J.W. Schroeder, NDSU Extension Service, Published August 22 2012
Dairy Focus: Many factors affect corn silage priceWhat's a fair price for corn silage?
That question is difficult to answer due to the number of factors involved that are dynamic and biologically variable. Some factors include production costs; grain price; harvesting costs; costs of handling, hauling and storing forage; grain drying costs; fertility and organic matter value of stover; and forage quality (especially starch content and neutral detergent fiber digestibility).
The amount of moisture also has a major influence on corn's feed value and needs to be considered to determine fair silage prices accurately. Before making any decision, consult an insurance agent for additional impacts on indemnity payments for the sale of silage versus grain.
Here are some thoughts to consider if you are a buyer or seller.
If you are the buyer (livestock feeder), start with the price you are willing to pay for ready-to-feed silage. When pricing in-the-field values, take into account these discounts: lower feed value due to drought stress, cost of harvest and making silage, transportation and any feeding loss.
For example, if the value of the ready-to-feed silage is $55 per ton, you need to deduct 10 percent, or $5.50 per ton, because of the lost feed value as the result of it being drought-stressed corn. You also need to deduct the cost of harvesting and silage making, or $12 per ton ($60 per acre, the custom rate for chopping and hauling, divided by 5 tons per acre), which leaves you with a maximum value of corn in the field of $37.50 per ton.
If you are the seller (corn producer), look at the value of the corn for grain and the fertilizer value that will be removed if the entire plant is harvested. For example, if the estimated yield is 5 tons of forage and 37 bushels of grain per acre, the value of the fertilizer removed from silage is $80 per acre, or 5 tons x $16 per ton, and the value of the grain is $222 per acre (37 bushels x $6 per bushel). This example is based on the assumption that 12 pounds of nitrogen is removed per ton (12 x $.60, which equals $7.20 per ton); 4 pounds of phosphorus is removed per ton (4 x $.55, which equals $2.20 per ton) and 12 pounds of potassium is removed per ton (12 x $.55, which equals $6.60 per ton).
Then you need to deduct the harvest and marketing cost of $28 per acre, leaving you with a value per ton standing in the field of $274 per acre, or $54.80 per ton.
If you decide to harvest the crop for ensiling, the main consideration will be proper moisture for storage and fermentation. The crop will look drier than it is, so moisture testing will be critical. Be sure to test whole-plant moisture of chopped corn to ensure that acceptable fermentation will occur. Use a forced- air dryer, oven, microwave, electronic forage tester, near infrared reflectance spectroscopy or the rapid "grab-test" method for your determination.
With the "grab-test" method, squeeze a handful of finely cut plant material as tightly as possible for 90 seconds. Release your grip and note the condition of the ball of plant material in your hand. If:
* Juice runs freely or shows between your fingers, the crop contains 75 to 85 percent moisture
* The ball holds its shape and your hand is moist, the material contains 70 to 75 percent moisture
* The ball expands slowly and no dampness appears on the hand, the material contains 60 to 70 percent moisture
* The ball springs out in your open hand, the crop contains less than 60 percent moisture
Then account for the influence of moisture when establishing price. Use 65 percent moisture silage at $45 per ton as an example. Each ton contains 700 pounds of dry matter (2,000 x 0.35). The value per hundredweight of dry matter is $6.43 ($45 divided by 7).
However, if the moisture content is 70 percent, then each ton contains only 600 pounds of dry matter. To have comparable value, this silage would have to be priced at $38.58 (6 x $6.43) per ton. On the other hand, if the moisture content were 60 percent, then a comparable price would be $51.44 per ton (2,000 x 0.40, which equals 800, and then 8 x $6.43). But remember, if the corn gets too dry, it will not ensile, so proper moisture is necessary to make silage.
To calculate on a dry-matter basis, the formula is ($ per ton x actual dry
matter) divided by dry matter for silage. For example, to determine the price of corn silage at 20 percent moisture (80 percent dry matter) using the reference price of $45 per ton of 65 percent moisture (35 percent dry matter) silage, the calculation would be ($45 x 80) divided by 35, which equals $102.86 per ton at
80 percent dry matter.
As you can see, trying to find an equitable value for corn silage can be a little more work, so some prefer to start with the following pricing rules of thumb for corn silage that's ready to feed, then adjust from there:
* 1 ton of silage is equal to approximately eight to 10 times the price of a bushel of corn.
* 1 ton of silage is equal to approximately six times the price of a bushel of corn plus harvest costs.
* Corn silage is worth approximately one-third the price of alfalfa hay.
While this gives you a place to start, you also need to keep in mind some likely discounts to feed value, including the condition of drought-stressed corn.
According to University of Wisconsin researchers, if droughty corn is estimated to yield 20 to 40 bushels per acre, the feed value typically would be adjusted to 90 to 100 percent of the price of normal corn silage. If the yields are estimated in the range of 0 to 20 bushels per acre, the feed value would be 80 to 90 percent of the price of normal corn silage. And if the stalks are short and barren, then multiply the price by 70 to 80 percent.
If the buyer is responsible for harvesting, then use the custom farm rates for your state as a guide to establish credit toward the final payment.
For more information, visit NDSU Extension Service publication "What is the Value of a Standing Corn Crop for Silage?" online at http://www.ag.ndsu.edu/pubs/plantsci/rowcrops/ec1343.pdf.
Schroeder is a dairy specialist with the NDSU Extension Service.