Guidelines for Estimating

Silage Production Costs 2016in Manitoba

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Date: January, 2016

This tool is available as an Excel worksheet at: or at your localis also available to help determine machinery costs.

Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and use of this information is the responsibility of the user. If you need help with a budget, contract your local MAFRD GO office.

Guidelines For EstimatingSilage Production Costs - 2016

This guide is designed to provide planning information and a format for calculating the costs of producing barley, corn and alfalfa grass silage for the purpose of feeding livestock in Manitoba. General Manitoba Agriculture, Food and Rural Development (MAFRD) recommendations are assumed in using fertilizers and chemical inputs. These figures provide an economic evaluation of the crops and estimated yields required to cover all costs. Costs include labour, investment and depreciation, but do not include managmement costs, nor do they necessarily represent the average cost of production in Manitoba.

The assumptions on which the costs were calculated are clearly defined in the supporting pages. They were developed using a combination of recommended practices and methods followed by many producers. The major advantage of silage is that the crop can be harvested when it is ready in almost all weather conditions. Since there are fewer harvesting losses, more nutrients are harvested per acre compared with most other systems. Ensiling permits the use of a wider range of crops including grasses, legumes, grains, corn and miscellaneous salvage crops that have suffered weather damage or weed infestation. The major disadvantages of silage compared with hay is that it requires more capital investment and labour. Also, silage has limited market potential, because trucking costs limit distance to market, it must be produced near the location where it will be fed.

These budgets may be adjusted by putting in your own figures. As a producer, you are encouraged to calculate your own costs of production for your silage crops. On each farm, costs and yields differ due to soil type, climate and agronomic practices.

The Farm Machinery Custom and Rental Rate Guide www.manitoba.ca/agriculture

MAFRD GO Office.

Guidelines: Silage Production Costs2

Manitoba Agriculture, Food and Rural Development

Year 1 ForageEstablishment 1

$/acre $/wet ton $/acre $/wet ton $/acre $/acre $/wet ton Your Farm

A. Operating CostsSeed & Treatment $14.63 $2.17 $86.40 $6.91 $36.00 - -Nurse Crop Seed - - - - $9.06 - -Establishment (amortized) - - - - - $15.33 $2.50Fertilizer $56.48 $8.37 $82.84 $6.63 $72.27 $45.99 $7.51Herbicide/Insecticide $12.00 $1.78 $12.00 $0.96 $25.00 $0.00 $0.00Field Fuel Costs $12.97 $1.92 $13.19 $1.06 $17.39 $9.46 $1.55Moving Fuel Costs $1.96 $0.29 $3.62 $0.29 $1.30 $1.77 $0.29Packing Fuel Costs $1.91 $0.28 $3.54 $0.28 $1.27 $1.73 $0.28Machinery Operating $11.67 $1.73 $11.67 $0.93 $11.67 $11.67 $1.91Machinery Lease $4.80 $0.71 $4.80 $0.38 $4.80 $4.80 $0.78Crop Insurance $10.31 $1.53 $11.64 $0.93 $5.80 $9.17 $1.50Miscellaneous $7.50 $1.11 $8.50 $0.68 $5.00 $5.00 $0.82Land Taxes $10.00 $1.48 $10.00 $0.80 $10.00 $10.00 $1.63Rental & Custom Costs $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Interest on Operating $3.97 $0.59 $6.83 $1.01 $5.49 $3.16 $0.52Total Operating $148.19 $21.95 $255.03 $20.87 $205.04 $118.08 $19.29

B. Fixed CostsDepreciation

Machinery Depreciation $29.17 $4.32 $29.17 $2.33 $29.17 $29.17 $4.77Bunker Storage $3.33 $0.49 $5.00 $0.40 $3.33 $3.33 $0.54

InvestmentLand Investment Costs $43.75 $6.48 $43.75 $3.50 $43.75 $43.75 $7.15Machinery Investment $7.29 $1.08 $7.29 $0.58 $7.29 $7.29 $1.19Bunker Storage $0.42 $0.06 $0.63 $0.05 $0.42 $0.42 $0.07Total Fixed $83.96 $12.44 $85.83 $6.87 $83.96 $83.96 $13.72Total Operating & Fixed $232.15 $34.39 $340.86 $27.73 $289.00 $202.04 $33.01

