I was recently asked what the value a cattle feeder should put on home grown corn silage for budgets in 2008. Silage price should increase along with the value of corn for grain. However, silage has a lot of moisture and costs associated with transport and storage and there is not a straight line relationship. The following is an article with thoughts on how to value different types of silage and haylage.
Unlike with grains and even hays that usually have a base market price or value, silage crops are not routinely traded and thus arriving at a fair value for both the buyer and seller can be a problem. Corn, alfalfa and wheat silage are the most common.
Following is a brief discussion of some methods for determining prices that can be used. Since silages may contain 50 to 70% moisture, their amount of actual feed or dry matter varies greatly and should be taken into account. Thus, the first question one would ask or determine when dealing with silages is, what is the moisture or dry matter content? If dry matter content is not known, then it should be determined.
There are a number of methods and formulas used to determine the value of whole plant corn silage. They vary greatly in their degree of complexity but surprisingly all result in similar values. A “quick and dirty” method, is to use a factor of 8 to 10 times the price of a bushel of corn grain to obtain the price per ton of silage. A factor of 8 to 9 best fits for an “in the field” price, whereas a factor of 9 to 10 fits best for silage in storage. Use the higher range of the factors when corn grain is priced at $2.50/bu or less and use the lower range when grain is priced $3.00/bu. or more. Given a corn price of $5.00/bu., these factors would result in silage being priced at $40.00 to $45.00 per ton.
I prefer to use a method that is more complicated but takes into account moisture content of the silage in addition to the price of corn grain.
First, the method assumes that the dry matter of whole plant corn silage contains 50% grain. This can be adjusted if necessary.
Let’s go through an example to see how the method applies. We’ll assume that moisture content of the silage has been checked and found to be 65%. Therefore, dry matter content is 35%. To determine the amount of dry matter per ton, we simply determine 35% of 2000 lbs.
2000 lbs. x .35 = 700 lbs. dry matter per ton of whole plant silage
700 lbs. dry matter x .50 = 350 lbs. of grain dry matter per ton
350 lbs. grain dry matter x .85 = 411.8 lbs. no. 2 corn 56 lbs./bu. = 7.35 bu. no. 2 corn
If we again assume $5.00/bu., value of grain in the ton of silage is: 7.35 bu. x $5.00/bu. = $36.75.
Additional charges or costs should be made to cover the additional costs such as fertilizer, harvesting and storing of silage compared to corn grain. I use a value of $1.00 per 100 lb. of silage dry matter per ton to cover these costs. Here again, this value could be adjusted if conditions warrant.
For our example, there are 700 lbs. of dry matter per ton. Thus, $1.00/cwt. results in an additional value of $7.00. Adding the cost of the corn grain $36.75 and the $7.00 results in a total cost of $43.75 per ton of whole plant corn silage. This value is near that obtained earlier using a factor of 9 times the price of a bushel of corn. You might ask why go through all the extra calculations?
Let’s quickly take another example, but in this case the silage contains 60% moisture rather than 65%. Therefore, there are 800 lbs. of dry matter per ton as compared to 700 lbs.
2000 lbs. whole plant silage x .40 = 800 lbs. dry matter per ton
800 lbs. dry matter x .50 = 400 lbs. of grain dry matter per ton
400 lbs. grain dry matter x .85 = 470.6 lbs. no. 2 corn 56 lbs./bu. = 8.40 bu. no. 2 corn
8.40 bu. x $5.00/bu. = $42.00 for the grain
Adding $8.00 for the 800 lbs. of dry matter, results in a total value per ton of $42.00 plus $8.00 = $50.00. This is a difference of $6.25 per ton or represents $625 for every 100 ton of silage purchased or sold. Also, this difference occurred with only a 5 percentage unit change in silage moisture/dry matter content. Thus, it is important to take into account the moisture content of corn silage when determining its value. In addition, other factors such as spoilage and quality must also be given consideration.
ALFALFA AND OTHER HAY-CROP SILAGES
For pricing, these types of silages, I usually attempt to arrive at a fair price based upon what the forage might sell for as hay and then adjust according to dry matter content. Hay prices can usually be obtained in the local area.
Let’s assume for example, that hay is valued at $120.00 per ton. What value is fair for similar quality material as silage or haylage? Hay will generally contain around 13% moisture. Thus, a ton of hay contains: 2000 x .87 = 1740 lbs. of dry matter. At 120.00 per ton, each 100 lb. of dry matter is worth, $120.00/17.40 = $6.90.
Assuming that each 100 lb. of dry matter from silage or haylage has the same value, we simply need to again determine the amount of dry matter per ton. At 60% moisture, there would be 800 lb. of dry matter (2000 x .40 = 800) per ton. Thus, the value of a ton of this particular silage would be 8 x $6.90 = $55.20.
The above method assumes similar costs of harvesting, storing and feeding of hay and silage which may or may not be correct depending upon the situation.
SMALL GRAIN SILAGES
I know of no easy straight forward method for pricing these silages. A suggestion is to compare them with either hay-crop silages or corn silage depending upon the stage of maturity when the small grain silage was harvested. If harvested in the boot stage, feed value in terms of crude protein and energy will be similar to that of high quality hay-crop silage. Thus, a value can be based upon hay as discussed earlier. If, however, the small grain is in the dough stage when harvested, crude protein will be similar to that of whole plant corn silage, but energy value 80-85% that of corn silage. Thus, in this situation, the value of corn silage can serve as the base with an adjustment made for the lower energy value. Again, taking moisture into account will be important and can greatly influence value per ton.
Modified from Determining a Value For Silage Crops by Kern S. Hendrix, Professor Emeritus, Department of Animal Sciences, Purdue University