Cost Effectiveness of Silage Depends on Pricing It Correctly
Calculating the economics of silage for beef producers seems like it would be cut and dried but not so. A lot has been learned recently about how to price corn silage.
Beef producers are primarily focused on two approaches for growing and finishing cattle. First, how does silage fit as the predominant feed (50% to 80%) in a growing diet? It's an excellent feed for integrated operations who also grow cattle, so they can buy calves and feed them large concentrations of silage, which is very economical. The goal is to grow those cattle from about 500 pounds after weaning up to 800 or 900 pounds before they shift to a finishing diet.
“A silage-based diet can be a real plus for calves that are smaller-framed because if you just put them on finishing diets, they can get fat too quickly and will not finish at higher weights as expected,” said Galen Erickson, professor of ruminant nutrition at the University of Nebraska-Lincoln. “Producers should pay attention to supplementing protein. We've learned that if you're going to grow cattle on a silage-based diet, they respond well to bypass protein. The best source is distillers grains.”
For midwestern finishing systems, the question remains: how does silage fit as a forage source? Today, silage is much more economical than most hay, and it may be possible to feed more silage.
“Most large feedyards will feed 10% to 15% silage which works well. It's an excellent roughage source and is still more economical than using alfalfa hay or other hays. We asked: if it works well at 15%, could it work even better at 30% or 40% of the diet in smaller operations that own their own cattle?” he said. “Essentially if we feed more silage, is it more economical to the operation? The answer depends on how silage is priced.”
- Price silage based on the correct price of corn standing in the field, and make sure that you've subtracted the price of combining
If you're buying corn silage from your neighbor, your neighbor doesn't have to combine the corn. You’ll be the one chopping and putting up the silage.
“Based on our calculations, the cost for corn standing in the field calculates out to 7.65 times the corn price,” said Erickson.
- Make sure to recycle manure nutrients (NPK) back to the fields which offsets the cost of the silage.
“If you are buying from your neighbor and you take away some of the forage residue, then the farm should replenish those nutrients, and your neighbor will want you to pay for those nutrients. I don't have a concern with that, but here's the dilemma: If your neighbor charges for nutrient removal of the forage, then you have all this manure that provides the same nutrients, but your neighbor doesn't want to pay you back for those nutrients when you spread manure. So, it’s important to have a good discussion that ensures a fair trade for both parties.”
- Use the fall harvest corn price for your silage because otherwise you're double charging for storage.
The corn price changes throughout the year, but in general, corn is cheapest at harvest. Data show the corn price increases by $0.05 per bushel per month, which equates, interestingly, exactly to what it costs to store corn per month from the time of harvest. For pricing purposes, the part that gets missed is that corn grain is increasing $0.04 to $0.05 per bushel per month.
“A lot of times people say, ‘I'm going to buy your corn silage, and you can price the corn next February.’ But the price of corn is higher next February than at harvest, so why does that matter? It matters because I'm also having to store it. If corn price is going up because of its storage costs on the grain, you’re double paying for storage by paying the February corn price and the storage cost on the silage,” explained Erickson.
The University of Wisconsin and Iowa State University offer a corn silage pricing calculator that can help in your efforts.
On the economic side, he said, if you own the acres and you're not buying the silage from your neighbor, feeding silage is a no brainer. However, in either scenario, it only works if you manage the process.
“There's a lot of work that goes into those two to three days or maybe a week that you're putting up the silage, - targeting the right moisture, kernel processing, chop size and packing it well,” he noted. “If you’re not going to invest in the process, then shrink will be high. This can quickly go from being a very smart decision to a very poor decision if you don't invest the time and effort to manage it.”
Headline photo courtesy of Galen Erickson
To read more articles like this one:
Optimize Corn Silage Harvest to Maximize Your Ration
Corn Silage Harvest: Want More Money in the Bunker
Five Key Priorities for Making Quality Silage