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1207 PD: Corn silage pricing

Tim Beck Published on 30 November 2007

When attempting to price corn silage there are several methods that have been used to arrive at silage values. Many issues need to be addressed in a pricing system, including:

•amount of grain development in the crop

•drought impacts on the crop

•storage, hauling and shrink charges

•silage processing

•differences in the digestibility of corn hybrids

The cost of inoculants applied to the silage would need to be considered along with the quality of the corn processing used. When prices are quoted in the marketplace it’s often unclear how many of these issues have been considered. More research is needed to develop a method for pricing silage that adequately addresses the most important variables.

Two pricing methods are commonly used:

1. calculating the silage price based on substitute forage prices

2. computing the value based upon the price of shelled corn

The first method uses the price of other grass hay on a dry matter basis and takes 75 percent of that value to arrive at the price of corn silage. The formula for this calculation is:

(Other grass hay per ton/0.9 dry matter) x 0.75 x (dry matter of corn silage/100)

As an example, with grass hay at $132 per ton and corn silage at 33 percent dry matter, this would suggest corn silage would be:

($132/0.9) x 0.75 x (33/100) = $36 per ton

When considering this price, it’s vital to realize this is the price of the silage coming out of the storage structure, not the standing crop price. There are several discounts needed to get back to the field price, including:

•shrink due to fermentation losses that can be as high as 10 percent

•the cost of storage including plastic costs for covers or bags (potentially $1 per ton)

•chopping, hauling and processing costs

A second method would be to use the price of dry shelled corn times a factor of eight. At $4 corn grain, this would suggest a price of $32 per ton of silage. Others use a factor of nine that arrives at a price of $36 per ton of corn silage. This price would need to have the same adjustments applied as above to arrive back at the field level price for the silage.

Historical references suggest a factor of six times dry shelled corn should be used for drought-stressed corn plus $3 to $4 per ton for harvest and storage. So, drought-stressed corn with minimal grain would be worth $24 per ton if shelled corn was $4 per bushel.

The $3 to $4 adjustment for harvest and storage was made before processors, so it is too low when processing is used. Based on the custom rates value, processing may add another $5 per ton for a total adjustment for chop, process, haul, fill and pack of $9 per ton.

Since these adjustments vary by farm and the number of crop operations included in the price, it’s critical to consider the costs on your farm. In our example, these adjustments amount to nearly $14 per ton off the finished silage price to arrive at the value of the standing crop. Each producer will need to calculate this adjustment based on the harvest and storage methods used, storage losses and storage costs on their farm.

After using one of these methods to arrive at a price per ton for the corn silage, it’s important to consider how fermentation may have been affected by the dry matter and energy value of the corn silage. This is especially true for drought-stressed crops. Drought-stressed corn silage may have reduced energy value, or harvesting too wet or too dry may also have affected fermentation.  PD

References omitted but are available upon request at

—Excerpts from Penn State Field Crop News, Vol. 7, No. 24

See more articles like this at www.progressivedairy.com

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