Could growing your own grain save your dairy 15% on energy costs or bankrupt you? The truth depends on your farm size, location, and what the experts won’t tell you.
Your nutritionist recommends buying grain. Your banker suggests growing it. Meanwhile, Penn State researchers found that Pennsylvania dairy farms that grow their feed use 15% less fossil energy than those that import it from the Midwest.
So who’s right?
Let’s cut through the confusion and examine what the research shows versus what the sales pitches promise. The cold, hard truth about growing grain on dairy farms is more complex than either side admits, and knowing when it makes sense—and when it’s financial suicide—could be the difference between thriving and barely surviving the next market downturn.
WHY FARMERS ARE RUSHING BACK TO GRAIN PRODUCTION
Dairy farmers’ interest in producing feed grains has historically ebbed and flowed with market conditions. Still, we’re currently witnessing a significant upswing in consideration of this practice across multiple dairy regions.
This renewed attention isn’t happening in a vacuum—it’s a direct response to several converging factors in the dairy landscape that are causing many farmers to rethink their feed-sourcing strategies.
The appeal is understandable: growing your grain potentially offers greater control over feed costs, provides inventory security during supply chain disruptions, and creates flexible acreage that can be harvested as grain or forage depending on seasonal needs.
But before adopting this trend, farmers need to carefully evaluate whether on-farm grain production truly meets their operation’s specific circumstances.
THE SHOCKING ENERGY ADVANTAGE NOBODY’S TALKING ABOUT
Let’s start with some good news that might surprise you: Research from Penn State University found that dairy farms in the Northeast that grow their grain can reduce fossil energy inputs by up to 15% compared to farms that import feed.
The study compared three farming systems with identical herd sizes and milk output but varying degrees of feed self-sufficiency. Systems that produced both forage and grain on-farm lowered total fossil energy inputs per ton of milk by 15% compared to systems producing only forage.
How? Primarily by importing 71% less feed crops that would have been grown elsewhere.
“If you think about the Midwestern practices for growing feed crops, largely it’s done with synthetic nitrogen fertilizers, which are extremely energy-intensive to produce. We wanted to understand the energy use that this approach requires compared to growing feed on-farm, where that fertilizer requirement can be met, in part, with manure and through diversifying crop rotations to include perennial legume crops.” — Penn State University Researchers.
This significant reduction in energy usage comes from creating a more closed nutrient cycle on the farm. The researchers noted that nitrogen inputs were four times greater for imported corn grain than for that grown on the trial farm, where injected animal manure and nitrogen-fixing legumes met a significant portion of the crop’s nitrogen requirements.
More recent research from the University of Wisconsin-Madison confirms these findings, showing that integrated crop-livestock systems can reduce purchased fertilizer inputs by up to 80%, significantly lowering costs and environmental impacts. Their long-term cropping systems trial demonstrated that diverse rotations, including grain and forage crops, could maintain yields while reducing input costs by $40-70 per acre compared to continuous corn systems.
WHERE YOUR DAIRY’S ENERGY GOES
| Dairy Farm Equipment/Process | Percentage of Energy Use |
| Ventilation | 25% |
| Lighting | 24% |
| Milk Cooling | 22% |
| Vacuum Pumps | 17% |
| Manure Handling | 4% |
| Electrical Water Heating | 4% |
| Feeding | 3% |
| Miscellaneous Equipment | 1% |
Source: NYSERDA Dairy Farm Energy Audit Summary Report, 2003
MILK COMES FIRST: THE PRINCIPLE MOST GRAIN-GROWING DAIRIES FORGET
Before you get seduced by potential energy savings, remember this fundamental truth: you’re a dairy farmer, not a grain producer. Your primary mission is putting milk in the tank – everything else is a distraction.
Every dairy farmer must ask whether adding grain production truly advances your operation’s ability to make milk or diverts precious resources from what you do best.
