, J., Burdine, K. H., Dillon, C., Smith, S. R., Butler, D. M., Bates, G. E., & Pighetti, G. M. (2021). Optimal forage and supplement balance for organic dairy farms in the Southeastern United States. Agricultural Systems, 189, 103048.

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Location

Tennessee, Kentucky

Collaborators

John Allison, University of Kentucky
Carl Dillon, University of Kentucky
Ray Smith, University of Kentucky
David Butler, University of Tennessee Institute of Agriculture
Gary Bates, University of Tennessee Institute of Agriculture
Gina Pighetti, University of Tennessee Institute of Agriculture

Region

Southeast

Topic

Livestock Feeding, Livestock Well-Being

Category

Livestock, Dairy

Year Published

2021

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Created and maintained by the Organic Farming Research Foundation.