Producers are seeing lower milk prices from January 2025 highs. While this downturn still reflects basic supply and demand, there are significant differences compared to recent cycles: strong cull and beef prices, earning component incentives, corn silage quality by region and a younger generation of managers.

Each farm adviser uses a set of metrics from their area of expertise, but how do they all connect to your profitability? Are we even measuring the right things?

Here’s the catch. IOFC only tells us the economics of what’s going into the tank, not what’s going into the cow for good health and reproduction, and impacting the farm’s true profitability. It measures how well we are converting feed dollars into milk dollars. IOFC values today’s milk but ignores tomorrow’s pregnancies.

As 2025 progresses, dairy markets remain soft with somewhat mixed – though more bearish than bullish – signals. That said, prices and IOFC have, thus far, held up better than many expected. The scale and duration of current market pressures, however, remains uncertain.

While IOFC seems like a very simple calculation, it may not be an accurate one. There are many moving parts on farm, and these can influence the outcome independently of the feed or management change that has been made. Some modifications may be needed to get a true picture of events.

The ability to identify individual cow feed efficiency has the potential to have significant, far-reaching impacts on herd management related to feeding costs, culling and breeding. Not only could unprofitable cows be culled from the herd earlier, highly feed-efficient cows could be targeted for breeding to leverage the heritability of efficiency. 

With so many factors to consider, understanding a farm’s income over feed costs can take time, but that understanding also provides a clear map of the changes possible on the farm. By knowing the total costs associated with their operation, dairy farmers can weigh their options to find the next bump in their paycheck and support profitability.