A new economic formula calculates the true value of hog manure, according to a University of Minnesota Extension educator.
There's no doubt that the rising cost of commercial fertilizer has created a heightened demand for hog manure, increasing the challenge to maximize its value.
Bob Koehler, University of Minnesota Southwest Research and Outreach Center at Lamberton, MN, speaking at a World Pork Expo seminar, presented new methodology to apply a value to manure's worth.
Koehler spoke during the Environmental Information Center session sponsored by Engineered Storage Products Company, manufacturers of Slurrystore systems.
“Research shows manure can improve crop yields. I've seen university trials that show a 7- to 10-bu./acre increase in corn from hog manure vs. commercial fertilizer. There is definitely a growing market for manure as a commercial fertilizer replacement,” he said.
“More producers are seeking an appropriate market value in sales to crop producers, and are considering the contribution of manure value to cash flow in livestock operation budgets,” he continued.
Koehler discussed how he helps area farmers determine manure prices using this basic pricing formula:
Net economic impact of manure (usually on a per-acre basis) = the value of Year 1 fertilizer and application costs + residual value (mostly Year 2, if any) +/- yield response or other benefits or costs - manure application costs.
“Usually working on a per-acre basis, we first determine the fertilizer costs that the manure will replace,” said Koehler. “We look at nitrogen (N), phosphorus (P) and potassium (K), and in some cases micronutrients. Then we also look at any application costs associated with applying these nutrients in a commercial fertilizer form.
“Next, if a farmer would have purchased more fertilizer in Year 2 that is replaced by the manure application, we value potential residual credits for the next year,” he commented.
The next step is to look at potential yield response due to manure. Farmers need to figure out if yield impacts can be expected beyond what can be attributed to N, P and K, Koehler said. Tillage or weed control costs must also be considered.
“We add the value of any increases in yields. Then we determine if the farmer might save money from a reduction in tillage costs because the manure application equipment provided it,” he explained.
“Also, did the farmer incur greater weed control costs? There are many, many variables, but fertilizer replacement and yield response are usually the major contributors to value.”
The last part of Koehler's formula to arrive at manure value is determining manure application costs. Does the farm own the equipment or will a commercial applicator be hired?
Either way, cost of fuel, labor, repairs, etc., can affect application costs. “The application cost is usually higher per unit at lower rates, but often lower rates increase efficiency of nutrient use, resulting in a net economic gain. Over-application has a large negative impact on net value because it drives up application costs per acre to apply nutrients that are not needed,” he said.
There are many ways to express net value. “We use a ‘Manurwkst’ spreadsheet to calculate the economic impact on a per-acre basis. Dividing the total gallons (or tons) of manure available by the per-acre application rate gives us the total acres applied.
“Then, we take the acres applied times the net impact per acre, resulting in the net impact for the manure-producing unit or facility under study. After the impact of the facility or operation is calculated, further analysis can be done by other appropriate units, such as animals produced or animal spaces,” he said.
Koehler also provided strategies for maximizing manure value. He suggested applying manure to fields needing nitrogen and to crops and fields that need more potassium and phosphorus.
Farmers should incorporate manure at application time to reduce losses to nitrogen volatilization and check manure nutrient concentration, avoiding dilution if possible.
Koehler also recommended developing a multi-year set of manure tests for each hog barn to better estimate nutrient levels in manure.
Reduce manure application costs by avoiding over-application. Use equipment that has a range of application levels that can be calibrated to achieve accuracy of application, he said.