As with most agricultural inputs, the price of milk replacers, which for a long time was rather stable, has been fluctuating more often (has more or so increased in price) in recent years. However, the explanation for this fluctuation is different compared to other inputs.
In 2016, the Canadian Milk Supply Management Committee (CMSMC) decided to change the rules that allowed the Canadian Dairy Commission (CDC) to sell surplus skim milk powder (SMP) to milk replacer manufacturers. Remember the saga of importing liquid milk protein from the U.S. as a form of circumvention of supply-managed imports? Negotiations on the subject led to the abolishment of this milk class. Since then, milk replacer manufacturers have had to negotiate their supplies directly with processors on a monthly basis, hence the price variation. Rising prices of milk replacers up against a certain stability in the price of milk at the farm has forced many to question the profitability of using these replacements altogether and with good reason. It’s worth doing the math.
The adjustment of the farm blend milk price over the last two years has changed the situation quite a bit. At the time of writing this article, the price of milk replacers has dropped and they are once again very interesting to use on farms. There is also quite a bit of “milk to be produced”; quota has been added to the negotiable quota of dairy farms and for the past few years, there are at least nine months in the year that counts at least one extra day of milk to be produced. In a context of underproduction (extra day to make, production margin below zero or in a under-credit zone), let’s compare the price of whole milk and the cost of replacing it with milk powder. In March, the weighted average farm gate price of milk minus deductions is around $90/hl in the P-5. At the same time, it costs $0.63 to $0.70 per liter of milk replacer. If we compare an average of 8 liters per calf per day, the savings represent from $3500 to more than $5000 for a farm of 40 heifers per year (100 cows, 80 replacement animals)! But the comparison does not end there. First, milk replacers are better balanced in terms of fat and protein for the needs of the calf. Indeed, to obtain a “lean” weight gain, i.e., a weight gain putting emphasis on skeletal growth and not to the increase of adipose tissue, which needs more protein and less fat.
“How can you claim it’s better than cow milk?” you might ask. We must not forget that for decades of breeding, we have been working to increase the fat content of our milk, in part because of our quota system, which is based on fat deliveries. Finally, most milk replacers contain very useful additives to help young calves get a good start in their growth: oilseeds, digestive catalyst, organic selenium, specific sugars and so on. On the other hand, some large farms often have quite a bit of unsellable milk that could be used for young calves instead of being thrown away. There are also additives that can be added to whole milk to improve the growth of calves. Just ask your cooperative’s expert advisor.
Hugues Ménard B.Sc. T.P.
Expert, agricultural business strategy, dairy sector, Sollio Agriculture