The economics of growing maize silage on-farm

03 November 2015

Multiple factors influence the economics of growing maize silage on-farm

Maize silage grown on-farm is at its cheapest per kilo of dry matter in low pay-out years, reveals Ravensdown Agri Manager Bryce Fausett in a paper he is presenting to the New Zealand Grassland Association Conference today.

The paper titled ‘The true cost of maize silage’ is co-authored by J.S Rowarth and F.G Scrimgeour, and challenges assumptions that growing maize silage on-farm is the more economic choice. It details the multiple factors that influence the true cost of growing maize.

“Essentially,” Fausett summarises, “the research shows that in the 2013/14 dairy season, with an $8.40 per kilo of milk solids (kgMS) payout, the costs to many farmers of growing the maize on their own properties would have been more than the price for which it could have been purchased. However, the opposite would have applied in the 2014/15 season when payouts were low.”

The research showed that a significant cost for farmers growing maize for silage on their own properties was the “opportunity cost” (i.e. the loss of productive grazing area for cows). The cost of the loss of grazing production was much higher than the cost of purchased maize silage in a high payout year and/or on an intensively farmed property, with the reverse applying on low intensity properties and/or in a low payout year.

“The more profitable a farm is per hectare, the more the maize is actually costing, so for the most profitable farmers it is likely to be more economical to buy maize in,” Fausett says.

“In situations where on-farm and purchased maize costs are similar,” Fausett says, “a balanced consideration of factors is required. Non-economic factors, such as yield risk, environmental considerations, effluent use and pasture renewal systems will probably influence the farmer’s decision on whether or not to grow maize on-farm.”

Even in a good payout year, the economics of growing maize silage on-farm were probably on the good side for low intensity properties, Fausett notes, whereas for high intensity properties, the cost of growing maize is more often going to be higher than the cost of purchasing it.

“By taking into account opportunity costs the farmer gets a more accurate estimate of the cost of the feed in that given year.” Fausett concludes “In all scenarios, farmers should also take into account the non-financial advantages and disadvantages, including the risks of opting for on-farm production versus purchase, to make a decision that best suits their farm.”

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