fur ”WWWIlmll‘llllnflllnl . 31293 00701 8918 ; M38111 State This is to certify that the thesis entitled ECONOMIC CONSIDERATIONS OF CORN HANDLING AND STORAGE SYSTEMS USED ON MICHIGAN DAIRY FARMS presented by Peter L. Callan has been accepted towards fulfillment of the requirements for M.S. degree in Dairy Science Date//fll/AZZ77%/2 34 /9/9 0-7639 A I 0V E FINES: 25¢ per W por tu- RETURNIM L XBRARY MATERIALS: Place in book return to move charge fra- circulation recon ECONOMIC CONSIDERATIONS OF CORN HANDLING AND STORAGE SYSTEMS USED ON MICHIGAN DAIRY FARMS By Peter Callan A Thesis Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Dairy Science 1979 ABSTRACT ECONOMIC CONSIDERATIONS OF CORN HANDLING AND STORAGE SYSTEMS USED ON MICHIGAN DAIRY FARMS By Peter Callan A mail survey was sent to 9,000 Michigan dairy far- mers to determine at what point farmers will change from artificially drying corn grain to high moisture corn or low moisture ear corn storage systems under rising energy costs. Total annual costs per bushel for harvesting and storage systems were calculated for volumes from 1,000 to 20,000 bushels. Expectations of higher milk production and increased mechanization were the primary reasons to change storage systems. Rising energy costs were not important reasons to switch storage systems. Cribs were the lowest cost storage system followed by bin dryers with stirrators, concrete silos, automatic and portable batch dryers and sealed storage units. Snap- per heads were the most inexpensive harvesting systems fol- lowed by picker-shellers, pickers and 4 row combines. At annual inflation rates greater than 20% for energy inputs, dairy farmers can economically justify changing from arti- ficially drying corn grain to high moisture corn storage systems. ACKNOWLEDGEMENTS I would like to take this Opportunity to express my deepest appreciation to the many people who made contribu- tions toward this thesis. First, I am deeply indebted to Dr. John Speicher whose guidance proved invaluable through- out my graduate program. His unflagging support enabled my research to come to fruition. I would like to thank Dr. Harold Hafs and the Department of Dairy Science for the financial support made available throughout my graduate studies. The contributions made and guidance received from Drs. J. Roy Black and J. Tal Huber, were genuinely valued. My deepest appreciation goes to Dr. Clyde Anderson whose infinite patience and knowledge enabled me to utilize the computer system during my research. Finally, I am grateful to all my friends in the Dairy Science and Agricultural Economics Departments for their advice and encouragement. Their friendships will always be cherished. ii TABLE OF LIST OF TABLES . . . . . . LIST OF FIGURES . . . . . . . INTRODUCTION . . . . . . . . . REVIEW OF LITERATURE . . . . . CONTENTS Harvesting and Storage Systems Harvest Losses . . . . . Corn Storage Systems . . Corn Drying Systems . . . Low Moisture Ear Corn . . High Moisture Corn Storage Systems Trends in Corn Harvest and Storage Systems Nutritional Aspects of Ear Corn, Dry Shelled Corn and High Moisture Corn High Moisture Corn Feeding Trials . High Moisture Corn Rations Cost Analysis . . . . . . Economic Analysis of Drying Systems . . . . . . . MATERIALS AND METHODS . . . . The Questionnaire . . . . Questionnaire Procedure . Methods of Analysis . . . iii Storage Page vii $00001an 15 13 19 2O 2O 2# 25 27 36 36 58 38 Economic Analysis . Budgeting . . Determining the Change-over Point from Dry Shelled Corn to High Moisture Corn Systems RESULTS AND DISCUSSION . Cost Analysis of Harvest Systems Cost Analysis of Storage Systems Determining Breakeven Cost Between Drying Systems and Alternative Storage Systems Tabulation of Survey Data Survey Response . SUMMARY . . . . . BIBLIOGRAPHY . . . APPENDIX I . . . . Mail Survey . APPENDIX II . . . Average Total APPENDIX III . . . Investment Cost Data APPENDIX IV . . . Input Costs (Dollars) Per 100 Bushels APPENDIX V . . . . Unusual Survey Responses Field Losses of enced by Length of Harvest iv Corn as O Influ- and Moisture Content at the Beginning of Harvest Page 39 56 59 61 61 77 83 103 106 111 116 116 121 121 122 122 125 125 128 128 Table 10 11 12 13 14 LIST OF TABLES Annual Cost Per Bushel for Corn Harvesting syStems O O O O O I O O O O O O O O O 0 Annual Cost Per Bushel for Sealed Storage and Unloader . . . . . . . . . . . . . . Annual Cost Per Bushel for Sealed Storage and Unloader over a Twenty Year Period . Annual Cost Per Bushel for Concrete Silo and Unloader . . . . . . . . . . . . . . Annual Cost Per Bushel for Steel Grain Bin With Aeration Systems . . . . . . . . . Annual Cost Per Bushel for Full Bin Dryer With Stirring Devices . . . . . . . . . Annual Cost Per Bushel for Portable Batch Dryer O O O O O O O O O O O O O O I O 0 Annual Cost Per Bushel for Automatic Dryer and Wet Holding Bin . . . . . . . . . . Annual Cost Per Bushel for 960 Bushel Corn crib O O O O O O O O O O O 0 O O O O O 0 Approximate Annual Cost Per Bushel for Portable Batch Dryer-~Storage Bin (Sys- tem l) and Wet Holding Bin--Automatic Batch Dryer--Storage Bin (System 2) . . Farm Characteristics and Average Crop Acreage by Region and State . . . . . . Frequency of Herd Size by Region and State. Frequency of Corn Grain Acreage by Region . Frequency of Corn Grain Storage Systems by Region and State . . . . . . . . . . . . Page 62 65 65 65 66 66 66 67 Table 15 l6 17 18 19 20 21 22 23 24 25 Combinations of Corn Grain Storage Systems . Capacities of Storage Systems . . . . . . . Frequency of Corn Harvesting Systems by Region 0 O O O O O O O O O O O O O O O 0 Reasons for Using Present Harvest System . . Reasons to Change Harvest System . . . . . . Farmers Planning to Expand Present Storage syStems O O O O O O I O O O O O O O O 0 Reasons Farmers Change Corn Storage Systems. Farmers Planning to Change Storage Systems . High Moisture Corn Processing Practices by Storage Systems . . . . . . . . . . . . . High Moisture Corn Feeding Practices . . . . Change in Disorders After Changing to High Moisture Corn . . . . . . . . . . . . . . vi Page 90 91 \0 \n 97 98 99 101 102 105 Figure LIST OF FIGURES Variable costs for concrete silos and sealed storages over a twenty year planning period . . . . . . . . . . . Harvesting systems costs for 5,000 to 20 ’ OOO buShels I O O O O O O O O O O 0 Storage systems costs for 5,000 to 20,000 buShelS I O O 0 O O O O O O O O O O 0 Least cost harvesting and storage system combinations for 5,000 to 20,000 bush- els O O O O O O O O O O O O O O O O 0 Ten percent to eighty percent inflation rates for energy inputs--5,000 bushels Ten percent to eighty percent inflation rates for energy inputs--10,000 buShels O O O O O O O O O I O O I O 0 Ten percent to eighty percent inflation rates for energy inputs-~15,000 bushels . . . . . . . . . . . . . . . Ten percent to eighty percent inflation rates for energy inputs--20,000 bushels . . . . . . . . . . . . . . . Michigan crap reporting regions . . . . . vii Page 42 65 70 '75 79 80 81 82 INTRODUCTION The increased mechanization of American agriculture has resulted in a growing dependence on petroleum and pe- troleum based products. In recent years, there has been a significant trend towards artificially drying corn for grain instead of allowing the corn to dry in the field and harvesting as low moisture ear corn. Artificially drying corn has permitted an earlier harvest and a 10 to 15 per- cent increase in yields. Earlier harvest reduces field losses due to weather and insects, allows the use of high yielding "full season hybrids" and enables the farmer to Operate his harvesting equipment under more ideal weather and crop conditions (American Society of Agricultural En- gineers, 1978). Over 80 percent of the corn produced in the United States is artificially dried using heat (Ameri- can Society of Agricultural Engineers, 1978). With in- creased mechanization, large acreages can be harvested faster as shelled corn instead of picking and storing in cribs. Liquified petroleum (LP) gas, natural gas and fuel oil are the primary sources of heat in crap dryers (Econ- omic Research Services, 1977). LP-gas refers primarily to the hydrocarbons prepane and butane. Both occur in combi- natiOn with underground deposits of natural gas and oil. They are extracted from natural gas and produced in pro- duction of crude oil. In 1975, 74 percent of total domes- tic LPbgas production came from natural gas processing plants and the balance was produced by oil refineries (Na- tional LP—Gas Association). Domestic prepane production totalled 71.6 percent of the LP-gas production in 1975 (National LP-Gas Association). Due to undesirable physical prOperties, butane and prepane-butane mixes are not util- ized in agriculture. Approximately 90-95 Percent of the fuel used in high temperature crap dryers was supplied by LP-gas (Council for Agricultural Science and Technology, 1977). Dwindling stocks of American petroleum reserves have resulted in a growing dependence on foreign petroleum sources. According to a 1978 study, known natural gas and petroleum reserves will be depleted with 48 and 26 years, respectively, if consumption continues at 1977 rates (Energy Research and Development Administration, 1978). Although production ag- riculture accounts for only 5 percent of the United States energy consumption, it appears that increased mechanization could increase agriculture's energy needs (Economic Review, 1978). Rising energy costs due to limited supplies pose a serious threat to American agriculture. More energy is consumed in corn production than in any other crop. In 1974 corn grain utilized an estimated 499.2 trillion BTU while its closest competitors, winter wheat and alfalfa, consumed 158.6 and 121.5 trillion BTU (American Society of Agricultural Engineers, 1978). A 1978 Michigan study reported 8.75 gallons of gasoline and 52.7 gallons of propane were used for plowing, planting, harvesting and drying grain for one acre of 100 bushel corn (Maddex and Bakker-Arkema, 1978). Although supplies are limited, petroleum and natural gas prices are currently regulated by the Federal Govern- ment. Under regulated prices, gasoline and LP-gas prices rose 69 and 150 percent from 1975-1977 (Economic Review, 1978). When the ceilings are lifted, there could be dra- matic price rises. Consequently, rising energy prices could force farmers to change corn harvesting and storage systems. This study has three purposes: 1. To deveIOp an economic framework in which a dairy farmer will be able to determine the total annual cost on a per bushel basis in constant dollars for alternative harvesting (e.g. corn picker, combine, snapper head) and storage sys- tems (ear corn, dry shelled corn, high moisture corn) that are under consideration for implemen- tation on his farm. 2. 