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Factors Affecting the Price of Manure Applied on Corn
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Factors Affecting the Price of Manure Applied on Corn

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Proceedings available at: www.extension.org/67651 ...

Proceedings available at: www.extension.org/67651

The 2010 USDA Agricultural Resource Management Survey (ARMS) Corn data will be used to examine the price paid for manure as a function of type of manure (i.e. species), form of manure, distance, size of farm, location, yield goal and whether the application rates of manure were influenced by Federal, State or local policies. Based on economic theory and the few empirical studies on manure use, it is hypothesized that swine manure will command a lower price than manure from cattle or poultry operations, all else equal. Liquid manure, due to dilution and volatilization of nutrients, will have a negative effect on price received. Due to transportation costs, which are included in the ARMS manure cost question, distance is hypothesized to have a positive effect on price. Farms in areas with high nutrient demand, such as the Corn Belt, are hypothesized to pay higher prices for manure while those in areas with excess manure nutrients, such as the Chesapeake Bay area, will pay lower prices or even be compensated to accept manure. Similarly, if policy affects application of manure, it is an indication that there are problems of excess manure in the area so prices are expected to be lower. Higher yield goals are expected to be positively associated with the price paid for manure since nutrient requirements will be higher.

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Factors Affecting the Price of Manure Applied on Corn Factors Affecting the Price of Manure Applied on Corn Presentation Transcript

  • Factors Affecting the Priceof Manure Applied on CornLaura McCannDept. of Agricultural and Applied EconomicsUniversity of Missouri
  • Motivation Expanded use of manure may benefit cropfarmers facing higher fertilizer prices andprovide an extra source of income forlivestock farmers More careful use of manure nutrients mayalso improve water quality Little information exists on prices paid formanure or their determinants “Manure Entrepreneurs: Turning Brown toGreen”
  • Previous Research:Nunez and McCann, 2008 Looked at factors affecting which crop-onlyfarmers used manure in MO and IA in 2004 19% used manure, 36% of those paid for it Tended to be younger, less-educated farmerswith little off-farm income and a small farm Significant barriers included perceivedtransportation costs, difficulty in estimatingapplication rates, and smell Generally manure was applied by the supplier ora custom applicator
  • Previous research:Ali et al., 2012 Examined testing of manure that wastransferred off the farm, indicator of nutrientvalue? Livestock farmers in MO and IA were surveyedin 2006 (also see poster) 51% tested manure vs 20% for whole dataset 57% were paid for manure Species differences as to payment and distancetransported (e.g. poultry vs swine) Manure was less likely to be tested if solid and ifAU/acre was higher
  •  Manure was more likely to be tested if farmersthought the practice was profitable, if it wastransported further, if there was a contract forthe manure, and if payment was received.  “Value of manure nutrients, rather than thewater quality impacts, is driving manure testing” Also a paper by Norwood et al. (2005) thatshowed, among other things, that people had alower willingness to pay for swine manure.
  • Research Questions How can we characterize U.S. manure markets? What factors affect the price of manure paid bycorn farmers nationally? Region? Species? Distance? Solid vs liquid? Who applies? Size of farm, expected yields?
  • Data and Methods USDA Agricultural Resource ManagementSurvey (ARMS) of corn farmers for 2010 Dependent variable was total price paidfor manure applied on a specific field andincluded transportation costs but notapplication costs SAS Enterprise, OLS regression analysis(results are preliminary)
  • Characteristics of manure usersFull dataset(n=2654)Manure users(n=919)Acres of corn 345 190Size of field 48.5 30.3% of revenuefrom corn38.4 18.4% certifiedorganic0.34 0.33
  • Char. of manure users, cont. The majority (76.9%) used their own manure Distance from the source of manure to the fieldwas 3.29 miles on average with a range from 0-320 miles (and this excludes compost!) 16% indicated that federal, state or localregulations affected application rates Custom applicators were used in 17% of caseswith a mean cost of $297/field.
  • Char. of manure users, cont. Manure was tested in 22% of cases (similar toGedikoglu and McCann, 2012 for MO and IA). The most common source of manure was dairy(49%), followed by beef (24%), poultry(16%), and swine (8%). Most manure users (43%) were in the ERSNorthern Crescent region with Heartlandrepresenting 39%. (note that this data is only corn farmers)
  • Off-farm manure users The form of manure was similar betweenown and off-farm, almost 70% used solidand almost 17% used lagoon liquid Of the farmers who sourced manure, 129(or 61%) paid for it, 79 received it forfree, and 4 were paid to accept it. The subset of farmers who used manurefrom off the farm and had no missing datawere included in the regression, n=169
  • Preliminary Regression Results Adjusted R2 was 0.417 Acres of corn planted on the farm (i.e. farmsize), and expected production on the field werenot significant There was no effect of government regulations.It was expected that this would lower the pricepaid if it was linked to excess manure issues. There were also no regional effects aftercontrolling for other factors
  • Preliminary Results, Cont. Trivially, size of field was associated with ahigher price paid In line with expectations, the price paidfor dairy, beef and poultry manure washigher than for swine manure Being custom applied was associated witha significantly higher price paid (and thiscost was supposedly not included in theprice)
  • Preliminary Results, Cont. Distance between source and field waspositively and significantly related to pricepaid, (it does include transportation costs) The price paid for lagoon liquid was sig.higher than the price paid forslurry, contrary to expectations.However, this may just be due to thehigher transportation costs.
  • Conclusions There do not seem to be major differencesbetween the MO/IA studies and the nationaldata but more careful comparison of regions isplanned People are increasingly willing to pay for manurenutrients People are willing to pay less for swine manureso addressing smell issues may be useful
  • Conclusions, Cont. Organic corn production doesn’t seem to be animportant source of manure demand People who want to sell their manure toneighbors may need to apply it or identifycustom applicators; corn farmers haveequipment for conventional fertilizer but not formanure It would have been useful if transportation costsand the value of the manure nutrients had beenseparate questions
  • Acknowledgements This research was partially funded by a USDA-NIFA Integrated Research, Extension andEducation 406 Project Thanks also to USDA-ERS for permission to usethe ARMS data and Missouri Ag Stats Service Contact info:Dr. Laura McCannMcCannL@missouri.edu