By: Jason Hartschuh, Assistant Professor, OSU Extension Field Specialist, Dairy Management and Precision Livestock, Ohio State University Extension
This article has been reposted from the Buckeye Dairy News, to view the original article, click HERE.
Pricing Corn Silage
Corn silage is the most economical forage ingredient in dairy cattle diets based upon Sesame ingredient pricing. Corn silage constitutes from 35 to 60% of the total ration intake and is 25 to 40% of the total lactating cow feed cost. A proper economic value to corn silage is important to optimize farm income.
Three ways to price corn silage. Actual production expense (fixed land cost & variable inputs), alternative ingredient market value, or an agreed upon cost from a neighbor for standing corn silage. This article will cover these three alternatives.
Actual production cost
The actual production expense provides a method to account for the variable costs (seed, fertilizer, chemicals, machinery, labor, insurance, etc.) and fixed costs (land, taxes, etc.) associated with the effort to plant, grow, harvest, and feed corn silage. The Ohio State Extension 2024 corn budget calculator values 183-bushel corn grain variable costs at $550/acre and fixed land, labor, and management costs at $444/acre for a total cost of $994/acre to grow and harvest corn grain. Corn silage yield of 23 ton/acre calculates to a value of nearly $43/ton standing in the field with a range of $26 to 46/ton varying by tonnage harvested. Your specific fixed and variable farm costs can be used to find your farm corn silage cost. The 2022 OSU Extension silage budget allows users to input their specific farm costs and can be downloaded at: https://farmoffice.osu.edu/farm-management/enterprise-budgets.
Corn silage total cost into a ration requires adding the harvest, haul, pack, inoculate, storage losses (shrink), and feed out costs. The OSU Extension 2024 custom rate survey (https://farmoffice.osu.edu) provides the range for chopping, hauling, and packing costs at $8.25 to $15/ton. Industry costs for inoculant range from $0.50 to $1.50/ton, storage shrink $4 to $8/ton, and feed out costs of $0.60 to $2/ton.
Corn market price
Another option is to use the OSU corn silage pricing tools which assist in calculating corn silage value based on market prices, which can be found at: https://go.osu.edu/cornsilageprice. This tool allows you to enter your yield estimates and corn grain market price to arrive at a price per ton and per acre. The tool then also allows the users to include the harvest cost of grain and silage to arrive at a fair market price for both the buyer and the seller. At Poet in Marion, OH, the current new corn crop price for October/November is $3.83/bu. With current corn prices, the market value of the corn silage ranges from $27 to $47/ton as fed. When including the harvest cost that the seller doesn’t incur, the bottom value of the corn silage is $27.50/ton as-fed, while the upper value for the buyer based on feed value is $42/ton as-fed.
Alternative market ingredient value
Alternative ingredient market value (Sesame) calculates an economic value for corn silage based on market costs of ground corn grain, alfalfa hay (silage) and various co-products. The Buckeye Dairy News regularly publishes and archives historical ingredient values and calculates predicted prices of various ingredients. Corn silage value per ton in recent years has been predicted at $73, 92, 100, and 85/ton in years 2020, 2021, 2022, and 2023, respectively. Corn grain ($/bu) and 48% soybean meal ($/ton) in those same years was $3.70/$300, $6.00/$376, $6.45/$470, and $6.60/$435, respectively. “Home grown” corn silage is an economical and valuable ingredient into dairy cattle rations. Get it grown, chopped, and packed properly.
Pricing Standing Corn Silage
Purchasing standing corn indicates that current silage inventory is limited, and more forage is required. Prior to buying standing corn, evaluate these options for alternative forages: 1) Plant a fall or winter cover crop. Spring oat, spring triticale, and annual/Italian ryegrasses are options for early August plantings. Oat and triticale can produce 2 to 2.5 ton /acre DM yield by mid-October in boot stage or possible 3 ton/acre at head stage in early November. 2) Reduce current corn silage usage and replace with optional economically priced co-products. A dairy nutritionist educated in ration software optimization can provide “best cost” pricing of byproducts that could supply cost savings over purchasing standing corn silage. 3) Reduce lactating or replacement herd inventory. Cull inefficient low-producing cows and reduce replacement heifer inventory to 75% of mature cows if expansion is not in the future.
Purchasing standing corn for silage can be accomplished in multiple ways. The agreement must be fair for both buyer (dairy farmer) and seller (crop farmer). Purchasing standing corn silage starts with determining the yield of grain of the standing corn. Then a grain price can be figured out by local cash markets, forward-contract, or delayed pricing. Add on the value of the silage fodder that is removed and deduct a harvest charge the seller will not incur. Each aspect of this pricing will be reviewed.
Determining the grain yield of standing corn can be estimated in several ways. Grain yield can be estimated in multiple ways: 1) Leave multiple test blocks in each field that can be harvested as dry corn grain for yield. 2) Use the grain yield estimate calculated by crop insurance. 3) Harvest the standing corn as silage. Obtain tonnage and moisture at time of chopping. Adjust total silage tons to a 35% dry matter basis. Calculate the bushels of corn grain in each ton by using the equivalent factor of 0.15 tons of corn silage harvested equals one bushel of corn grain. Another general rule is each ton of corn silage contains 7 bushels of dry shelled corn.
Add the stover value of the corn silage removed. Corn silage has roughly 50% stover on a dry basis. Value the stover based upon good quality grass hay. Every ton of harvested corn silage would remove about 400 lb of stover on a dry hay equivalent basis (15% moisture). The 400 pounds of grass hay at $120/ton market price would equate to $24 value of fodder per ton of corn silage removed.
Remove the dry grain harvest cost for the seller since the grain producer will not be harvesting the crop as dry corn. The OSU Ohio custom rates survey has a value of $10.50/ton to harvest, haul, and fill a corn silage bunker.
Example. Standing corn silage that yields 25-ton/acre corn silage (35% DM). The 0.15 factor equates to 167-bushel corn grain. This factor may be low in high-yielding grain corn where a ton of silage may contain 8.6 bushels of corn. Corn price of $3.80/bu generates $635/acre for grain yield. The $635 divided by 25-ton corn silage equals $25.40/ton for corn silage. Add the $24 value of fodder and subtract the $10.50 harvest charge. Final price of corn silage: $25.40 + $24 – $10.50 = $38.90/ton.
Summary
Corn silage is a critical and key part of the production and economic return for your dairy farm. Prepare the equipment, set and monitor the correct chop length and kernel rolls, put people safety first, and review equipment safety and update as needed. Continuously scout silage fields for proper fungicide application. Communicate with silage contractors and neighbors on establishing the corn silage price. Have a safe, abundant, and blessed silage season.