4 To determine, with rising energy costs, at what point it is economically feasible for dairy farmers to switch from artificially dry- ing corn to high moisture corn systems. Tabulation of the results of a survey sent to Michigan dairy farmers regarding corn harvest- ing, handling and storage systems being used on Michigan dairy farms. .On the basis of survey re- sults, projections will be made with respect to the point at which dairy farmers would be willing to change harvesting and storage systems. LITERATURE REVIEW There are many components which interact in the se- lection of corn grain harvesting and storage systems used on dairy farms. This review of literature analyzes the problems encountered in the selection of corn grain har— vesting, storage and feeding systems for dairy farms. Economic and nutritional aspects of corn grain storage and feeding systems are included in the review. Harvesting and Storage Systems Several factors should be taken into consideration in the selection of a corn grain harvesting and storage system which is to be used on a dairy farm. The major con- siderations are volume of corn grain currently harvested and anticipated future volume of corn grain. Other factors include age and size of existing machinery and storage fa- cilities, availability of labor and capital, total acre- ages of other grain craps and whether the grain will be sold or fed to livestock (Midwest Plan Service, 1968; Hoglund, 1965). The difference in field and storage losses between various harvesting and storage systems also affects the choice. Harvesting systems are generally designed on the premise that there is a 90% probability that there will be 20-25 Operating days. This calculation has been based on a normal 45-50 day fall harvest season after rainy days and Sundays have been subtracted. Normally, other crop harvesting, livestock feeding and machine breakdowns cut down the number of harvest days on many farms (Midwest Plan Service, 1968). Consequently, a 15-day Operating system gives a realistic harvesting season for many farms. By artificial drying, shelled corn can be harvested at moisture levels up to 30 to 55%.compared to 20% for ear corn. This allows harvesting to begin two to three weeks, earlier than for cribbing (Dum et al., 1978). Early har- vest would tend to reduce the likelihood of harvest losses that are caused by lodging, fallen ears and harvest delay due to wet weather. Dum et al. (1978) reported that early harvest has potential savings of 5 to 15 bu per acre. The relationship between moisture content and harvest loss is shown in Appendix II. ngvest Losseg In a study by Davis (1964) field losses for picking ear corn, under ideal conditions, were about 8%, whereas losses for high moisture shelled corn were three to four percent less. It was difficult to accurately estimate tO- tal field and harvesting losses because there were a vari- ety Of factors which influence them. Field losses included number Of ears fallen to the ground before harvest and harvest losses. In a study by Burrowtridge and Heopner (1965), sev- eral categories Of harvest losses were reported. These in- cluded: machine ear loss which were ears Of corn that were still attached to the stalk after harvest; loose kernel losses when kernels came from the snapping rolls, the racks, and the shoe; cylinder losses which were kernels left on the cob due to incomplete shelling; and invisible losses which have been defined to include chips of kernels and kernel tips which remain in the cob, scavenger losses due to the action Of wildlife and maturity losses due to immature kernels. Harvesting losses were influenced by ground speed Of the harvesting machine, skill Of the ma- chine Operator, state Of repair and adjustment of the ma- chine, corn variety, insect infestations and stalk and weather conditions before and at the time Of harvest. As moisture level decreases, machine harvesting losses in- crease (Johnson and Lamp, 1966). Davis (1964) reported total field losses increased from 5.0%ito 18.4% by delaying harvest from October to December. Corn Storage Systems Selection of a corn storage system for a dairy farm is greatly influenced by harvesting rate and annual volume. Shelled corn can be ensiled as high moisture corn in oxy- gen limiting silos, concrete stave silos or bunker silos. It can also be artificially dried and stored in grain bins or sprayed with prOprionic acid or an acetic-prOprionic mixture to prevent spoilage while stored in wooden or metal bins. Ear corn can be ground and stored as high moisture ear corn in silos or as low moisture ear corn in cribs. There are a variety Of drying systems that have been utilized on farms. According to Maddex (1966) daily volume was the most important factor in the selection Of a drying system. Harvest delays were minimized by expanding drying facilities when the rate of harvest increased due tO the utilization of larger harvesting equipment. Maddex (1966) stated a system's capacity was influenced by field condi- tions, moisture content of the corn, handling methods and down time. The rate of artificial drying depended upon temperature of drying air, humidity Of the air, rate Of air flow through the corn and to a lesser extent, the moisture content Of the kernel. Brooker et a1. (1968) recommended moisture levels for dry shelled corn were as follows: 1. storage for 12 months or longer with no aera- tion, 15% moisture 2. storage for 10-12 months with aeration, 14-15% moisture 5. storage with aeration for less than 10 months, 15% moisture 4. short-term storage (5-5 months) with aeration, 5. winter storage (2-5 months) with aeration, 16.5- 18. 0% moisture Recommended moisture levels for storage were based on adequate cooling of grain in the drying system and regu- lar inspection Of the grain (Maddex and Bakker, 1978; Mid- west Plan Service, 1968). Brooker et al. (1974) recommended aeration of stored grain with low airflow rates (1 cfm/bu) to maintain grain quality. Aeration serves to prevent moisture migra- tion by maintaining uniform temperature throughout the grain mass and to cool the grain for minimizing mold and insect activities. Corn Drying Systems Dryers were categorized as batch in bin, automatic batch, continuous flow and low temperature bin dryers. Various degrees of mechanization have been added to bin drying systems. Brooker et a1. (1974) classified bin dry- ing systems into the additional categories of full bin, 10 full bin with recirculators or stirrators, bin layer dry- ing and batch in bin with recirculators or stirrators. In the batch system, grain was dried in one bin and transfer- red tO another bin for storage. In the full bin system, the grain was usually stored in the drying bin. Batch in bin systems were developed for two reasons. Mechanical grain spreaders evenly distributed the grain and sweep and unloading augers quickly unloaded the bin. According tO Brooker et al. (1974) a batch in bin drying system Operates under the following principles: 1. placing a layer Of grain in the bin of not more than 5-4 feet, 2. forcing heated air (120-160 degrees F) through the grain until the desired moisture content Of the batch is reached, 5. cooling the grain with the fan, 4. moving the grain to market or another storage bin. Brooker et a1. (1974) mentioned that grain recircu- lators can be used in either full bin or batch in bin sys- tems. A recirculator consists Of a sweep auger which re- moves grain from the drying floor at some preselected moisture content and elevates the grain through an en- closed auger tO the tap of the bin or to another bin where it is cooled. Recirculators eliminate over-drying Of the grain closest to the drying floor. 11 Schwart and Hill (1977) indicated the advantages and disadvantages Of batch in bin systems are as follows: Advantages: l. Drying bins may vary from 18' to 48' diameter with a variety Of dryer units. 2. It allows flexibility in harvest schedule. 5. The bin may be used for storage at the end Of the season. Disadvantages: l. The grain at the bottom may be 5-5% drier than the grain at the top. 2. Operators may over-dry a portion of the batch to be sure that all the grain is sufficiently dry. 5. The system Operates 24 hours a day and requires supervision beyond normal working hours. 4. The grain must be handled at least twice, and this can seriously damage grain that is over dried. Stirrators (augers) were used in batch in bin and full bin dryers to eliminate the problem of over-drying and to break up areas where wet grain may be packed. Stirrators reduce the moisture gradient in the bin by moving dry corn near the drying floor to the top Of the bin so that the drying capacity is increased. A major problem Of stirrators in batch in bin sys- tems is the possibility of mechanical malfunction. 12 Additionally, the stirrators take up 1-1% rings Of the bin which may not be used for drying (Brooker et al., 1974). An alternative to bin drying systems was the use of automatic batch or continuous flow dryers. In both systems, the corn was dried by forcing large amounts of heated air (200+ degrees F) through the grain until average moisture level in the grain reached the desired level. In continu- ous flow dryers, wet and dry grain was constantly flowing through the system. Both systems were easily moved and could be Operated on a 24-hour a day basis with minimal su- pervision. By including a large holding bin for wet corn into the system, flexibility in the amount harvested each day was gained. Brooker et al. (1974) indicated that auto- matic batch systems automatically transferred the batch Of dried grain from the dryer into a storage bin when drying was completed. Then a batch Of wet corn was automatically conveyed into the system to begin drying. Thus in an auto- matic batch system, the grain handling equipment was Oper- ated intermittently. Low temperature drying is a recent innovation to re- duce energy requirements for artificial drying. Air tem- perature was increased 10 degrees F. or less by electric heaters and was blown through a full bin of corn whose moisture levels were 24% or lower. The drying period was extended over 50 to 50 days. Low temperature drying is practical only in those geographic regions where the average 13 daily temperature during harvest is between 50 and 50 de- grees F. and moisture content Of the grain is 24% or lower (Brooker et al., 1974). It appears that low tem- perature systems are not applicable to Michigan farms be- cause a majority of the shelled corn is harvested in the 25 to 50% moisture range. If farmers wait for the corn to field dry to 24%, they significantly increase the chances of losing the crap due to harvesting under adverse weather conditions. Low Moisture Ear Corn Johnson and Lamp (1966) recommended that ear corn be harvested at moisture levels Of 20% to reduce the chances of spoilage in the crib. Wiggans and French (1958) reported that ear corn could be safely stored at moisture levels up to 55%iin cribs 4.5 feet wide and 8 feet high. They cautioned that, when cribs are wider or higher, it would be safer to crib the corn at moisture levels under 50%. High Moisture Corn Storage Systems Ensiling high moisture corn provides an alternative method of storage. High moisture corn (HMC) is fed as either high moisture ear corn (HMEC). HMEC must be ground 14 before being stored in any type of structure (Merrill, 1971). In order to successfully ensile high moisture grain, the handling and storage system must provide conditions which exclude or minimize oxygen penetration, prevent mold growth and protect against the weather (Merrill, 1971). Once these conditions are met, the grain can be success- fully stored in oxygen limiting structures (sealed storage), conventional concrete silos or horizontal silos (Merrill, 1971). ' Harvesting, storing and feeding high moisture grain have recently been reviewed by Merrill (1971). The most generally recommended moisture levels for harvesting, stor- ing and feeding high moisture corn are as follows: HM shelled corn HM ear corn Maisture levels % moisture % moistug average 28 55 range 25-50 30-55 limits 25-35 28-40 The cob raises the moisture content Of HMEC about 5%ihigher than for HMSC because it comprises about 20% of the dry matter in the corn ear (Merrill, 1971). Merrill (1971) indicates that the upper limits are based on the desirability of having corn dry down to the point Of reaching physiological maturity, which is attained at approximately 55%»kernel moisture. This achieves maxi- mum dry matter yield per acre and allows the chemical 15 composition to reach the levels which are typical for ma- ture grain. A final point tO consider is high moisture levels can cause bridging in sealed silos and heating in conventional silos (Merrill, 1971). If the moisture content is below recommended levels the corn might not ferment. Molding and heating are likely to occur due to the poor packing at the low moisture levels (Fox, 1976). Davis (1964) recommended that corn harvested below 24% for ensiling in a conventional silo and 22% for sealed storage should have water added to insure safe stor- age. In addition, he noted that water added to kernels that are ground, cracked or rolled will be more readily absorbed. water should be added prior to ensiling so that the excess may drain Off. Dum et a1. (1978) stated that management is the key to successful storage in conventional silos. Although it has been reported that whole kernel storage has been suc- cessful in conventional silos, McGuffey and Hillman (1976) recommended that HMSC be ground before storage. Grinding facilitates packing and reducing mold and spoilage by ex- cluding air from the ensiled grain. Dum et a1. (1978) reported that grinding increased storage capacity up to 14% in concrete and horizontal silos. According to Stevenson (1975), conventional tower and horizontal silos should be filled as rapidly as possi- ble to minimize exposure to the air. It was recommended 16 that plastic or caulking be placed around the doors in concrete silos to minimize oxygen seepage into the struc- ture (Otterby and Hutjens, 1978). Dum et a1. (1978) sug- gested that silage distributors be used to prevent separa- tion Of kernels, fines and cob. A more uniform density ex- pedites unloading and enhances fermentation, consequently reducing spoilage. Upon completion of filling concrete and horizontal silos, the tops should be covered with plas- tic tO reduce spoilage (Dum et al., 1978). It is difficult to precisely determine storage losses for a silo because the losses are influenced by rate Of fill, moisture content Of the corn, silo condition and rate of unloading. Storage losses on a dry matter ba- sis for sealed storage, concrete silos and horizontal silos are listed as follows: Sealed Storage Concrete Silo Horizontal silo % D.M. loss % D.M. loss % D.M. loss 4.17 (Baker, 1969) 7.0 (Chandler et 15 (Knoblaugh et 81-: 1975) 81-. 