Making Manure Pay: New Economics of Manure in an Era of Change

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Making Manure PayNew Economics of Manure in an
Era of Change

• Kevin Erb
• UW Extension Environmental Resources Center (ERC)

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Dont Panic Yet.
Photo www.profi.co.uk
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Practical Solutions

• Lancaster (PA) Famer

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Rethinking Manure

• 1860s Worth more than the cow
• Even distribution impossible

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Rethinking Manure

• 1860s Worth more than the cow
• Even distribution impossible
• 1960s Who needs it
• Storage for convenience

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Rethinking Manure

• 1860s Worth more than the cow
• Even distribution impossible
• 1970s Who needs it
• Storage for convenience
• 2000s Source of all evil
• RTK (sub ½ inch accuracy) in use

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What is Manure?

• Fertilizer Resource/Organic Matter Builder?
• Headache and Hassle?
• Income generator?
• Like the in-laws get the good with the bad?

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Rethinking Manure

• Dont get stuck thinking the
• same way.
• www.profi.co.uk
• Opportunities abound if youre willing to look.

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Rethinking Manure

• Envision your farm
• without manure.
• www.profi.co.uk
• Examine how manure impacts your farm.
• Maximize profitability.
• Protect yourself with written agreements.

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Envision your farm without manure

• What would you do differently if a truck picked
  up your manure each day?
• What changes?
• What crops you plant/when?
• What fields you rent/buy?
• Quality of feed produced?

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How does manure affect your farm?

• Think about your entire operation.
• Personal time / family members time
• Agitation, application, incorporation
• Paperwork, reporting

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How does manure affect your farm?

• Think about your entire operation.
• Obvious Costs
• Custom applicator, equipment rental
• Risk of an accidental release

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How does manure affect your farm?

• Think about your entire operation.
• Not so Obvious Costs
• Fuel used in agitation, application.
• Impact on the rest of the dairy.
• Delayed tillage in fall / planting in spring
• Lost time in barn (missed AI opportunities)
• Damage to roads/neighbor relations

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Do you know your breakeven cost to haul manure?

• How far can go you before you start losing money?
• ½ mile?
• 1 mile
• 5 miles?

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Maximize Profitability

• How can you make manure profitable?
• Can you produce less manure?
• Can you decrease hauling costs?
• Can you turn manure into gold?

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Produce less manure?

• Higher producing herds produce more manure.
  FACTORS AFFECTING MANURE EXCRETION BY DAIRY COWS
  W. P. Weiss, The Ohio State University

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Produce less manure?

• Increasing silage in the diet will decrease
  manure volume. FACTORS AFFECTING MANURE EXCRETION
  BY DAIRY COWS W. P. Weiss, The Ohio State
  University. Graph from Hoards Dairyman, June 2007
  
• 10 increase
• in silage
• 4 less
• manure

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Produce less manure?

• Every gallon of water (rain, washwater, etc) is a
  gallon you pay to pump and apply.
• An inch of rain on a one acre storage 270 to
  600 to apply.
• A garden hose left running in the parlor for 2
  minutes per day 100 to 220 to apply.

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Decrease Hauling Costs

• Avoid Stop Signs.
• Each one adds 3-5
• minutes per load
• Avoid meeting other
• vehicles (oneway traffic)
• Avoid busy roads

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Decrease Hauling Costs

• Let the cows spread it themselves
• Managed Grazing
• Unmanaged Pasture options

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Decrease Hauling Costs

• Concentrate Nutrients
• Water is expensive to haul.
• Keep water out
• Remove the water
• Irrigate liquids?
• Palatability, disease transmission,
  groundwater/drainage tile concerns

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Move Fields Closer to Barn

• Explore Partnerships with neighbors
• Give it away
• Dutch Treat
• Trade manure for feed

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Dutch Treat Barter

• Farmers have land closer to another farms manure
  source
• Each agrees to haul a set amount of manure to the
  others property
• Both save time, wear and tear
• Both benefit from manures nutrients

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Dutch Treat Barter - Distance
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Distance

• 20 Acre Field
• Each farmer saves 2 miles each way
• 3 Loads per acre 240 miles saved/10 hours labor
• Corn field planted 1 day earlier

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Dutch Treat - Obstacle
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Obstacle

• 10,000 cars per day major hassle
• Can we put silage on the safer side of the road?

