A review of your dairy’s performance measurements and rations can indicate where areas of opportunities and challenges lie, and help identify clear goals. I’m sure that “Strategic plan for 2021” (or some variation of this) has been on your to-do list since early December. You might be asking yourself, what are my priorities and where should my time and attention go? Or, how can I best use my management team, strategic partners, and technological tools to take action and accomplish my 2021 goals? And, where should I start?”

Well, why not start with the biggest expense on your dairy?

Depending upon region, feed costs make up 40 to 60% of a dairy’s operational costs and managing these numbers—along with feed efficiency and feed management—not only impacts profitability, but can have positive effects on animal health and reproduction.

A review of your dairy’s performance measurements and rations can indicate where opportunities and challenges lie and help identify clear goals. When formulating your strategic plan for 2021, try this approach:

  1. Measure performance
  2. Review nutrients and rations
  3. Identify goals along with clear steps for taking action

1. Measuring performance

Feed efficiency (FE), in the simplest terms, measures the pounds of milk produced per pound of dry matter consumed. This has long been a consideration of dairy diets and is a measurement to determine the relative ability of cows to turn nutrients into milk. However, when considering the impact of milk component pricing to your milk check, a more valuable number comes from calculating your herd’s component efficiency (CE).


The economic return for improvement in CE is enormous since greater than 80% of the milk value is derived from the pounds of milk fat and protein, while diet cost makes up around half of the dairy’s operational costs.

Component efficiency can be improved, similar to FE, by increasing component production relative to dry matter intake. Moving your herd’s component efficiency up one percentage point can result in a measurable increase of net milk revenue over feed cost per cow per day.

Calculating CE: Divide pounds of components by pounds of dry matter intake and multiply by 100 or use our digital CE Calculator. From company research, 11% CE is an obtainable goal and can be accomplished through solid nutrition and rumen health. Today’s Holstein cattle have the genetic potential to produce well above 3.8% butterfat and a 3% protein. Additionally, these numbers can be influenced another 0.10% by using supplements and additives, if and only if it is economically feasible.

Beyond milk performance, there are multiple other measurements for performance you can consider. In particular, financial performance should not be overlooked, income over feed costs (IOFC) or Feed over Energy Corrected milk will tell you the portion of income from milk sold that remains after paying for purchased and farm-raised feed used to produce milk. In other words, it’s your net income after paying feed costs.

Calculating IOFC: Income over feed costs is typically calculated on a per cow per day basis. For this calculation, three parameters must be known: milk yield (lbs./cow/day), milk price ($/cwt), and feed costs ($/cow/day). To calculate feed costs, the ingredient composition of the diet being fed (lbs./cow/day) and the price of each ingredient ($/ton) must be known.

Use these performance measurements along with your farm’s other key indicators to help outline areas you want to improve, as well as noting areas that were successful.

2. Deep dive into diets

Nutrition plays a critical role in driving milk production and CE, which is why reviewing your ration requires more than just a feed audit. Doing a deep dive into your diets at the nutrient level will help identify whether cows are receiving a consistent flow of nutrients that meet their biological needs and maximize component production.

Not all ingredients provide the same level of nutrients. For instance, both canola meal and soybean meal are popular ingredients for providing protein. The cow doesn't need protein per se, rather, she requires the amino acids that are the building blocks of protein. Many ration models focus primarily on lysine and methionine, but research clearly shows a need to focus on others as well, such as phenylalanine and histidine. For a strategy of CE to work, every bite of the ration your cows take has to provide the precise nutrients required for their health and productivity.

We cannot forget to mention the largest portion of dairy cow diets—forages. Forages are critical to maintaining rumen health by providing physically effective NDF, but also dictate performance and efficiency through the digestibility of NDF. Testing forages and analyzing the reports can help you get the most out of your bought and home-grown forages.

There are many measures of fiber included on forage sample reports and they are designed to help nutritionists and ration software predict cow performance. General guidelines for Acid Detergent Fiber (ADF), Neutral Detergent Fiber (NDF), and NDF from Forage (NDF-Forage) in final rations are shown in Table 1. The characteristics of NDF are not constant, so as we strive to enhance performance, the Neutral Detergent Fiber (NDF) portion has received the most attention by labs and research over the past few decades. In recent years, focus has been on the ‘undigested’ portion of NDF (often reported as uNDF240) and the digestibility of the NDF at certain hours of fermentation (eg. 24, 30, and 48 hours).

While refining these NDF parameters can help nutritionists impact cud chewing, manage rumen pH, and control milk, fat, and protein yields on your farm, attention must also be given to the non-fiber carbohydrate fractions delivered by forages and other feedstuffs. Considerable attention is being given to the starch fraction of corn. Multiple silage varieties are on the market with genetics focused on impacting starch characteristics that may influence digestion in the cow. Work with your nutrition advisor to properly analyze starch ingredients in ways that can be applied to ration software to enhance your herds performance and component efficiency.

Table 1. Ration guidelines for fiber (University of Minnesota)

 Measure Lactation Stage
  Early Mid Late Dry
 ADF Min 18 20 21 28
 NDF Min 28 28 32 35
 NDF-Forage Min 20 21 21 25
 NDF-Forage Max 24 26 28 -

3. Making plans and taking action

Remember the old adage “It takes a village to raise a child”? Well, the same goes for running a dairy farm, and your farm’s success starts with choosing and using the right partners.

You may rely on family, employees, nutritionists, veterinarians, consultants, and even technology to keep the parlor turning. Throughout the planning process, work with your strategic team—or build one—to gain insight, utilize expertise, and delegate work. 

Sometimes taking action can be as simple as implementing new standard operating procedures (SOPs), while other goals may involve investing in labor saving equipment or better technology.

Animal nutrition, while being the largest expense of a dairy, is a key factor in animal health, as well as production and reproduction. What and how animals are fed affects all aspects of a dairy. View our brief video to learn how we are approaching nutrition and helping herds thrive. You can also find support for improving your herd’s component efficiency with a feed ration review and analysis that can help you in the strategic planning process.