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Posted 6 October 2008. Forage and Grazinglands. There Are New Ways to Price Corn Silage University of Minnesota. www.extension.umn.edu St. Paul, Minnesota (September 15, 2008)--What is a fair price for corn silage? The traditional formula—multiplying the price of a bushel of corn by 7 to 8—was simply based on the average amount of corn grain that a ton of corn silage contains. With more dairy producers purchasing standing corn silage, they are looking for a more accurate way to determine a value based on its feed value.
Fortunately, with today's more sophisticated forage tests it is easier to estimate the feeding value of corn silage. It is important that both buyer and seller approach the negotiation with a good faith effort and an attitude that both parties need to win for a successful long term relationship. For the seller, a starting point is to value standing corn silage based on the value of the corn minus the cost of harvesting, drying and hauling to market. For the buyer, a starting point should be the value of nutrients compared to alternatives. Corn silage is a combination of corn grain and stover (leaf and stem material). Therefore, it makes sense to determine the monetary value based on the nutritional value of corn grain, and a similar stover forage like straw or grass hay minus the harvesting cost and storage shrink. These two values provide a window to begin negotiation between the buyer and seller. University of Minnesota Extension dairy nutritionist Jim Linn has developed a formula taking into account the nutritional content of corn silage. This formula is based on the starch content of the corn silage and places a value on the stover portion as well. University of Wisconsin scientists have developed an easy-to-use spreadsheet and further refined the formula to adjust for harvesting costs, shrink, quality adjustment and the fertilizer value of the harvested stover. The results are two different values per ton. One is the minimum value for the seller based on the value of the corn and stover adjusted for harvesting costs. The other is the maximum value that the buyer should pay based on feeding value and the cost of harvesting. This provides an excellent starting point for negotiating a fair price. To develop a successful long term relationship between buyers and sellers, it must be a win-win situation. The seller's corn crop will be harvested earlier and harvesting, drying, and hauling costs will be eliminated. The buyer will acquire a consistent supply of high quality feed at a fair price. For more detailed information, see the Forage Quarterly Newsletter, at www.extension.umn.edu/forages. Contact: |
