Pricing drought-damaged corn

Corn that has suffered severe drought damage is sometimes harvested as silage instead of grain. It can still have significant feed value if harvested at the right stage.

Pricing drought-damaged corn

Corn that has suffered severe drought damage is sometimes harvested as silage instead of grain. It can still have significant feed value if harvested at the right stage.

“There are several things you should consider before you decide to harvest drought-damaged corn for forage or silage purposes,” says William Edwards, Iowa State University Extension economist.

First and foremost, any damaged acres that are covered by crop insurance should be viewed by an insurance adjuster and released by the insurance company before harvesting takes place. Whether it’s your droughty corn you want to harvest or corn that belongs to someone else, the crop insurance agent should be the first person the owner of the standing crop contacts.

Grain producers may be willing to sell corn standing in the field to be harvested by a livestock producer or custom operator. The buyer and the seller must agree on a selling price. “The seller would need to receive a price that would give at least as good a return as could be received from harvesting the corn as grain,” says Edwards. “The buyer would need to pay a price that would not exceed the feeding value of the corn.”

Figure value as silage

Edwards offers the following guidelines to help you figure how much to pay your neighbor for drought-damaged corn harvested as silage or forage.

One ton of normal, mature-standing corn silage at 60% to 70% moisture can be valued at about eight times the price of a bushel of corn. For a $6 corn price, a ton of silage would be worth about $48 per ton. However, drought-stressed corn may have only 5 bushels of grain per ton of silage instead of the normal 6 to 7 bushels. A value of about six times the price of corn would be more appropriate. For silage with little grain content, a factor of five times the price of corn can be used.

If the crop is sold after being harvested and transported, those costs must be added to that value, typically $5 to $10 per ton, depending on whether it is done by a custom operator or the buyer, and the distance it is hauled. A buyer would only consider the variable costs for harvesting and hauling, whereas a custom operator would need to recover fixed costs, as well.

A spreadsheet for estimating value for corn silage is at www.extension.iastate.edu/agdm/crops/html/a1-65.html.

Crop insurace to the rescue

Farmers who suffer crop losses from the 2012 drought or any other covered peril, can rest assured that crop insurance indemnities will be paid timely, says Tom Zacharias, president of National Crop Insurance Services, the organization representing the crop insurance industry.

He says farmers who think they have a loss on an insured crop should notify their crop insurance agent within 72 hours of damage. Then they should continue to care for the crop and protect it against further damage if possible. Finally, the farmers must obtain consent from the insurance company prior to destroying or harvesting any of the insured crop.

He assures farmers that while it is too early to predict loss estimates, the insurance industry is ready for any claims that are filed. “2011 was a busy year for the insurance industry when we paid out more than $10.8 billion in indemnities,” says Zacharias. “The insurance companies handled those losses quickly and accurately, and they will do the same this year.”

Crop insurance is the most popular risk management tool for farmers. Congress is writing the 2012 Farm Bill and farmers from every major commodity group have testified what the farm bill needs to do. There is one main theme that threaded through their testimony: “Do no harm to crop insurance.”


This article published in the August, 2012 edition of WALLACES FARMER.

All rights reserved. Copyright Farm Progress Cos. 2012.

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