C. Labour $30.64 $4.54 $45.82 $3.67 $30.64 $18.14 $2.96

Total Costs $262.79 $38.93 $386.68 $31.40 $319.64 $220.18 $35.98

Estimated FarmgatePrice $ per ton $40.00 $32.00 $44.08 $44.08Yield per acre (ton) 6.75 12.50 4.47 6.12Gross Revenue $270.00 $400.00 $197.03 $269.76

Marginal Returns Over Operating Costs $121.81 $18.05 $144.97 $11.13 ($8.01) $151.68 $24.78Over Total Costs (Net Profit) $7.21 $1.07 $13.32 $0.60 ($122.61) $49.58 $8.10Operating Expense Ratio 54.9% 63.8% 104.1% 43.8%

Breakeven Price Per TonOperating Costs $21.95 $20.87 $19.29Total Costs $38.93 $31.40 $35.98

Breakeven Yield (tons per acre)Operating Costs 3.7 8.0 2.7Total Costs 6.6 12.1 5.0

Cost of TDN ($ per pound DM) $0.081 $0.082 $0.069Cost of Crude Protein ($ per pound DM) $0.444 $0.586 $0.285

1. Alfalfa-grass establishment (with oat silage nurse crop) net cost of $122.61 (total cost minus estimated gross revenue) were amortized over 8 silage production years.

TDN & Crude Protein Cost Analysis

Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility of the user.

Barley Silage Alfalfa-Grass Silage

Production Costs Production CostsAnnual Annual (Years 2 to 9)

Corn SilageAnnual

Production Costs

Silage Production Cost Summary - 2016

Profitability & Breakeven Analysis

Guidelines: Silage Production Costs 3

Manitoba Agriculture, Food and Rural Development

Cost/ Cost/ Cost/ Cost/ Cost/ Cost/Acre Ton Wet Acre Ton Wet Acre Ton Wet

A. Operating Costs $148.19 $21.95 $255.03 $20.87 $118.08 $19.29B. Fixed Costs $83.96 $12.44 $85.83 $6.87 $83.96 $13.72C. Labour $30.64 $4.54 $45.82 $3.67 $18.14 $2.96Total Cost of Production $262.79 $38.93 $386.68 $31.40 $220.18 $35.98

Estimated yield per acre (wet tons) 6.75 12.5 6.12Cost of TDN ($ per pound) $0.081 $0.082 $0.069Cost of Crude Protein ($ per pound) $0.444 $0.586 $0.285

Up DownPercent Yield Variation 10% 15%

Barley Corn Alfalfa Grass Silage Silage Silage

Higher Yield (tons per acre) 7.4 13.8 6.7Lower Yield (tons per acre) 5.7 10.6 5.2

Higher Yield Scenario - Up 10%Cost per ton $35.39 $28.12 $32.71Cost of TDN ($ per pound) $0.073 $0.074 $0.063Cost of Crude Protein ($ per pound) $0.404 $0.525 $0.259

Lower Yield Scenario - Down 15%Cost per ton $45.80 $36.39 $42.33Cost of TDN ($ per pound) $0.095 $0.095 $0.081Cost of Crude Protein ($ per pound) $0.523 $0.679 $0.336

Barley Corn Alfalfa Grass Silage Silage Silage

Cost of Silage ($/wet ton) $38.93 $31.40 $35.98

Equivalent Dry Hay Value (TDN Basis) for Breakeven Purchase Decision:Alfalfa/Grass - 12.6% H2O, 57.6% TDN ($/ton) $81.31 $82.66 $69.38

($/lb) $0.041 $0.041 $0.035

Alfalfa - 12.1% H2O, 63%TDN ($/ton) $89.44 $90.93 $76.32($/lb) $0.045 $0.045 $0.038

Alfalfa/Grass - 12.6% H2O, 13.1% CP ($/ton) $101.78 $134.23 $65.31($/lb) $0.051 $0.067 $0.033

Alfalfa - 12.1% H2O, 19.2% CP ($/ton) $150.03 $197.85 $96.28($/lb) $0.075 $0.099 $0.048

Barley Silage Corn Silage Alfalfa Grass Silage

Risk & Sensitivity Analysis

Forage Cost Comparison Analysis

Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility of the user.

