Economics of Manure Bartering

Transcription

1 Regional View Economics of Manu Bartering Michigan: Online list of manu producers /cash grain farmers Kevin Erb UW Extension Environmental Resources Center (ERC) Illinois: Co-ops as brokers in some cases Ohio: State licensing of brokers Why Barter Regional View Manu has fertilizer value Fields without manu history can benefit Wisconsin: Dairy farmers don t want to be on a list of those with too much manu Value to fields with high fertility is less than fields with low fertility. Why Barter Mo even distribution of nutrients across watershed Regulations may force manu distribution Higher fertilizer prices make it mo feasible Wisconsin Approach Common types of exchanges Dutch Tat Manu for Feed Manu for Cash Manu for Services

2 Dutch Tat Barter Dutch Tat - Obstacle Farmers have land closer to another farm s manu source Each ages to haul a set amount of manu to the other s property Both save time, wear and tear Both benefit from manu s nutrients Dutch Tat Barter - Distance Obstacle 10,000+ cars per day = major hassle Can we put silage on the safer side of the road? Distance 20 Ac Field Each farmer saves 2 miles each way 3 Loads per ac = 240 miles saved/10 hours labor Manu for Feed Dairy farmer ages to buy certain amount of feed at set price Cash grain farmer ages as part of contract Cash grain farmer ages as part of contract to take so much manu Corn field planted 1 day earlier

3 Manu for Cash Cash grain farmer ages to pay a certain amount for the manu Amount based on: Hauling cost Nutrient value Who check is made out to has tax consequences Utilization of Dairy Slurry: Resource or Waste? Cost: major hurdle in moving liquid manu - Dairy Slurry is 90-95% water As a sult > 50% of dairy farms haul within 5 minutes of barn Turnquist et al Nutrient accumulation Manu Nutrients not efficiently utilized Potential Solution Shad costs: dairy & grain farmer Manu for Services Study Objective Cash grain producer trades services for manu Feed hauling Tractor use Tillage Evaluate the economics of transporting liquid dairy manu, and its potential as nutrient source in cash grain systems. Issues Addssed: 1. How much to load and haul: 1 to 5 miles? 2. What is the value of liquid dairy manu in corn? 3. How far could liquid manu be hauled if costs a shad: dairy and grain? Economics Factors Affecting the Economics of Transporting Liquid Manu Based on work by Ggg Sanford, UW Madison Agronomy Grad Student Costs 1. Manu hauling and spading costs 2. Fuel price 3. Fertilizer prices Value of Manu Fertilizer Replacement 1. Manu nutrient content 2. Crop nutrient needs 3. Soil test levels Is the a market value? 1. Manu forages 2. Grain farmer pays fuel 3. 50/50 split of manu management expenses

4 Manu Hauling Costs Variability of Slurry Nutrient Content (first year available) Average Manu Nutrient Concentration High concentration Low Concentration Nutrient Nutrient Price $/lb Slurry Nutrients lbs / 1000 gal. Market Value at 10,000 gal. / ac Mean Nutrients + 1 SD Market Value at 10,000 gal. l/ ac Mean Nutrients - 1 SD Market Value at 10,000 gal. l/ ac 2 million gallon pit ~200 acs 1 mile from pit Bid: $ 9,283 Fuel: $ 3,422 Tot: $12,705 N $ $ $19.40 (incorporated) P 2 O $ $ $8.27 K 2 O $ $ $34.34 S $ $ $1.59 Total $ $ $63.59 Manu Hauling Costs Soil Test Levels & Corn Nutrient Needs 20% change in diesel price = minimal impact on spading radius 20% change in N price = 0.4 mile change in bakeven distance Soil Test P: Statewide Ave.: 52ppm Dane/Columbia Ave.: 58ppm Excessively high range UWEX commendation: 0 lbs / ac Soil Test K: Statewide Ave: 141ppm Dane/Columbia Ave.: 163ppm Excessively High range UWEX commendation: 0 lbs / ac (Peters 2005 & A2809) Cost per acs to haul and spad dairy slurry (10,000 gal/ac) Overview of Variables cost dolla per p er ac $151 $128 $113 $106 $96 $86 $64 $63 $46 $38 $32 $26 $23 $17 distance from slurry pit (mi) fuel cost hualer bid(less fuel) total cost 2 methods of covering hauling expenses Dairy covers all own land shad payment 2 - soil test levels Optimum: N:P:K needed Excessively High: N-only needed 3 - levels of slurry nutrients Mean Mean + 1s.d. Mean 1s.d. 3 - N prices % 3 - Diesel prices % 108 potential combinations focus on a few key variables Sensitivity Analysis: Change in single variable holding all else constant

5 Effect of High Soil Test Level N - Only Effect of Optimum Soil Test Level N:P:K turns per ac c $ Effect of High Soil Test Level N - Only Effect of Optimum Soil Test Level N:P:K turns per ac c $88.05 dairy farmer 1.6 miles dairy farmer Effect of High Soil Test Level N - Only Effect of Optimum Soil Test Level N:P:K $ miles dairy farmer shad payment dairy farmer shad payment 1.6 miles 4.5 miles - - -

6 Effect of Slurry Nutrient Content shad payment optimum soil test: N:P:K Effect of Slurry Nutrient Content shad payment optimum soil test: N:P:K $180 $ miles 4.5 miles >5 miles high nutrients low nutrients mean nutrients Effect of Slurry Nutrient Content shad payment optimum soil test: N:P:K Conclusions $ Hauling dairy slurry is very expensive 2. Dairy hauling to owned land N-only: not profitable N:P:K: 1.6 miles mean nutrients average slurry 3. Most important factors (shad costs) Nutrient level of soil: miles ave. slurry 4.5 miles Nutrient content: 3 >5 miles ±1 s.d. N:P:K Effect of Slurry Nutrient Content shad payment optimum soil test: N:P:K Conclusions $ Factors of lesser importance Fuel Price Potential win win situation 4.5 miles >5 miles high nutrients mean nutrients Diesel $2.88 $3.46 / gal Distance duced by 3% Nitrogen Price N price / lb Distance duced by 7% Dairy: Hauling Costs, NMP Grain: Incased profitability, soil quality

7 Other Considerations Other Considerations WRITTEN CONTRACT IS ESSENTIAL Who provides 590? Incorporation time / mud on road cleanup Who is sponsible for manu sample? Field Responsibility If field is too wet, can either party delay application? Who is authorized to approve other fields? If manu is diffent than anticipated, (lower NPK), is the a medy? Other Considerations Summary Legal Responsibility Your land base may trump economic factors Spill insurance? Accident during transport? Ensuring manu applied according to plan Cafully consider all aspects befo signing an agement Other Considerations Summary Legal Responsibility Penalty for bach of contract? Length of contract? Recordkeeping sponsibility? Talk to other dairy producers about their experiences Talk to your custom manu hauler A written contract is essential

8 Questions? Kevin Erb UW Extension Environmental Resources UW Extension Environmental Resources Center (ERC)