What’s it worth? You might be surprised at the variety of items of which dairy nutritionists are asked to assess the value. Partially intact feed bins, antique farm equipment, crossbred bull calves and silo staves are just a few of the more unique ones on the list. More commonly, springing heifers, a gallon of liquid manure or the neighbor’s farmland may need a quick estimate.
Finally, and most relevant to the job at hand, are products that provide nutrients to dairy cattle: a ton of Western hay, a load of canola meal, some bales of peas and oats from last year or an acre of standing corn for silage. Thanks to this year’s widespread drought conditions, the value of an acre of corn silage will be tougher and more important to determine for many dairy producers than it has been in recent years.
I’ve learned that the estimates that don’t get questioned are those that are delivered loudly and without hesitation – not necessarily based on good empirical data. The corn silage question, however, calls for accuracy even though good data might be difficult to obtain.
Variation in this year’s crop will make it difficult to apply the old thumb rules of pricing corn silage. Some corn had timely rains, looks great and will have close-to-normal grain yields. Other acres were under drought conditions for the entire season and made no grain at all. Even tougher to gauge are the acres in between: high-silage yield with little grain or near-normal grain yields on very small plants.
The value of the corn crop will depend on your perspective. A grain producer may have planted this acre of corn intending to harvest and sell the grain and leave the stover on the field for its ground cover and fertilizer nutrients.
The drought may have reduced the yield potential to the point that he is now looking to sell it as silage. He is still going to value the acre of corn based on its corn grain yield potential and the fertilizer value of the stover, less his costs of harvesting, hauling, storage, etc. A dairy producer looking to procure corn silage from local grain growers needs to consider this perspective when assigning a value.
A local corn grower’s grain yield will be 75 bu per acre. He can sell his corn for $7.50 per bu. The yield, if taken as silage, will be 11.4 tons per acre (at 65 percent moisture). Yield of the stover will be 2.04 tons of dry matter. What’s it worth?
The gross value of the grain is easy: 75 x $7.50 = $562.50 per acre
Then we need to add the fertilizer value of the stover yield: 2.04 tons of dry matter at a value of $16.79 per ton = $36.48 per acre.
We then need to subtract the costs of harvesting as grain: $35 per acre for combining, $0.15 per bu for hauling, $0.15 per bu for drying and $.04 per bu per month for storage for nine months and 2.5 percent harvest and storage shrink losses. Adding these up, the total comes to $100.95 per acre.
The total net value to the grain producer is: $562.50 per acre (grain value) + $36.48 per acre (stover value) - $100.95 per acre (harvest, etc. cost) = $498.03 per acre
$498.03 per acre ÷ 11.4 tons per acre = $43.69 per ton standing corn silage
The estimates that went into this example came from an excellent University of Wisconsin Extension spreadsheet that allows the user to calculate the value of silage from both the buyer and seller perspective. A more accurate result will be obtained if actual measures are used instead of estimates.
Silage yield is best measured by weighing each load coming off of the field along with checking the moisture content of each load. Spot checks of representative loads can also work.
Grain yield can be determined by using crop insurance estimates, kernel counts or test strips. It can also be estimated using the starch content of the harvested silage.
Stover yield can be estimated using the silage and grain yields determined above or by using university publications that provide estimates. Fertilizer value of the stover can be calculated using prices provided by an agronomist or local fertilizer vendor.
The value of corn silage in the example is
calculated using data from the seller’s perspective.
This is the price against which buyers will have to compete in many areas. Tables 1 and 2 show averaged values using two university extension spreadsheets (UW’s, as used above, and one from Purdue University). (Click on each image above or click here for Table 1 and click here for Table 2 to view these images at full size in new window.)
As stated previously, a lot of assumptions were made to generate the values in these tables. More accurate values will be obtained using actual measures and inputting them into the spreadsheets. The spreadsheets can be found at:
University of Wisconsin
We can and should also calculate the value from the buyer’s perspective. This value will almost always be higher than the seller’s value because grain handlers sell grain for a higher price than their buying price. There is also more variation around this number as it could depend on several on-farm factors, including forage inventory carryover and price of feed commodities available to the dairy.
Both of the referenced spreadsheets allow you to calculate a value of the corn silage to the dairy using corn market prices as the driver.
The examples above have been based on corn that has at least some grain yield potential. There will also be acres that have no grain yield possibility at all. This type of forage should be valued as a grass or small-grain silage. The local market for this forage should determine the value, usually based on the forage’s Relative Feed Value (RFV) or Relative Feed Quality (RFQ).
Don’t forget to use common sense when estimating a value of corn silage available for purchase. Unharvested wheat straw was selling for about $65 per ton of dry matter in my area this summer.
The old thumb rule for standing corn silage has been 7.5 multiplied by the price of corn for silage at 65 percent moisture. This would be $160 per ton of DM for $7.50 per bu corn. The theoretical range for 2012 corn silage would be $65 to $160 per ton of dry matter based on these numbers. If your price is not in this range you should recheck your numbers.
While this article is intended to help calculate “fair” values of this year’s corn silage crop, ultimately the local supply and demand situation could drive prices beyond this value. Look to your nutritionist to help you determine the maximum price you can afford to pay given other forage and non-forage options available. PD
Randall Greenfieldin a nutritionist with Vita Plus Corporation. Email Randall Greenfield.