What is going on in hog industry? Slow down in growth Plain says 1.8% bigger YTD

Transcription

1 Economics of Manure

2 What is going on in hog industry? Slow down in growth Plain says 1.8% bigger YTD

3 What s happening in Iowa hog belt? Slowing in growth of new construction 200 in in in ocs/2008/2003meyer.pdf web.missouri.edu/~plainr/powerpoints/hogoutlook8-07.ppt Circovirus vaccine & death losses China & pork exports Weather and corn/sb prices Slaughter capacity & Canadian production 3

4 Good news is Canada gave up 73,000 sows Buyout program to target 150,000 sows Maybe reach 125,000 Top five have 200,000

5 Iowa Egg Production

6 How much do we have? Hogs 1 gallon per day * 345 days * 8,000,000 pig spaces = 2,760,000,000 gals. per year Layers 10.5 Ton/ 1,000 = 546,000 tons 9,000, ton/1,000 = 315,000 tons 200,000 Milk cows 4,000,000 Cattle 230,000 Lambs 6

7 Other Issues Will expansion continue? Will Iowa remain the low cost corn state? Will there be more consolidation in pork industry? Will the demand remain for older barns? 7

8 180 bushel Corn following Soybeans Nitrogen ---- $ price per pound $0.70 pounds per acre Phosphate ---- $59.16 price per pound $0.87 pounds per acre Potash ---- $37.80 price per pound $0.70 pounds per acre bushels of Soybeans following Corn Phosphate ---- $39.15 price per pound $0.87 pounds per acre Potash ---- $52.50 price per pound $0.70 pounds per acre Total value of replacement N,P,K is $300 8

9 170 bu Corn following Corn Nitrogen ---- $ price per pound $0.70 pounds per acre 200 Phosphate ---- $55.68 price per pound $0.87 pounds per acre Potash ---- $35.70 price per pound $0.70 pounds per acre $230 worth of N,P, and K 9

10 Table 7. Average U.S. farm prices of selected fertilizers Year Month Anhydrous ammonia Nitrogen solutions (30%) Urea 45-46% nitrogen Ammonium nitrate Sulfate of ammonium Superphosphate 20% phosphate Superphosphate 44-46% phosphate Diammonium phosphate ( ) Potassium chloride 60% potassium 2000 Apr NA Apr NA Apr NA Apr NA Apr NA Apr NA Apr NA Apr NA ??? $950 $500 $800 $800 $1000 $850

11 Manure Easements and Agreements Only one year agreement required Banker may want it for as long as the loan DeCoster has a few permanent It attaches to the deed to the ranch Usually written by the other attorney Requires the landowner s signature so often a three way. Tenant, landowner, bldg, pig owner Mays, shalls, will Who pays what, where, when 11

12 Costs Associated with Manure Management Manure Management Plans Storage Manure transportation and application Misc. 12

13 Manure Management Plans Application permit - Matrix Phosphorus Index Annual DNR update fees 13

14 Storage Costs Initial Construction Usually part of facility Maintenance of facility Maintenance of the grounds Property taxes??? - Temporary storage costs - new??? 14

15 Manure Transportation and Application Licensing fees Liability insurance Labor Record Keeping Fixed costs Variable costs 15

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17 Estimating Farm Machinery Costs Tractor $181,000 purchase $181,000 New so 0 hours Life 10 years Interest rate 7% 600 hours a year, 225 hp., $13 labor 17

18 Estimating Farm Machinery Costs Manure Tank Wagon $80,000 list higher yet $80,000 cost New so 0 hours Last 7 years 2,500 acres 5 acres per hour 18

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20 Costs $96,115 per year on the average

21 Other Costs Licenses & training Pickup Pump and tractor Additional labor Moving from site to site 21

22 5 year old Comparison $52,000 compared to $96,000

23 Operating Costs See Machinery Spreadsheet Importance of fixed costs on equipment a) Seasonal leasing b) Spring season c) Other uses for tractors true for dry 23

