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Trends in North American Dairy Cattle Production - A Nutritionist’s View |
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Author: L. DWAIN BUNTING, PH.D - Biomin World Nutrition Forum 2006
Publication date: 12/05/2006
Introduction
The North American dairy industry has changed rapidly in recent years. As dairy production has industrialized, primarily in the U.S. and Mexico, new economies of scale have dramatically changed the siting of dairies, the management practices and and the application of nutrition. The objective of this paper is to discuss key industry trends, opportunities, and challenges as dairy producers attempt to extract more milk from their operations at a reduced cost per unit produced.
Larger farms and greater production
Historical market conditions and patterns of government policy have pushed the North American dairy industry to be very proactive in adopting new technologies and management techniques. Average milk production per cow is almost 5 times greater than in the early 1900s with current U.S. production approaching an average of 8,800 litres per cow annually. Production increases in the last few years have largely come from greater technology adoption, as cows move from smaller to larger farms. In the U.S. and Mexico, there continues to be tremendous pressure to increase the production unit size. Some incentives for increasing unit size may include:
• Dilution of fixed assets over as many cows as possible
• Volume premiums from processors
• Opportunity to use technologies that require larger economies of scale
• Accessibility to better managers and consultants
• More sophisticated business structure
The cows are on the move
In both the U.S. and Mexico, cows are moving to large, industrial dairies in less populated areas. In the last five years in the U.S., the share of total milk production has declined by 1.5% each in the Northest and Southeast and by 2% in the Midwestern grain belt. During the same time period, the total share of milk produced in the U.S. increased from 43 to 48% in the western states. In the western U.S., the typical unit size of a new milking facility is about 3,000 cows.
Almost all new, high-efficiency milk processing plants are being located in the western U.S. which should accelerate the trend of cows moving into this region.
The primary factors driving the trend for western cow movement included:
• Less populated geography with a history of concentrated cattle feeding
• Land that can be purchased at lower cost and in larger increments
• Lower labor costs
• More favorable regulatory condition for siting large operations
Nutrition consultants gaining ground
In North America, more than 1/2 of dairies with more than 200 cows rely on independent consultants to provide their nutritional expertise. In the western U.S. and much of Mexico the majority of dairy operations are relying exclusively on independent consultants to provide their nutritional services. The total number of independent consultants operating in the U.S. has grown rapidly in the last few years. Many of these consultants have recently left midwest-based feed companies. Many consultants continue to reside in the midwest where they can be found both competing against and working in harmony with their former employers. The majority of U.S. consultants are members of consulting groups that share administration expenses, using a variety of business models. The majority of consultant compensation is based on straightforward service fees and/or sales of proprietary mineral blends that are understood to be the method of compensation.
The commercial feed business finding its niche
The entire North American feed business has struggled with profitability and will continue its trend of consolidation. There is little demand for high-inclusion dairy concentrates and feed manufacturers in dairy markets are squeezed by reduced package sizes at low margins. However because dairy production will not become integrated to the extent of swine and poultry production, feed suppliers continue to see considerable opportunity in dairy sales.
As the dairies are becoming larger, they are demanding a much higher level of technical support from feed companies. In particular, national feed companies find it difficult to margin feed sales appropriately for providing the level of technical service support expected by larger dairies. At the same time, there is growing pressure for feed companies to unbundle the pricing of feed products and technical services, such as ration formulation. With the greater availability of independent nutrition consultants, dairy producers feel they have more leverage when feed pricing is more clearly delineated from the cost of technical support. As a result, feed companies are primarily using the model of the technical sales specialist with “direct account responsibility” for larger dairy customers. In this way, the provision of product and services is more transparent to the dairy producer and, from the feed company’s point of view, the assignment of margin is more in line with the cost of doing business.
New technology supplier-driven
Historically, government-sponsored research drove the development of much of the new dairy technology in the U.S. and Canada. In Mexico, new technology is almost exclusively imported, primarily from the U.S. and Canada. Because public funding for livestock production research has largely dried up, universities and other public institutions now rely heavily on commercial suppliers to provide the lion’s share of funding for applied research. Although the overall effect on the advancement of dairy technology is largely benign, there is a considerable amount of academic research that is now outcome-directed. In some key areas, the academic dialogue concerning specific technologies or approaches is quite restrained for fear of upsetting corporate sponsors.
