A2B-Lancaster Farming, Saturday, July 19, 2003 Penn State Cooperative Extensi Capitol Region Dairy Team CONTRACTING CORN SILAGE Roland P. Freund Regional Farm Management Agent Carlisle In a previous column article I discussed the importance of each small farmer specializing in some enterprise. The families in a com munity can all be better off by specializing than if everybody continues to try to do everything independently. In recent years there has been a steady trend to ward specialization in the grow ing and supply of com silage. This is beneficial to the com grower and the dairyman. But both parties need to agree upon terms and conditions under which the com silage can be sup plied and fair payment made. Conditions may vary from the dairy contracting with a com grower to grow X acres and de liver to the dairy storage at har vest time, to a com grower pro ducing and storing silage and making daily delivery of the dairy’s needs. All those decisions! To assist in the process of arriving at a fair deal, I have prepared a checklist of about 40 points that parties to a silage deal should ponder. The worksheet accompanies this arti cle. The first thing to determine is if it will be a contract to grow by the acre or supply silage by the ton. Points 1 to 5 of the checklist cover those questions. • Contracting to grow per acre. If the dairy manager wants a com grower to plant, grow, and harvest X acres of com silage on the dairy’s land and/or Y acres elsewhere, he might negotiate this in the winter before planting. Then he can control such produc tion practices as variety; planting date; application of lime, fertility, and chemicals; harvest stage; height of cut; and kernel process ing. Under these terms the com grower is basically providing a custom growing service and the dairy manager dictates and con trols the growing process. Here the parties need to discuss points 6 through 27. They might decide that the dairy should pay the grower a fair payment for the services and inputs rendered by the grower, plus the rent value of any land supplied in the deal. This might work out to something like $l9O per acre on dairy’s land or $250 on grower’s land. If the dairy controls the growing, it should also bear the production or quali ty risks of drought, hail, or flood or transfer those risks to crop insurance. • Contracting to supply per ton. It is too late in mid-summer to try to dictate many of the pro duction practices as mentioned above. The dairy manager who did not contract with a corn grower to grow silage now has to find growers who have suitable fields of corn and negotiate with them to buy the silage. This time the grower is not furnishing a growing service but supplying a commodity com silage. The grower needs to get at least as much for the crop as it would brings §qJ<J gljejlptf pgip t Pf-„ Roland P. Freund tails of this transaction need to be discussed by working through points 1 through 5 and 16 through 40 of the checklist. The pmdent dairy manager now has the problem of calculat ing what the dairy can afford to pay for a given quantity (tons) of material of a specific quality (Dry Matter, NEL). The dairy needs to buy these nutrients in silage cheaper than it can deliver the same quantity and quality of nu trients to the feed bunk from other sources such as hay and grain. The grower and the buyer thus establish the minimum and maximum price range. This is the range in which they can strike a deal. • Location and time of pur chase per ton. A ton of com si lage standing in the field is worth far less than a ton of silage deliv ered to the feed bunk the follow ing July. The nutritionists can probably tell you what the latter value is compared to substitutes. Unless the grower delivers the si lage to the dairy feed bunk, the price should be adjusted for any costs to the buyer for harvesting, hauling, filling, storage losses, unloading and mixing. Determining how many tons there are in a given transaction requires measurement. Ideally, every load should be weighed and moisture tested. If representative loads are weighed, then many samples should be drawn to ar rive at a representative moisture level. The height of settled silage in an upright silo will probably give a more accurate tonnage than sampling loads. • Complex computations. As I write this in the second July, I can’t tell you what you should pay (or charge) for a ton of com silage two months from now. But I can direct you to a Website where you can find this article, the worksheet, and a spreadsheet where you can put in all the factors discussed above to come up with a price range with in which the silage deal might be struck. Go to http:// cumberland.extension.psu.edu/ Agriculture/FarmMgt/ fmmgt.htm and click on “Con tracting Corn Silage.” If you do not have Web access, perhaps your nutritionist, accountant, or extension agent can assist you to access both the worksheet and the spreadsheet as discussed jrtmtw....... 