Making a Case for High-quality Silage

March 1, 2018 04:16 PM
Build trust and open communication with your lender.

The availability and ease of access to credit always changes with the markets. Certainly the current downturn in the farm economy has caused lenders to take a harder look at loans. Low milk prices have had a negative impact on producer cash flow, while limited processor capacity has slowed down herd expansions. Fortunately, there is room for loans that improve the efficiency of the dairy, but even those are harder to come by.

Still, producers need operating credit to be able to purchase inputs that are essential to running the farm and dairy. Those inputs include crop inputs, like corn seed. This year if you are looking to spend more on corn seed, it might be more difficult to convince your lender to add more to the operating loan. 

Unique Varieties

Not all corn seed is created equal. But there are a few varieties that make exceptional corn silage that is easy to digest. Corn silage options with highly digestible fiber, and even starch, are now available on the market. Digestible fiber leads to greater dry matter intake. And, corn silage with digestible starch means more available energy, and energy from forages means less need for energy from more expensive feed sources. All this makes for more efficient milk production.

Of course these silage varieties cost more than their high-yielding row crop brethren. On average, silage quality varieties that carry the BMR trait, for example, can cost producers up to $100 per bag more than conventional varieties. Convincing dairy producers to pay more for these varieties is one thing. Getting their lenders to up the operating loan to cover the added seed costs can be a more difficult battle.

“It’s a lot about communication,” says Matt Davis, dairy specialist at Farm Credit Mid-America. “When it comes to purchasing an input that is at a higher cost than other inputs but has the potential to deliver a greater return, producers need to communicate the net effect to the margin overall.”

Even if corn silage varieties like brown midrib (BMR) corn are a little more expensive, dairy producers see the advantages. Randall and Blake Holt, along with their family, operate a 5,000-cow dairy located in Hamilton, Utah. About two-thirds of the 3,000 acres of corn grown on their family’s operation is BMR. When they started the dairy in 2010 they planted BMR corn, and over time saw better yields. “We average about 30 tons per acre in our BMR fields,” Blake says.

The greatest benefit of the BMR silage has been feed efficiency, Holt says.

“Our ration is about 65% forage and has been as high as 70%,” he says. “We feed about 48 lb. of dry matter per day, and our energy-corrected milk is right at around 90 lb. per cow so we think the efficiency is there.” 

Better Efficiency

According to Jim Henry, dairy development manager with Mycogen Seeds, communicating the benefits of greater efficiency is “a riddle we try to go through every day.” The key, he says, is for the lender to see the benefits of not only greater efficiency but also a higher value silage product.

“With the benefits of higher-quality corn silage, the salvage value of the forage is higher,” Henry says. “When looking at the silage pile, there can be a $15 to $20 value difference per ton between silage from conventional corn and higher value silage corn. That’s a big difference when figuring asset values.”

The technology in corn silage varieties is just one technology that continues to evolve on dairy operations. That puts a strain on lenders who have to keep pace with understanding the benefits of advancing technology to make informed lending decisions.

“It’s a challenge because technology changes so fast,” Davis says.

Attending dairy industry meetings and trade shows is one way Davis and his team stay abreast of new information. Working in a large geography has its benefits as well, Davis says, with two or three projects going on at any given time there is an opportunity to see changes in the industry firsthand.

“It’s important to just be out there and focused on learning new things,” he adds.

In the end, Davis says understanding the advantages of new technology comes down to trust.

“A lot of trust goes into making a lending decision,” he says. “We like to work closely with producers and communicate early and often about what’s going on.”

For the Holt family, who started their dairy in 2010 in a difficult economic climate, working closely with their banker is second nature.

“We’ve always had an open relationship with our banker,” Randall Holt says. “Our lender understands us better than he understands the dairy business. Trust is built in.”

Ideally the lender is part of the dairy’s advisory board, Davis says.