1978) 5.0 (Knoblaugh et 8.0 (Knoblaugh et al., 1978) . al., 1978) 6.0 (Hoffman and 12.5 (Hoffman and Self, 1975) Self. 1975) 9.0 (Logan and 15.0 (Logan and Hillman, 1975) Hillman, 1975) Sealed storage for HMC Offers several advantages over concrete and horizontal silos. HMSC can be stored whole and does not have to be ground or rolled prior to l7 ensiling (Merrill, 1971). Thus harvest rate is not af- fected by the capacity of the conditioning units. HMC, whose moisture content is several percentage units above or below the recommended moisture levels, can be safely stored, thus allowing for extended harvest periods (Davis, 1964). Fox (1976) stated that minimum daily amounts of HMSC did not have to be removed to prevent spoilage. Thus, a farmer had the Option to vary rations depending on the amounts and types of forages that are available throughout the year. Fox (1976) stated that before switching to a HMO storage system, a dairyman should consider the limitations Of HMO systems. The moisture level of the corn must be carefully monitored at harvest to minimize harvest and storage losses. Dum et a1. (1978) reported that TDN yield per acre can be reduced by 10 to 12%.when HMSC is fed in- stead Of HMEC. Sometimes, extra equipment must be acquired to handle HMC. For example, HMEC must be ground before en- siling regardless of storage system (Merrill, 1971). Stevenson (1975) recommends that dairymen consider several management factors when using concrete or hori- zontal silos. These include rapid fill, grinding before storage, good packing, careful coverage of ensiled grain and an adequate feeding system once the structure is Opened to avoid spoilage and molding. TOp spoilage in concrete 18 and horizontal silos can be great if an adequate amount is not fed daily (Otterby and Hutjens, 1978). When designing HMO systems for concrete and horizontal silos, a dairyman needs to balance the number of animals, the silo diameter and the amount fed to minimize spoilage losses (Merrill, 1971). This can be a problem in warm weather. It is re- commended that 4-6 inches be removed daily from the ex- posed silo face during the summer, while in the winter the removal rate may be reduced to 2-5 inches per day (Fox, 1976). In the past several years, much interest has focused on using prOprionic acid or acetic-prOprionic acid mixtures as a method of preserving HMSC. The acid kills fungi, in- hibits further growth of microbes almost indefinitely and prevents germination of the grain (McGuffey and Hillman, 1976). The amount of acid required to preserve the corn depends on the moisture content Of the corn and the length Of storage. Saur (1975) reported that 16-24 pounds of prOprionic acid are required for a ton of 50%imoisture corn (HMSC) compared to 6-12 pounds of 18%.HMSC. Jorgen- sen et a1. (1975) recommended that the acid should be ap- plied at the higher level for a recommended moisture level to insure sufficient coverage if the grain and acid was not thoroughly mixed. Unless the grain is treated within several hours after harvest, it will start to heat and spoil. 19 One Of the major advantages of acid treated corn is that it is a temporary storage system for HMO that is to be fed to livestock (Schwart and Hill, 1977). Unlike HMO ensiled in silos, acid treated corn can be mixed with large batches of feed during warm weather and then fed several hours later without the risk of spoilage (McGuffey and Hillman, 1976). Since the acid is corrosive, the life Of metal grain bins and handling equipment is reduced (Campbell, 1972). Trends in Corn Harvest and Storage Systems The Michigan OrOp Reporting Service has conducted several mail surveys from 1970-1977 on corn harvesting and marketing on Michigan farms. Combine harvesting has in- creased from 45%iin 1970 to 70%»in 1977 while the use Of mechanical corn pickers has dropped from 42%iin 1970 to 21.7% in 1977. The use of field picker-shellers has re- mained nearly constant at 8%. As acreage increased, larger farms tended to harvest more of the crOp with combines. The surveys grouped corn cribs and storage bins into the same category, thus it was impossible to determine the num- ber of corn cribs that are still in use. In the earlier surveys, no distinction was made between HMEC and HMSC storage. Thus, it was impossible to establish trends in the handling of HMO on Michigan farms. 20 Nutritional Aspects of Ear Corn, Dry Shelled Corn and High Moisture Corn The composition of dry ear corn and dry shelled corn as specified in the Nutrient Requirements 9; Dairy Cattle (1978) are as follows: Ground Corn Cob U.S. NO. 2 54 lb/bu Dry Matter % 87.0 89.0 N.E. for Lactating Cows 1.84 2.05 Meal/kg Crude Protein % 9.50 10.0 Calcium % 0.05 0.05 Phosphorous % 0.26 0.51 Crude Fiber % 9.0 2.0 Due to the presence of the cob in ground ear corn, net energy, and crude protein are lower than in shelled corn. The major advantage of feeding low moisture ear corn is the increased fiber in the diet. The value Of the cob as a means of increasing the fiber level in the diet should be considered in low fiber rations. High Moisture Corn Feeding Trials Numerous feeding trials have studied the effect Of HMO vs dry shelled corn (DSC) on butterfat levels, milk production, dry matter intakes and solids not fat composi- tion Of milk. Several researchers have shown no differences 21 in milk production from HMSC (Chandler et al., 1975; Clark and Harshbarger, 1972; Clark et al., 1975; Harshbarger, 1961; Lassiter et al., 1960), HMEC (Harshbarger, 1961; Lassiter et al., 1960) or DSC (Clark and Harshbarger, 1972) on a dry matter basis. Harshbarger (1961) reported that feeding HMEC did not affect dry matter intakes or butter- fat levels. When compared to DSC on a dry matter basis, HMSC did not affect butterfat levels (Chandler et al., 1975; Clark and Harshbarger, 1972; Clark et al., 1975; Harshbarger, 1961; Hansen et al., 1959) and solids not fat composition of milk (Clark and Harshbarger, 1972; Clark et al., 1975). On the other hand, studies by McCafree (1968) and Palmquist (1970) have shown that feeding HMSC causes a butterfat depression. In McCafree's experiment, HMSC, HMEC and DSC were supplemented with soybean meal while hay, corn silage and grass silage were fed ad libitum. In all groups, dry matter intakes were low but were signif- icantly decreased for the HMSC group. The lowest forage dry matter intakes occurred very near the week of maximum dry matter intakes and peak production. It appeared that increases in milk production could be accounted for by the increased net energy concentration in the ration which was a result of the slightly increased concentrate to forage ratio. In the Palmquist study (1970), equal parts Of hay, 52%idry matter corn silage and HMSC were fed on an as fed 22 basis. Palmquist concluded that liberal feeding of high quality forage and limiting HMO to less than one third of the total dry matter intake may help alleviate the problem of milk fat depression. Macleod et a1. (1975) Observed in Canadian studies that severe milk fat depression with HMSC is only likely when 50 percent or more of total ra- tion dry matter is from concentrates. Several researchers have compared DSC and prOprionic acid treated HMSC on a dry matter basis and have concluded that feeding acid treated corn does not affect milk produc- tion (Clark et al., 1975; Clark and Harshbarger, 1972; Jones, 1972; Forsyth et al., 1972; Jorgensen et al., 1975), butterfat (Clark et al., 1975; Clark and Harshbarger, 1972; and Macleod et al., 1975), dry matter intakes (Clark et al., 1975; Forsyth et al., 1972; Macleod et al., 1975) or solids not fat composition of milk (Clark et al., 1975). HMO can be successfully integrated into rations for lactating cows if its use is carefully monitored. When switching from a balanced commercial feed to HMO, the dairyman must understand the cow's nutritional requirements and how HMO will fulfill some of these needs. Several precautions must be taken when feeding HMO. HMC is a palatable feed and when it is fed in the bunk some animals may over consume HMO at the expense of other feeds (Otterby and Hutjens, 1978) and become over conditioned. Protein and mineral supplementation (calcium, phosphorous) 23 may be required in order to meet nutritional requirements (Merrill, 1971). Otterby and Hutjens (1978) recommended grinding HMSC before feeding because 10-20% of the kernels pass through undigested unless the corn is ground before feeding. Clark et a1. (1975) reported increases in milk production of approximately two kilograms per day when HMSC was rolled prior to feeding. Over feeding should be avoided because high intakes of HMO may cause over condi- tioning and butterfat depressions. Fiber levels should be maintained at levels of 15% or higher of dry matter in- takes to reduce the incidence of butterfat depression (Hillman et al., 1975). If butterfat depression continues, feeding sodium bicarbonate or magnesium oxide may help al- leviate the problem (Otterby and Hutjens, 1978). Goodrich and Meiske (1976) reported that beef cattle fed highly fermented rations consisting of wet corn silage or corn silage plus HMO may put animals under acid stress and lower performance. From this study it appears that high acid feeds caused reduced feed intakes. Fox (1976) reported that excessive fermentation occurs at moisture levels that are higher than the recommended levels. This resulted in increased energy loss during storage and in- creased protein breakdown. 24 High Moisture Corn Rations Otterby and Hutjens (1978) reported several ways HMO can be incorporated into the ration. In some herds, a constant amount Of HMO was fed to all cows as a "tOp dress" to the grain mix in order to supply additional en- ergy to high producing cows. This method can result in excessive energy levels in the ration for cows late in lac- tation which can cause over conditioning and the problems of the fat cow syndrome. Cows should be split into groups and fed the additional HMO on the basis of production and body condition. A second method was mixing HMO with pro- tein, minerals and vitamin supplements to provide a com- plete grain mix. A fourth method is mixing HMO with sup- plements and forages and feeding as a complete ration. Blending and feeding HMO should take place as soon as pos- sible after removal from the silo to reduce heating and spoilage. Heating may become a problem in hot humid weather. The use of O.l%-0.2% sodium prOprionate or a com- mercial mold inhibitor may be used if heating or spoilage problems occur (Otterby and Hutjens, 1978). Mixing supple- ments containing urea with HMO can result in palatability problems if not fed immediately after mixing because of ammonia release from the urea (Dum et al., 1978; Merrill, 1971; Otterby and Hutjens, 1978; and Snyder, 1968). Palatability is the keystone Of all feeding programs. 