1 Are you contracting to Contracting Per Acre/Per Ton Price calculated on Years/seasons covered by contract Deliver to Buyer's Storage /Just-in-time Who furnishes land Rent Value of land used Who Decides? Acres to grow Hybrid variety Planting date 8 9 10 on Application of: 11 12 13 14 Who covers risk-drought etc Harvest date Kernel processed Height of cut Length of cut Who pays for: Harvesting Hauling Packing/blowing Innoculants Covers/bags Ensilmg/storage losses Acceptable range:Dry Matter Net Energy of Lactation NEL Mycotoxins Measurements and Prices: How quantity to be measured How quality to be analyzed Dry Matter Ton basis OR Adjusted to 35%D.M. Based on: Harvest contract Corns/Bu OR Other Corn Price Grass Hay Price OR Soybean Oil Meal Price Calculations using Quality Price Adjustments Note Well: This is NOT intended to be an agreement, nor a legally binding contract. It is a guideline for discussion which must take place between forage buyer and forage grower BEFORE a deal is struck to either grow a crop or supply forage under a specified set of circumstances. A legal contract based upon these terms be drawn up by legal counsef fpr one party and approved by legal counsel for the other party to this contractual arrangement. Entries Sought For Pennsylvania Soybean Yield Contest MILLIE BUNTING Market Staff LANDISVILLE (Lancaster Co.) —Soybean growers wanted. The Pennsylvania Soybean Board (PASB) is seeking appli cants to participate in the Soy bean Yield Contest 2003. An in tent to participate must be submitted and postmarked by Aug. 30,2003. This annual contest highlights practices which produce maxi mum economic yields and en- □ YES IWOUIP LIKE TO PARTICIPATE IN THE PENNSYLVANIA SOYBEAN YIELD CONTEST 2003! PLEASE SEND ME AN APPLICATION. NAME ADDRESS CITY STATE. I -'I Please mail* to. PA SOYBEAN YIELD CONTEST •ATTN JOHN YOCUM PO BOX 308 LANDISViLLE PA 17538 • Musi be postmarked by August 30. Contracting Corn Silage Needs Points to Negotiate Roland P Freund Penn State Extension Farm Management Lime Fertility Sidedress Chemicals Other Other courages the production of high quality beans. Any bona fide farmer who is growing five acres or more of soy beans in the state is eligible. Those entering the contest must use nonirrigated soybeans, but they are not restricted as to vari ety, fertilization, spacing, or other cultural practices. The top winner who produces the most soybeans per acre will be awarded the State Yield Champion Trophy and a trip for two to the 2004 Commodity RULES 1 Nol/c» of intent to participate must be sub mitted and postmarked by August 30. 2003 X Three (3) acres in one block (ex 209' x 627’ =3 ac) from a field of at least five (5) acres within the physical boundanes of Pennsylvania shall be selected by the grower For convenience the test area may be measured after harvest i A designated representative (other than the grower) shall a Measure the lest area b Be present when test area is harvested c Supervise weighing on state-inspected scales or an approved weigh wagon d Sign the report The designated representative may be an | NRCS (SCS) staff person, extension employee, production credit association representative. | FHA representative, FFA Vocational Ag Instructor, bank ag loan officer, pnvate crop consultant, stete/prtvate college agriculture staff or a retiree from one of these occupations The representative may have no financial or direct business ties to a company selling agn busmess supplies (i e , be totally independent) ZIP 4 Only one entry per farm will be accepted 5 There is no charge for contest participation 4 Moisture content shall be obtained on a state- j 7 Acre yields will be calculated on the basis of PENNSYLVANIA SOYBEAN BOARD approved moisture meter I 13% moisture Grow Silage? Acre? Grower $/Acre $ per ’Freund) Si Penn State Penn State (Ishler) Table ply Silai Sui Buyer per per per per per per ireadsheet Classic, March 2-4, 2004, in Las Vegas, Nev. The second-place winner will receive a trophy and SSOO cash. The third place win ner will receive a trophy and $3OO cash. Entries requesting an applica tion for the contest should be mailed to Pennsylvania Soybean Yield Contest, Attn: John Yocum, P.O. Box 308, Landis ville, PA 17538. Included with this story are the contest rules and an entry form. • Awards for growers Participants must complete all required forms provided with the application and meet all other requirements as herein stated to become eligible for awards a The grower who is certified in the contest as having produced the greatest yield per acre in accordance with contest rules will be declared the State Yield Champion for that year & receive first prize and a trophy b Second and third place winners will be recognized with appropriate pnzes & trophies c. Each contestant producing over sixty (60) bushels per acre from a plot officially entered & measured will receive an engraved plaque giving membership in the 60-Bushel Club 9 Publicity Production practices used by participants producing sixty (60) bushels or more per acre will be publicized at the time county and stale winners are acclaimed PENNSYLVANIA SOYBEAN BOARD HELPINC YOU CROW YOUR BEST!
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