Friday, March 29, 2024

The true cost of feed

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Dear EditorTony Waugh argues that, contrary to popular belief, pasture is not cheap.
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He calculates it costs 37.1 cents per kg drymatter (DM). Most farmers would instantly compare this figure with what they are paying for, say, maize or palm kernel and be drawn to the same erroneous conclusion. The problem is that ancient conundrum – comparing apples with oranges.

Waugh calculates that the marginal cost (he calls them direct costs) is 4.9 cents/kg DM to which he then adds the fixed costs (essentially the costs associated with owning land) of 32.3 cents/kg DM. I have no problem with his calculations.

However, the convention when comparing the cost of animal feeds is to use the marginal cost. Thus, pasture costs about 4-5 cents/kg DM, fertiliser nitrogen feed grass (no clover) costs about 10-12 cents, forage crops about 15-20 cents, and maize and palm kernel in excess of 30 cents/kg DM.

Sure, if you want to compare them on a total cost basis you can add the fixed costs, which generally will be the same for all these types of feed. In other words adding the fixed cost does not affect the relativity of the costs.

So let us not forget clover-based pasture is the cheapest animal feed on the planet. I’m sure many farmers are relearning this lesson in this tough, low payout, year.

Dr D C Edmeades ONZM
Managing director
agKnowledge

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