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IBC silageproduction.jpg Iowa Beef Center

Consider added factors in pricing corn silage

While fair price is what seller and buyer agree to, there are many variables to consider in negotiating silage price.

In the absence of a reported market price, determining a fair price for corn silage is a negotiation between buyer and seller. As in most negotiations, the fair price is what the seller and buyer agree to, but there are many variables to consider in negotiating that price, according to an announcement from the Iowa Beef Center.

Iowa State University Extension livestock specialist Russ Euken offered guidance for sellers and buyers on determining a corn silage price.

The biggest factors in determining price are the feed value of the silage, which is of interest to the buyer, and replacing the potential corn grain value, which is of interest to the seller. The feed value can be determined by the cost of alternative feed, e.g., corn grain and forage, or by a feed analysis, Euken said.

In addition to the corn price and potential corn yield, he said there are other factors to consider. These include the moisture and maturity levels at harvest, additional nutrient removal with silage harvest, the alternative forage price and potential harvest and storage losses.

According to Euken, a rule of thumb for pricing is using a factor of eight times the corn price for standing corn and 10 times the corn price for harvested silage per ton for typical silage.

To help fine-tune pricing, consider using a spreadsheet or silage price calculator that can help take many of those considerations into account, Euken said, noting that one such tool is available on the Iowa State Ag Decision Maker website. The spreadsheet helps determine a minimum price from the viewpoint of the seller and a maximum price from the viewpoint of the buyer.

For example, Euken suggested using the spreadsheet and making the following assumptions for the harvesting, storage and additional fertilizer costs:

* $35 per acre for grain harvest, and $85 per acre for silage harvest;

* 5 cents/bu. to handle and store grain, and $2.50 per ton to handle and store silage;

* 20 cents/bu. drying cost for corn, and

* 35 cents/lb. fertilizer cost for phosphorus and potassium, and a price for alternative forage of $60 per ton.

Then, estimating a yield of 180 bu. for corn grain at $3.75/bu. or a yield of 23 tons per acre for corn silage at 35% dry matter, the average of minimum price and maximum price is $30.75 per ton of silage. This is 8.2 times the price of corn as unharvested silage, or $36.75 per ton of silage, which is 9.8 times the corn price or as a harvested crop, Euken said.

As a comparison, using the same set of assumptions but a lower estimated corn yield of 140 bu. and price of $3.50/bu. or a lower estimated corn silage yield of 18 tons per acre at 35% dry matter, the average of the minimum and maximum price is $28 per ton, or eight times the price of corn as unharvested silage, and $35 per ton, or 10 times the price of corn as harvested silage, Euken added.

The Iowa Beef Center at Iowa State University was established in 1996 with the goal of supporting the growth and vitality of the state’s beef cattle industry. It comprises faculty and staff from Iowa State University Extension & Outreach, College of Agriculture & Life Sciences and College of Veterinary Medicine and works to develop and deliver the latest research-based information regarding the beef cattle industry.

Source: Iowa Beef Center, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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