Equivalent Dry Hay Value (CP Basis) for Breakeven Purchase Decision:

Guidelines: Silage Production Costs 4

Manitoba Agriculture, Food and Rural Development

Barley Corn Alfalfa-GrassYears tons/acre tons/acre tons/acre

1 6.75 12.50 4.47 (establishment year)2 - - 7.213 - - 7.214 - - 6.715 - - 6.216 - - 5.727 - - 5.468 - - 5.229 - - 5.22

10 - -

Total Yield - - 49.0Average Yield 6.75 12.50 6.12Years Production 1 1 8Years Rotation 1 1 9

1. Users are reminded to adjust fertilizer rates when making changes to forage yields.

Barley Corn Alfalfa-GrassCrude protein DM (CP)% 11.9 9.3 14.6Energy DM (TDN) % 65.5 66.4 60.4As fed moisture % 63.2 71.2 56.8

Barley Corn Alfalfa-GrassGrain price (per bushel) $4.00 $4.00 -Dry Hay price ($ per ton) - - $85.00Silage Price Factor x 10.00 8.00 0.5186

Silage ($ per wet ton) $40.00 $32.00 $44.08

Alfalfa/Grass Hay Alfalfa HayCrude Protein feed analysis % 13.1 19.2TDN feed analysis % 57.6 63.0Moisture content % 12.6 12.1

Estimated Yield of Silage - Wet Tons per Acre 1

Silage Forage Analysis

Silage Price Formula

Forage Value Comparison (Feed Analysis)

Guidelines: Silage Production Costs 5

Manitoba Agriculture, Food and Rural Development

Seeding Rate Price CostCrop per Acre per Unit per AcreCereal Silage

Barley 2.25 bu $6.50 /bu $14.63Corn 32,000 plants $0.0027 /bu $86.40

Alfalfa-Grass SilageAlfalfa-grass 10 lb $3.60 /lb $36.00Oat nurse crop (silage) 1.25 bu $7.25 /bu $9.06

Bulk Price Actual Nutrient Nitrogen SulphurFertilizer Type $/tonne $/lb Usage UsageNitrogen: (urea) 46-0-0 $536 $0.529 100% -Nitrogen: (NH3) 82-0-0 $820 $0.454 0% -Nitrogen: (liquid) 28-0-0 $344 $0.557 0% -Phosphorus: 11-52-0 $779 $0.568 - -Potash: 0-0-60 $507 $0.383 - -Sulphur: 20.5-0-0-24 $449 $0.397 - 100%MES S15: 13-33-0-15 $776 $0.640 - 0%

TotalCrop lbs $/acre lbs $/acre lbs $/acre lbs $/acre $/acreCereal Silage

Barley 80 $42.28 25 $14.19 0 $0.00 0 $0.00 $56.48Corn 110 $58.14 30 $17.03 20 $7.67 0 $0.00 $82.84

Alfalfa-Grass SilageAlfalfa-grass 0 $0.00 30 $17.03 60 $23.00 15 $5.96 $45.99Oat nurse crop (silage) 50 $26.43 50 $28.39 30 $11.50 15 $5.96 $72.27

1. Users are reminded to adjust silage yields when making changes to fertilizer rates.

Weed Insect Forage TotalControl Control Removal Cost

Crop $/acre $/acre $/acre $/acreCereal Silage

Barley $12.00 $0.00 $12.00Corn $12.00 $0.00 $12.00

Alfalfa-Grass SilageAlfalfa-grass $0.00 $0.00 $0.00Oat nurse crop (silage) $15.00 $0.00 $10.00 $25.00

Fertilizer 1

Seed & Treatment

The fertilizer recommendation will vary depending on the soil type, climate and crop rotation. MAFRD recommends that soil test sampling and analysis be conducted each year to produce a better baseline for fertility. It costs $0.50 to $1.50/acre for custom sampling and analysis.

Chemicals

Amount of Actual Pounds of Elements Applied Per AcreNitrogen Phosphorus Potash Sulphur

Guidelines: Silage Production Costs 6

Manitoba Agriculture, Food and Rural Development

Interest Rate on Operating 5.50%Silage machinery repair 4.00% (% of total investment)

Land Taxes ($/acre) $10.00

Fuel Cost ($/litre) $0.85

Labour Cost per Hour $20.00

Barley CornSilage Silage Establishment Production

Field Fuel Cost ($/acre) $12.97 $13.19 $17.39 $9.46Moving Fuel Cost

Truck capacity (tons) 20 20 20 20Fuel Use (miles/gal) 2 2 2 2Distance to storage (miles) 3 3 3 3

