Shrink: Finding Hidden Dollars

Mike Hutjens
Extension Dairy Specialist
University of Illinois, Urbana

As feed prices remain high, dairy managers are looking for “hidden dollars in their feeding program. Feed shrink represents dollars spent on feed produced or purchased on their farms that are not used to generate revenue. Sources of shrink are listed below.

•Human error: incorrect weighing of ingredients, over feeding, poor bunk management, mixing of the TMR, not uniform delivery of feed, scale inaccuracy

•Storage losses: wind, rain, snow, birds, rodents, marginal silage packing, incorrect delivery of purchased feed, wheel contamination/loss

•Cow impact: feed sorting, tossing feed out of the bunk or on their back

•Feed factors: harvesting losses, storage losses, seepage, deterioration of wet feed, molding, variation in nutrient content

Economics of Feed Shrinkage

Example 1. If you feed costs are $3.00 day per cow and three percent shrinkage occurs, shrink costs $3,785 (nine cents a day times 100 cows times 365 days).

Example 2. Harvesting and feeding round bales can incur a loss of 15 percent (from standing forage to storage), 30 percent loss stored outside, and 10 percent loss at feeding (sorting, refusal, and damaged hay) results in a loss of 1035 pounds of hay per ton (2000 lb x 85% harvested = 1700 lb x 70% not damaged = 1150 lb x 90% fed = 1035 lb of hay consumed).

Example 3. A shrink of 3 percent in a protein/mineral blended mix priced at $300 a ton and fed at 5 pound inclusion rate to a herd of 200 cows results in a loss of $1,642 (5 lb supplement x 3% shrink x 365 days x $300 a ton).

Shrink Guidelines

Shrink losses vary from farm to farm, but the following targets can be used. Feeding shrink for day is 10 to 20 percent depending on hay quality, method of feeding, and processing. Wet silages losses vary from 5 to 10 percent. Concentrate shrink can vary from 2 to 5 percent. Wet by-product feeds can shrink 10 percent to effluent loss (run off) and deterioration during storage. Vertical storage of concentrates can drop shrink to less than two percent while flat storage can range from 3 to 8 percent.

Strategies to Find Hidden Shrink Dollars

Develop an inventory monitoring approach to measure shrink. If you can not measure these values, then it can not be managed. Three approaches can be used with increasing costs and time commitment.

•A pencil and paper approach is a daily paper log of the amount of feed delivered, cow numbers, weather factors, and milk yield recorded. Feed refusals should be tracked to correct values to monitor feed efficiency (milk yield per pound of dry matter or other benchmarks to compare herd or string variation).

•Use of a computer spreadsheet allows for data to be entered by hand (a second risk of human error occurs), but it is automated and more complicated calculations and charting can occur along with tracking historical data and inventory control. Dedication is needed for accuracy.

•Computerized software with electronic scales on wagons or trucks is the “Cadillac” system providing accurate data collection and summarization. Software program such as EZ Feed, FeedWatch, Feed Supervisor, or TMR Tracker are commercially available. Each group of dairy cattle can be monitored with exact shrink values calculated and inventory control possible allowing for strategic purchases and ordering as needed. This approach results in values than can evaluate on-farm changes and reward personnel.

Feed storage is another key area to review as wind, birds, precipitation, errors in weighing, mold development, and unloading/loading errors can be huge.

•Flat (horizontal) storage of feed ingredients can increase shrink depending on design and management. One approach is to build an indoor storage and mixing facility to reduce weather and mud factor. Oregon workers suggest the following guidelines for flat storage: 14 feet by 30 feet bins sloped outward, floors poured after walls so seams do not cross to adjacent bays, an apron at the open end sloping away from storage, one or two extra bins to allow clean out between loads, and bagged supplements in an adjacent storage area (less costs). The number of bins will vary depending of the farm has processed hay or straw, grain (corn or barley), protein supplement (may include minerals, vitamins, and additives), fat contain feed (fuzzy cottonseed or roasted soybeans), and by-product feed(s) such as soy hull or citrus pulp. Additional bins may allow for storage if a commodity is a “good” buy at limited times of the year (such as gin run fuzzy cottonseed).

•Upright (vertical) or bin storage will reduce shrink as electric motors drive augers that an accurately be stopped when adding feed (typically 1 to 2 percent shrink). Lease-to-buy may be available from feed companies or commodity brokers. Disadvantages include bridging of feed, limit on fat addition, and slower filling rates. A combination of flat and upright storage is ideal.

•Liquid (tank) storage can be used for liquid molasses, fats and oils, and commercial liquid blends that may contain trace minerals and additives. Pumps can apply liquid feed quickly over the top of the mixer load. A heating systems may be needed keep products flowing under cold weather conditions.

Premixing several feed ingredients is an excellent approach with inclusion rates of 5 to 15 pounds per cow compared to 3 to 5 individual ingredients risking weighing and mixing errors. Check on the commercial cost of mixing and labor ($15 to $25 a ton) and if the commercial blender will pass along some of bulk feed savings. Another premix advantage is inventory costs, payment of bulk individual feed ingredient, and shrink errors can be transferred to the company or cooperative. Large farms may do this on-site using their TMR mixer. An Illinois example is blending processed straw, fuzzy cottonseed, and a protein/mineral/vitamin/additive mixture.

Feed bunk management considerations include avoiding H bunks (reducing feed tossing and spilling), batch sheets that adjust for changes in dry matter in wet feed ingredients, avoid over filling bunks leading to feed waste, check load cells for weighing accuracy, and establish a feed mixing protocol and time to maintain consistency. During hot weather, check feed temperature to monitor secondary fermentation. All ingredients arriving on the farm must be weighed and recorded.

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