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Helping dairy farmers avoid Fonterra FEI penalties with supplementary feed

Matthew Grayling. Image courtesy of GrainCorp Feeds

Fonterra’s new fat evaluation index (FEI) grading system came into effect on September 1 2018, and it is forcing New Zealand dairy farmers to look more closely at what products they are feeding their cows.

“For many farmers FEI isn’t an issue, but farmers who use a lot of PKE (palm kernel expeller) have been changing up their feed options to mitigate or avoid penalties,” says Daniel Calcinai, general manager of New Zealand-based national feeds company GrainCorp Feeds.

Fonterra established the FEI test to measure the fat composition in the cow’s milk it collects, to ensure it is suitable for manufacturing products that meet customer specifications.

The use of PKE as a supplementary feed was identified as a key influencer on high FEI levels in dairy milk.

A by-product of the palm oil extraction process from the fruit of the palm, PKE had become increasingly popular as a feed option in dairying, due to its relative low cost. However high use of PKE can impact the fatty acid profile of milk, and has led to manufacturing challenges for Fonterra with certain products.

Fonterra’s FEI test was rolled out nationwide in March 2017 and since May 2017 farmers have been able to view their FEI results and take steps to improve poor test results.

As of September 1, farmers suppling milk to Fonterra with higher-than-acceptable levels of FEI are incurring demerits and financial penalties.

“The FEI test analyses the milk and if the levels are above a certain threshold during the grading process then the farmer is penalized – in some cases, up to 20 per cent of the value of that day’s milk,” says Calcinai. “That is a significant amount of money for those affected dairy farmers.”

The FEI grading framework is on an A-B-C-D scale, with A grade milk meeting requirements, a B grade meeting requirements but approaching the threshold limit (alert), a C grade exceeding threshold limits (2 demerits and 10 per cent deduction per collection day) and a D grade well in excess of threshold limit (with 4 demerits and 20 per cent deduction per collection day).

In 2018, in the lead up to FEI being implemented, GrainCorp has been working closely with its farming clients to plan alternative feed strategies. “The goal is to not only improve and diversify the herd’s nutritional offerings, but improve their FEI grading and avoid demerits and penalties,” says Calcinai. “Our team have met with farmers to develop a feed strategy that suits their farm, and we’ve had some good successes.”

Taranaki farmer Matthew Grayling has worked with GrainCorp to prepare for the introduction of the FEI grading system. Based on a 200 hectare farm at Okato, Grayling milks 500 dairy cows across two herds, 300 Jerseys and 200 Friesians.

After feeding his stock a small amount of PKE as supplementary feed at the end of April 2018, Grayling was shocked to find his farm’s milk had received an FEI grade of ‘D’. “It was just two to three kilograms (per cow) of PKE, which was a little concerning. A ‘D’ is a 20 per cent penalty, and I felt we couldn’t afford to be in that range.”

At that time of year, it would have cost $700 a day, Grayling estimates, “and even more at the peak of the season”.

He dried his cows off, and last spring he decided to “mix up” his feed options, based on advice from his GrainCorp representative Darrel McCracken. He added a 30 per cent soya hull to his standard feed (ProCow30, a blend of PKE, minerals and 30 per cent molasses), which brought his FEI grade back to an A.

Grayling says that dealing with the FEI grading system will be a challenge some farmers. “To keep producing quality milk we need to manage our input feed carefully,” says Grayling. “If we want to add supplementary feed we have to be smarter in how we do it.”

Calcinai says that altering the mix of dry feeds can dilute the impact on FEI. “Those who use higher levels of PKE during certain parts of the season may find that blending with a liquid feed such as molasses is a good option,” says Calcinai. “Not only will it help reduce FEI levels but we have seen it improve production and help enhance the utilisation of other feeds. What’s more, it is safe to feed ad-lib and can be fed through existing bulk PKE feeding systems”

GrainCorp has access to a wide range of exclusive, highly nutritional feeds as well as competitively priced commodity feeds. These feed options can be blended at rates required to meet specific herd and budget requirements.

In January 2018 GrainCorp began offering molasses through its national supply chain, and there has been a lot of interest in that, particularly with PKE/Molasses blends says Calcinai.

“We’ve found that blending molasses with PKE up to 30 per cent has helped farmers reduce FEI significantly over a short period of time. Adding molasses is not only helpful in reducing FEI, but is a really high quality feed for dairy cows.”

Calcinai says molasses is the “next lowest cost feed to PKE” that farmers can get, so it also makes sense from a financial point of view. “If a farm is set up to bulk feed, it’s definitely a viable option to consider adding molasses to mitigate FEI risk and get results,” says Calcinai.

GrainCorp has distribution centres across New Zealand, including ISO-accredited liquid storage facilities at Tauranga, New Plymouth, Napier, Bluff and Timaru, which means farmers around the country are able to get delivery of products such as molasses quickly and efficiently.

Source: GrainCorp Feeds

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