Dairy Channel: How to price standing corn for silage

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In the past 16 harvest seasons, no matter whether the crop year was considered droughty, average, fantastic or resembled an Indian Monsoon, the question that always comes up is “how do we set a price on corn in the field to be chopped for silage?”

This year is no exception.

While I would love to be able to give you a set price that works for everyone (or at least makes everyone happy,) it isn’t going to happen. There are many different ways to calculate a price and a number of factors to consider.

Comparison. For crop growers and dairy farmers alike, there are benefits to working out a fair arrangement to allow each to achieve their objectives.

The guy raising the crops needs to make a profit on the corn he raises. If he has a field that did not make much grain, he still may have a good forage product to sell.

The dairyman needs a good, competitively priced source of feed with the ultimate objective of producing milk at a profit (work with me on the long-term picture here… we are not going to get into a discussion about current milk prices.)

Most dairymen shouldn’t be trying to raise all their feed themselves.

Corn silage is not required by dairy cows; it is only a vehicle containing nutrients required by cows. Therefore, the price of the silage is based on its nutrient composition and the prices of alternative feeds.

If a dairy farmer can purchase the nutrients provided by corn silage less expensively from other sources and provide a balanced and productive ration, he should not buy the silage.

Conversely, if a grower can harvest his corn for grain and sell it for more than he could make selling it for silage, he should combine the field.

Nothing’s easy. The only thing that can be said with certainty is that no method is perfect or easy. We will look at one method, and as Bill Weiss, OSU dairy nutritionist puts it, “This strategy should only be used as a guide, it is not the gospel.”

This method is found in an article on pricing silage written by Bill Weiss, Normand St. Pierre and me.

To determine an accurate price for standing corn, one needs to know its nutrient composition (fiber, energy, protein), the costs of other feedstuffs in the local area and then use statistical methods to determine its value.

Program calculations. The SESAME computer program written by St. Pierre (OSU animal scientist) can make these calculations.

This program was used to determine the value of the corn silage for our example. The SESAME software is available for purchase, or your county extension agent may be able to run the program for you.

Most people won’t know the nutrient composition of their standing corn. Drought-stressed corn usually has higher fiber, lower energy and slightly higher protein than normal corn silage.

Actual composition could vary significantly from the values assumed in the example we use.

In the example, prices for alternative feeds are from vendors near Wooster, Ohio, in early August. Actual prices could vary substantially based on local markets. See example.

How it works. The SESAME program calculates the value of a feed when it is actually fed. Standing corn must first be chopped, then ensiled and stored before it is fed.

Costs, losses and risk are associated with each of these steps.

The cost of chopping usually ranges from $4-$7 per ton of silage (assumed to contain 35 percent dry matter). Chopping costs per ton decrease as yields increase.

Because of lower yields caused by drought, we assumed a chopping charge of $6 per ton (35 percent dry matter) for drought-stressed corn compared to $5 per ton for normal corn.

Storage costs typically range from $3-$4 per ton. On average, about 10 percent of the material put into a silo is lost via fermentation (shrink).

Where exactly does this 10 percent go? Could be one or several places.

Silage that seeps is loosing moisture and nutrients. Silo gases include nitrogen. Fermentation generates heat. Additional storage and feeding losses do exist, but are borne solely by the dairyman and do not enter into the equation to price standing corn.

Based on these assumptions, drought-stressed standing corn has a value of approximately $18 per ton (35 percent dry matter) to a dairy farmer. A reasonable range is $16-$20 per ton.

In comparison, average normal corn silage with average yield and using the same prices for alternate feeds has a value of approximately $22 per ton (at 35 percent dry matter). This is with a reasonable range of $20-$24 per ton.

Risk factor. The last factor affecting the value of standing corn is risk. A farmer purchasing standing corn is assuming risk. Is the corn high in nitrates? Will it ferment properly? And the questions continue.

We do not know how to put a value on risk but the price a buyer should be willing to pay should be less than the actual calculated value.

Moisture and price. Our example established a price for corn silage with 35 percent dry matter. When the crop is finally harvested, actual dry matter may not be exactly 35 percent.

If the dry matter content is higher or lower, the price should be adjusted accordingly.

When dry matter is higher, a ton of feed contains more nutrients and less water. When dry matter is lower, a ton of feed contains more water and fewer nutrients.

The final price for very wet (less than 30 percent dry matter) and very dry (greater than 40 percent dry matter) corn silage should be discounted further from the calculated price adjusted for dry matter.

Very wet corn does not ferment properly and has a high potential to cause lower feed intakes. Very dry corn also does not ferment well and frequently results in lower digestibility due to heat damage and mold growth.

This silage may also have a lower net energy lactation and a shorter bunk life than corn ensiled at the proper moisture level.

For a complete copy of the paper, Pricing Standing Corn for Silage, contact your local OSU Agriculture Extension Agent or e-mail shoemaker.3@osu.edu.

(The author is the northeast Ohio district dairy specialist with OSU Extension. Send comments or questions in care of Farm and Dairy, P.O. Box 38, Salem, OH 44460.)


DROUGHT-STRESSED CORN SILAGE

Nutrient value at feeding1,2       $30.55

Less:

      Chopping      $6.00

      Storage      $3.50

      Fermentation loss (10 percent)      $3.05

Estimated value of standing crop      $18.00

Reasonable pricing range:      $16-$20/T


1. Calculated using the SESAME computer program and Aug. 2 local commodity prices.

2. Estimated nutrient values: 35 percent DM, 50 percent NDF, .60 Mcal energy per pound, 8.8 percent CP.

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