“It’s not uncommon for us to sit down with owners, operators, the accountant, nutritionist, veterinarian and others to go through specific situations on the dairy,” he says. “We’re all working toward the same goal in the end, so it’s good for us all to discuss the challenges and opportunities that lie ahead.”


Note: This story appears in the February 2018 magazine issue of Dairy Herd Management.

Back to news


Spell Check

harrison saban
texas, TX
6/27/2018 03:22 AM

  Are you looking for financing source such as Bank Guarantee (BG) and Standby Letter Of Credit (SBLC)? I am a direct mandate to a Financial Institution who is also known as private lender specialized in the Lease of Bank / Financial Instruments in the form of Bank Guarantees (BG), Standby Letter of Credit (SBLC), Documentary Letter of Credit (DLC), Letter of Credit (LC), Performance Bonds (PB); Whether you are new starting up, medium or large establishment that needs a financial solution to fund/get your project started or an established business looking for extra CAPITAL to expand your operations, our company renders all the credible and trusted bank guarantee providers who are willing to fund and give financing solutions that suits your specific business needs. We help/assist you secure SBLC and bank guarantee (BG) for your trade and investment from world ranked Banks such as; HSBC, Barclays Deutsche Bank Frankfurt, and Any A rated Bank in Europe e.t.c DESCRIPTION OF INSTRUMENT: (1) Instrument: Bank Guarantee {BG} /StandBy Letter of Credit.{SBLC} (Appendix A). (2) Total Face Value: Eur/USD 1M{Minimum} to Eur/USD 10B{Maximum}. (3) Issuing Bank: HSBC Bank London, Barclays Bank and Deutsche Bank Frankfurt. (4) Age: One Year and One Day. (5) Leasing Price: 4% of Face Value plus 2% commission. (6) Delivery: bank to bank SWIFT MT-799 and/or MT-760. (7) Payment: MT103 (TT/WT). (8) Hard Copy: Bonded Courier Service. RWA ready to close leasing with any interested client in few banking days We will be glad to share our working procedures with you upon request to help us proceed towards closing deals effectively. For further inquiry contact Email : Skype : Saban.financialbg

ardan cook
london, CT
12/4/2018 05:25 AM

  Are you an individual businessman or a business organisation that wishes to expand in business ??, we offer financial instrument such as BGs, SBLCs,MTNs, LCs, CDs and others on lease and sales at a rate of 4%+2% of the face value and reasonable conditionfrom a genuine provider. You are at liberty to engage our leased facilities into trade programs as well as in signatory project(s) such as Aviation, Agriculture, Petroleum, Telecommunication and any other project(s) etc. Email:~ Skype ID:info.hlfinanceplc With our financial/bank instrument you can establish line of credit with your bank and/or secure loan for your projects in which our bank instrument will serve collateral in your bank to fund your project. We deliver with time and precision as set forth in the agreement. Our terms and Conditions are reasonable and we work directly with issuing bank lease providers, this instrument can be monetized on your behalf for upto 100% funding. Intermediaries/Consultants/Brokers are welcome to bring their clients and are 100% protected. In complete confidence, we will work together for the benefits of all parties involved. All relevant business information will be provided upon request. BROKERS ARE WELCOME & 100% PROTECTED!!! If Interested kindly contact me via Skype ID:info.hlfinanceplc serious enquiry BG & SBLC For Lease and Purchase 100% protected (We moves first)

Walsh Robert
illinois, IL
9/1/2018 02:56 AM

  We are authorized Financial consulting firm that work directly with A rated banks eg Lloyds Bank,Barclays Bank,HSBC bank etc We provide BG, SBLC, LC, LOAN and lots more for clients all over the world. We are equally ready to work with Brokers and financial consultants/consulting firms in their respective countries. Our procedures are most reasonable and safest as we operate a 100% financial risk free process which entails that the issuing and receiving bank continues the transaction immediately after DOA is countersigned We hope to establsih a long term business relationship with you even after this first trial Regards WALSH SMITH, ROBERT email : skype: cpt_young1 Tel contact: +447031968934


Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by
Brought to you by Beyer