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Pricing Corn Silage - Fall 2013

John Hanchar, Farm Business Management
Northwest New York Dairy, Livestock & Field Crops

September 23, 2013
Pricing Corn Silage - Fall 2013

  • Price analysis suggests that the price of corn silage depends on corn silage quantities, the price of alfalfa hay, the price received by farmers for milk, and the price of corn grain.
  • Estimated corn silage price is sensitive to alfalfa hay price and corn grain price.
  • Price estimates combined with understanding of relevant supply and demand factors from an individual farm business owner's perspective can aid decision making regarding corn silage price. Given most recently available alfalfa hay and corn grain prices (August, and September/October 2013, respectively), price analysis suggests an estimated corn silage price of about $42 per ton.
Determining Corn Silage PriceA farm business owner can examine how much he/she would be willing to supply to a market at a given price. Cost of production analysis combined with consideration of other factors helps to define the supply relationship. A seller can develop a target based upon the above, but actual market conditions provide no guarantee that a buyer will purchase quantities desired at a price that achieves the producer's cost target.
Some farm business owners might approach the problem of determining corn silage price from a value in production, or input demand perspective. The amounts of corn grain and corn stover in a ton of corn silage, relevant prices, and corn silage's place in the milk production process are key variables. A buyer can develop a price target based upon the above, but actual market conditions provide no guarantee that a producer will sell the quantity desired at a price that matches the buyer's willingness to pay.
For more information regarding the two approaches mentioned above, visit the team’s website at and click on the “Forages” tab.

Although factors in price determination, the two approaches described above, by themselves, in isolation don’t completely determine market price and quantity. Supply and demand relationships work simultaneously in markets to determine price and quantity. Empirical price analysis brings supply and demand relationships together to determine price.

Corn Silage Price Analysis
Empirical price analysis suggests that corn silage price is a function of corn silage quantities, alfalfa hay price, the price received by farmers for milk sold, and corn grain price. Ordinary least squares regression provided an estimate of corn silage price as a linear function of the above variables. Even though the analysis is somewhat rough, elementary, readers of the original article describing this work in August 2012 noted that the analysis and estimates generated should be helpful to farm business owners looking to price corn silage.
Corn Silage Price Estimates – Fall 2013

Corn silage price estimates can be generated using the ordinary least squares regression results reported in August 2012, where estimated corn silage price is a function of alfalfa hay price and corn price, other factors (corn silage quantity and milk price) fixed at average levels for the period 1991 through 2010.

  • estimated corn silage price ($/ton) = 10.621 + (0.079 x price of alfalfa hay ($/ton)) + (2.448 x price of corn ($/bushel).
Consider the following as current market conditions.
  • alfalfa hay price is $205 per ton (USDA/NASS. Agricultural Prices. Washington, DC: National Agricultural Statistics Service. August, 2013.), and
  • the price of corn is roughly $6.00 per bushel (Western NY Energy. “Corn Bids.” September 10, 2013. Approximate value based upon reported bids for September through October 2013.)
Using the estimating equation and the above prices for alfalfa hay and corn grain yields an estimated corn silage price of $42 per ton.

Estimated corn silage price is sensitive to alfalfa and corn grain prices. Earlier this year, producers described market conditions very different than those described above. Suppose alfalfa hay price is $300 per ton, and the price of corn grain is $7.25 per bushel. Then, estimated corn silage price is $52 per ton.

Corn silage price estimates combined with understanding of relevant supply and demand factors from the individual farm business owner’s perspective can aid decision making regarding corn silage price.

For more information please contact John Hanchar.

Thanks to Christian Yunker, CY Farms, LLC/Batavia Turf, for providing valuable comments on earlier versions of this work.











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July 18, 2019
Batavia, NY

After the day's work is done, come hear about two new research trials conducted by Julio Giordano's lab:
  • Strategies for improving dairy cattle reproductive performance and economics
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July 23, 2019
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Come join us on July 23 in Seneca County at Quinten Good's farm for a demonstration and walking tour of 16 different pre- and post-emergence treatments in soybean and 12 different treatments and combinations in corn.
  • Tall waterhemp and marestail are two weeds that are resistant to glyphosate and ALS herbicide modes of action in the WNY and Finger Lakes regions.
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USDA Announces New Decision Tool for New Dairy Margin Coverage Program

WASHINGTON, April 30, 2019 ? Agriculture Secretary Sonny Perdue announced today the availability of a new web-based tool - developed in partnership with the University of Wisconsin - to help dairy producers evaluate various scenarios using different coverage levels through the new Dairy Margin Coverage (DMC) program.

The 2018 Farm Bill authorized
DMC, a voluntary risk management program that offers financial protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer. It replaces the program previously known as the Margin Protection Program for Dairy. Sign up for this USDA Farm Service Agency (FSA) program opens on June 17.

"With sign-up for the
DMC program just weeks away, we encourage producers to use this new support tool to help make decisions on participation in the program," Secretary Perdue said. "Dairy producers have faced tough challenges over the years, but the DMC program should help producers better weather the ups and downs in the industry."

The University of Wisconsin launched the decision support tool in cooperation with FSA and funded through a cooperative agreement with the USDA Office of the Chief Economist. The tool was designed to help producers determine the level of coverage under a variety of conditions that will provide them with the strongest financial safety net. It allows farmers to simplify their coverage level selection by combining operation data and other key variables to calculate coverage needs based on price projections.

The decision tool assists producers with calculating total premiums costs and administrative fees associated with participation in
DMC. It also forecasts payments that will be made during the coverage year.

The new Dairy Margin Coverage program offers very appealing options for all dairy farmers to reduce their net income risk due to volatility in milk or feed prices," said Dr. Mark Stephenson, Director of Dairy Policy Analysis, University of Wisconsin, Madison. "Higher coverage levels, monthly payments, and more flexible production coverage options are especially helpful for the sizable majority of farms who can cover much of their milk production with the new five million pound maximum for Tier 1 premiums. This program deserves the careful consideration of all dairy farmers."

For more information, access the tool at For
DMC sign up, eligibility and related program information, visit or contact your local USDA Service Center. To locate your local FSA office, visit

New Guidance for Mortality Disposal Issued

NYS Department of Ag and Markets has posted guidelines on disposal of livestock carcasses, in response to reports that some rendering companies have halted pickups from farms.|1