When the grain price and milk price change, the opportunity to make milk from grain for a margin also changes.
Grain prices vary depending on the type of grain fed, additives used and volume delivered. The price is currently between $280/ tonne and $400/ tonne as fed.
Considering the major processors picking milk up in Gippsland, based on a litre of milk at 4.15 per cent fat and 3.3 per cent protein, opening milk prices for the month of September 2017 are between $3.93/kg MS (29.3c/litre) and $5.11/kg MS (38c/litre).
To work out the grain price and milk price ratio (GP/MP Ratio) that determines the amount of milk that must be produced by a cow to break even on income and the cost of the grain when feeding a kilogram is as follows:
Grain Price (c/kg) divided by milk price (c/litres) = Litres of milk required to break even (income on cost of grain)
Using the September 2017 extremes of grain price and milk price as examples:
40c/kg divided by 29.3 c/litres = 1.37litres/kg of grain fed.
28c/kg divided by 38 c/litres = 0.74litres/kg of grain fed.
Consider the things that will determine your milk produced for a kilogram of grain fed, pasture availability, stage of lactation, diet balance, animal health, cow condition etc.
Remember, when feeding grain the last kilogram fed is likely to get the lowest marginal response in production; it’s the law of diminishing returns. In addition to this, perfect pasture management is key to higher pasture consumption and a more profitable dairy system