This debate primarily affects regions where homegrown forages already form the foundation of profitable milk production. If growing grain comes at the expense of high-quality forage or compromises any aspect of your dairy operation, you’re shooting yourself in the foot before you even start.
The farm must ensure the resources are available to plant these extra acres of row crops without compromising in other areas. Adequate forage inventories need to be secured before diverting acres to grain production.
When there are extra grain acres to plant, timely planting of forage crops and spring harvest of hay crops cannot be compromised.
THE BRUTAL ECONOMICS YOUR EQUIPMENT DEALER WON’T MENTION
Let’s talk money – the real bottom line that often gets obscured in discussions about on-farm grain. The actual cost calculation extends far beyond seed, fertilizer, and herbicide.
A comprehensive assessment must include:
- Capital investments in specialized equipment
- Storage facilities and processing technology
- Additional labor requirements
- Opportunity costs of land use
- Potential impacts on overall farm operations
Even with the advantages of energy efficiency documented by research, the economic equation remains complex. When accounting for all factors, many farms discover that the financial advantage of homegrown grain only materializes when commodity prices reach relatively high levels.
THE REAL NUMBERS: CAPITAL INVESTMENTS AND PAYBACK PERIODS
According to data from the University of Minnesota Extension, establishing grain production capabilities on a dairy farm requires substantial capital investment. Here’s a breakdown of typical equipment costs and expected useful life:
| Equipment | Typical Cost Range (New) | Expected Useful Life | Annual Depreciation |
| Combine | $300,000-$500,000 | 10-15 years | $20,000-$50,000 |
| Corn Planter | $80,000-$150,000 | 8-12 years | $6,600-$18,750 |
| Grain Drill | $40,000-$80,000 | 10-15 years | $2,600-$8,000 |
| Grain Storage Bins | $1.80-$2.50 per bushel capacity | 20-30 years | $0.06-$0.12 per bushel |
| Grain Handling Equipment | $25,000-$80,000 | 10-20 years | $1,250-$8,000 |
| Grain Dryer | $40,000-$150,000 | 15-20 years | $2,000-$10,000 |
Source: University of Minnesota Extension, Farm Machinery Cost Estimates
For a medium-sized dairy farm (150-300 cows) looking to produce 50% of its grain needs, total capital investments can easily exceed $500,000. This doesn’t include additional labor costs, maintenance, and fuel expenses.
It’s critical to note that not every energy efficiency measure is economically worthwhile on every farm. Penn State Extension warns against “false efficiency” from measures that look good on the surface but cause more problems than they’re worth.
This applies perfectly to on-farm grain production – what appears efficient in one dimension may create inefficiencies elsewhere.
THE BREAKEVEN EQUATION: WHEN GROWING YOUR OWN FINALLY PAYS OFF
Cornell University researchers analyzed the economics of on-farm grain production versus purchasing, finding that breakeven dynamics vary dramatically based on farm size, existing equipment, and market conditions:
| Farm Size (Acres dedicated to grain) | Breakeven Corn Price ($/bushel) | Years to Positive ROI at Average Prices |
| Small (50-100 acres) | $5.80-$7.25 | 15+ years |
| Medium (100-250 acres) | $4.75-$5.60 | 8-12 years |
| Large (250+ acres) | $4.10-$4.80 | 5-8 years |
Source: Cornell University PRO-DAIRY Program, Farm Business Management Data
These figures assume new equipment purchases, including depreciation, maintenance, fuel, and labor costs. Farms with existing equipment or those able to use custom operators for specific tasks may realize significantly better economics.
THE MILLION-DOLLAR INVESTMENT QUESTION NOBODY’S ASKING
The most thought-provoking question dairy farmers must consider is opportunity cost: “If money is available for investment, what has the potential to have a greater impact on milk production efficiency? Investing in grain infrastructure or cow-centric upgrades to improve areas such as cow comfort, milking process, and feeding practices?”
