Introducing the Cost of Forage Production tool

The profitability of any dairy farm is highly influenced by the cost of milk production. The sales price of raw milk may fluctuate depending on the season: higher in the dry season, lower in the rainy season. As the sales price is usually a given for the individual farmer, her or his logical choice is to manage the cost of production. This goes for small and big farms, for expanding and constrained markets and for all countries in East Africa. For example, feeding cost in Kenyan dairy farms is estimated to constitute 60%-80% of all production costs.

The high cost of feed for dairy animals was confirmed in a study by Tegemeo Institute of Agricultural Policy and Development in 2014/15 on behalf of Kenya Dairy Board (KDB). The study revealed that some dairy farmers incurred high expenses on purchasing and production of feeds and feed ingredients for dairy cattle but the margin between milk income minus feed cost was limited, which compromised the profitability of the dairy farm. This corroborates with a similar study by (KDB 2023) that reported that on average the unit cost of production is relatively high compared to the average revenue for smallholder farmers across different production systems, cost of fodder and family labour inclusive. By the close of 2022, it was observed that a minimum of 25% of farmers were experiencing losses in their cow productivity, efficiency, herd management and cow breeds. 

The growing need for milk and other dairy products presents a valuable market chance for small holder dairy farmers who are major suppliers of raw milk to the dairy industry. However, this necessitates that farmers take steps to enhance productivity and boost financial efficiency.

To meet the increased demand for milk, and considering the challenges farmers are facing such as land size, labour, capital input, intensified sustainable milk production is the best strategy. To realize this strategy, there are two options for the dairy farmer: a) Feed more improved forages to dairy animals or b) Feed more concentrates to dairy animals.

The choice for more concentrates may increase the cost of dairy production and carry the risk of acidosis in cows. Concentrates may serve as feed for monogastric animals i.e pigs and poultry. Monogastric animals will utilise these concentrated feed ingredients more efficiently as compared to ruminants. Arguably, some of the grains and cereals in concentrate may also serve as food for humans. Ruminants are well equipped to digest fibrous plant materials which cannot be utilized by monogastric animals. Dairy cattle would best utilize energy and protein from fibrous plant materials such as grasses and legumes. In short, dairy animals are best fed with forage supplemented with concentrates such as agro-industrial by-products to meet the nutritional requirements in their diets. Successful farmers are interested in balancing the feed ration for dairy animals for the lowest possible cost. And this is why farmers need to calculate the cost of forage production.

Producing cost effective quality forage on-farm

On farm forage production contributes a significant initial short to mid-term investment of the farmers financial resources. It is essential to know all expenses (e.g. land preparation, seed, weeding, harvesting) and output (yield, nutritive quality) associated with forage production in order to make informed decisions about feed costs, feed budgeting, feed planning and resource allocation.

Improved forages, which have recently been introduced to East Africa have potential to give higher yields, more protein and a wider harvesting window before their quality deteriorates. Overgrown forages are characterised by high fibre content, low protein content and low digestibility.

Forages high in fibre take longer to be digested in the rumen and enteric methane emission intensity (CH4/l milk) is higher. Methane is a potent greenhouse gas contributing to global climate change and with enteric methane fermentation contributing approximately 40-50% of total global methane emissions (Gerber et al., 2013), it highlights the important role of the livestock sector in global methane emissions and the need to reduce these emissions. Feeding highly digestible feeds, harvested before maturity and supplemented with diet concentrates to formulate a balanced diet is a strategy promoted to reduce methane emissions. Improved forages have been developed in Kenya and other countries and can be used by smallholder dairy farmers to reduce feed cost, optimise milk production and reduce CH4 emission intensity.

Calculate the cost of forage

The estimation of expenses related to forage production on farms in East Africa is complex because most grasses and legumes used are perennials and today’s expenses have to be spread over a long period in which the perennial grasses (e.g., Napier, Brachiaria, or Panicum) are productive. The true benefits of forage production can only be known after the forage has been utilized by the dairy cow and the farmer has sold the milk. 

If we want to understand the cost of forage production, we need to know all expenses related to the total amount of biomass produced, only then we can try to reduce feeding cost which is crucial if we consider the dairy farm as an ongoing business. Therefore, the question that arises is: if the cost of producing a forage is not known and well understood, how do we know and consequently advise farmers how to change or improve forage production on the dairy farm?

Accurately calculating the cost of forage production helps farmers to determine if they are generating a high enough margin (milk income – feed costs) to cover other expenses, assess the financial feasibility of different feeding options and make data driven decisions to improve the efficiency and profitability of the dairy farm.

Cost of producing forages on farm is also important when a comparison is made between buying forage or growing forage on-farm. In addition, it is important for farmers to consider the trade-offs between production cost and forage nutritional quality when making decisions about forage production, as this can have a significant impact on the overall success of the farm as a business. Forage cost models need to be an integral part of Kenya’s agricultural landscape, helping farmers make informed decisions about forage production and feeding management.

The NEADAP Cost of Forage Production Tool makes it possible to compare performance (e.g. yield/ha and nutritive value) of different forages. It strives to find a balance between yield/ha and forage quality to optimize both the financial performance and sustainability of the farm. The CoFP tool helps ensure the efficiency and effectiveness of forage production, thus improving overall decision making in the dairy farm. The costs incurred in the production of a particular forage can be filled in the tool, giving the farmer an idea of production costs of a specific forage from pre-planting up-to the point of harvest and/or preservation. These costs of forage production (cost per kg or tonne biomass) are expressed in relation to the dry matter content nutritional quality of the forages. Nutritional composition of interest includes protein (CP), Energy (ME) and fibre content because this affects feed intake.

The NEADAP Cost of Forage Production Tool will have the following components:

● Pre-planting costs -This section contains the land tenure, soil/SAP testing, land preparation (Virgin land & Cultivated land) costs

● Hay & Silage information -This section contains all information on hay and silage yield.

● Planting costs- this section contains all planting, maintenance, harvesting and post-harvesting costs & yield depending on the number of cuttings

● Feed library -This section contains all nutritional information about a specific forage (Dry matter (DM), Crude protein (CP), Metabolizable energy (ME), Neutral Detergent Fibre (NDF))

● Output- An indicative cost price & potential of recommended forages for profitable dairy farming. The tool will show the cost of producing 1 Kg dry matter (DM), 1 MJ metabolisable energy (ME) or 1 Kg crude protein (CP)

Are you interested in learning more about the development of the Cost of Forage Production Tool?

Please contact Damaris Kikwai at dkikwai@snv.org