Sunday, June 7, 2015

Growing your own feed: why bother?

Bill Gauch posted a comnent that I think is great, and bears a little expansion:  

"I'm interested to see this from your PNW perspective. Here in New England, I've always read that it's pointless to grow your own hay and your own corn. The savings after the cost (labor, land, seed) to grow far exceeds what you could make as profit growing alternate crops and buying feed."

"its pointless to grow your own hay or corn" - there's two parts to that.  

 First, I'm never, ever going to be able to produce the corn more cheaply than the guys in the midwest.  Their economies of scale, much larger equipment, established subsidy system and infrastructure for moving corn around is unbeatable.  We produce corn in the midwest with the most efficient production possible on this planet.  And I'm not kidding.  American corn production is amaizing :)  

  But that speaks to the cost to the farmer for producing the corn; that's not at all the price that I end up buying that same corn for here.  

The corn I get here in Washington may come from the midwest, but it passes from the farmer to the grain elevator to the railroad and then to a broker or commodity speculator and finally gets here to the local feed mill, and then to me.  Every step of the way there's a markup.  So what the farmer produces for $3 and sells for $6 in iowa ends up being $12 to $14 here in sacks at the feed store, or $380/ton in bulk feed (=$10.50 for a 50lb unit)

 I don't have to compete with the guys in iowa at $3 - if I were to try to sell my corn on the commodity market that's what I'd have to do, and I'd go broke trying that.  What I do have to compete with is the local retail price here of $12 -- and that gives me a lot more room to play.  at $12 a bushel and 150 bushels/acre I'm harvesting $1800/acre worth of corn, at retail per acre.  And that's with a low-yield, short-season corn.  150 bushel corn is nothing special; high-yielding varities are over 200 bushels.  Bushel of corn is 56lbs, btw.    I chose this type of corn based on it being a 90 day corn; I want it to mature early, and have the most time possible to dry-down before harvest.  September and october are usually fairly dry months here.  

Now corn prices this year will likely be lower; the farmer press is sure of it.  But even if corn goes to $4 a bushel (30% reduction in price) or $3/bushel (cost of production, 50% price drop) that often doesn't result in a 30 to 50% price drop at retail; those guys still want their cut, and as much as they can.  So the price I'm competing against is insulated from market prices - which means that I still have quite a bit of margin before I lose money raising corn.  

And Bill, you're right.  To buy corn from the midwest with farm revenue I'd have to grow and sell something else, and probably  sell at wholesale, and then use those wholesale dollars to buy at retail.  I'd like to step off that path and try something different.  


11 comments:

answer2me said...

If your feed store cost is 380$ a ton, What do you expect the cost of growing it your self per ton to be.

Nick Keenan said...

Bruce --

I've read that government subsidies play a huge role in the corn market and led directly to the creation of the feedlot model. Feedlots are generally located near railroads, they buy grain by the railcar at not much above the price paid to the farmer. The subsidy for corn comes to about $2/bushel, so the feedlot operators are able to buy corn for less than the cost of production. You only get the subsidy if you sell your crop, so a farmer who grows corn to feed to his own animals is at a disadvantage to one who buys feed (or sells feed).

I'm in southern New England and there are plenty of people growing corn and hay. I don't know corn, but most of the people harvesting hay are "custom" operators who spend the entire summer haying other people's land. The reason for that is economy of scale: more expensive hay equipment is more productive, to be competitive you need to have a minimum of about $100,000 worth of equipment, even that is pretty bare-bones, $300,000 might be more like it. If you have that much tied up in equipment it needs to be running every day between Memorial Day and Columbus Day. Which doesn't leave you much time to do anything else.

People have been growing corn here for hundreds of years, the Indians were growing it when the Pilgrims arrived. However, the past 70 years of "conventional" agriculture have created weeds and pests so strong that corn can no longer be grown any other way.

answer2me said...

What is your cost to produce price per ton?

Bruce King said...

Nick: Subsidies for corn production absolutely play a big part in most corn farmers lives, and in their farm plans. the government has a vested interest in stable food prices, and subsidies are very popular - read: hard to vote against as a polititician. So they're here to stay I think, for both reasons.

What you say about economies of scale, and larger machines, is absolutely true. My little 4 row corn planter doesn't hold a candle to the 80 row monsters that you see on youtube. With my forage production, the biggest expense I have is labor to move it out of the field and into the barn. I'm probably going to do something about that later this year, or next year.

In this area I don't really have a custom cultivate/plant/weed/harvest option. The local farmer that I did try to have do some planting for me ended up screwing me, so in self-defense I'm basically owning my own equipment and labor to do the job. Had he been satisfactory or if I had other choices I may very well have chosen to go that way myself.

Bruce King said...