25 Moldy HMO will be rejected by many dairy cows and this could result in decreased feed intakes. Lynch et al. (1970) reported that under field conditions, high intakes of HMSC produced symptoms of tetany in lactating dairy cows. Attempts to reproduce these symptoms were unsuccess— ful. Theoretically, feeding HMSC will result in higher energy intakes compared to HMEC because of the absence Of the cob. The premise that absence of the cob will allow more space in the digestive tract for consumption Of other feeds to achieve a higher total energy intake and consequent- ly increased production has not been supported by the re- sults of feeding trials (Merrill, 1971). However, the cob appears to be useful in helping maintain a minimum of 15% fiber level in the ration where forage dry matter and crude fiber intakes may be minimal. After reviewing the litera- ture on feeding HMSC, HMEC, and proprionic acid treated HMO; it appears to the author that on a dry matter basis one pound of dry shelled corn equals one pound of HMEC or HMSC or prOprionic acid treated HMO. Cost Analysis Costs were broken down into two categories: fixed and Operating. Fixed or annual costs are defined to include depreciation, interest on investment, insurance, repairs, 26 taxes and housing. Operating or variable costs fluctuate with amount of use and include fuel, oil and Operating sup- plies. Ritchey et a1. (1961) calculated total repair costs as a percentage of new costs for various farm implements. These costs were derived from a review Of literature and from farm surveys in various states. Interest, housing, taxes and insurance can be expressed by a fixed annual charge as follows: Cost per year for each $100 value Interest 5.00 Housing 1.60 Taxes 2.00 Insurance .40 Ritchey et a1. (1961) noted that expressing all costs as a percentage of new cost has the advantage that data for various sizes of machines was not needed. Thus, repair costs were calculated as a percentage of the new investment cost. Ritchey et a1. (1961) estimates of re- pair costs are widely used as a basis to approximate the fixed and Operating costs of new farm machinery. Schwart and Hill (1977) calculated the cost Of own- ership and repairs on a per hour basis as a percent of the list price. The cost of ownership and repair per hour are based on the assumed number Of years Of use and assumed annual hours Of use. Fuel requirements are determined by 27 multiplying P.T.O.H.P. X .069 for gasoline .0504 for diesel .0825 for L.P. gas Economic Analysis of Drying and Storage Systems Casler (1975), Madsen et a1. (1978), Schwart and Hill (1977), Davis (1964), Speicher (1965) and Burrowbridge and Heopner (1961) studied the economics of on the farm drying and storage systems for corn grain. In the studies, fixed 'costs were estimated as a percentage Of purchase price. In each analysis, operating costs were calculated by making assumptions on drying times, operating efficiencies and prices of energy inputs. Speicher (1965), Madsen et a1. (1978), Schwart and Hill (1977) and Davis (1964) determined total annual costs of storage systems on the basis of 20- year planning periods. Mechanical components of the stor- age systems and harvesting equipment were replaced at 10- year periods. Casler (1975) used an eight-year planning interval for the storage system. Burrowbridge and Heopner (1961) capitalized storage systems over 50 years while harvesting equipment were replaced at lO-year intervals. Davis (1964) and Speicher (1965) calculated the total annual costs for the following harvesting and storage systems: full bin dryer, portable batch dryer, cribs, 1- and 2-row pickers, 2-row picker-sheller, 2-row combine, 28 concrete silo and metal grain bins. Burrowbridge and Heopner (1961) analyzed total annual costs for l- and 2- row pickers, 2-row combine, portable batch dryer, cribs and metal bins. Field losses were included in the total annual costs of harvest systems. The 1961 Virginia study (Burrowbridge and Heopner, 1961) concluded that full bin dryers were the least cost alternative for volumes under 10,000 bushels while port- able batch dryers were the most economical for volumes greater than 10,000 bushels. The study reported that farms with less than 60 acres Of corn and 180 acres Of grain crOps would be best suited to using a l-row picker and custom harvesting the grain. 0n farms with more than 250 acres of corn and grain crops, owning and Operating a combine would be the most economical system. The results of the Burrowbridge and HeOpner (1961) study may be limited in value. Labor and capital were valued on the basis of the rate they would earn if utilized elsewhere on the farm. This may tend to enlarge the compe- titive advantage of custom hiring and diminish investment in harvesting and storage facilities. This study assumed custom hiring as an alternative would be available for all farms. This assumption may not be factual. Secondly, full bin drying and high moisture corn facilities were not analyzed in the study. 29 Davis (1965) in an Illinois study concluded that cribbing ear corn was the least cost system for volumes less than 4,400 bushels while HMSC in concrete silos was the most economical system for 4,400 to 22,000 bushels. Batch in bin drying systems provided an alternative to high moisture corn systems with higher annual costs rang- ing from $1.12 to 84.89 per 100 bushels, picker-sheller units were most economical while combines were the least expensive at the higher volumes (Davis, 1964). Speicher (1965) noted in a Michigan study that dairymen should not compare ear corn and shelled corn on an equal nutritional basis because of the energy value Of the cob in the ration. He suggested annual costs Of har- vesting, handling and processing be calculated on a per .cow rather than a per bushel basis. This would be more meaningful when the entire crop is to be fed to the dairy enterprise. The Michigan study (Speicher, 1965) concluded that for volumes below 17,600 bushels a picker-sheller was the least cost harvesting system while over 17,600 bushels a combine was the most economical system. HMSC harvested with a picker-sheller and stored in a concrete silo was the least cost method Of harvesting and storing 4,400 to 22,000 bushels. HMEC harvested with a picker-grinder and stored in a concrete silo was the next lowest cost harvest- ing and storage system. The difference between the two 30 systems for 4,400 to 22,000 bushels ranged between $2.88 and 85.59 per hundred bushels. A comparison Of HMSC har- vested by picker-shellers and stored in concrete silos and full bin drying systems indicated higher costs for the dried corn which ranged from 85.52 to $7.80 per hundred bushels for 4,400 to 22,000 bushels. Speicher (1965) noted that HMEC stored in concrete silos was the highest profit system for harvesting and storage on dairy farms. The energy furnished by the corn allows a greater number of cows to be fed from the same corn crOp compared to HMSC. A 1977 Illinois study (Schwart and Hill) compared total annual costs on volumes of 5,000 to 100,000 bushels for the following systems: batch in bin dryer, batch in bin stir dryer, low temperature dryer, gas tight silo, acid treated bin storage, low moisture ear corn in crib and lo- cal elevator. Ear corn was competitive under 5,000 bushels. The higher field losses as a result Of a delayed harvest make it more costly than other systems for larger volumes. The Illinois study (Schwart and Hill, 1977) concluded that batch in bin systems were the least expensive storage systems for volumes between 10,000 to 80,000 bushels per year. At volumes greater than 60,000 bushels, automatic batch and continuous flow dryers became comparable with bin drying systems. Acid treated corn was competitive with other systems for volumes up to 10,000 bushels. The corro- sive action Of the acid reduced the life of metal bins by 51 about one half which increased storage costs. The major cost was the acid which increased operating costs above other storage systems. The difference in cost between the acid treated corn and the least cost storage system for 5,000 to 100,000 bushels ranged from 3.80 to $1.00 per hundred bushels. A 1978 Minnesota study (Madsen et a1.) considered the following drying systems: continuous flow dryer, automatic batch dryer, batch in bin, high/low temperature continuous flow, high/low temperature automatic batch, dryeration continuous flow and dryeration automatic batch. In combination high temperature-low temperature sys- tems, corn is discharged from the dryer when it is hot at approximately 22% into a drying bin (Madsen et al., 1978). The corn is cooled in the drying bin which reduces the moisture content 1%. Drying is completed in the drying bin using either natural air or air heated to increase its temperature several degrees above natural air temperature. In dryeration systems, the corn is discharged hot from a high temperature dryer to a bin where it steeps for 8 to 10 hours. The corn is then cooled with an airflow of l c.f.m. per bushel and transferred to storage (Madsen et al., 1978). Madsen et al. (1978) assumed the dollar was declin- ing in value throughout the period of the analysis. The nominal costs for each year were adjusted for inflation in that year to arrive at constant dollar cost. All costs 52 subject to inflationary pressures were considered on the basis of prices for the beginning year of the analysis. The costs were grouped into the following categories: 1. Costs that were not influenced directly by the inflation rate because they were based on prices negotiated at a specific time. 2. Costs that were subjected to inflationary pres- sures o 5. Costs that were affected by electricity prices. 4. Costs that were subject to yearly changes in prOpane prices. Examples Of these costs are as follows: Category 1 Category 2 Category 5 Category 4 Initial down Payments for Electricity Propane payment Replacement Finance Parts payment Insurance Income Tax Premium Deduction In the Madsen et a1. (1978) analysis, alternative energy price scenarios with a 7% inflation rate are listed as follows: Modest Significant Rate of electric price increase .08 .09 Rate of propane price increase .08 .12 On farms with volumes Of 10,000 bushels, the low temperature systems had lOwer cost Of 3.05 per bushel over batch-in-bin systems under modest energy price increases. 