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.”
– Ends –