24 Revenue 4 acres per hour (4.4 mph) 12 hours per day (50% eff.) 60 days per year 3,500 gallons per acre $.009 per gallon $90,7200 per rig 24

25 Revenue 4 acres per hour (4.4 mph) 12 hours per day (50% eff.) 60 days per year 3,500 gallons per acre $.015 per gallon $151,200 per rig 25

26 Revenue 4 acres per hour (4.4 mph) 12 hours per day (50% eff.) 60 days per year 4,000 gallons per acre $.015 per gallon $172,800 per rig 26

27 Revenue 4.8 acres per hour (4.4 mph) 12 hours per day (60% eff.) 20% increase 60 days per year 4,000 gallons per acre $.015 per gallon $207,360 per rig 27

28 Cost of Travel Time in Minutes Load Unload Base Travel Extra Travel Time Percentage % Traveling one mile farther will increase time by 25% Assuming 20 mph travel speed, base distance equals 2 ½ miles 28

29 Cost of Travel Time in Minutes Load Unload Base Travel Extra Travel Time Percentage % Traveling one mile farther will increase time by 40% Assuming 20 mph travel speed, base distance equals 1 mile 29

30 Cost of fewer Acres per Hour Rate Gals. Acres/hr. Income $ $ $ $ $ $35.00 $11.67 Need to charge $12 per acre more when the acres per hour declines from 4 to 3. 30

31 Cost of fewer Acres per Hour Rate Gals. Acres/hr. Income $ $ $ $ $ $60.00 $20.00 Need to charge $20 per acre more when the acres per hour declines from 4 to 3. 31

32 Hauling Dry Layer Manure May be able to buy a barn. Typically is handled by broker. May be covered by IDALS Chapter 200 or 200A 32

33 Typical Costs Buy the material Loading Hauling Re-loading Spreading 33

34 Loading Loader heavy duty

35 Loading/Reloading

36 Trucking

37 Trucking $27,000 per year or $2.22 per ton

38 Loading/Reloading

39 Spreading Use either the tractor and spreader or the truck calculator

40 Spreading $79,000 per year or $8 a ton

41 Total Costs Material cost Loading cost Hauling cost Loading cost Spreading cost Total Plus $3.00 / ton $2.25 / Ton $3.00 / ton $8.00 / ton $16.25 plus material / ton 41

42 Conclusions Travel time is a major factor in costs. Need to run the numbers to see how it impacts your operation. With the higher fertilizer prices it will pay to haul farther. 42

43 Placing a Value on Manure Two schools of thought: What ever the market will bear or Nutrient Replacement Values 43

44 What ever the Market will Bear Based on supply, demand and transaction costs with discounts for potential limitations. When demand increases and supply remains constant the value goes up if there aren t competing substitutes. Ex: Discussion about ethanol plants competing with feed mills if areas import corn and the transportation costs that could be associated with that. 44

45 Potential Limitations Uniformity of product Correct Ratio of ingredients Need all of the ingredients Timeliness Compaction As well as benefits such as organic matter, slower release N and micronutrients. 45

46 What ever the Market will Bear Based on supply, demand and transaction costs with discounts for potential limitations. When supply increases and demand remains constant the value goes down if there aren t new uses. Ex: If one area is over supplied, the buyers will be able to discount price. When the cost of exporting increases the local market price will decline further. 46

47 Nutrient Replacement Values 2005 Crop Removal Rates Nitrogen $ units = $52.80 Phosphorus $ units = $31 Potassium $ units = $19.55 Total value = $ Assumes corn/soybean rotation with 170 and 44 bu. yields 47

48 Nutrient Replacement Values 2009 Crop Removal Rates Nitrogen $ units = $112 Phosphorus $ units = $87 Potassium $ units = $80 Total value = $280 Assumes corn/soybean rotation with 170 and 44 bu. yields 48