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Manure for Feed

• Dairy farmer agrees to buy certain amount of feed
  at set price
• Cash grain farmer agrees as part of contract to
  take so much manure

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Manure for Cash

• Cash grain farmer agrees to pay a certain amount
  for the manure
• Amount based on
• Hauling cost
• Nutrient value
• Who check is made out to has tax consequences

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Manure for Services

• Cash grain producer trades services for manure
• Feed hauling
• Tractor use
• Tillage

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Turn Manure into Gold

• Explore small scale markets (compost)
• More money is made at the small volume consumer
  level, not at the large volume landscaper sales.
• Explore large scale markets
• Sell solids for bedding
• Source as a raw material
• Sell Carbon (carbon credits/energy)

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Dont Turn Gold into Manure

• Know your costs.
• Know what the impact of a technology is on your
  application and handling costs.
• There is no magic poo machine that makes manure
  disappear

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Dont Turn Gold into Manure

• ALWAYS have legal advice when entering a
  contract.

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Putting your plan into Action

• Create a manure team
• Manure Applicator
• CCA or Agronomist
• Banker
• Free Thinker
• Brainstorm options, pursue the best.

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Questions?

• Kevin Erb
• UW Extension Environmental Resources
• Center (ERC)

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Why Barter

• More even distribution of nutrients across
  watershed
• Regulations may force manure distribution
• Higher fertilizer prices make it more feasible

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Regional View

• Michigan Online list
• of manure producers
• /cash grain farmers
• Illinois Co-ops as
• brokers in some cases
• Ohio State licensing of brokers

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Regional View

• Wisconsin Dairy farmers dont want to be on a
  list of those with too much manure

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Wisconsin Approach

• Common types of exchanges
• Dutch Treat
• Manure for Feed
• Manure for Cash
• Manure for Services

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Economics

• Based on work by Gregg Sanford, UW Madison
  Agronomy Grad Student

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Utilization of Dairy SlurryResource or Waste?

• Cost major hurdle in moving liquid manure
• - Dairy Slurry is 90-95 water
• As a result
• gt 50 of dairy farms haul
• within 5 minutes of barn Turnquist et al.
  2006
• Nutrient accumulation
• Manure Nutrients not
• efficiently utilized
• Potential Solution
• Shared costs dairy grain farmer

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Study Objective

• Evaluate the economics of transporting liquid
  dairy manure, and its potential as nutrient
  source in cash grain systems.
• Issues Addressed
• How much to load and haul 1 to 5 miles?
• What is the value of liquid dairy manure in corn?
• How far could liquid manure be hauled if costs
  are shared dairy and grain?

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Factors Affecting the Economics of Transporting
Liquid Manure

• Costs
• Manure hauling and spreading costs
• Fuel price
• Fertilizer prices

• Value of Manure
• Fertilizer Replacement
• Manure nutrient content
• Crop nutrient needs
• Soil test levels
• Is there a market value?
• Manure forages
• Grain farmer pays fuel
• 50/50 split of manure management expenses

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Manure Hauling Costs - 2005

• 2 million gallon pit
• 200 acres
• 1 mile from pit
• Bid 9,283
• Fuel 3,422
• Tot 12,705

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Manure Hauling Costs - 2008

• 20 change in diesel price
• minimal impact on spreading radius
• 20 change in N price
• 0.4 mile change in breakeven distance

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cost per acre
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Variability of Slurry Nutrient Content(first
year available)
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Soil Test Levels Corn Nutrient Needs

