Producing feed on-farm rather than buying it in is one of the most significant financial decisions a livestock or arable farmer can make. When the numbers stack up, the savings can be substantial. When they don’t, the investment in equipment and labour quietly erodes margins year after year. Understanding feed production cost in detail, broken down by farm size and operation type, is the starting point for making that decision with confidence.
This guide walks through the key cost components of on-farm feed production, explores how those costs shift as farm scale increases, and highlights the calculation errors that most commonly lead farmers to either overestimate or underestimate their true feed cost per tonne. Whether you are running a small pig unit or managing a large dairy enterprise, the principles here apply directly to your situation.
Key cost drivers in on-farm feed production
On-farm feed production costs fall into several distinct categories, and understanding each one separately is essential before combining them into a meaningful total. The main drivers are capital equipment, energy consumption, raw material sourcing, labour, storage, and preservative use. Each interacts with the others, and changes in one area often ripple through the rest of the calculation.
Capital equipment is typically the largest upfront cost. The type of mill chosen, whether a roller mill, disc mill, or hammer mill, determines both the initial investment and the ongoing energy and maintenance spend. Roller mills and disc mills are generally more energy-efficient for whole-grain processing, while hammer mills excel when a finely ground, dry product is required for specific feeding regimens, particularly on some cattle and pig units. Raw material costs depend heavily on whether you are processing your own grain or purchasing it, and grain moisture content at harvest directly affects whether drying costs enter the equation. With crimped grain preservation methods, drying is eliminated entirely, which can represent a significant saving.
Feed production costs for small farms
For smaller operations, typically those processing under 500 tonnes of grain per year, the cost structure is dominated by fixed costs spread across a relatively low volume. This means the cost per tonne tends to be higher than on larger farms, but that does not automatically make on-farm production uneconomical.
A small farm running a compact roller mill or disc mill will face fixed costs including equipment purchase or finance repayments, insurance, and any shed or storage infrastructure. Variable costs include electricity or PTO fuel, preservative (if crimping), and operator time. On a small operation, labour is often the hidden cost that gets underestimated. If the farmer is doing the processing personally, the opportunity cost of that time should be factored in. That said, small farms often benefit from lower input costs when processing home-grown grain, avoiding haulage, drying, and merchant margins that can add significantly to the cost of bought-in compound feed.
The break-even point for a small farm typically sits at a meaningful price differential between home-produced and purchased feed. Even modest savings per tonne, multiplied across several hundred tonnes annually, can justify the investment in entry-level processing equipment within a few years.
How mid-sized farms reduce cost per tonne
Mid-sized farms, broadly those processing between 500 and 3,000 tonnes annually, are often where on-farm feed production becomes clearly cost-competitive. At this scale, fixed costs are spread across enough volume to bring the cost per tonne down meaningfully, while the operation remains manageable without requiring dedicated full-time staff.
Equipment capacity and throughput
Matching equipment capacity to actual throughput is critical at this scale. A mill that is consistently run at or near its rated capacity operates more efficiently and experiences less wear relative to output than one that is either overloaded or underused. Mid-sized farms often benefit from mid-range roller mills or disc mills that offer a balance of throughput, energy efficiency, and capital cost. Our W-Max disc mills, for example, are well-suited to this range, handling wet or dry grain with low energy consumption and straightforward operation.
Preservative and storage costs
At mid-scale, the choice of storage method becomes a more significant financial variable. Storing crimped grain in a sealed clamp, tower, or tube silo eliminates drying costs and preserves nutritional value better than dried grain. Tube silo storage in particular is a cost-effective and flexible option that scales well. Preservative costs are real but predictable, and automated dosing systems, such as those integrated into modern disc mills, ensure accurate application relative to grain volume, avoiding both under-treatment and wasteful overuse.
Large farm feed production: when scale drives profitability
At large scale, typically above 3,000 tonnes per year, the economics of on-farm feed production shift decisively in favour of processing your own grain. Fixed costs per tonne become a small fraction of the total, and the variable cost structure becomes the primary focus for optimisation.
Large operations often run high-capacity disc mills or roller mills continuously during harvest and processing windows, maximising throughput and minimising downtime. The W-Max 40 disc mill, for instance, is capable of processing up to 100 tonnes of maize per hour, making it a practical choice for large arable and livestock enterprises where throughput speed is as important as cost per tonne. At this scale, energy efficiency becomes a major financial lever. A mill that consumes even a small amount less energy per tonne, multiplied across thousands of tonnes, produces a meaningful annual saving. Investing in equipment with advanced control systems that optimise the relationship between mill load and tractor or motor output directly reduces running costs.
Large farms also gain flexibility in raw material sourcing. Processing capacity gives them the option to buy grain opportunistically at harvest when prices are typically lower, store it, and process it as needed. This purchasing flexibility can reduce raw material costs considerably compared with buying compound feed at prevailing market prices throughout the year.
Comparing total cost of ownership across farm sizes
Total cost of ownership (TCO) is the most reliable framework for comparing feed production economics across different farm sizes, and it consistently tells a more accurate story than simple purchase price comparisons. TCO covers the full lifespan of the equipment, including acquisition cost, installation, energy, consumables, maintenance, spare parts, and eventual replacement.
For small farms, TCO analysis often reveals that a durable, well-supported machine with higher upfront cost outperforms a cheaper alternative over a ten-year horizon, because lower maintenance frequency and better parts availability reduce total spend. For large farms, the calculation shifts toward energy costs and throughput efficiency, since even marginal improvements in those areas compound significantly at high volumes. Mid-sized farms need to balance both dimensions.
One factor that is easy to overlook in TCO calculations is after-sales support. A mill that breaks down during harvest and cannot be repaired quickly causes losses that dwarf the cost of the repair itself. Equipment backed by fast spare parts supply and responsive technical support has a genuine financial advantage that belongs in any honest TCO comparison. We have been supporting farmers with crimped grain solutions since 1969, and that depth of experience is reflected in how our mills are designed for serviceability in real farm conditions.
Common calculation mistakes that skew feed cost estimates
Even experienced farmers regularly make a handful of calculation errors that lead to misleading feed cost estimates. Recognising these mistakes is as valuable as understanding the correct methodology.
Ignoring opportunity costs. When a farmer processes grain personally, the time spent has a real value. Failing to assign a realistic labour cost to that time understates the true cost of production. This is particularly common on smaller farms where the farmer does everything.
Using purchase price instead of total landed cost for raw materials. The cost of grain at the farm gate is not the same as the cost of grain in the mill. Haulage, drying (if applicable), and any storage losses between harvest and processing all add to the real raw material cost.
Underestimating energy costs. Many farmers calculate energy costs based on nameplate motor ratings rather than actual measured consumption under typical operating conditions. Real-world consumption depends on grain type, moisture content, desired particle size, and throughput rate. Using nameplate figures alone can significantly understate energy spend.
Omitting preservative costs for crimped grain. Preservative is a genuine variable cost that must be included. Modern dosing systems make this easier to track accurately, but farms without automated dosing sometimes lose track of actual preservative use over a season.
Comparing against the wrong benchmark. Home-produced feed should be compared against the true delivered cost of an equivalent compound or blend, not against a generic commodity price. If the purchased alternative would be a nutritionally matched compound, that is the correct comparison point.
Getting these calculations right is what separates a confident investment decision from a guess. If you would like to work through the numbers for your specific operation, get in touch with us and we can help you build an accurate picture of what on-farm feed production could mean for your farm’s profitability in 2026 and beyond.
