Feed costs are the largest single expense item for dairy farms. Old news. After years of skimpy margins, feed costs have been reviewed, adjusted and reviewed again. Rising grain prices launch the cycle all over again.
Forages are the foundation of the dairy cow’s diet and are the most likely feed to be home-raised. As a corn-belt state, corn silage is included in most rations for Ohio’s dairy cows. When dairy farms participate in the Ohio Farm Business Analysis program, we do an enterprise analysis for the dairy, and most farms also complete enterprise analysis of their crop enterprises.
Let’s take a closer look at corn silage production for the three-year period from 2017 through 2019 (Table 1).
Every year, at least a few of the farms experience poor local weather conditions, which explains the typical range of yields. On an annual basis, yield per acre ranged from 11 to 28 tons per acre in 2017, 17 to 28 tons per acre in 2018 and 10 to 25 tons per acre in 2019.
While some corn silage yielded well in 2019, the $33 average crop insurance revenue per acre and lower average yield per acre, reflects 2019’s widespread weather challenges.
Market Facilitation Program payments are included in the “Other Crop Income” category in 2019. In this three-year period, the average total cost of producing corn silage was $746 per acre (Table 3).
What inputs were the biggest contributors? The largest are shown in Table 2. Seed, fertilizer, custom hire and the cost of land, represented by either cash rent, or, for owned land, the cost of real estate taxes and mortgage interest.
For these dairy farms, homegrown forage is “sold” or charged to the dairy enterprise at the total (direct plus overhead expenses) cost of production per ton. Some farms also sell corn silage to other farms above their cost of production.
Once the crop is in the ground, the biggest factor impacting the farm’s cost of production per ton is the final yield. Keeping in mind the range in yields helps to explain the range in cost of production in 2019; from less than $18 per ton to more than $100 per ton.
While some of the cost of the $100 or more per ton corn silage might be offset by crop insurance revenues, low yields and the need to purchase replacement forages impact farms well into the future.
Cost of feed impacts dairy enterprise profitability. Input costs and yields impact costs of feed.
In 2019, the median cost of production for corn silage was $37.32 per ton. That means that half of the corn silage fed cost between $18 and $37.32 per ton to feed, and half cost between $37.32 and $100 or more per ton to feed.
Which side of $37 are you on? Which side do you want to be on?
If you want to choose sides, the 2020 Ohio Farm Business Analysis Program is open for enrollment. Farms can work with a technician to complete their analysis by the May 27 deadline.
The information you receive from your analysis will tell you where you were in 2020. Integrating that information with your agronomic decisions will help you choose sides and line up for a profitable future.
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