The growing need for milk and other dairy products presents a valuable opportunity for smallholder dairy farmers who are major suppliers of raw milk to the dairy industry. This opportunity is shaped by the prices farmers receive and the costs they incur.

The sales price of raw milk may fluctuate depending on the season: higher in the dry season, lower in the rainy season. As this price is usually beyond farmers’ control, the logical choice is for farmers to manage the cost of milk production, which has a strong influence on the profitability of any dairy farm. NEADAP has developed the Cost of Forage Production tool to help farmers with this important step in managing their businesses.

Feeding costs and productivity

Feeding costs form the main component of production costs; in Kenyan dairy farms, it 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) (Tegemeo Institute, 2016). 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 was confirmed in a similar study 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 (KDB 2023). 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. It is clear that farmers must take steps to enhance productivity and boost financial efficiency.

To meet the increased demand for milk, and considering the challenges such as land size, labour and capital input, farmers’ options to intensify sustainable milk production are through:

• feeding more concentrates to dairy animals
• feeding more improved forages to dairy animals.

While concentrates can fill nutritional gaps in the diet of dairy cows, too many concentrates may increase the cost of dairy production and also carry the risk of acidosis in cows.

As ruminants, dairy cows are well equipped to digest fibrous plant materials, using energy and protein from 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.

Producing cost-effective quality forage on-farm

On-farm forage production requires a significant initial short- to mid-term investment of the farmer’s 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.

For example, one problem that is common in Kenya is overgrown forages. These are characterised by high fibre content, low protein content and low digestibility. Quite apart from the costs of this to smallholder farmers, 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 that contributes to global climate change. With enteric methane fermentation contributing approximately 40–50% of total global methane emissions (Gerber et al., 2013), the livestock sector makes a significant contribution to global methane emissions and has an important role in reducing them.

However, improved forages, which have recently been introduced to East Africa and continue to be developed in Kenya, have potential to give higher yields, more protein and a wider harvesting window before their quality deteriorates. Feeding highly digestible feeds, harvested before maturity and supplemented with diet concentrates to formulate a balanced diet, can reduce feed costs and optimise milk production for individual farmers as well as reducing CH4 emission intensity.

Successful farmers achieve a balanced feed ration for dairy animals with the lowest possible cost. To do this, they need to better understand the cost of forage production.

Calculating the cost of forage production

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.

To understand the cost of forage production, we need to know all expenses related to the total amount of biomass produced. Only then, can we try to change or improve forage production on the dairy farm and reduce feeding cost. It is also important to know the cost of producing forage on-farm so it can be compared with the cost of buying forage.

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.

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 Cost of Forage Production calculator

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 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 entered into the tool, giving the farmer an idea of production costs of a specific forage from pre-planting to the point of harvest and/or preservation. These costs of forage production (cost/kg or tonne biomass) are expressed in relation to the dry matter content nutritional quality of the forages. Nutritional composition of interest includes crude protein (CP), metabolizable energy (ME) and fibre content, because these affect feed intake.

The NEADAP Cost of Forage Production tool has the following sections:

• Pre-planting costs: This section contains the land tenure, soil/plant sap testing, land preparation (virgin land vs cultivated land) costs
• Hay and 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 and yield depending on the number of cuttings
• Feed library: This section contains all nutritional information about a specific forage (dry matter [DM], CP, ME, neutral detergent fibre [NDF])
• Output: This section contains an indicative cost price and potential of recommended forages for profitable dairy farming. The tool will show the cost of producing 1 kg DM, 1 MJ ME or 1 kg CP.

Find out more

Are you interested in learning more about the Cost of Forage Production tool? Please contact Damaris Kikwai at dkikwai@snv.org