55 This advantage increased to 5.05 per bushel over automatic batch dryers with significant energy price increases (Madsen et al., 1978). Madsen indicated as volumes increased to 20,000 and 40,000 bushels, batch in bin and automatic batch dryers had savings of 3.004 and $.Ol2 per bushel over low tempera- ture systems for modest energy price increases. However, under significant energy price increases, the low tempera- ture system saved 3.015 and 5.002 per bushel over automa- tic batch dryers for 20,000 and 40,000 bushels. The least cost system for farms with 60,000 bushels or more was the dryeration continuous flow dryer (Madsen et al., 1978). Madsen et a1. (1978) concluded as energy prices increase prOpane and electricity become an increasingly larger prOportion Of total annual costs. As energy prices increase, savings on fuel costs were realized by systems which rely on grain aeration for moisture removal during part of the drying Operation. Low temperature systems offer farmers savings in total annual costs through the use of cheaper energy inputs for volumes under 60,000 bushels (Madsen et al., 1978). Schwart and Hill (1977) noted that moisture contents above 24% were not recommended for low temperature drying systems. Field losses increase because harvest must be delayed until the corn dries in the field to 24%imoisture (Johnson and Lamp, 1966). The savings in supplemental heat was offset 34 by the increased amounts Of electricity required to meet the high airflow requirements for drying the grain (Schwart and Hill, 1977). Economies of scale were not available for volumes greater than 60,000 bushels (Madsen et al., 1978) because drying bins are limited to a maximum 16 foot height due to the excessive power requirements for necessary airflows at greater depths (Schwart and Hill, 1977). Each bin must have a drying unit because drying time may extend for one month or longer. Larger volumes require greater investments in storage-drying bins than would be needed for alternative systems. Consequently, total annual costs were higher at larger volumes for low drying systems than for alternative systems (Madsen et al., 1978; Schwart and Hill, 1977). Casler (1975) provided a system by which corn grow- ers can estimate the total annual costs of on farm drying systems. This system enabled a farmer to determine the break-even investment for on farm drying facilities com- pared to commercial drying. This system did not consider the availability of labor and commercial drying at harvest and management skills required to operate drying systems. To the best of the author's knowledge, there has been no research which has considered the impact Of deregu- lation of natural gas on the production of steel, concrete, plastics and other raw materials. The question must be ad- dressed because raw material prices could change as a 35 result of natural gas deregulation. Consequently, corn grain storage and harvesting systems could be altered due to changes in raw material prices. Previous researchers have primarily concentrated on the economic analysis of harvesting and storage systems which process volumes of 20,000 bushels or more. Current research is limited on the total annual costs of harvest- ing and storage systems for volumes of 20,000 bushels or less. Past research has assumed that cost is the major criteria in the selection of corn harvesting and storage systems. Materials and methods describes the research methods and procedures used to generate total annual costs of har- vesting and storage systems which handle volumes up to 20,000 bushels. The second part Of the chapter outlines the methods and procedures used to analyze the results of a mail survey on corn harvesting and storage systems sent to 9,000 Michigan dairy farmers. MATERIALS AND METHODS The data for this research project were Obtained from two sources. A detailed questionnaire was sent to 9,000 dairy farms in Michigan. The questionnaire con- sisted of 19 questions which considered the types of corn harvesting and storage systems being used on Michigan dairy farms. In the second segment of the project, the net pre- sent value method Of cost analysis was used to determine the relative economic feasibility Of the systems under consideration. Rising energy costs were calculated on a constant dollar basis using priceescalators (inflation factors). Budgets for corn handling and storage systems were compiled depicting average total costs on a per bushel basis for the systems, and the point at which ris- ing energy costs cause high moisture corn systems to hold an economic advantage. The Questionnaire A questionnaire requiring approximately 15 minutes to complete was designed. Questions were categorized as follows: farm location by county and township, number of 56 57 animals in milking herd, crop acreages, harvesting and storage systems used on the farm, advantages and disadvan- tages of present storage systems, reasons to change har- vesting and storage systems and high moisture corn feeding practices. After initial completion, the questionnaire was submitted to each graduate committee member for critical review and suggestions. Following this initial review a second questionnaire was prepared. The revised question- naire was tested during personal interviews with ten dairy farmers. Additional changes in the questionnaire's con- struction were made on the basis of the dairymen's criti- ques. The final questionnaire contained 19 questions. Twelve of the questions consisted of filling in the blanks while the remaining seven questions were multiple answer questions. A copy of the questionnaire is included in Ap- pendix I. The questionnaire was sent to dairymen for several reasons. The primary goal was to determine when dairymen would consider changing harvesting and storage systems. Were there other reasons besides investment and input costs which influenced the dairy farmer's decision to change har- vesting and storage systems? Another goal was to determine the most important advantages and disadvantages for each type of storage system. 58 Questionnaire design was deficient in that it did not distinguish the extent to which corn grain was custom harvested, nor did it differentiate between the types Of harvesting equipment used for custom harvesting. The ques- tionnaire did not provide space for listing multiple structures Of a storage system. Questionnaire Procedure The questionnaire was mailed to 9,000 Michigan dairy farmers during the first week of November, 1978. The list Of Michigan dairy farmers utilized included all those that sold milk between September 1977 and January 1, 1978. Methods of Analysis Questionnaire data were summarized and presented by tables in Results and Discussion. Some Of the data were categorized by region. Counties were classified ac- cording to region as delineated by the Michigan Agricul- tural Reporting Service. By using the same regions, data collected in this study could be compared to past and fu- ture research projects conducted by the Michigan Agricul- tural Reporting Service. 59 The null hypothesis that the average importance attached to the advantages of storage systems in question 10, Appendix I, was tested across systems. This will be tested against the hypothesis that certain advantages were more important than other advantages. The disadvan- tages of storage systems in question 11, Appendix I, will be tested in a similar manner. Chi-square analysis will be used to test questions 10 and 11, Appendix I. Economic Analysis Net present cost analysis was incorporated into a decision making framework to calculate the relative econ- omic feasibility of potential harvesting and storage sys- tems. The harvesting and storage systems incorporated into this study are as follows: 1 and 2 row corn pickers, l and 2 row snapper heads, 2 row picker-sheller, 4 row combine, low moisture ear corn, full bin dryer with stir- rators, automatic batch and portable batch dryers, steel grain bins, concrete silo and sealed storage for high mois- ture corn. These systems were included because they are the most prevalent storage and harvesting systems currently being used on Michigan dairy farms. Costs may be broken down into two groups. Fixed costs are constant and are not subject to change. They are the result of past commitments. Fixed costs include 4O taxes, insurance, interest and depreciation. Variable costs change with the level of production and with what is produced. In contrast to fixed costs, management is able to determine whether or not the variable costs should be incurred. Fuel, repairs, and supplies are examples of variable costs. Total annual costs (fixed and variable) of an in- vestment are affected by its useful life. This problem must be addressed when comparing costs for sealed storage and concrete silos. Sealed storage units may be used for 20 years or longer. Their glass lined steel walls rarely deteriorate or develop air leaks which cause spoilage of the ensiled grain. Concrete silos tend to develop holes around doors and between cracks in silo walls after several years of use. Generally after ten years of service, con- crete silos are not used for high moisture grain storage due to the increased incidence of air leaks in the struc- ture which cause high spoilage losses. Sealed storage units are priced two to three times higher than similar sized concrete silos. The dairy farmer is faced with the decision whether to make the large investment in the sealed storage or purchase a concrete silo and replace it with a new concrete silo in the eleventh year. Although a ten-year planning period was used in this analysis, it may be argued that dairy farmers utilize planning periods longer than ten years for large capital 41 investments. If a twenty-year planning period was used for comparing sealed and concrete silos, a new concrete silo would be constructed in the eleventh year of the analysis. The purchase price of the concrete silo in the eleventh year may be considerably different than origin- ally estimated due to unforeseen events (e.g. energy and raw material shortages, new technology). Thus projected annual costs for concrete silos could differ dramatically from actual annual costs incurred during the twenty-year planning period. In this study, sealed storages with a twenty-year planning period were compared to sealed storages, concrete silos, cribs, and drying systems which had ten-year planning periods. The dairy farmer must project inflation rates for investment and total annual variable costs over the next twenty years as part of the decision making process. He asks, "will profits be maximized by purchasing a sealed storage unit instead of two concrete silos over a twenty- year period?" Total annual variable costs are lower during the first three to four years of an investment due to lower levels of repair costs. The trade Off between investment and total annual variable costs for the two systems is shown in Figure l. 42 .3223 8m? 5233 8mm . m 28 1 $38 maamm m lllll 9233 was mzo mas-Sm § Manon-m8 _ ' [HI] J n ,l a .1, W ,l I w ,l, W I 0 l, m [L . a l\ C 1% \ \ ,l \ \ _l. \3. I .. .... x . _ t o m 8 a no mm mac-m H. 03: 05292 8- 8.833 «:3. m2. “8.8 «no-Sm 9s.- No <2... 2333 828. 45 Dairy farmers are faced with the problem of uncer- tainty when comparing the relative profitability of poten- tial investments. In this study, it was assumed that pro- fit maximization was the primary criterion used in the selection of harvesting and storage systems. The problem of uncertainty in investment decision making can be handled using three different methods. With the decision analysis framework, managers attach probabili- ties tO alternative outcomes of each potential investment. The potential outcomes are totaled and the sum is the ex- pected value Of a decision. Probabilities may be deter- mined through empirical analysis, deductive and subjective reasoning. Net present cost and sensitivity analyses in- corporate the time value of money concept into the deci- sion making process. This concept states that a dollar received today is preferable to a dollar received at some future date because of uncertainty, inflation and alterna- tive uses for today's dollar (Aplin and Casler, 1973). A dollar today is worth more than a dollar to be received in the future because today's dollar can be invested so it will "grow." The net present cost method of investment analysis enables the decision maker to calculate the value of expeomd cash flows into present dollars. Cash flows are the costs and benefits associated with an investment during its econ- omic lifetime. An appropriate discount rate must be 44 selected for net present cost analysis. The discount rate may be determined from several sources. It can be the in-- terest rate the firm pays on borrowed funds for potential investment projects. The discount rate may also be inter- preted as the firm's cost of capital which is the weighted average of the component costs of debt and equity in the firm's capital structure. Net present cost is defined as the sum of future cash inflows and outflows, discounted at the cost of capi- tal, minus the cost of the investment. Investments with positive net present values may be considered as potential investments because the present value of net cash inflows is greater than the capital outlays for the investments. If capital is limited, management will select those invest- ments with the highest net present values so that profits will be maximized for the firm. Thus, the net present value of an investment indicates the potential profits or losses from an investment. There