Crops > Cost & Return > Analysis

How to price silage and insurance coverage during periods of drought

AgDM Newsletter
August 2012


xls file

Corn that has suffered severe drought damage is sometimes harvested as silage instead of as grain. Questions often arise about how to arrive at a fair price for standing crops such as corn silage when there are no widely quoted market prices.

Pricing drought-damaged silage

Corn silage can still have significant feed value if harvested at the right stage. See the article “Alternatives for Drought-damaged Corn—Grain Crop or Forage” for harvesting recommendations. Any damaged acres that are covered by crop insurance should be viewed by an adjustor and released by the insurance company before harvesting takes place.

Grain producers may be willing to sell corn standing in the field to be harvested by the livestock producer or a custom operator. The buyer and the seller must agree on a selling price. The seller would need to receive a price that would give at least as good a return as could be received from harvesting the corn as grain. The buyer would need to pay a price that would not exceed the feeding value of the corn. Within that range the price can be negotiated.

One ton of normal, mature standing corn silage at 60% to 70% moisture can be valued at about 8 times the price of a bushel of corn. For a $6.00 corn price, a ton of silage would be worth about $48 per ton. However, drought stressed corn may have only 5 bushels of grain per ton of silage instead of the normal 6 to 7 bushels. A value of about 6 times the price of corn would more appropriate.

For silage with little grain content, a factor of 5 times the price of corn can be used.

If the crop is sold after being harvested and transported, those costs must be added to that value, typically $5 to $10 per ton, depending on whether it is done by a custom operator or the buyer, and the distance it is hauled. A buyer would only consider the variable costs for harvesting and hauling, whereas a custom operator would need to recover fixed costs, as well.

An electronic spreadsheet for estimating a value for corn silage, for both the buyer and the seller, is available from Ag Decision Maker.

Insurance coverage for drought-damaged crops




Any insurance indemnity payments will be settled based on actual harvested production over the entire insurance unit. Fields declared a complete loss will be combined with any harvested acres in the same insurance unit to calculate the final yield. Yield losses are equal to the farm’s historical yield times the level of guarantee purchased, minus the actual yield.





William Edwards, retired economist. Questions?