The New York State Energy Research and Development Authority (NYSERDA) recommends following an “energy pyramid” approach, where farmers first conduct an energy analysis and then implement conservation measures and efficiency improvements before considering more capital-intensive projects.
This structured approach ensures farmers prioritize investments with the quickest and most substantial returns.
Given limited capital resources, investments that directly improve cow productivity and comfort – better bedding systems, improved ventilation, and more efficient milking parlors – may yield higher returns than grain production infrastructure. Every dollar tied up in specialized grain equipment is not working to improve the core of your business.
For perspective, adding a variable-speed drive to a milking vacuum pump can reduce that component’s energy use by as much as 60%, with typical savings of thousands of dollars per year for a medium-sized farm. Such targeted efficiency measures often deliver faster payback than diversification into grain production.
WHY HIGH-PRODUCING HERDS STRUGGLE WITH HOMEGROWN GRAIN
The challenge of homegrown grains often intensifies during storage and feeding. Commercial grain suppliers blend massive volumes to achieve consistent nutritional profiles and dilute potential quality issues.
Your operation can’t match this consistency, potentially leaving you vulnerable to quality variations impacting high-producing cows.
“Feeding high-moisture corn was fine when our cows were making 75 pounds of milk, but now they are at 105 pounds, and these cows notice any little hiccup in diet energy, high-moisture corn has become a real headache.” — Dairy Producer.
Modern high-producing cows have less tolerance for nutritional variability. Proper storage infrastructure represents both a significant investment and an ongoing management challenge.
Repurposing existing structures often seems economically attractive but frequently leads to excessive shrinkage and quality losses that eliminate potential savings. Every percentage point of shrink directly reduces the economic viability of homegrown grain.
“Shrink” refers to the loss of feed during storage, handling, and feeding. According to research from the University of Wisconsin, shrink losses for corn grain typically range from 4% to 15%, depending on storage methods. At current corn prices, each percentage point of shrink represents a loss of approximately $0.04-0.07 per bushel.
SUCCESS STORIES: WHEN GRAIN PRODUCTION WORKS
Despite the challenges, some dairy operations have successfully integrated grain production into their business model. Research from Michigan State University identified key characteristics of these successful integrated operations:
PROFILE: LARGE-SCALE INTEGRATED DAIRY (600+ COWS)
A 650-cow dairy in western New York operates 1,800 acres, with 1,100 acres dedicated to corn and soybeans for grain. Their success factors include:
- Sufficient scale to justify full equipment ownership (2 combines, 3-grain trucks)
- A dedicated grain management team separate from dairy operations
- Modern grain storage with temperature monitoring and aeration
- Proper equipment sizing to ensure timely forage harvest isn’t compromised
- Crop consultant specifically for grain production decisions
- Financial metrics tracking grain production as a separate profit center
“We track our grain production as its business unit with dedicated equipment and labor. This allows us to accurately compare our production costs against market prices and make informed decisions about which crops to grow versus buy each year.” — New York Dairy Farmer, 650 cows.
PROFILE: MID-SIZED PARTNERSHIP MODEL (300 COWS)
A 320-cow operation in Pennsylvania takes a different approach, sharing equipment and expertise with neighboring farms:
- Equipment-sharing partnership with two neighboring grain farms
- Custom harvesting arrangements that prioritize timing
- Focused primarily on corn production, purchasing other grains
- Uses flexible harvest approach – can choose grain or silage based on seasonal needs
- Maintains emergency grain purchase relationships with local suppliers
- Implements intensive soil testing to maximize fertilizer efficiency from manure application
This operation reports production costs approximately 15-20% below market prices in most years. It also has dedicated acreage that can be harvested as silage in drought years.
THE RESEARCH GAP THAT COULD BE COSTING YOU THOUSANDS
While the Penn State research demonstrates energy advantages for on-farm grain production in the Northeast, regional differences play a crucial role in this equation. The research specifically studied Pennsylvania dairy farms, where the energy intensity of transporting grain from the Midwest creates an opportunity for energy savings through local production.