is a computer model available which does all the calculations for net present cost and it is called Teleplan III (Harsh, 1972). The following equations re- present Teleplan III: 45 Discounted Cash Flow 2 -10 + n 'CR(1+QCR)t(l-s)-V01(1+Q )t(l-S)-VC2(1+Q2)t(l-g) tal ::. (1+r ...VC(1+Q4)t(l-g)i K + n de reciation +interes 1. -+1nnc' (Lo-r)E \ tal.l +r + salvage(l+Qs)t + investment credit (1+r)n (144‘)1 IO 2 initial investment cost OR a custom rate Q1 ... Q4 a inflation rate for labor, gasoline, propane, repairs g a tax rate VCl ... VO4 a labor, gasoline, propane, repairs r . after tax cost of capital t a time periods n a last year of investment 5 a salvage value inflation rate When all or part of the investment is borrowed the following equations represent amortization of the loan: L M ' PUIF where M 2 equal loan payment L a total loan PUIF a present value annuity factor Loan balances are calculated as follows: Balance x i - interest payment M - interest payment a principal payment Balance - principal payment a new loan balance. The custom rate represents those savings in costs or income generated per machine unit (e.g. acre, bushel) if the investment is made. Savings generated from owning a crOp dryer instead Of custom drying is an example Of a reduction in costs. An illustration of an income 46 generating investment is the purchase of a combine for custom harvesting. Receipts from custom hire minus costs per acre (e.g. labor, hauling grain) are considered as income. However, fixed and variable costs associated with the investment are not deducted from the income. Fixed and variable costs related to the investment are considered in another part of Teleplan III. If management expects a second category of expenses or income to be affected by the investment, an additional custom rate may be incorporated into the model. For exam- ple, a farmer believes that grain stored on the farm has higher storage losses than storage at the local elevator. A negative custom rate for the additional storage losses would be included in the analysis of on-farm grain storage facilities. Conversely, a positive custom rate for a reduction in storage losses could be used if on-farm storage has lower losses. The coefficient Q represents the inflation rates for the variable costs in the analysis. Inflation rates may fluctuate among variable costs depending upon economic conditions and the decision maker's preferences. The in- flation rate for custom hire represents a weighted average of the inflation rates for all variable costs used in the analysis. Tax rate selection can alter the net present cost Of an investment. Incorporation of a high tax rate distorts 47 the relative profitability of the analysis because the tax savings incurred by depreciation from the investment accrue as cash inflows in the analysis. Depreciation is a non-cash expense. The federal government and not the investment is generating large cash inflows for the in- vestment when high tax rates are used in net present cost analysis. With a high tax rate, the impact of variable costs and interest costs in the analysis are under esti- mated because they are multiplied by the coefficient (l-g). To adjust for rising machinery costs, salvage values are multiplied by an inflation rate. This model does not consider the impact of taxes on the salvage value. If the impact of taxes are considered on the salvage value, the coefficient (1-g) would be included in the numerator. The annual number Of units per year on which the investment will be used is represented by the coefficient K. As the value of K increases, total annual costs (vari- able and fixed) per unit decrease since fixed costs are spread over a larger number of units. The net present cost of investment credit is dis- counted for one year in the model. This is due to tax savings from the investment credit being realized on the following year's tax return. The model enables the decision maker to modify vari- able costs and their inflation rates according to changes in economic conditions. Nhenever significant changes are 48 made in the inflation rate of a variable cost, the infla- tion rate for the custom rate will be adjusted since it is calculated as the weighted average of variable costs' inflation rates. ' Various custom rates may be substituted in the model. The break-even price is represented by the custom rate which indicates a net present value of zero profits for the investment. Total annual cost per machine unit (e.g. bushel, acre) comprises the breakeven price. In this study, total annual costs per bushel were calculated for harvesting and storage systems at the following vol- umes: 1,000, 5,000, 10,000, 15,000, and 20,000. Principal and interest payments may be incorporated into the analysis if all or part of the investment was fi- nanced. In Teleplan III, interest was included on a pre- tax basis. The model does not permit management to determine the portion of total annual cost that is composed of vari- able cost. Furthermore, the model cannot breakdown total variable cost into its component variable costs. Selection of the discount rate is crucial because it represents the "cut off criterion" for determining whether an investment is economically feasible. Projects with a negative net present cost will yield a rate of re- turn lower than the discount rate (i.e. cost of capital) used as a standard in the analysis of potential investments. 49 Decision makers may use several discount rates to reflect differences in risk among investments in net present cost analyses. The net present cost method is useful when comparing investments with unequal lives. Salvage values of invest- ments are incorporated into analyses when comparing pro- jects with uneven economic lifetimes. The salvage value represents the value Of the investment at the end of the investment period. Sensitivity analysis is a technique in which the net present cost of potential investment projects can be analyzed for different values of kay factors. For example, the expected return Of an investment could be calculated for several different assumptions regarding input costs. Sensitivity analysis indicates which variables and assump- tions are most critical in the analysis. Consequently, it tells management where to focus its analytical efforts. It encourages decision makers to consider the impact of uncertainty on the outcomes of potential investments. Fi- nally, it identifies areas on which management should con- centrate its attention after approval and during imple- mentation of a project. Net present cost analysis was incorporated into this study because discount rates for net present cost analyses can be documented by examining interest rates charged on loans for similar projects. Therefore, interest 50 rates were used as discount rates in net present cost analyses. It was difficult to locate empirical evidence which supports the probabilities utilized in decision rule analyses. It appears that the probabilities were deter- mined by deductive and subjective reasoning which may dif- fer among individuals. A discount rate Of 14% was used in the study. This was comparable to the interest rate charged to dairy far- mers by agricultural credit institutions. The 14%»rate includes a 7% general inflation rate, 4%ireturn on funds to the lender and 5%»risk premium. Interest rate compo- nents were determined by the author's subjective reasoning. Different discount rates may be substituted into the study depending upon changes in the economic conditions, desired rates Of return and risk premiums. The dairy farmer is faced with the problem of asset fixity in a storage system if a major technological advance- ment for lower cost storage systems is discovered sometime after but before the storage system is worn out. Although the investment is technologically outmoded, the marginal value product of the investment is greater than the sal- vage value but is less than its acquisition price. Conse- quently, the asset is fixed. When the marginal value pro- duct is equal to or less than the salvage value, disinvest- ment will occur by selling the storage system for either scrap metal or concrete stone. If total costs are amortized 51 over planning periods greater than ten years and new tech- nological advancements are discovered several years after investment, potential losses in ownership costs will be greater because only a small part of the investment will have been amortized during the first few years Of the in- vestment. The user cost problem of determining the optimal rate to extract services from fixed assets is difficult to address because of imperfect knowledge. Producers will invest or disinvest in durables to maximize profits. In an era of rapidly escalating petroleum prices, there is an economic incentive to develop alternative forms of energy. It appears to the author that mankind is on the threshold of major technological breakthroughs in the de- velOpment of alternative energy forms that are cheaper than petroleum and petroleum based fuels. Currently, thousands of researchers around the world are studying the use of coal, solar, wind, electrical and nuclear energy as alter- native sources of power. If an energy substitute that is cheaper than petroleum and prOpone is develOped within the next few years, current petroleum based technology may be outmoded. The invention and introduction of low cost substi- tutes for petroleum and propane could make present corn storage and handling systems obsolete. The author believes the incidence of asset fixity and obsolescence in an era of rapid technological change can be minimized by the use of 52 a ten-year planning period. Salvage value determination is a difficult problem because of imperfect knowledge. In this analysis it was assumed that there was a 10%isalvage value on steel grain bins and equipment and a 50% salvage value on concrete and sealed silos. A 50% salvage value was assumed for sealed storages at the end of a twenty-year planning period. The 10% salvage value on equipment represented the value of the equipment for either replacement parts or scrap metal at the end of the ten- and twenty-year planning periods. It must be recognized that the salvage value of the con- crete and sealed silos for HMO would be a function of the energy price scenario at the end of the planning period. Thus, if there are dramatic price rises in the price of propane during the ten-year planning period, the salvage value of these structures could be higher than their ini- tial cost. Prices for inputs and products are influenced by several factors. Some agricultural products such as corn have government price supports which establish a minimum price for the commodity while the price limit is deter- mined by supply and demand on national and international markets. At the present time petroleum and propane prices are regulated by the federal government. As deregulation occurs, these inputs will be priced on the basis of supply and demand on world markets. Since oil is a finite 53 resource and OPEC nations control much of the discovered oil reserves in the world, they have a monOpoly on oil supplies for the world market. Once petroleum and pro- pane deregulation occurs in the United States, alterna- tive forms Of energy such as solar, wind, nuclear, and coal will be substituted at a greater rate for propane and petroleum. The ceiling price on propane can be expected to be influenced by the cost of coal gasification. The ceiling prices for alternative energy sources will be de- termined by propane and petroleum prices on world markets. Otherwise, consumers will utilize petroleum if it is cheaper than alternative energy sources. Electricity rates are assumed to increase at the same rate as gasoline and Oil since 011 is used to power some electrical generating facilities. Since 1974, utility companies have attached a fuel and purchased energy adjust- ment charge to consumer's electrical bills (Surbrook, 1979). This charge is used to make adjustments for the Often fluctuating costs of fuel used to generate electricity. As utility companies switch to coal Operated generating facilities, electrical rates will probably increase. Transportation costs will increase due to higher fuel costs which will raise coal prices. Utility companies pass along the higher input costs to the consumer by rais- ing electrical rates through rising petroleum prices. 