Tuesday, February 28, 2017

Can we put economic value to having a manure storage?

I love to talk about the economics of manure. Not only is it a fascinating topic, but it’s one that has major influence over decision making. Typically, when I focus on manure economics it’s discussions about application costs or related to application decisions about how to get the most value from the manure. However, this discussion is going to be a bit different, it’s going to focus on how a manure storage can add value to a farm.

Normally we think of manure storage as the cost of doing business; if you are going to raise livestock, regulations will often require you build a manure storage. However, manure storages can offer value, in that they allow manure application timing to be adjusted to better match with crop nutrient need timing, so the nitrogen in the manure can be better utilized. This alone has value, but in addition, manure storages allow you to adjust your schedule. No longer does manure application have to be a daily activity, but it can be focused on the activity most critical to making your farm money (maybe planting in the spring, harvest in the fall, or if you are on a small dairy farm performing heat detection on your herd). I know what you are thinking, can you put a dollar value on those things? Not really, but I’m going to try anyway.

Let’s start by focusing on manure application timing and the value that offers to a farm. I’m not going to debate about spring versus fall application or even the exact date you start applying in the fall, but instead focus on the big picture. Almost every small dairy that doesn’t have manure storage has that sacrificial field, you know the one – hurry up and get the first cutting of hay and then start applying manure on it, effectively making it a sacrificial area for the year. So let’s try to put some numbers on this so we can estimate a value.

The first place to start is with nutrient value. Application timing is important for nitrogen management. In cases where the manure is applied to a sacrificial hayfield, very little if any of the nitrogen would be left to support the next growing crop. Thus one fair assumption would be to assume the nitrogen value of the manure is provided by the manure storage. At a swine finishing site, this is approximately 20 lbs. of nitrogen per pig space per year, or a value of around $6.50. Storing this manure would require around 365 gallons of storage. Currently, I estimate manure storage costs to be around $0.0183 per gallon of storage, or around $7.  Overall, that doesn’t sound like a bad value to me as if the storage allows you to go from getting almost no value from the nitrogen in the manure to significant value, the storage would pay for itself in just a couple years.

How would this look at a dairy farm? There a cow will make about 6500 gallons of manure a year; constructing that storage would require about $120. The nitrogen value saved by having a storage would about to about $25 per cow per year. Not quite as favorable as the swine finishing case, but still an investment that should pay for itself within a decade.

Figure 1. Concrete manure storage on a dairy farm in Northwest Iowa.

What about the marginal value of time, i.e., the value you get by saving that hour of manure application during your busy times? I’m only going to give one example on this, but let’s say it’s gotten to be May 1st and you don’t have your corn in. Rather than applying manure for an hour that day because you don’t have a manure storage, you are out with a corn planter getting the corn in. What is that worth? Based on some work from Emerson Nafzinger from the University of Illinois (figure shown below) the yield on this planting date would be about 98% of maximum yield, with yield the next day at about 97% of maximum. In an area of 200-bushel corn yields, that would work out to about a 2 bushel per acre difference and at a corn price of around $3.50 a bushel, about 7 dollars per acre planted in that hour, compared to having to wait until the next day.

Figure 2. Corn planting date response to 35 Illinois site-years, with the yields expressed as a percentage of the yield produced by the highest-yielding date at the site (from Emerson Nafzinger, University of Illinois)

So next time you look at your manure storage and all the work it brings, hopefully you can also see that it does have the potential to help make sure the manure is a resource by moving application to times when the nitrogen is more valuable, that it can help reduce time demands for you during periods of the year when other things are more critical, and that by doing these things, it does provide value to your farming operation.