Total ($/acre) $1.96 $3.62 $1.30 $1.77Packing Fuel Cost

Tons per hour 45 45 45 45Fuel Consumption (litres/hour) 15 15 15 15

Total ($/acre) $1.91 $3.54 $1.27 $1.73

Crop Insurance 1 ($/acre) $10.31 $11.64 $5.80 $9.17

Other Costs ($/acre) $7.50 $8.50 $5.00 $5.00

Rental and Custom WorkSeeding/Planting ($/ace) $0.00 $0.00 $0.00 -Application ($/acre) $0.00 $0.00 $0.00 $0.00Silage Harvesting ($/acre) $0.00 $0.00 $0.00 $0.00General ($/acre) $0.00 $0.00 $0.00 $0.00

Total ($/acre) $0.00 $0.00 $0.00 $0.00

Labour Hours per Acre # Hired # of Acres Hours Cropping 0.875 1.131 0.875 0.250 Staff Months Farmed Per AcreSwathing 0.125 0.000 0.125 0.125 1 4 300 2.13Forage Harvest 0.133 0.200 0.133 0.133 2 0.5 300 0.53Trucking 0.266 0.640 0.266 0.266 0 0 300 0.00Packing 0.133 0.320 0.133 0.133 0 0 300 0.00

Total Hours 1.532 2.291 1.532 0.907 Total 2.7Total ($/acre) $30.64 $45.82 $30.64 $18.14

Trucks

Crop L/acre 1.29 1.85 0.75 2.42 1.29 0.42 1.21 9 0.42 0.5Cereal Silage

Barley 15.26 1 0 0 1 0 2 1 1 0 0.5Corn 15.52 1 1 1 0 1 2 0 1 0 0.5

Alfalfa-Grass SilageAlfalfa-grass 11.13 0 0 0 0 0 0 1 1 1 0.5Oat nurse crop 20.46 1 2 2 1 0 2 1 1 0 0.5

air drillrow

planterSP

sprayer

Alfalfa Grass Silage

Number of Field Operations3/4 ton pickupcultivate swather

forage harvester

Field Fuel Usage

Operating Costs

1Crop insurance: (2015 rates)Alfalfa grass establishment Insurance for $80/ac coverage.Annual Insurance for 80% Select Hay coverage in MASC (FA 6) with LTAY alfalfa grass <= 4 years, yield 1.529 tons/acre (3.63 tons/acre wet silage).Annual Insurance for 80% for Corn Silage and Greenfeed.

spin spreader

tandem disk harrow

Guidelines: Silage Production Costs 7

Manitoba Agriculture, Food and Rural Development

Land value ($/acre) $1,750 Land cost ($/acre) $43.75Total Silage acres 300 Machinery Investment ($/acre) $291.67Depreciation Rate 10.0%Investment Rate 2.50% Machinery Depreciation cost ($/acre) $29.17

Machinery Investment cost ($/acre) $7.29Barley Silage Bunker Storage (total cost) $10,000 Machinery Lease cost ($/acre) $4.80Corn Silage Bunker Storage (total cost) $15,000 Total ($/acre) $41.26Alfalfa Silage Bunker Storage (total cost) $10,000

Market Silage Silage Market Silage SilagePower & Misc Equipment Value Usage % Allocation Harvest Equipment Value Usage % Allocation

4WD Tractor 300HP $150,000 10% $15,000 Swather 25ft $25,000 10% $2,500MFD Tractor 175HP $50,000 10% $5,000 PT Forage Harvester $20,000 100% $20,000

$0 0% $0 PT Forage pickup header $2,500 100% $2,500$0 0% $0 PT Forage corn header $5,000 100% $5,000$0 0% $0 Dump wagon $7,500 100% $7,500$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0

Total $20,000 Total $37,500

Market Silage Silage Market Silage SilageSeeding, Tillage, Spraying Value Usage % Allocation Trucks & Trailers Value Usage % Allocation

Cultivator $25,000 10% $2,500 Diesel tandem w/silage box $50,000 10% $5,000Harrow 70ft $25,000 10% $2,500 $0 0% $0Air tank $15,000 10% $1,500 $0 0% $0Air drill 50ft $60,000 10% $6,000 $0 0% $0SP sprayer $75,000 10% $7,500 $0 0% $0Corn Planter $10,000 50% $5,000 $0 0% $0

$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0

Total $210,000 $25,000 Total $5,000

Owned Equipment TOTAL $87,500 $291.67 per acre

Annual Silage Silage Annual Silage SilagePower & Misc Equipment Lease Usage % Allocation Harvest Equipment Lease Usage % Allocation

enter equipment here $0 0% $0 enter equipment here $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0

Total $0 Total $0

Annual Silage Silage Annual Silage SilageSeeding, Tillage, Spraying Lease Usage % Allocation Trucks & Trailers Lease Usage % Allocation

enter equipment here $0 0% $0 1/2 ton pickup $9,600 15% $1,440$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0

Total $0 $0 Total $1,440

Leased Equipment TOTAL $1,440 $4.80 per acre* Leased equipment costs are listed under Operating Costs on the Summary Page.

