Income Over Feed Cost

What is Income Over Feed Cost?

Income Over Feed Cost (IOFC) is the difference between the revenue a cow generates (from milk and milk components) and the cost of the feed she consumes. It is the single most important economic KPI in dairy farming because it directly measures the profitability of the feeding program — the largest variable cost on any dairy.

IOFC is calculated as: IOFC = (Milk Revenue per Cow) – (Feed Cost per Cow). For example, a cow producing 80 lbs of milk at $20/cwt generates $16.00 in revenue. If she consumes 48 lbs of DMI from a ration costing $350/ton, her feed cost is $8.40/day. IOFC = $16.00 – $8.40 = $7.60.

A higher IOFC indicates that the herd is converting feed into profitable milk more efficiently. IOFC varies by season (lower in summer due to heat stress reducing DMI and milk), ration cost, milk price, and production level. The goal is to maximize IOFC, not minimize feed cost — sometimes spending more on feed increases IOFC by boosting milk production more than the additional feed cost.

IOFC benchmarks vary by region and milk pricing system, but generally: IOFC >$10/day is excellent, $7–$10 is good, $5–$7 is marginal, and <$5 indicates the feeding program needs optimization. Our IOFC calculator provides real-time tracking of this critical metric.

IOFC Calculation Example

Detailed walkthrough for a single cow: Milk revenue = 80 lbs/day × $0.20/lb = $16.00. Feed cost = 48 lbs DMI × ($350/ton ÷ 2,000 lbs) = 48 × $0.175 = $8.40. IOFC = $16.00 – $8.40 = $7.60/day. For a 200-cow herd: $7.60 × 200 cows = $1,520/day, or $463,600 over 305 days. Benchmark comparison: >$10/day = excellent (top 20% of herds), $7–$10 = good (average), $5–$7 = marginal (needs optimization), <$5 = poor (immediate action required). If your IOFC is below $7, break it down: is milk revenue low (production or component price issue) or feed cost high (ration formulation or ingredient prices)? A 5 lb/day increase in milk production (from 80 to 85 lbs) increases IOFC by $1.00/day — equivalent to reducing feed cost by $0.176/lb. Track weekly to catch seasonal patterns and respond quickly.

Maximizing IOFC

The goal is to maximize milk revenue per unit of feed, not minimize feed cost. Spending more on feed often increases IOFC when it boosts production more than the cost. Strategies: improve forage quality — better forage (RFV 150 vs 120) increases DMI by 3–5 lbs/day and milk by 4–7 lbs/day, adding $2–$3/day to IOFC. Use bypass protein (soybean meal, heat-treated soybean, distillers) — increases milk protein percentage by 0.1–0.2%, worth $0.10–$0.20/cwt on component pricing. Precision feeding by lactation stage — feed higher-energy rations to peak lactation cows (20–60 DIM) and lower-energy rations to late lactation cows (150+ DIM). Manage feed waste — every 1% reduction in feed waste saves $0.03–$0.05/cow/day. Monitor DMI daily — a 2 lb/day increase in DMI (from better forage or management) typically increases milk by 3–4 lbs/day.

Seasonal IOFC Patterns

Summer IOFC typically drops 15–25% due to heat stress — reduced DMI (cows eat 10–15% less), reduced milk production (5–15 lbs/day), and lower milk components. Plan ahead: increase ration energy density before summer, ensure adequate shade and cooling, and consider feeding during cooler evening hours. Winter may see IOFC improvement with better forage quality (freshly harvested) but higher heating costs for water and feed. Track IOFC weekly during summer and monthly otherwise. Set seasonal benchmarks: summer IOFC >$6.50/day, winter >$8.50/day. If IOFC drops suddenly (>$1/day), investigate immediately — common causes include feed delivery errors, forage quality changes, equipment malfunction, or water supply issues. Use a simple spreadsheet to graph IOFC weekly — trends are more informative than single data points.