What’s hot in nutrition
THE EMERGING SURPLUS OF CORN MILLING CO-PRODUCTS
In the midwestern U.S., a large number of ethanol plants are currently being built and many others are in the planning stages. Because of the demand for ethanol production, corn prices will rise significantly. However, the oversupply of distillers grains (wet or dry) is anticipated to push the prices of this product down to the level of corn, making distillers grains an excellent opportunity ingredient. Although research will continue to be directed at defining maximum ration inclusion levels for these products, product variability may be the most important practical problem for the industry.
Inclusion levels as high as 20% of dry matter as distillers grains are suggested by some researchers. The maximum practical inclusion level of distillers grains will likely be determined to be somewhat lower as field nutritionists struggle with rumen available fat restrictions and attempt to define minimum rumen available starch requirement. Corn processors are also expected to deal with the potential corn co-product oversupply by changing the nature of the co-products produced. Some processors are expected to isolate the oil and corn fiber fractions from the distillery byproduct, resulting in a coproduct feedstuff with much higher crude protein levels.
STILL LOOKING FOR AMINO ACID SOLUTIONS
In spite of robust supplier promotion and industry dialogue, the practice of formulating for amino acids is being adopted rather slowly. Many nutritionists are not convinced that they can show consistent responses to bypass amino acid products and continue to use conventional protein blends that enter the ration in fixed amounts. In spite of mixed results in the field, the growing availability of distillers grains is renewing interest in amino acid balance, particularly with respect to lysine. It is widely believed that the availability of a cost-effective bypass lysine source limits the industry-wide adoption of systematic formulation for amino acid balance.
ESSENTIAL FATTY ACIDS
No area of dairy nutrition has received more attention in the last two years than fatty acid nutrition. This has been driven both by the developmental interests of bypass fat suppliers and by public interest in milk as a functional food with an enhanced fatty acid profile. Because of the volume of research data produced in the last few years, substantial progress has been made in modeling fatty acid metabolism in the dairy cow. This has led to a much better understanding of the role of the rumen in fatty acid biohydrogenation and interconversion and how this metabolism impacts milk fat synthesis and fatty acid content. In everyday formulation, the greatest benefit of this knowledge will be in obtaining maximum benefit from high fat feed ingredients.
Nutritionists and dairy producers seem to be primarily interested in those rumen bypass fatty acid products that focus on altering the reproductive-hormonal axis of the dairy cow to improve fertility. Although it is clear that these fatty acid products may positively influence hormonal patterns and fertility, the theoretical requirement (dose) for these fatty acids and the permissible technology cost continues to be debated.
MYCOTOXIN CONCERNS
Mycotoxins have historically been considered an adulteration issue (aflatoxin) and thought to be primarily a concern in more hot and humid climates.
However, two factors appear to have contributed to the recent surge of interest in mycotoxin contamination of dairy feeds throughout North America. First, there is now greater appreciation of the immune supression and other subclinical health problems in dairy cattle that can be caused by mycotoxins, including those mycotoxins that are prevalent in more temperate geographies.
In some animal models, it appears that mycotoxins are key factors in increasing the infectivity of certain disease agents, such as appears to be the case with mycotic hemorraghic bowel syndrome in dairy cattle. Secondly, there is possible evidence, or at least concern, that mycotoxin contamination in basic grains and grain co-products is on the rise. The most freqently cited reasons for concern are:
• The trend for many succesive crops of corn being grown in the same fields as a departure from the historical rotations between corn and soybean crops.
• The large size of the national corn crop that may be leading to compromised storage conditions.
• The increased usage of distillers grains and other corn co-products that may have substantially higher risk of mycotoxin contamination.
Author: L. DWAIN BUNTING, PH.D
ADM Alliance Nutrition, Inc., 1000 North 30th Street, Quincy, IL USA
Author: L. DWAIN BUNTING, PH.D - Biomin World Nutrition Forum 2006
Publication date: 12/05/2006
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