Leased Equipment Inventory

Fixed Costs

Owned Equipment Inventory and Current Values

Guidelines: Silage Production Costs8

Manitoba Agriculture, Food and Rural Development

Fuel Costs:Includes fuel used for field work, and trucking in inputs.

Machinery Operating Costs:Includes costs for maintenance, repairs, licenses and insurance.

Crop Insurance: (2015 rates)

Miscellaneous Costs:

Land Taxes:

Interest On Operating:Interest charges on operating costs are calculated at 5.5% for six months.

Land Investment Cost:

Depreciation:Assumed 10% on machinery, no salvage value.

Investment Cost:Assumed 2.5% opportunity cost on machinery.

Estimated Farmgate Values:Silage prices are based on estimated prices for fall/winter 2014/15.

Profitability & Breakeven Analysis:Gross Revenue = Price per unit x Yield per acre (eg. barley silage: $40.00/ton x 6.75 ton/ac = $270.00/ac)

Net Profit = Gross Revenue - Total Cost (eg. barley silage: $270.00 gross revenue - $262.79 total cost = $7.21 per acre)

Operating Expense Ratio = (Operating Cost / Gross Revenue) x 100 (eg. barley silage: $148.19 operating expense / $270.00 gross revenue = 54.9%)

Breakeven Price = Cost / Target Yield (eg. barley silage cost $262.79 / 6.75 ton = $38.93 per ton)

Breakeven Yield = Cost / Price per Unit (eg. barley silage cost $262.79 / $40.00 ton = 6.57 ton)

Cost of TDN ($/lb DM) Silage = Total Cost Per Ton / (2000 x silage dry matter% x silage TDN%) (eg. barley silage cost $38.93 per ton / (2000 x 36.8% DM x 65.5% TDN) = $.081 per pound)

Cost of CP ($/lb DM) Silage = Total Cost Per Ton / (2000 x silage dry matter% x silage CP%) (eg. barley silage cost $38.93 per ton / (2000 x 36.8% DM x 11.9% CP) = $.444 per pound)

Equivalent Dry Hay Value (TDN Basis $/ton) of silage = 2000 x Hay dry matter% x Hay TDN% x Silage Cost of TDN($/lb DM)

Equivalent Dry Hay Value (CP Basis $/ton) of silage = 2000 x Hay dry matter% x Hay CP% x Silage Cost of CP($/lb DM)

Created and maintained by January, 2016For more information, contact your local Roy Arnott Benjamin Hamm Ray BittnerFarm Management Specialist Farm Management Specialist Farm Production Extension

(eg. alfalfa grass hay ($/ton) = 2000 x 87.4% DM x 13.1% CP x $.4445 per pound TDN barley silage (total cost @ $38.93 per ton)= $101.78 per ton) If dry hay costs less than $101.78 per ton, it is a lower cost feed source.)

Land values are based on appoximate average land values in Manitoba. Budget assumed 2.5% return on land investment

Includes overhead expenses: silage plastic, hydro, telephone, accounting, buildings, supplies and insurance, etc.

The average for the province was based on land tax assessment and mill rates of a sample of municipalities growing crops.

Risk Area #14 - 80% Coverage, $160 Hail. Forage Area (FA) #6 - Establishment Insurance at $80/ac coverage and annual Insurance at 80% coverage.

Other Assumptions

(eg. alfalfa grass hay ($/ton) = 2000 x 87.4% DM x 57.6% TDN x $.0808 per pound TDN barley silage (total cost @ $38.93 per ton)= $81.31 per ton) If dry hay costs less than $81.31 per ton, it is a lower cost feed source.)

MAFRD Farm Management MAFRD GO Office or:

ESR-016086 January 2014

For more information• Contact your local Manitoba Agriculture,

Food and Rural Development (MAFRD) Growing Opportunities (GO) Office.

• Visit us at manitoba.ca/agriculture.