Tuesday, 3 November 2015
The economics of maize silage
Many assume that growing maize silage is a more economic choice than purchasing it. However, there are multiple factors that influence the true cost of growing maize silage on-farm.
Research shows that in the 2013/14 dairy season, with an $8.40 per kilo of milk solids payout, the cost of growing maize silage on-farm was more than the price for which it could have been purchased.
A significant cost is the loss of productive grazing area for cows (opportunity cost). This is much higher than the cost of purchased maize silage in a high payout year and/or on an intensively farmed property. By taking opportunity cost into account you get a more accurate estimate of the cost of the feed in that given year.
The opposite applies on low intensity properties and/or in a low payout year.
Even in a good payout year, the economics of growing maize silage on-farm are probably on the good side for low intensity properties. Whereas for high intensity properties, the cost of growing maize is more often going to be higher than the cost of purchasing it.
The more profitable a farm is per hectare, the more the maize is actually costing. For the most profitable farms, it is likely to be more economical to buy maize in.
In situations where on-farm and purchased maize costs are similar, balanced consideration is required. Non-economic factors, such as yield risk, environmental considerations, effluent use and pasture renewal systems will probably influence your decision on whether or not to grow maize on-farm.
In all scenarios, you should also take into account the non-financial advantages and disadvantages, including the risks of opting for on-farm production versus purchase, and make a decision that best suits your farm.
Our experienced team of Agri Managers, Agronomists and Technical Reps are here to help you in the decision-making process.