Answer2me: I won't really know what my price per ton is until I get the harvest in and weigh it. But I can give you my planting costs so far:

Tractor time so far:
6 passes of disk over 20 acres, at 3 hours/pass, 18 hours
1 pass of plow over 20 acres, at 15 hours
2 more disc passes at 3 hours, 6 hours
lime application, 6 hours
seeding at 12 hours
total 57 hours of tractor time, $25/hour cost (15/hour labor, $10/hour fuel/maint)
total tractor cost: $1425

inputs:
200 gallons of diesel @2.40/gallon
8 sacks organic open-pollinated corn seed, $245/sack, $1960
30 tons lime, $30/ton + 330 delivery, $1230
Mixed organic dry fertilizer per soil test, $1675
total input cost: $5345

Not listed here:
parts/Repairs to seeder: $570
parts/Repairs to disc: $220

Total cost to plant 20 acres: $7560

Cost per acre so far: $378

Estimated yield - 150 bushels at 56 pounds/bushel, 8400lbs/acre

I'm going to incur costs harvesting, and I may not get the yield I am expecting, but what I'm hoping for is a cost of something like $500/acre everything included, which would get me the corn at a price of about $0.06 cents a pound for my corn, vs $0.19/pound of feed.

Nick Keenan said...

Bruce --

You make a good point, which is that it's tough to run a farm and be dependent on custom operators. All farming is weather-dependent and timing dependent. Custom operators have their own priorities and they may not align with yours.

I had the ironic situation last year of a custom operator taking hay off of my land and then I had to buy hay. He had already sold the hay from my land to another customer and couldn't leave any for me. This year I am going to try and take hay myself on a small scale. I won't be nearly as efficient, but I'll do it on my schedule and keep it for myself.

George said...

I'm curious as to why you had to make so many passes w/ the disc? If I run a plow, its usually 2 passes w/ the disc. If its ground thats been in hay, or cover crop, 2 passes make a nice seedbed for corn.

Bruce King said...

Started out with long grass and lots of weeds, so did the first few passes of the disk to slice up the vegetation and to expand the field a little; ran the disk around the edges of the field, and got 3 or 4 acres back from the blackberries. My plow doesn't have coulters, and plowing with long grass the plow gets gummed up and have to stop and kick stuff off the plow. Did a couple more passes with the disk to see if I could get a seedbed with just the disk, didn't like it, plowed, and then had to go over it a couple of times more to get the consistency down to something that I was happy with.

If I were to do it again I'd probably brush hog, do a pass with the disk, and then plow, and then disk until satisfied.

I've been thinking tha I should probably get a bigger/better disk. Mine is a JD 210, 12' disk, and I'm thinking it's not as good a disk as it could be; I've fiddled with the angles a little, but in watching other farmers in the area their disks seem to do a better job than this one. My works, just seems to take another pass or two to get to the same result. The disk can get good results - the pics of the corn planting from the last entry give you an example of that disks results, but I'm feeling like it takes me extra passes to get there.

Bill Gauch said...

I'll be interested to see the end result. You've clearly done the math, which it seems that few people actually do. So, aside from weather-related catastrophe, I assume you will make out in the end.

George said...

Ah yes that 210 is more like our other set of discs that we use for the last pass to even up (even though it does leave a ridge down the center) fields and finely chop up any remaining clods.

For our primary tillage disc we use a miller disc harrow. Not ours, but looks very similar.. http://farmequipmentusa.com/wp-content/uploads/2010/10/015.jpg It is an offset disc harrow, and also has a secondary hydraulic cylinder to to put more down pressure (tilts) the front set into the soil further. We also use 22-24" notched platters which really helps to cut in well. I think you would be better served by upgrading, should result in less trips across the fields.

Rich said...

I'm in a completely different part of the country, growing winter wheat, so any suggestions I give might not work exactly the same for you as they work for me, but when I was still using tillage I used to disc my wheat stubble, then I'd have to wait for a rain before I could chisel plow the field. It was important to wait for enough moisture before chiseling to both breakdown the straw and clods, and get any weeds, etc. sprouted so I could start to clean up my field.

After chiseling (usually as deep as I could), I'd leave the field until more rain came and then I'd run a field cultivator to start building my seedbed. Right before drilling my wheat, I'd usually run the field cultivator one more time to kill any weeds. All totaled, it would take around 3-4 tillage passes spread out over 3-4 months to get my fields ready to plant wheat again.

To me, it sounds like you might not be waiting long enough between your tillage operations, since it takes time for all the grass and stubble to break down after discing. If everything hasn't started breaking down after the first tillage pass, discing it too soon will just bring everything back up on the surface that you buried on the first pass.

Of course, I'm also farming in a drier part of the world, so most of the above might not even apply to your farm.