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Managing economic risk in grazing corn In grazing corn |
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| Written by Administrator | |
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Growing grazing corn is expensive, but managing risk can make it an economic
alternative to swath grazing cereals.
Forage corn acres have gained plenty of coffee shop talk in the past few years.
After all, seeing cows out grazing standing corn in the middle of the winter
was not a common sight until a few years ago. After the frost impacts of 2002
and 2004, though, some farmers have been left wondering if the added expense
of growing corn is worth the risk. However, with the extremely favourable grazing
corn crop of 2005 tilting the scales back to grazing corn, just how do the economics
pencil out and what are the risks? Lorne Erickson, forage systems beef specialist with Alberta Agriculture, Food and Rural Development at Lacombe, says that to develop realistic economic numbers, you have to be careful to compare real-world situations. "We've done some economics and essentially, if we compare corn seeded in mid-May, when it should be seeded in our short season area, with a cereal seeded in mid-June for swath grazing, then corn starts to look pretty good," explains Erickson. However, when corn is compared to a cereal seeded in mid-May for either silage or greenfeed, then corn does not compare as favourably. "Corn doesn't yield that much better under that situation and it costs more to grow it than cereal silage," says Erickson. When comparing costs of cereals and corn grown for silage or winter grazing, cereals cost less to produce and corn costs more. No surprise there. In fact, when corn silage is compared to cereal silage, corn can cost about $100 per acre more to grow. But when harvest costs are eliminated, then grazing corn costs come down to about the same as cereal silage, but still about $55 more per acre than cereal swath grazing, according to Erickson's calculations. At the Western Beef Development Centre at Lanigan, Saskatchewan, researcher, Bart Lardner has looked at the economics of growing corn since 1999. His 2002 Grazing Corn Report found the cost of growing grazing corn to vary from $166 to $129 per acre. In that trial, his seed and fertilizer costs were lower than EricksonÕs estimates. Unfortunately, frosts during the first week of August 2002 severely cut corn yields, so estimating grazing days was difficult. Lardner also compared swathed corn and barley for backgrounding calves in 2003. The costs for growing those crops were similar to Erickson's, at $155.62 per acre for grazing corn and $92.16 per acre for swath grazing barley. He is now into a two year grazing corn trial funded by Monsanto Canada, but the results are not yet available for publication.
If grazing corn costs more to grow, then the only way it makes economic sense is if it out-yields cereal swath grazing - producing more cow days per acre. Vern Baron, a forage physiologist with Agriculture and Agri-Food Canada at Lacombe, says that when comparing forage grazing yields on the ranch, be sure to compare the systems properly. "One of the things people forget is that when the planting date is delayed for swath grazing cereals, the yields of oats or barley drop off dramatically," explains Baron. Research at AAFC Lacombe by S. Kibite shows that delayed seeding of barley and oats reduce yield by about 40 percent compared with a mid-May seeding. That reduction in yield starts to chew into the cost advantage of swath grazing cereals. Baron's research at AAFC Lacombe over four years established average yields of corn and cereal crops seeded in mid-May. He then estimated yields for the small grain cereals if they were seeded in mid-June, with a 40 percent yield penalty. He estimates that grazing corn can yield at least one ton more dry matter per acre. Erickson, Baron and colleague Arvid Aasen, a pasture specialist with AAFRD, then looked at the potential length of grazing days, based on these yields. Using an average consumption of 25 pounds of dry matter per day per cow, they found that grazing corn had substantially more cow days per acre than swath grazing small grain cereals. When the cost of growing the crops is compared to the yield and grazing days, Erickson says the cost per cow day pencils out favourably for grazing corn. Swath grazed barley came in the highest at $0.70/cow/day, followed by corn at $0.58, triticale at $0.56 and oats at $0.51. At Lanigan, Lardner's backgrounding calf trials saw corn yield estimates in early September 2003 at 5.67 tons per acre on a wet matter basis, compared to 1.86 tons per acre for the barley. The corn was seeded on May 30 and the barley on June 16. The DKC27-12 hybrid corn was seeded at 35,000 seeds per acre on 30 inch seedrows, and Excel barley was sown at two bushels per acre on an eight inch row spacing. Recommended production practices were used for both crops. "I always tell producers that corn will cost $150 per acre more to grow, but if you can manage to get 175 to 200 grazing days, then you can get costs down to $1 per day, or maybe even lower," says Lardner. He includes grazing expenses, such as fencing and watering, labour and fencing equipment and minerals and salt.
What about risk? Risk management comes down to assessing the crop production costs, potential yield and dependability of yield. Corn wins on yield potential, but costs more to grow, resulting in similar costs per cow day of corn at Lacombe, and similar cost per pound of gain at Lanigan. The remaining risk variable, dependability of production, is still being sorted out. The frosts of 2002 and 2004 certainly hurt yields of all swath grazing crops, but the large corn yields of 2005 point to the crop's potential. A clue to the dependability of yield lies in 'corn heat unit' maps. Lardner says the 30 year average at Lanigan in east-central Saskatchewan is around 1900CHU. However, that has ranged from 1600CHU to 2600CHU before the first fall frost. He says that for grazing corn, good cob development is necessary so there is enough protein and 'total digestible nutrients' to get the cows through most of the winter.
"Yes, corn is a higher risk crop if you look at the dollar outlay. It's a warm season crop that needs growing temperatures above 25 degrees C," says Lardner. "But here, if you can grow nine to 10 tons per acre on a wet basis, then the risk starts to look lower." Baron agrees with that assessment, and says that if you just look at risk as total outlay of money versus a wreck in production like in 2004, then corn is riskier. "But if you look at cost per cow day, then I think corn comes out equal or better than barley at Lacombe," he says. "The probability of a total wreck happening frequently is pretty low in areas with higher CHUs." Lardner says that given the recent frost wrecks for grazing crops, he recommends that grazing corn risk be managed by not putting all the eggs in one basket. "Put in a portion of your grazing acres in corn and the rest in a grazing cereal. In good years, you're going to do really well with the corn. In other years, you have the risk covered if you have a wreck with the corn because you still have some grazing barley to get you through part of the winter," he explains. "You need to manage risk in today's economic environment. At the same time, you have to try to cut cost of production." -30-
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