Livestock farmers explore manure contracts with crop producers

WOOSTER, Ohio – The message to farmers attending the Ohio Farmers’ Institutes in 1891 was this:

“Manure is money, therefore, with all thy getting, get manure. Show me a man who saves every shovel-full of manure, who seeks for it as for hidden treasures, and I will show you a man who is prosperous in his business.”

The message to producers attending the 2001 Manure Science Review Aug. 27-28 in Wapakoneta and Aug. 30-31 in Wooster was that manure is just one more source of income from their farming enterprise.

Contract arrangements for feed and manure have existed in Ohio for many years, according to Glen Arnold, Putnam County extension agent.

As livestock operations have grown in size, contracts for feed and manure have become more common, he said.

“It allows livestock producers to focus their attention on managing their operations without taking their attention away from the animals during planting and harvest,” Arnold said. “It has also allowed them to expand their operations without acquiring more land to raise additional feed for the animals.”

Value on both sides. Contracting allows crop producers to add value to their crops by marketing to livestock producers instead of through normal marketing channels.

At the same time, producers need to keep several key points in mind as they look at contract arrangements. First, prices must be profitable for both parties. Secondly, even in the case of lower-than-expected yields, crop producers will be expected to deliver the contracted amount of feed.

Likewise, livestock producers are obligated to purchase the contracted amount of feed at the price stated in the contract even if feed prices may change later in the season.

Finally, crop producers need to monitor dry-down rates on corn silage and high moisture corn. The right of producers to refuse feeds delivered below minimum acceptable moisture levels can be written in the contracts.

No standard contract. Arnold said feed and manure contracts will become more detailed than they are at the present time.

Currently, no standard contract exists for all contract feed arrangements. In fact, Arnold said it would be difficult for producers to cover all potential problems in a contract without resulting in a lengthy, cumbersome document.

“Any contract is only as good as the integrity of the parties who sign it,” he said. “Get your agreement in writing. Draft your contract with an attorney and get all of your questions answered before you sign the contract.”

What’s fair? It is a challenge for livestock and crop producers to arrive at a fair price for the feed or crop. One possible solution is to have each producer figure their costs of production and use this to determine purchase and selling prices.

The contract should include what feed is to be delivered, who is responsible for raising, harvesting and transporting the crop, base price per unit of feed based on acceptable quality and moisture levels, how the feed will be tested for moisture and quality, how and where it will be tested and weighed, payment method and interest rates, right of refusal and cancellation clause and an arbitration clause.

Manure contracts also vary, according to Arnold. But there are several basic items covered in the contract, including the amount and location of land for manure application, length of the contract, including a termination clause, analysis, method and rate of applications, when it will be applied, liability for accidents, any payment and signatures of both parties.

Historically, livestock owners have either applied the manure or paid to have it applied, but they may start asking crop producers to pay a portion of the application expense or even pay for a portion of the nutrients in the manure.

New arena. Crop producers can benefit from manure contracts, but crop fertility programs should be adjusted for the nutrients gained from manure. They also need to look at the costs associated with receiving manure such as tillage to incorporate the manure.

They also need to look at the social costs. “It is important to remember that the neighbors may consider manure a nuisance,” he said.

Other methods of gaining additional income from manure include brokering manure by bringing crop and livestock producers together or even auctioning off manure. Another method of adding value to manure is to dry it and compost it.

* * *

Seven habits for highly effective manure managers

WOOSTER, Ohio – A character in Thornton Wilder’s play The Matchmaker notes that “Money is like manure, it is no good unless it is spread around, encouraging young things to grow”.

For the audience attending the Manure Science Review Aug. 30-31 in Wooster, the take-home message was that to make money from manure, it can no longer just be spread around. It must be properly managed just like any other resource.

Tom Menke, a private consultant, explains his list of seven habits for effective manure managers.

First, they need to test the manure and the application fields.

“If you don’t test the manure, you will not know what is in the manure and how to use it,” he said. “Manage the manure nutrients so you don’t have the manure nutrients managing you.”

Second, producers need to plan for adequate and appropriate manure storage. Part of the storage system needs to be a treatment system.

Third, producers need to schedule their fields for manure application.

“Think ahead,” Menke said. “Plan which fields will receive manure. Plan your crop rotation. Plan your buffer areas.”

Fourth, producers need to calibrate manure handling equipment so they know how much manure is going on their fields.

Fifth, producers need to be considerate of their neighbors. “In a populated state like Ohio, this is an integral part of manure management,” Menke said.

Develop a good neighbor policy. Record the type and location of manure applications. Inspect the manure before it goes to the field. Inject liquid manure to reduce odor and runoff. Eliminate insect problems.

“The environment should be your top priority,” he said.

Sixth, producers need to be proactive.

“You need to have an emergency plan in place,” Menke said. “You need to know what equipment is available; you need to know how to deal with problems.”

Finally, producers need to take everything and put it together in a total system.

“Develop a total nutrient management plan,” he said. “It makes life a lot easier. You know where you are going and how you are going to get there.”