49 Nutrient Replacement Values ,339 gallons of hog manure wet dry feeders Nitrogen $ units = $52.80 Phosphorus $ units = $53.63 Potassium $ units = $33.15 Total value = $ Note: this rate is above crop removal for nitrogen for a C/SB rotation. Potentially have lose of N from application. ISU Extension Pm

50 Nutrient Replacement Values ,500 gallons of hog manure wet dry feeders Nitrogen $ units = $47.85 Phosphorus $ units = $31.00 Potassium $ units = $19.04 Total value = $97.89 Note: crop removal rate for phosphorus for a C/SB rotation. ISU Extension Pm

51 Nutrient Replacement Values ,000 gallons of hog manure wet dry feeders Nitrogen $ units = $101 Phosphorus $ units = $87 Potassium $ units = $78 Total value = $266 Note: crop removal rate for phosphorus for a C/SB rotation. ISU Extension Pm

52 Nutrient Replacement Values ton of layer chicken manure lbs/ton Nitrogen $ units = $37.62 Phosphorus $ units = $124 Potassium $ units = $42.50 Total value = $204 Note: nitrogen 65% available, P assumed to 100% available. ISU Extension Pm

53 Nutrient Replacement Values ton of layer chicken manure lbs/ton Nitrogen $ units = $45.50 Phosphorus $ units = $ Potassium $ units = $105 Total value = $359 Note: nitrogen 65% available, P assumed to 100% available. ISU Extension Pm

54 Potential Limitations Uniformity of product Correct Ratio of ingredients Need all of the ingredients Timeliness Compaction As well as benefits such as organic matter, slower release N and micro-nutrients. 54

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56 $

57 Manure Nutrient Calculator Compares the value of commercial fertilizer with manure. Estimates the acres needed. Includes the Iowa P-Index formulas, summary report and landform maps. Costs $10 57

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59 William F. Lazarus Professor and Extension Economist Bob Koehler Extension Educator - Livestock Systems/Swine University of Minnesota 59

60 Bob Koehler Southwest Research & Outreach Center, University of Minnesota Bill Laser, Department of Applied Economics, University of Minnesota

61 Bob Koehler Southwest Research & Outreach Center, University of Minnesota Bill Laser, Department of Applied Economics, University of Minnesota

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63 Fertilizers According to the Iowa Fertilizer Law (Chapter 200), the definition of fertilizer is any substance containing one or more recognized plant nutrient which is used for its plant nutrient content and which is designed for use and claimed to have value in promoting plant growth Fertilizers have a guaranteed analysis that is the minimum percentage of plant nutrients claimed and reported as total nitrogen (N), available phosphorus (P) or P2O5 or both, soluble potassium (K) or K2O or both According to the Fertilizer and Agricultural Lime Rule (Chapter 43), specific additional plant food elements beside N, P, and K can be guaranteed: calcium, magnesium, sulfur, boron, chlorine, cobalt, copper, iron, manganese, molybdenum, sodium, and zinc. There is a minimum analysis requirement (Table 1). For mixed fertilizers, the sum of the guaranteed analysis of total N, available P2O5, and soluble K2O must be 20 percent or greater. Thus, materials below these levels cannot be registered as a fertilizer; however, this rule does not apply to specialty fertilizers for nonfarm use or materials ordinarily applied directly to plant foliage. 63

64 Soil conditioners According to Chapter 200, the definition of soil conditioner is any substance which when added to the soil or applied to plants will produce a favorable growth, yield or quality of crop or soil flora or fauna or other soil characteristics, other than a fertilizer, recognized pesticide, unmanipulated animal and vegetable manures or calcium and magnesium carbonate materials used primarily for correcting soil acidity. According to Chapter 43, product claims may be substantiated by one of two methods: 1) efficacy testing or 2) available research data relevant to Iowa crops and soils. 64

65 Thank You Kelvin Leibold Farm & Ag Business Management Field Specialist ISU Hardin County Extension 524 Lawler Iowa Falls, IA (641)

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