September 28, 2012

How much rent should a corn producer get for allowing animals to graze the crop residue? There is no single number that works in all situations. The amount will vary according to the level of service being provided by each party, such as fencing, watering, and care of the cattle. 

The Cornstalk Grazing Cow-Q-Lator may provide some help in answering this question. It is an Excel spreadsheet available online. Download it at http://extension.unl.edu/statewide/westcentral/ag-economics/

This tool is designed for cattle producers to evaluate costs of cornstalk grazing. However, it could be used by a corn producer to calculate how much a prospective lessee can pay.

This spreadsheet uses grain yield to estimate forage availability. If a user enters corn yield the tool will estimate the dry matter available. Generally the stalk harvest efficiency is set at 50%.

There is a cell available for "Acres rented." While lessees need to match this cell with the value in the "Acres needed" cell, corn producers have a set number of acres available which they should enter into the "Acres rented" cell. They should then adjust entries into the cells "Total number of animals," "Average animal weight," and "Days on cornstalks" until the "Acres needed" cell matches their acres available.

The Cornstalk Grazing Cow-Q-Lator illustrates the effect of travel distance on transportation and monitoring costs. The example in the online spreadsheet shows that the cost of transportation and supervision exceeds the cost for leasing the stalks when cattle are moved 75 miles. Corn producers will find that the farther they are from the cattle's home, the less their stalks are worth. However, they may be able to provide animal care and supervision and reduce the owner's costs, thus increasing the value of their crop residue.

The critical calculation for the lessee is the total cost per head per day. The cattle producer will be comparing that number against the cost per head per day of other options. The corn producer can adjust the cost per acre for cornstalks until the total cost per head per day is competitive compared to the lessees other options.

In a normal year, winter grazing costs about half of summer grazing but supplemental feed is commonly provided. Grazing rates for different areas may be found in the Nebraska Farm Real Estate Highlights.

While the Cornstalk Grazing Cow-Q-Lator may provide a way for corn producers to estimate the value of their crop residue, there are many issues that must be addressed between the lessee and lessor. An important one is who builds the fence around the corn fields if one is needed.

This issue was addressed in a survey conducted in Lincoln County. The survey asked who was responsible for constructing the fence around cornstalks. It compared the price paid for stalks by lessees who built the fence to the price paid to lessors who built the fence. There was no difference in the price paid for leasing cornstalks between these two groups.

Roger Wilson
Farm Management/Enterprise Budget Analyst