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Video Series Shows How New Penn State Dairy Tool Can Monitor Farm Profitability

Posted: April 20, 2009

Penn State Dairy Extension is offering a new online tool to help dairy producers better manage feed costs during the current economic downturn.

Penn State Dairy Extension is offering a new online tool to help dairy producers better manage feed costs during the current economic downturn. The Penn State Income Over Feed Costs Tool, in spreadsheet format, is available online, free of charge, at dairyalliance.psu.edu/resources/income-over-feed-cost-tool. The Web site also features a video series that shows the benefits of using the IOFC tool.

"The highest expense on a dairy is related to feed, and when times are tight, many producers try to trim their feed costs. But there is a limit to how much feed costs can be reduced without having a negative affect on animal performance," warns Virginia Ishler, nutrient management specialist with Penn State Dairy Alliance and manager of the Penn State Dairy Research Complex.

Ishler is a member of the Penn State Dairy Extension Risk Management Team that created the Penn State Income Over Feed Costs (IOFC) Tool to help producers and their nutritionists monitor income over feed costs on a monthly basis. “By monitoring IOFC you are in essence also monitoring animal intakes, milk income, and feed costs. These details provide some powerful information for making smart decisions and developing long-term strategies for improving profitability,” explains Ishler.

"The highest expense on a dairy is related to feed, and when times are tight, many producers try to trim their feed costs. But there is a limit to how much feed costs can be reduced without having a negative affect on animal performance"
--Virginia Ishler

Dairy producers and nutritionists from across the U.S. recently participated in a free webinar series, called “Managing Feed Costs on Your Dairy,” that demonstrated how using the Penn State IOFC can benefit their operations.

Video recordings of this series are now available online at the IOFC Web site listed above. The series shows how producers can manage risk by using IOFC as a tool to implement feeding strategies that help control costs. The series is designed for dairy producers, their managers, nutritionists, and advisers.

  • Part 1 of the series, Managing Risk During Difficult Times: Milk Futures, Feed Costs, and Nutritional Strategies,  features Ken Bailey, professor of Ag Economics at Penn State, who focuses on the current economic state of the dairy industry and offers predictions for 2009. Presenters also include Virginia Ishler and Erica Cowan, program specialist, Penn State Dairy Alliance, who discuss the benefits of using the IOFC tool.
  • Part 2 of the series, Using Income Over Feed Costs as a Tool to Control Costs, provides an in-depth overview on how to calculate income over feed costs. Virginia Ishler and Gabriella Varga, professor of Animal Science at Penn State, share their strategies for cutting feed costs while maintaining animal performance. In addition, Penn State Extension educators Tim Beck and Keith Dickinson share how some Pennsylvania producers are successfully managing IOFC and cash flow on their dairies in the current economy.

"Managing dairy cash flow is always a challenge with the big picture variables of milk yield, feed prices, milk prices and the number of cows milking constantly changing from month to month,” notes Beck. “To successfully manage their businesses, dairy producers need to plan their monthly cash flow for the coming year using their best combination of historical and projected costs along with outlook information. The IOFC tool then makes it easy to determine the breakeven IOFC needed to keep the farm operating with a positive cash flow. Because IOFC is easy to calculate, it then provides a convenient standard to measure the health of the farm's cash flow as changing conditions develop over the year."

To download the free IOFC tool or view the “Managing Feed Costs on Your Dairy” educational videos, visit dairyalliance.psu.edu/resources/income-over-feed-cost-tool.

Penn State Dairy Alliance provides free assistance to producers who would like help using the tool on their dairies. For more information, contact Penn State Dairy Alliance, toll-free, at (888) 373-7232 or e-mail askdairyalliance@psu.edu.