54 Labor was included as a variable cost for harvesting and storage systems due to the Opportunity cost principle. Labor was charged to the corn harvesting and storage enter- prises at the cost Of 84.00 per hour. This figure deline- ates the current price Of farm labor. Also, this rate represents the return labor might generate if it was utili- zed elsewhere on the farm for activities such as managing and caring for the dairy herd. Low moisture ear corn had a shorter harvesting sea- son than HMSC because harvest must be delayed until the moisture content dries to 25%. At moisture levels greater than 25%, there is the risk of spoilage when ear corn is stored in cribs. Harvesting systems were designed so that corn har- vesting was completed by the end of the third week in November. Corn harvest may be extended beyond this date, however, harvest losses rise due to the increased likeli- hood Of harvesting corn under adverse weather conditions. Consequently, it was assumed that harvest losses increase .005%'per day for each day harvest continued beyond the scheduled harvest season. Conversely, savings generated from a reduction in harvest losses by the start of harvest before the scheduled harvest season may be offset by in- creased drying costs for shelled corn and higher storage losses for HMSC, HMEC and low moisture ear corn. 55 Harvesting and storage losses were incorporated into net present cost analysis. The total annual cost per bushel for harvesting and storage systems included harvest- ing and storage losses. Appendix IV lists the electricity, labor, propane and gasoline costs per 100 bushels for the harvesting and storage systems considered in this study. The harvesting costs were based on harvesting 90 bushels of corn per acre. Appendix III lists the capacities for storage sys- tems included in this analysis. Capacities for concrete silos, sealed storages, grain bins and cribs were calcu- lated using values provided by the Midwest Plan Service. The approximate storage space requirements are listed as follows: Material Description lb/cu ft lbgbu Corn shelled 28%imoisture 41.1 65.7 25% moisture 45.1 65.0 15.5% moisture 44.8 56.0 Ear corn 15.5%imoisture 28.0 70.0 55.0%:moisture 56.5 88.8 .77 x radius x radius x silo height x lb/cu ft y lb/bu Capacit Capacities for concrete silos were determined using 28%rmoisture content while a 25%»moisture content was used for sealed storage. Cribs and grain bin capacities were calculated using a 15.5%imoisture content. 56 It was assumed that 5 feet at the top of concrete silos and sealed storage units would be used for either an unloader or breather bags. Thus, the capacity listed for a 20' x 60' silo is the capacity of a 20' x 55' silo filled to the top. Capacities for cribs and grain bins did not include space above the save line. Horizontal silos were not considered in this study. It is difficult to remove 4 tO 6 inches of silage daily from the exposed silo face without loosening and exposing additional silage to the air. Silo dimensions must be tailored to animal numbers and feeding programs. Fox (1976) concluded that horizontal silos were best suited for farms with over 500 cattle so that spoilage losses can be mini- mized. Acid treated corn was not included in the study be- cause the corrosive action Of acid reduces the life of handling equipment and storage bins. Budgeting Harvesting and storage systems considered in this project are as follows: Harvesting Handling and Storage 1 row corn picker crib 2 row corn picker automatic batch dryer 2 row picker-sheller portable batch dryer 1 row snapper head steel grain bin 2 row snapper head concrete silo for HMO 4 row combine full bin dryer with stnnauxs sealed storage 57 Assumptions: 1. Dryer efficiencies: full bin - 1800 - BTU/1b water removed or 21.50 gal/100 bu automatic batch - 2800 BTU/lb water removed or 33.14 gal/100 bu portable batch - 2800 BTU/lb water removed or 33.14 gal/100 bu Moisture percentages: Grain harvested at 28%:moisture and dried to 14% moisture content. Input costs: labor 54.00 per hour prOpane 30.40 per gallon gasoline 80.75 per gallon oil 82.40 per gallon electricity 80.041 per kilowatt hour Drying rate: Drying systems considered in this analysis dry at least 1500 bushels per day of grain from 28% down to 14% moisture content. Harvesting rate: 1 row picker or snapper head 0.8 acre per hour 2 row picker, picker-sheller or snapper head 1.55 acre per hour 4 row combine 4.00 acre per hour 8 hour harvest day 20 day harvest season - HMSC 10 day harvest season - low moisture ear corn 4% harvesting loss - HMSC 8% harvesting loss - low moisture ear corn 90 bushels corn per acre 58 Total harvest losses increase .005% per day for each day harvest continues past the scheduled harvest season. Cost data: ten year planning period 20% tax bracket 50% salvage value on concrete and sealed silos 7% inflation rate 9% electricity inflation rate 9%igasoline and Oil inflation rate 11%ipropane inflation rate annual repairs for storage and harvesting systems, 2% of initial cost taxes for storage and harvesting systems, 1.5% of initial cost insurance for storage and harvesting systems, 0.5% of initial cost straight line depreciation 10%»investment credit taken in the first year 10% salvage value on equipment and storage bins no trade-in of Old equipment on new equipment one half of the cost of combines or forage choppers plus the cost of snapper heads or corn heads will be allocated for corn harvesting labor inflation 7% interest rate 14% after tax rate of return on equity capital 15% new machinery inflation rate 7% Storage losses: 2%isteel grain bin 6% sealed silo 10% concrete silo Auxiliary Equipment: NO auxiliary equipment (e.g. augurs, elevators, silage blowers, and tractors to Operate corn pickers, and haul wagons, will be purchased. Variable costs for tractors and electric motors needed to Operate storage and harvesting were included in the budgets. Corn price: 32.40 per bushel 59 10. Power requirements: 70 horsepower tractors were used to Operate har- vesting and drying equipment. Fuel requirements on a per hour basis were calculated as follows: P.T.O.H.P. X .069 gal/hr gasoline .0504 gal/hr diesel .9 kilowatt/hr electricity The calculation of all costs in this study was based upon 1979 prices obtained by the author. The prices in- clude both the current cost Of harvesting and handling equipment and the current cost of prOpane, electricity and gasoline. Since the study projects costs over a ten year planning period, the use of 1979 prices would be unrealis— tic due to the impact of inflation. Inflation factors were incorporated into the study to adjust for rising price levels. Inflation rates for gasoline and propane were higher than the general inflation rate due to their limited supplies. The inflation factor is a constant per- centage from year to year. Determinin the Chan e-over Point from Dr ShelIed Corp to Higfi Moisture Corn Systemg Inflation rates of 10%, 20%, 40%, 60%, and 80% for electricity propane and gasoline are incorporated into the analysis to determine when farmers could economically jus- tify changing from drying corn to high moisture corn sys- tems. Total annual costs per bushel for portable batch 60 dryers, automatic batch dryers and full bin dryers are cal- culated under the spectra of rising energy prices. All other assumptions regarding investment and input costs are not changed in the computation Of total annual costs for these systems. The change-over point for the drying sys- tems was calculated at volumes of 5,000, 10,000, 15,000 and 20,000 bushels. The cost curves are illustrated in the Results and Discussion. It was difficult to compare the total annual costs of sealed storage units, concrete silos, batch in bin dry- ers and grain bins because these systems were not designed to store exactly 5,000, 10,000, 15,000 and 20,000 bushels. A regression line was fitted to the total annual costs of these systems so that comparisons could be made at the pre- viously mentioned increments. Thus, the total annual costs for these systems were determined from the regression line. Total annual costs for batch in bin dryers for volumes greater than 10,000 bushels were not included in the analy- sis. The author felt dairymen would have increased flexi- bility from two smaller bins instead of one large bin if several grain crops were grown on the farm. RESULTS AND DISCUSSION This section was divided into two parts. The first portion of this section analyzes the results Of budgeting for harvest and storage systems. The second portion dis- cusses tabulation and interpretation of mail questionnaire data. Cost Analysis of Harvest Systems Total annual cost per bushel for corn harvesting systems are shown in Table 1 and Figure 2 for input prices outlined in materials and methods and Appendices II to IV. The annualized cost was the cost at which the net present cost of the investment had 0 profits. Table 1 shows the annual cost per bushel for each harvesting system. As shown in Appendix II, field losses rise as the length of harvest season increases. Field losses are incorporated into the annual cost per bushel for harvesting systems. Pickers had higher costs at larger volumes due to a delayed harvest. The onset Of low moisture ear corn har- vest must be delayed until the corn's moisture content reached the desired level for cribbing. Since only one 61 62 Table 1. Annual Cost Per Bushel for Corn Harvesting Systems (For 90 Bushels per Acre) Harvesting I Bushels ‘ Systems 1,000 5,000 10,000 15,000 20,000 1 Row Picker s .8929 5.4058 3.4000 3.4586 5.5175 2 Row Picker 1.460 .4718 .5484 .2957 .5561 2 Row Picker- Sheller 1.410 .4052 .2805 .2587 .2178 1 Row Snapper Head .9096 .5485 .2785 .5070 .5648 2 Row Snapper Head 1.550 .5912 .2755 .2540 .2145 4 Row Combine 5.600 .8050 .4525 .5554 .2769 picker was used to harvest the larger volumes, the harvest season was extended due to the relatively slow harvest rate. tinued beyond the scheduled harvest season. Consequently field losses mounted as harvesting con- This was re- flected in the higher annual costs per bushel at the larger volumes. Two row snapper heads and two row picker-shellers were the lowest cost corn harvesting systems due to longer harvest seasons and lower investments. used to harvest HMEC. Snapper heads were The four row combine had the high- est annual costs because of the small volumes relative to the large initial investment. Annual Cost Per Bushel 3.60 J. 1.60 1.40 1.20 1.00 .80 .60 .40 .20 63 ‘1 w 4 Row Combine 2 Row Picker 1 Row Picker . 2 Row Picker Sheller 1 Row Snapper Head 30d 2 ROW Snapper Head 1 L 1 l 1 1.000 5,000 10,000 15,000 20,000 Bushels Figure 2. Harvesting system costs for 5,000 to 20,000 bushels. 64 The repair costs for one row pickers and one row snapper heads could increase beyond the estimated 2% Of initial investment. These costs could be higher due to the extended harvest seasons for volumes greater than 10,000 bushels. The result would be higher annual costs. Cost Analysis Of Storage Systems Annual costs per bushel for corn storage systems are shown in Table 2 through Table 9. Storage losses were included in the annual cost per bushel for all storage systems. Losses ranged from 2% for cribs and steel grain bins to 6% for sealed storages and 10% for concrete silos. Table 10 compared the costs of automatic batch and porta- ble batch drying systems. Table 2. Annual Cost Per Bushel for Sealed Storage and Unloader __‘- Bushels Dimensions Sealed Storage Unloader Total HMSC Costs 4945 20' x 28' 8 .5852 8 .5688 8.9520 9671 20' x 50' .4725 .2475 .7198 16119 20' x 80' .4462 .2102 .6562 65 Table 5. Annual Cost Per Bushel for Sealed Storage and Unloader over a Twenty Year Period Bushels Dimensions Sealed Storage Unloader Total HMSC Costs 4945 20' x 28' 3 .4265 3 .1745 3.6006 9671 20' x 50' .5490 .0975 .4465 16119 20' x 80' .5290 .0740 .4050 Table 4. Annual Cost Per Bushel for Concrete Silo and Unloader Bushels Dimensions Silo Unloader Total Cost HMSC 1,768 12' x 30' 3.4407 8.2850 8.7257 5,051 16' x 45' .5964 .1260 .5224 10,810 20' x 60' .5555 .0758 .4291 15,722 20' x 85' .5190 .0657 .5847 Table 5. Annual Cost Per Bushel for Steel Grain Bin With Aeration Systems Bushels Total Costs DSC 2,415 9 .2614 4,910 .1854 9.676 ~1375 16.783 ~1355 20,580 .1318 66 Table 6. Annual Cost Per Bushel for Full Bin Dryer with Stirring Devices Bushels Total Costs DSC 5 ,000 6 - 5775 5,000 .4974 9 . 