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Serving: IA
combine in corn field
NO MARKET PRICE: Questions often arise about how to arrive at a fair price for standing crops such as corn silage, oats, hay and cornstalks.

Figure a fair price for corn silage

Consider several variables when negotiating a price for corn silage.

In the absence of a reported market price, determining a fair price for corn silage is a negotiation between buyer and seller. As in most negotiations, the fair price is what the seller and buyer agree to, but there are many variables to consider in negotiating that price.

The biggest factors in determining price are the feed value of the silage, which is of interest to the buyer, and replacing the potential corn grain value, which is of interest to the seller, says Iowa State University Extension livestock specialist Russ Euken.

The feed value can be determined by the cost of alternative feed — such as corn grain and forage — or by using a feed analysis. In addition to the corn price and potential corn yield, there are other factors to consider. These include moisture and maturity at harvest, additional nutrient removal with silage harvest, alternative forage price and potential harvest and storage losses.

Using the silage price calculator

A rule of thumb for pricing is using a factor of eight times the corn price for standing corn, and 10 times the price of corn for harvested silage per ton for typical silage, Euken says. To help fine-tune pricing, consider using a spreadsheet or silage price calculator, which can help take many of those considerations into account. One such tool is available on the Iowa State Ag Decision Maker website. The spreadsheet helps determine a minimum price from the viewpoint of the seller and a maximum price for the viewpoint of the buyer.

Use the spreadsheet and make the following assumptions for harvesting and storage costs and additional fertilizer costs:

  • $35 per acre for grain harvest and $85 for silage harvest
  • 5 cents per bushel to handle and store grain and $2.50 per ton to handle and store silage
  • 20 cents per bushel for drying corn
  • 35 cents for phosphorus and potassium fertilizer
  • $60 per ton for alternative forage

Then estimating a 180-bushel corn grain yield at $3.75 per bushel, or a 23-ton-per-acre corn silage yield at 35% dry matter, the average of minimum price and maximum price is $30.75 per ton of silage. This is 8.2 times the corn price as unharvested, or $36.75 per ton of silage, which is 9.8 times the corn price, as a harvested crop.

If yield lower, is price lower?

For a comparison, using the same set of assumptions but a lower estimated 140-bushel corn yield and price of $3.50 per bushel, or a lower estimated 18 ton per acre of corn silage yield at 35% dry matter, the average of minimum and maximum prices is $28 per ton or eight times the price of corn as unharvested silage, and $35 per ton or 10 times the price of corn as harvested silage.

Source: ISU, which is responsible for information provided and is wholly owned by source. Informa Business Media and subsidiaries aren’t responsible for content in this information asset.

 

 

 

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