• Soil Test P
• Statewide Ave. 52ppm
• Dane/Columbia Ave. 58ppm
• Excessively high range
• UWEX recommendation 0 lbs / acre
• Soil Test K
• Statewide Ave 141ppm
• Dane/Columbia Ave. 163ppm
• Excessively High range
• UWEX recommendation 0 lbs / acre

(Peters 2005 A2809)
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Overview of Variables

• 2 methods of covering hauling expenses
• Dairy covers all ? own land
• shared payment
• 2 - soil test levels
• Optimum NPK needed
• Excessively High N-only needed
• 3 - levels of slurry nutrients
• Mean
• Mean 1s.d.
• Mean 1s.d.
• 3 - N prices
• 1999
• 2005
• 2005 20
• 3 - Diesel prices
• 1999
• 2005
• 2005 20

• 108 potential combinations
• focus on a few key variables
• Sensitivity Analysis
• Change in single variable holding all else
  constant

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Effect of High Soil Test Levelaverage slurry
nutrientsN - Only
88.05
returns per acre
distance from slurry pit (miles)
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Effect of High Soil Test Levelaverage slurry
nutrientsN - Only
88.05
returns per acre
distance from slurry pit (miles)
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Effect of High Soil Test Levelaverage slurry
nutrientsN - Only
88.05
returns per acre
2.6 miles
distance from slurry pit (miles)
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Effect of Optimum Soil Test Levelaverage slurry
nutrientsNPK
returns per acre
62.92
distance from slurry pit (miles)
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Effect of Optimum Soil Test Levelaverage slurry
nutrientsNPK
returns per acre
62.92
1.6 miles
distance from slurry pit (miles)
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Effect of Optimum Soil Test Levelaverage slurry
nutrientsNPK
returns per acre
62.92
1.6 miles
4.5 miles
distance from slurry pit (miles)
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Effect of Slurry Nutrient Contentshared
payment optimum soil test NPK
returns per acre
62.92
distance from slurry pit (miles)
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Effect of Slurry Nutrient Contentshared
payment optimum soil test NPK
returns per acre
62.92
4.5 miles
distance from slurry pit (miles)
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Effect of Slurry Nutrient Contentshared
payment optimum soil test NPK
returns per acre
62.92
4.5 miles
gt5 miles
distance from slurry pit (miles)
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Effect of Slurry Nutrient Contentshared
payment optimum soil test NPK
returns per acre
62.92
4.5 miles
3.4 miles
gt5 miles
distance from slurry pit (miles)
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Conclusions

• Hauling dairy slurry is very expensive
• Dairy hauling to owned land
• N-only not profitable
• NPK ? 1.6 miles
• average slurry
• Most important factors (shared costs)
• Nutrient level of soil 2.6 ? 4.5 miles
• ave. slurry
• Nutrient content 3 ? gt5 miles
• 1 s.d.
• NPK

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Conclusions

• Factors of lesser importance
• Fuel Price
• Diesel 2.88 ? 3.46 / gal
• Distance reduced by 3
• Nitrogen Price
• N price 0.38 ? 0.22 / lb
• Distance reduced by 7

• Potential win win situation
• Dairy Hauling Costs, NMP
• Grain Increased profitability, soil quality

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Other Considerations

• WRITTEN CONTRACT IS ESSENTIAL
• Who provides 590?
• Incorporation time / mud on road cleanup
• Who is responsible for manure sample?

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Other Considerations

• Legal Responsibility
• Spill insurance?
• Accident during transport?
• Ensuring manure applied according to plan

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Other Considerations

• Legal Responsibility
• Penalty for breach of contract?
• Length of contract?
• Recordkeeping responsibility?

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Other Considerations

• Field Responsibility
• If field is too wet, can either party delay
  application?
• Who is authorized to approve other fields?
• If manure is different than anticipated, (lower
  NPK), is there a remedy?

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Summary

• Your land base may trump economic factors
• Carefully consider all aspects before signing an
  agreement

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Summary

• Talk to other dairy producers about their
  experiences
• Talk to your custom manure hauler
• A written contract is essential