Positioning Commodity Feeds in Dairy Rations

Published on: 2/6/2017
Author/s : Michael F. Hutjens / Extension Dairy Specialist, University of Illinois, Urbana

Canadian modifications include the forage base may be more grass and small grain (barley) silages compared to Illinois corn silage based rations. When looking at pricing by-products, barley grain would be the energy base of choice and canola meal for the base protein source. Selecting by-products and levels will be different than the Illinois situations. By-products must be carefully considered when building rations in the future as a way to reduce feed costs and maintain rumen health and production. NDF sources from by-products can allow total ration NDF rations over 34 percent as these non-fiber NDF sources do not have the limitations of slower rates of passage and fill factors associated with forage NDF.


Take Home Messages


  • By-product feeds can provide nutritional and economic benefits for dairy managers.
  • Pricing and positioning are key focus areas to consider.
  • Several questions must be managed for on-farm success.
  • Feed variation must be considered when building dairy rations using by-product feeds.




By-product feeds (also referred to as co-product feeds) are produced during the production and manufacturing of human and industry products (such as sugar, ethanol, starch, or oil). These ruminant feeds can be more valuable than the original feed in some cases (such as corn distillers grain). This paper discusses positioning by-product feeds, calculating an economical value, strategies to use on dairy farms, and quality concerns.


Positioning By-Product Feeds

Positioning refers to determining how a by-product feed would be using in the dairy ration on each dairy farm situation. If the current ration does not need the nutrients in a by-product feed, it should not be considered. Categories are listed below with example by-product feeds that could fit in each group.

  • Protein source
    • Rumen degradable protein or RDP such as corn gluten feed or raw soybeans
    • Rumen undegradable protein or RUP such as heat treated soybean meal, corn distillers grain, fish meal, and/or blood meal)
  • Fiber source
    • Physical fiber such as fuzzy cottonseed or straw
    • Chemical fiber such as soy hulls, beet pulp, or citrus pulp
  • Oil/fat source (corn distillers grain, pork meat and bone meal, or fuzzy cottonseed)
  • Sugar source (citrus pulp, bakery waste, or molasses)
  • Starch source (hominy, whey, or bakery waste)
  • Phosphorous source (corn distillers solubles or pork meat and bone meal)

A by-product feed may fit in more than one position. Each dairy manager must determine if an opportunity exists on the dairy farm. For example, a ration high in corn silage could benefit from by-product feeds that could provide functional fiber (depending on particle size of the corn silage), additional protein (both soluble protein and RUP high in lysine), rumen fermentable fiber (low in starch), and supplemental source of oil/fat (depending on production level of the herd). In the grass or small grain ration forage based ration, adding RUP source, rumen fermentable carbohydrates, and fat/oil could be the optimal positioning of by-product feeds. One Illinois ration approach with higher levels of corn silage using by-product feeds could include 2 to 2.5 kg of fuzzy cottonseed, 1 to 52 kg of soy hulls, and one kg heat treated soy product. A computer rumen model program (such as the 2001 Dairy NRC model, AminoCow, or CPM model) can evaluate amino acid balance, dry matter intake, and energy discounts.


Pricing By-Product Feeds

Once the dairy manager has determined that an opportunity to use a by-product feed exists (positions properly), the next question is if the feed is favorably priced. Software programs can answer this question by determining the value of nutrients in the byproduct feed using reference feeds.

1. “Feed Val” spreadsheets were developed by the University of Wisconsin. The approach is to calculate a value of selected nutrients using base feeds and determine the value of nutrients in the by-product feed (Tables 1 and 2).

a. Feed Val 1 uses corn (energy) and soybean meal (protein) values.

b. Feed Val 3 uses corn (energy), soybean meal (RUP source), tallow (oil or fat), dicalcium phosphate (phosphorous), and limestone (calcium).

c. Feed Val 4 uses corn (energy), blood meal (RUP), urea (RDP), tallow (fat), dicalcium phosphate (phosphorous), and limestone (calcium).

2. “Sesame” is another program developed by the Ohio State University that considers several reference feeds in the area and calculates an economic value for the by-product feed.

When determining the value of a by-product feed, consider the following points to be sure the feed is a good value.


  • Adjust the break even price of the by-product feed for storage losses, shrink, and handling losses. Storage losses can be significant for wet by-product feeds (seepage of water from the delivered feed, mold that must be discarded, and dry matter losses due to fermentation). Shrink includes feed that is blown away, consumed by birds or rodents, contaminated by mud or manure, or spilled. Handling losses occur when the amount added is not accurately measured.
  • Determine if the price is for semi-load quantities that must be paid for when the feed is dropped.
  • Ask if the price is delivered to the farm or at the site of production (fob).



On-Farm Approaches

Herd size will have an impact on how an individual farm can use by-product feeds after determining it can be positioned and prices correctly. The minimum level of a feed or blend that can be successfully mixed in a TMR is 1 kg with 2 to 3 kg optimal. Two approaches are listed below.