“Relative to forage-only systems, even while requiring larger land areas locally, systems that produced both forage and grain on-farm lowered total fossil energy inputs per Mg of milk produced by 15%.” — Penn State Research Findings.
The researchers compared a novel cropping system implemented at Penn State University, which included a diverse rotation designed to produce forage, grain, and fuel on-farm (NSVO), with two model systems that produced either forage only (FOR) or forage and grain (FORGr).
They found that “relative to the FOR system, even while requiring larger land areas locally, the NSVO and FORGr systems lowered total fossil energy inputs per Mg of milk produced by 18% and 15% respectively”.
More recent research from Michigan State University Extension examined the economic performance of specialized versus diversified dairy operations across 246 farms. They found that specialized dairy farms (those focusing primarily on milk production and purchasing most or all feed) showed an 11% higher return on assets than diversified operations attempting to produce milk and significant grain crops. However, this advantage disappeared for farms larger than 500 acres, where economies of scale began to make grain production more feasible.
According to research, US farms doubled their energy efficiency in 25 years from 1994 to 2019. However, many opportunities to save energy remain, with many farms still operating outdated lighting systems and inefficient electric motors.
WHEN GROWING YOUR GRAIN MIGHT PAY OFF
Despite all the cautions, there are specific circumstances where on-farm grain production might be viable. Limited grain production could complement the dairy operation for farms with substantial excess acreage beyond forage needs, existing grain equipment, and experienced management capacity.
Regional factors play a significant role. The Penn State research specifically addressed Northeast dairy farms, where the energy intensity of transporting grain from the Midwest creates an opportunity for energy savings through local production. Farms in grain-producing regions may face entirely different energy and economic equations.
“On-farm fuel production lowered fossil energy inputs but required more land area and may not provide economic savings with current diesel fuel prices.” — Penn State Agricultural Systems Research.
The research also suggests that “on-farm fuel production in the NSVO system lowered fossil energy inputs but required more land area and may not provide economic savings with current diesel fuel prices.” This highlights the critical distinction between energy and economic efficiency—they don’t always align perfectly.
DECISION TOOL: IS GRAIN PRODUCTION RIGHT FOR YOUR DAIRY?
Use this self-assessment tool to evaluate whether grain production might be viable for your operation:
FAVORABLE CONDITIONS FOR ON-FARM GRAIN PRODUCTION:
✓ Farm has excess acreage beyond forage needs
✓ Operation already owns some grain equipment or has favorable custom work arrangements
✓ The farm is located more than 200 miles from significant grain production regions
✓ Management team has grain production experience or dedicated crop specialists
✓ Dairy size and land base allow for economies of scale (typically 2+ acres per cow)
✓ Operation has modern grain storage facilities or capital to build them
✓ Soil types and climate are favorable for grain production
✓ Dairy has sufficient equity position to absorb potential losses during the learning curve
WARNING SIGNS THAT GRAIN PRODUCTION MAY BE PROBLEMATIC:
⚠️ Farm struggles to produce sufficient high-quality forage
⚠️ Operation has limited equipment, labor, or management capacity
⚠️ Dairy focuses on high production per cow (90+ pounds)
⚠️ Farm is located in a traditional grain production region with competitive local markets
⚠️ Capital would be diverted from cow comfort or facility improvements
⚠️ Operation lacks modern grain storage facilities
⚠️ Farm struggles with timely completion of existing field operations
⚠️ Dairy has limited financial reserves to weather potential crop failures
YOUR DAIRY’S FUTURE: CORE BUSINESS OR DISTRACTION?
Dairy farms have attempted homegrown grain production for generations with wildly varying results. For some, it’s worked beautifully; for others, it’s been a financial burden. The difference between success and failure doesn’t come down to luck—it’s about a brutally honest assessment of your operation’s resources, capabilities, and core strengths.
