Cost Effectiveness of Silage Depends on Pricing It Correctly

(Sponsored Content)

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.”

  1. 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.

  1. 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.”

  1. 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.”

Galen Erickson
Galen Erickson, University of Nebraska-Lincoln

 

Headline photo courtesy of Galen Erickson

To read more articles like this one:

 

Dairy Herd Management

Optimize Corn Silage Harvest to Maximize Your Ration
Corn Silage Harvest: Want More Money in the Bunker
Five Key Priorities for Making Quality Silage

 

Drovers

Four Strategies to Plan Your Silage Season

Crop Selection Planning for the Next Silage Season

Crop Nutrient Needs for Alfalfa and Corn Silage

 

Sponsored by Lallemand Animal Nutrition 

 

Latest News

BT_Red_Angus_Bulls
Bull Breeding Soundness Evaluations

Before bulls are turned out this spring a complete breeding soundness evaluation (BSE) should be conducted by a veterinarian, including a physical examination, reproductive tract examination, and semen evaluation.

Mushrush_Argentina_Heifers
Keeping the First Calf Heifers on Track

Heifers conceiving early in their first breeding season will have increased lifetime production and efficiency. It is critical heifers attain enough weight to initiate their first estrous before the onset of breeding.

Stepped-Up Basis Repeal Would Be Detrimental to Ranches

Study says this tax increase, whether via tax at death or carryover of basis, will have negative impacts on family-owned businesses, US gross domestic product, and job creation both in the immediate and long term.

Nutrition Communications Workshop in Iowa

The Iowa Beef Industry Council (IBIC) recently hosted a nutrition communications workshop for dietetic graduate students enrolled in the University of Iowa’s Master of Clinical Nutrition Program.

Wendy's Corporate Responsibility Efforts and New Goals

Wendy's will focus on responsible sourcing, sustainable packaging, greenhouse gas reduction and increasing diversity within its leadership, management, and franchisees.

World Bank Expects Commodity Prices to Stay Firm on Economic Growth

Global commodity prices are expected to stay firm around current levels in 2021 after recovering in the first quarter buoyed by strong economic growth, the World Bank said on Tuesday.