Establishing a price for corn silage that's fair to buyer and seller alike is often a head-scratching proposition at best, a stomach-churning exercise at worst.
At the root of the problem are traditional rules of thumb for pricing a corn silage crop — multiplying the price of a bushel of corn by six to 10 times or multiplying the going price for top-quality hay by 50-66%. They usually fall far short in delivering an accurate picture of the crop's true value.
“It's just difficult to nail the thing,” says University of Wisconsin agronomist Joe Lauer. “We simply don't have a good way of marketing corn silage.”
A tug and pull between how buyers and sellers view silage comes into play. For buyers, feed value is likely to be the most important consideration in sizing up a silage crop. By most accounts, this is where the guideline of six to 10 times the price of a bushel of dry corn comes up short as a pricing mechanism.
“The problem is that it only values the grain portion of corn silage,” says University of Minnesota dairy nutrition specialist Jim Linn. “We really need to be looking at the fiber component as well as the grain component.”
Toward that end, Linn has developed a formula he thinks producers and nutritionists can use to more accurately assess the value of corn silage. The starting point is a base price that takes into account production costs like seed, fertilizer, agronomic practices and harvesting. The formula then makes adjustments for starch value and NDF digestibility (NDFd) in the silage. It also factors in potential milk production adjustments and considers milk price.
Working through the calculations can get tricky, Linn acknowledges. Several commercial forage-testing labs now offer analysis for NDFd and starch, so the key values needed for the formula can be obtained to assess corn silage value. (Linn uses an average starch value of 29%, which equates to about 150-bu corn).
He also cautions that the formula isn't a “one-size-fits-all” proposition. “There are so many individual situations,” he notes. “As people start to feed more corn silage, for example, they might not want as much starch. So the emphasis will shift to the fiber digestibility side of things.
“On the other hand, if 25% of the diet is corn silage, you might be more interested in the starch content. The overall feeding program and how you manage it dictates what you're looking for in the silage and what you're willing to pay for it.”
Bottom line, according to Linn: “It (the formula) at least gets people to a starting point where they look at silage based on quality, not just grain yield.”
For more information, e-mail Linn at email@example.com.
Corn silage sellers face a different set of considerations, says Mike Rankin, crop and soils specialist for University of Wisconsin-Extension. He advises sellers to start with the expectation that their silage is at least equal to dry corn and work from there.
“From a grower's perspective, it really doesn't matter what someone thinks the crop is worth as feed,” says Rankin. “If you sell it as grain, this is what you'd get for it.”
Once the base value of the crop is established, though, adjustments can and should be made up or down according to various silage quality parameters.
“It's important to adjust the pay price for silage moisture content,” says Rankin. “Either set it based on 100% dry matter or set your price at a given moisture content and make adjustments from there.”
Likewise, some corn types — brown midrib hybrids, for example — can offer quality advantages over others.
Sellers negotiating a price also need to keep in mind that things like harvesting, drying and hauling costs are factored into the price of dry corn up front, Rankin notes.
“Harvesting costs might be in the $4-5/ton range,” he says. “If the buyer is going to harvest the silage, you need to take that into consideration when you set the price.”
On the flip side, sellers also need to consider the potential drawbacks of marketing the crop as silage rather than as dry corn.
“With silage you're not leaving as much crop residue on the field and you have to determine how much, if anything, that's worth to you,” Rankin says. “You'll also likely be removing more potash (via stover) with silage. People usually don't think about that, but it can be significant.”
A final point: When dickering on price, buyers and sellers should be aware of local weather developments and market conditions.
“Maybe I'm a dairy producer who wasn't able to get my corn crop in this year because of an unusually wet spring,” explains Rankin. “If a lot of my neighbors are in the same boat and there's a shortage in the area, I'll probably to be willing to pay a little more for silage than I would in a normal year. In years of abundance, I'm probably going to be looking to buy at a lower price.”