Dr. Mark Stephenson, Director of Dairy Policy Analysis at the University of Wisconsin-Madison, notes: “The economic advantage of diversification into grain production varies dramatically with farm size, management capacity, and regional factors. The most successful dairies I’ve observed either focus intensely on milk production or achieve sufficient scale in both enterprises to justify the additional complexity.”
Before making any decisions about grain production, ask yourself:
- Is producing grain indeed advancing your dairy’s primary mission?
- Are you realistically equipped to manage the additional complexity?
- And most importantly, where will your capital generate the highest returns?
For some operations, particularly those in the Northeast with sufficient scale and existing infrastructure, the 15% energy reduction from on-farm grain production may align with both environmental goals and economic realities.
For others, doubling down on what you do best – producing milk – will outperform grain production every time. The truth isn’t convenient, but it’s what The Bullvine delivers.
QUESTIONS TO ASK BEFORE DIVING INTO GRAIN PRODUCTION
For Your Equipment Dealer:
- What is the total annual ownership cost, including depreciation, maintenance, and financing?
- How many acres of production are needed to justify this equipment purchase?
- What custom options exist that might allow less capital investment?
- How will parts availability and service scheduling work during critical harvest periods?
For Your Nutritionist:
- What quality variations should we expect with on-farm grain production?
- How will these variations impact our high-producing cows?
- What testing protocols should we implement for homegrown grain?
- What storage and processing methods would work best for our operation?
For Your Financial Advisor:
- How does this investment compare to other potential uses of capital?
- What is our actual breakeven cost, considering all expenses?
- How will this impact our debt-to-asset ratio and financial flexibility?
- What risk management strategies should we implement for crop production?
Key Takeaways
- On-farm grain production creates a 15% energy savings by reducing reliance on synthetic fertilizers and transportation, but these environmental benefits don’t always translate to economic advantages.
- Equipment investments for grain production ($300,000-$500,000 for combine alone) require substantial scale to justify, with small operations (50-100 acres) facing breakeven corn prices of $5.80-$7.25/bushel and 15+ years to positive ROI.
- Successful grain-producing dairies separate grain operations from dairy management, maintain modern storage with quality monitoring, and often operate at larger scales (600+ cows) or through strategic partnerships.
- High-producing herds (90+ pounds/cow) are particularly vulnerable to the quality inconsistencies of homegrown grain, making specialized milk production generally more profitable for operations under 500 acres.
- Before diversifying, use the article’s decision tool to evaluate whether your farm has the favorable conditions (excess acreage, equipment access, management capacity) or warning signs (forage struggles, limited capital, high-production focus) that predict success or failure.
Executive Summary
The decision to grow grain on dairy farms presents a complex trade-off between potential energy savings and significant financial risks that vary dramatically by operation. While Penn State research shows dairy farms producing their own grain can reduce fossil energy inputs by 15% compared to importing feed, the economics only work for specific farm profiles with sufficient scale, existing infrastructure, and management capacity. Success stories typically feature operations with 600+ cows, dedicated grain management teams, and modern storage facilities, while smaller farms often struggle to justify equipment investments that can exceed $500,000 and may take 8-15 years to provide positive returns. Before diversifying, dairy farmers must honestly assess whether grain production advances or distracts from their core mission of producing milk, as specialized dairy operations show 11% higher returns on assets compared to diversified farms below 500 acres.
Learn more
- The Hidden Costs of Homegrown Feed: Why Storage is Your Silent Profit Killer
Explores the often-overlooked expenses of feed storage, including shrinkage risks and infrastructure requirements. - Beyond Corn: How High Oleic Soybeans Could Revolutionize Your Dairy’s Nutrition Strategy
Examines the economic and nutritional potential of specialty crops like high oleic soybeans for dairy rations. - When to Buy vs. Grow: A Farmer’s Guide to Strategic Feed Sourcing
Provides actionable criteria for deciding when to produce feed on-farm and when to rely on commercial suppliers.
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