1. Buying semi-load quantities of individual by-product feeds can be feasible on larger dairy farms because it can be fed up in a timely period (less than 60 days). The following commodity feeds and storage needs can be considered.

a. Storage of processed hay

b. Storage of energy feed (hominy, corn, or barley)

c. Storage of an oil/fat (fuzzy cottonseed or roasted soybeans)

d. Storage of fibrous feed (soy hulls or citrus pulp)

e. Storage of micro-nutrient blend (mineral-vitamin-additive mixture)

f. Storage of a protein blend or feed

Vertical storage bins with auger can improve mixing accuracy and minimize shrink losses. Inside storage also lowers shrink loss and comfort for the feeder. Outside flat storage protected from the weather and wind losses should be considered to minimize shrink.

2. Buying a commercial blend of by-products along with mineral and vitamins and protein sources because semi-load quantities are difficult to store and pay for immediately as delivered for smaller herds. Larger herds also find this approach appealing IF the company or cooperative is willing to price the blended feed competitively. This approach can be a win-win situation for both parties.

a. The supplier may strategically purchase by-product feeds as they can lock in large quantities when a by-product feed is at an optimal price (for example fuzzy cottonseed in October and November). Existing storage, mixing, labor, and transportation unit can be used by effectively by the feed company or cooperative.

b. The dairy manager can have better control on mixing and feeding losses as only one feed is added to the TMR instead of 3 to 7 individual feeds.


By-Product Management

Cornell workers developed a list of questions that dairy managers should consider when deciding if using by-product feeds are a “good” choices for their farms.

  1. What guarantees of quality and composition will be provided for the feed from the supplier?
  2. What range in nutrient value can be expected?
  3. What additional supplements will be needed and how will smaller packages be handled and mixed in the TMR?
  4. Is adequate storage available on the farm?
  5. Will a continuous supply of this feed be available?
  6. Can I contract or lock in a year long supply of the feed?
  7. Does the farm have mixing, weighing, and handling equipment to accurately use this feed?
  8. Who will formulate the ration?
  9. How long can the feed be stored on the farm while maintaining quality?
  10. Should vertical, horizontal, indoor, or outside storage be considered?
  11. Will additional labor or management time by needed?
  12. If a quality issue occurs, who do I talk to and how will it be addressed?
  13. Who will be testing the feed for nutrient content?
  14. Will someone inspect the feed before it arrives on the farm?
  15. How much shrink can I expect and how much value should be discounted?


Feed Quality and Variation

Nutrient variation can occur with a by-product feed based on the level of nutrients in the based feed ingredient, processing plant, and processing method. Table 3 lists the nutrient composition of selected by-product feeds. An important question is how does the nutritionist build in and adjust for variation. One approach is the guard against a nutrient shortage that could reduce milk production (for example using one standard deviation below the average protein content). A second consideration is guard against a nutrient that could cause rumen health problems (for example one standard deviation about the average oil content). Ohio State specialists suggest formulating for 1.5 standard deviations for the nutrient in ration formulation program.

Feed quality reflects the wholesomeness of the feed which may change during storage. Bagging of wet brewers grain is recommended for herds that can not feed the quantity delivered in five to seven days during warm seasons. Covering with a tarp may protect the surface from rain and mold formation.

Be aware of a by-product feed that appears too cheap. For example, fuzzy cottonseed is normally selling for $280 a ton, but an opportunity for $210 a ton is available. Should you buy it? What questions should you ask? Why is the feed discounted?


Selected References

Grant, R.J. 2003. Recent research on by-product feeds for dairy cattle. Alternative Feed for Livestock and Poultry Conf. Proc. pp. 115-128.

St-Pierre, N.R. 2003. Establishing an economic value by by-product feeds. Alternative Feed for Livestock and Poultry Conf Proc. pp. 203-210.


Table 1. Break-even prices for energy feeds based on variable shelled corn and soybean meal price using Feed Val 3 (soybean meal 44% at $400/ton).


Table 2. Break-even prices for protein feeds based on variable shelled corn and soybean meal price using Feed Val 3 (shelled corn price at $4.00/bu).


Table 3. Nutrient composition of by-product feeds (modified from St. Pierre, 2003).



This article is reproduced with permission from the author.

Dr. Mike Hutjens specializes in dairy feeding and nutrition, specifically computer dairy ration formulation, feed particle size evaluation and farm troubleshooting and evaluation. He also focuses on dairy management and dairy judging and evaluation. He is the editor of the National Dairy Database and Illinois Dairy Report, and annually speaks at 90-100 meetings in Illinois and the Midwestern United States. He teaches Principles of Dairy Science, Introduction to Animal Sciences, Principles of Dairy Science, and Advanced Dairy Management and Dairy Feeding and Management.
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