Frequently Asked Economic Questions About Posilac
Frequently Asked Economic Questions
| Does it pay? |
As a rule of thumb, a cow needs to eat about 4 pounds extra feed on a dry matter basis, to produce an extra 10 pounds of milk. Feed costs are typically between 6 and 8 cents per pound of dry matter ($120 to $160 per ton of dry matter).
| Revenue: 10 pounds of milk/day @ $12.00/cwt = | $1.20 |
| Expense: 4 lbs of additional feed/day @ 7 cents/lb dry matter = | -.28 |
| Expense: POSILAC 1 STEP @ $5.20/14 days = | -.37 |
| Expense: Labor = | -.02 |
| Net income per cow per day = | $0.53 |
| Net income per dose (14 days) = | $7.42 |
| Return on Investment = | 79% |
| What is the breakeven milk production response? |
The breakeven milk production response depends on four major variables:
- Mailbox milk price.Feed costs supporting the additional milk production.Labor costs to administer POSILAC 1 STEP.Cost of POSILAC 1 STEP.
With a milk price of $12.00/cwt, feed cost of 7? per pound of dry matter, labor costs of $15/hour and POSILAC 1 STEP at $5.20 per dose, the breakeven milk production response is about 4.2 pounds of additional milk produced/cow/day through the application of POSILAC 1 STEP. With these same feed and labor costs and a 10-pound daily milk production response, the milk price would have to drop to $6.63/cwt to breakeven. Typically, milk price would have to drop below $7 before questioning POSILAC profitability.
| What is the impact on cash flow? |
With a 10-pound daily milk production response, milk price at $10.00, $12.00, or $14.00/cwt, labor @ $15/hr, POSILAC 1 STEP at $5.20/dose, feed at 7?/lb of dry matter and a 13 month calving interval, the additional cash flow per cow per year is:
| Mail box milk pric | $10.00/cwt | $12.00/cwt | $14.00/cwt |
| Additional Revenue | $273/cow/year | $320/cow/year | $382/cow/year |
| POSILAC 1 STEP cost | ($100)/cow/year | ($100) /cow/year | ($100)/cow/year |
| Feed & Labor cost | ($80)/cow/year | ($80) /cow/year | ($80)/cow/year |
| Additional Net Income | $93/cow/year | $140/cow/year | $202/cow/year |
Source: Monsanto Dairy Group