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0608 PD: Cows and forages vs. corn and soybeans

Curtis Cupp Published on 14 April 2008

Crop production demands for corn (starch) and soybeans (soy oil) have dramatically changed in the past 12 months in this country, as have the commodity prices that accompany them.

The needs for ethanol, biodiesel and the strong export markets (due to the weak dollar) have combined to produce the highest commodity prices in history.

The long-term balancing act for feed, fuel and food is just beginning. The only certainty at this point is higher prices for the staple starch and oil-bearing grain commodities.

Furthermore, the economic value of farm-raised forages are going to be impacted in no less of a dramatic format. Land rents, fertilizer, diesel fuel, as well as other operating costs, are all up significantly.

The opportunity for profitability, and whether a crop producer sells grain commodities or forages from his acreage, must be decided upon in the near future. The choice to raise crops or forages is complex and includes weighted concerns, such as whether his acreage base is flat and well-drained, or rolling and highly erodible.

He must also decide upon crop rotations and the nutrient removal differences between grains and forages and their financial impacts on his soil fertility. Table 1*describes the typical fertilizer nutrient removals per acre for corn, corn silage, soybeans and legume hay.

Labor and transportation costs are generally increased with forage production versus grains. This cost can be negligible if the dairy farm is right next door to the crop producer. However, it could add $100 per ton (dry hay) if the forage must be transported several hundred miles. The importance of excess soil compaction and its impact on future yields also needs to be evaluated, when raising forages versus grain commodities.

The bottom line for all of these considerations for both the crop producer and the dairyman is, “What is my forage worth in consideration of today’s grain commodity prices?”

The answer to this question has either been one of historical or supply/demand precedence. The historical opportunity for the pricing of forages has been one of “eight times the bushel price of corn” for corn silage, as an example. Another historical approach has been to take the corn and soybean meal valuation for the energy and protein contained in the forage, or its relative feed value (RFV).

The opportunity for supply/demand pricing has been based upon the need that ruminants require “roughage” in their diet, and when forages are in short supply, the need for “roughage” dictates higher forage prices.

These systems of forage pricing have merit, but they also have pitfalls. The historical approach of pricing corn silage on corn grain yield has limitations. The use of higher fiber digestibility corn silage hybrids may discount the corn yield value, whereas the total energy available to the animal may be the same (or higher) than conventional grain-yielding hybrids.

This approach also does not take into account the differences in fertilizer nutrient removal per acre between grain and forage production. The other historical approach of pricing forages on corn and soybean meal is that soybean meal does not take into account the value of the whole soybean, and it does not allow for a value to be placed on the farm-raised oil content of this commodity.

The supply/demand pricing format has practical application, but as we learn more about the cud-chewing requirements of cows we know we can feed less forage and more high-fiber byproducts such as wet brewers grains, citrus pulp, beet pulp, soy hulls, etc., as long as we control starch levels in the rumen.

The other option of forage feeding is to feed fewer pounds of a higher neutral detergent fiber (NDF) long roughage versus more pounds of a lower NDF long roughage for the net cud-chewing effect to be the same.

The differences between the protein and energy content of a poor roughage and premium roughage can be made up with cheaper byproduct feeds. This does not mean we should raise poor-quality forages, but rather this relates to only that roughage which is added for the “scratch factor.” How then should a dry roughage that has a low inclusion rate in a diet be priced?

According to many nutritionists the typical amount of effective NDF as a long roughage scratch factor that should be added to lactating cow diets is 2 pounds of NDF per 50 pounds of dry matter intake (DMI). For example, 3 pounds of wheat straw at 90 percent dry matter (DM) and 75 percent NDF or 5.9 pounds of alfalfa hay at 85 percent DM and 40 percent NDF satisfy these requirements. In recent months dairy producers have been inquiring about the “fair market value” of their forages. The same is also true for their forage-producing crop farmers.

They want to be fair to each other and to themselves. With the preceding statement being very important, an Excel spreadsheet (as shown in Table 2*) has been developed that will calculate the fair market value of a forage relative to the price of corn and whole soybeans. It is simply a conversion of the protein and energy from a forage test to the protein and energy contained in shelled corn and whole soybeans and the commodity pricing per nutrition unit thereof.

The conversion does not use soybean meal, but rather whole soybeans. The choice to convert a forage’s protein and energy to that of corn and soybeans is a practical and applicable conversion, in that, if no forages were raised, corn and soybeans would likely be the crops grown on the acreage base which is now reserved for forage production.

This spreadsheet allows equality of market pricing, whether acreage is planted to row crops or used for forage production. The spreadsheet is unbiased, as no byproducts are used to determine the net worth of a forage. It is simply a comparison and conversion of a farm-raised forage to farm-raised grain commodities. The Dairy National Research Council 2001 is the reference used for the protein and TDN1x values for corn and whole soybeans.

There is no perfect pricing format applicable to all forages, yet we must have a fair benchmark from which to start. This spreadsheet can allow for that determination.  PD

To download the Excel spreadsheet mentioned in this article, contact the e-mail address below.

Tables omitted but are available upon request to .

Curtis Cupp
Independent Dairy Nutrition Consultant

Curtis Cupp for Progressive Dairyman

See more articles like this at www.progressivedairy.com

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