REPLACING YOUR COMBINE WITH COWS MAY MAKE ECONOMIC SENSE

Originally published on June 7, 2001

 

We need rain.  I have put in my order for a three-day soaker.  Sounding much like a bad country and western song, although I guess this depends on which side of the feed transaction you're on, "while we wait and watch the skies; feed market prices continue to rise."

I recently chatted with farmers from Saskatchewan Agriculture's Feed and Forage Listing Service.  They have been inundated over the last few days with calls about the availability of old- and new-crop feed.  Greenfeed that was selling for $65 per tonne in January is now a $100 per tonne and climbing.

While I haven't seen confirmed sales, there's talk that feed barley (f.o.b. farmyard) will now fetch $3 per bushel.

Those fortunate enough to crow a crop might want to consider the greenfeed option.  In table one, I have looked at the harvest of a 50-bushel per acre feed barley crop versus the harvest of the same crop as greenfeed.

Using an $80 per tonne greenfeed price, we generate net revenue after cutting, baling and stacking of $192 per acre.  You'll notice that by keeping the combine in the shed we've avoided the harvest fuel, labor and repairs. 

This increases the return of greenfeed by a further $6 per acre.  Since we are not moving our barley to market, we avoid the $3 per are in trucking charges.  Harvesting as greenfeed in this example generates $201 per acre.

What would we make if we harvested the grain?  Using a spot barley price of $2.35 per bushel, our revenue per acre drops to $118 per acre.

Greenfeed clearly provides a much better return.  In fact, you would have to receive $4.02 per bushel in the fall in order for the grain harvest to equal greenfeed.

That is highly unlikely, since I'm sure the boys in Lethbridge, Alta., have already started switching their feed rations from western barley to American corn.

On another front, more grain farmers are considering grass.  My uncle put his remaining quarter section into alfalfa this spring.  A preliminary review, illustrated in table two, appears to justify his decision. 

 

 

       

Using the Saskatchewan long-term average price for forage of about $62 per tonne and a yield of 1.5 tonnes per acre, table two confirms an average return of about $45 per acre after seeding and harvest costs are deducted.  If a local market can be established, then forage will definitely beat cash rent.

While feedlots are not numerous in our area, we are seeing more and more cowboy hats and with them cows.

Getting back to my order for rain, I heard a memorable quote from a farmer last week.

Spoken with optimism, he stated that the rain would come.  "We are," he said, "one day closer."

 

Allyn Tastad, certified general accountant, is a partner in the accounting firm of Hounjet Tastad Harpham in Saskatoon at 306-653-5100, e-mail at allyn@hth-accountants.ca or website www.hth-accountants.ca. He is also involved in the family farm near Loreburn, Saskatchewan.  The opinions expressed in this column are for information only.