Know Your Return on Investment

Knowing the ROI gives a forage producer the ability to make decisions on silage hybrids that will best improve the profitability of the dairy operation.

Published on: Jul 20, 2006

Making management decisions based on profitability is vitally important to any successful dairy operation. One way to achieve this is by knowing the return on investment (ROI) for certain elements of the operation. ROI is expressed as a percentage and considers the annual benefit divided by the investment amount.

Knowing the ROI gives a forage producer the ability to make decisions on silage hybrids that will best improve the profitability of the dairy operation. In order to find the ROI of a silage hybrid, producers must know the following:

  • Cost of the hybrid in terms of feeding value - this includes input costs such as seed cost, yield, acres used, fertilizer, equipment and storage
  • Total ration costs
  • Milk production response as a result of the hybrid
  • Return generated by that response

Producers can also work with their seed representatives or nutritionist to determine the ROI of their silage hybrid. One tool that is available from Mycogen Seeds is a spreadsheet that calculates ROI based on the input costs, ration costs and responses generated.

The key is that the producer is able to measure a change in milk production based on hybrid change alone. Any decision can be based on ROI if the result of the decision has a measurable effect and that effect has an economic value.

To receive an ROI calculator, please contact Jaclyne Hamlett at (262) 938-5538 or jhamlett@bader-rutter.com.