200 . 5929 Table 7. Annual Cost Per Bushel for Portable Batch Dryer Bushels Total Cost DSC 1,000 . 3 1.5900 5,000 .5009 10,000 .5641 15,000 .5185 20,000 .2957 Table 8. Annual Cost Per Bushel for Automatic Dryer and Wet Holding Bin Bushels Automatic Batch Dryer Wet Holding Bin Total DSC Costs 1,000 8 1.37 8 .5501 81.7201 5,000 .4526 .0768 .5074 10,000 .2955 .0426 .5581 15,000 .2558 .0510 .2868 20,000 .2459 .0255 .2714 67 Table 9. Annual Cost Per Bushel for 960 Bushel Corn Crib Cost per bushel Low moisture ear corn 8 .1640 Table 10. Approximate Annual Cost Per Bushel for Portable Batch Dryer--Storage Bin (System 1) and Wet Holding Bin--Automatic Batch Dryer--Storage Bin (System 2) Bushels HMSC ,000 ,000 0,000 15,000 20,000 System 1 8 1.85 8 .6806 5 .5268 3 .4642 8 .4244 System 2 1.98 .6871 .5008 .4525 .4011 Although full bin drying systems with stirrators for volumes greater than 9,200 bushels are available, they were not considered in this analysis for several reasons. Equipment manufacturers indicated many farmers preferred the increased flexibility in a drying system Offered by two smaller drying bins instead of one large drying bin. This was desirable if several crops used the drying system each year. Larger bins required more supervision and management. Equipment dealers reported that larger bins had a higher incidence of mechanical problems with stirra- tors than in smaller bins. ’68 A wet holding bin was required to Operate an auto- matic batch dryer because grain flowed intermittently through the system. Storage bins, wet holding bins and drying systems must be considered as one unit when comparing ear corn, HMC and dry shelled corn systems. Wet holding bins, storage bins with aeration systems and automatic batch dryers were considered as one unit while portable batch dryers and storage bins with aeration systems were considered as another unit. These systems were compared in Table 10. It was difficult to compare storage systems on a per bushel basis because the systems were not always de- signed to hold exactly 1,000, 5,000, 10,000, 15,000, and 20,000 bushels. Linear regression was used to calculate storage system costs at the previously mentioned incre- ments. Total annual costs for cribs, batch in bin dryers, steel grain bins, concrete silos and sealed storages were determined using linear regression. These costs are illus- trated in Figure 5. Cribs were the lowest cost storage system. Cribs had savings Of 8.52 and 8.12 per bushel for 5,000 and 20,000 bushel volumes compared to concrete silos. When compared to automatic batch dryers, cribs had an advantage Of 5.50 and 3.21 for 5,000 and 20,000 bushel volumes. Al- though higher labor costs were reported in Appendix IV for cribs compared to shelled corn systems, annual costs were 69 lower due to the lower investment cost. While cribbing corn required more physical labor for loading and unloading, shelled corn systems still required labor to monitor and manage unloading and loading. From Appendices III and IV it was shown there was a trade-Off between labor and invest- ment costs. As labor saving devices were implemented in storage systems, investment costs increased. Farmers must decide how much they are willing to pay for labor saving conveniences when designing storage systems. After cribs, full bin dryers with stirrators pro- vided the second least cost storage system followed by con- crete silos, automatic and portable batch dryers and sealed storages. Full bin drying systems were competitive in price because they could be used for both drying and stor- age. The full bin dryer has an advantage of 8.05 and 3.07 per bushel over concrete silos at 5,000 and 10,000 bushel volumes. This advantage in cost could diminish if propane prices increase faster than anticipated. When compared to automatic batch dryers, concrete silos had savings Of 3.17 and 8.09 per bushel for 5,000 and 20,000 bushels. In con- trast, sealed storages had higher costs of 5.12 and 3.005 per bushel over automatic batch dryers for 5,000 and 20,000 bushels due to the high initial investment cost. Full bin drying systems were more efficient in the utilization of propane than batch drying systems. As a result, full bin systems have approximately 3.20 and 8.15 per bushel 70 $1.00 - .90 - /Sealed Storage .80 r- ' Portable Batch Dryer and Storage Bin .70 - Automatic Batch Dryer. Wet \ ° Holding and Storage Bins .60 - Sealed Storage ‘ (20 years) .50 - ‘ ll \ \ .40 - ' A \ Annual Cost Per Bushel '30 " F0" 8i" Dryer Concrete Silo .20 - f * <3 Crib .10 - 711 l L l 1 5.000 10.000 15.000 20.000 Bushels Figure 3. Storage systems costs for 5,000 to 20,000 bushels. 71 advantages over automatic batch systems for volumes of 5,000 and 10,000 bushels, reSpectively. Automatic batch and portable batch dryers were comparable in annual costs. Automatic batch systems had lower Operating costs because electrical motors were substituted for gasoline powered tractors for the Operation of the systems. Although auto- matic batch systems had higher initial investments they were cheaper than portable batch systems for larger volumes due to lower Operating costs. Sealed storage systems were the most expensive storage systems due to high initial in- vestments. Low temperature systems were not included in this study. It was recommended that only corn whose moisture content was below 24% be used in these systems (Brooker gp 31., 1974). Corn may not field dry to 24%»every year in Michigan. If the harvest season was delayed until the corn reached 24% moisture, the harvest season could be significantly shortened during a wet harvest season. As a result, harvest losses will increase when harvesting is extended beyond the scheduled harvest season. Low tempera- ture systems were not considered because they could not be used every year. Tables 2 and 4 listed the capacities of sealed stor- age and concrete silos for HMSC at 25% and 28%>moisture levels. If both systems were filled with 50% and 33% HMEC, storage capacities would be reduced by 54% due to the 72 presence of the cob. Consequently, annual storage costs per bushel would increase by 50%. The cob raises the moisture content of HMEC about 5%»higher than for HMSC because it comprises about 20% of the dry matter in the corn ear (Merrill, 1971). However, due to the presence of the cob in HMEC, net energy and crude protein are lower than in shelled corn. The major advantage of feeding HMEC is the increased fiber in the diet. The author felt that dairymen could not justify a 50% increase in annual cost per bushel for HMEC over HMSC. Dairymen should be able to increase the fiber content of rations in a cheaper manner than by filling HMO storages with HMEC. Most dairy farmers construct sealed storage systems on the premise that sealed storages will not become Obso- lete and that they can be used indefinitely due to their steel construction. As shown in Tables 2 and 5, there is approximately a 60%rreduction in costs when the system is utilized over a twenty year planning period instead of a ten year planning period. This results in a savings Of 3.25 and 3.10 per bushel for volumes of 5,000 and 20,000 bushels, respectively. In Table 5 it was assumed that one unloader would be used during the twenty year analysis be- cause the silo would be unloaded once each year. As shown in Figure 5, costs for sealed storage systems over a twenty year planning period were comparable to concrete silos over a ten‘year period. -At 20,000 bushels, concrete silos and 73 sealed storages had equal costs. Length Of planning period is the critical assumption when comparing the costs of concrete silos and sealed stor- age systems. If a dairyman believes that current technol- Ogy may be outmoded within several years, a ten year plan- ning period should be used to minimize the incidence of Obsolescence and asset fixity. Over a ten year planning period, concrete silos had savings Of 8.50 and 8.15 per bushel for 5,000 and 20,000 bushel volumes, respectively, (Figure 5) compared to sealed storages due to their rela- tively low investment costs. It is difficult to predict future investment costs. Concrete silo costs in the next decade may be considerably higher than estimated at the beginning Of a twenty year analysis due to unexpected energy and raw material shortages. Thus for a twenty year planning period, sealed storages may be the least cost HMO storage systems. An analysis Of prOprionic acid treated HMSC was not contained in this study because it provided temporary stor- age Of HMSC. PrOprionic acid treated HMSC may be stored for up to one year (Lloyd Berkimer). It was recommended 2.78 gallons (25.46 pounds) of 100% priOprionate be applied to one ton of 28%rHMSC to insure safe storage for up to one year (Lloyd Berkimer). The corrosive nature of the pro- prionate will reduce the life Of handling and storage equip- ment. Application of prOprionate must be carefully 74 monitored. Losses will easily occur if 311 grain is not covered with a uniform application. PrOprionic acid is manufactured from petroleum and petroleum based products. Thus rising petroleum prices will be reflected in higher costs for proprionic acid. At 3.57 per pound, the cost of treating one bushel of 28%»HMSC was 3.2214 per bushel. If the storage costs in Table 5 were used as an approximate indicator of storage costs for acid treated HMSC, the acid treated corn would be competitive with other systems for volumes under 10,000 bushels. At larger volumes, the acid treated corn was not competitive because the prOprionate was a high proportion of the total annual cost. Since no storage losses and costs for the corrosiveness on handling and storage equipment (augers, grain bins) were included in the annual costs of acid treated systems, total annual costs were underestimated. Selection of a storage and harvesting system can be influenced by the utilization Of the corn. If part of the corn crOp is sold, market availability will affect the choice of harvest and storage system. Although HMO and acid treated HMO may have lower storage costs than alterna- tive systems, market availability for non-livestock pur- poses may be limited. Figure 4 illustrated the total annual costs for least cost combinations of harvest and storage systems. Ear corn, HMO, and dry shelled corn systems were compared Annual Cost per Bushel 75 $1.30 1.20 ‘ /Seated Storage - 2 Row Picker - Shelter 1'10 ' Concrete Silo - 2 Row Snapper Header 1.00 - Portable Batch Dryer and . Bins - 2 Row Picker - Shelter *\ .90 L- 3 \ .80 - / '70 ”Full Bin Dryer - 2 Flow Picker - . Shelter . / , '60 b Concrete Site- 2 Row Picker - Shelter .50 '- . I Crib - 2 Bow Picker ' Automatic Batch Dryer '40 ' and Bins - 2 Row Picker - 1’ Shelter [L l l I 3.000 10.000 15.000 20.000 Bushels Figure 4. Least cost harvesting and stOrage system combinations for 5,000 to 20,000 bushels. 76 in Figure 4. The lowest cost harvest and storage system for 5,000 to 20,000 bushels was the 2 row picker-sheller-crib system. Using a 2 row picker-sheller, the least cost har- vest and storage systems were ranked as follows: full bin dryer with stirrators, concrete silos, automatic batch dryer with holding and storage bins, portable batch dryer with storage bin and sealed storage. Although 2 row snapper headers and picker-shellers have comparable annual costs per bushel (Table l), HMEC systems had higher annual costs due to increased storage costs. HMSC harvest and storage systems for concrete silos had cost reductions of 8.24 and 3.16 per bushel at volumes of 5,000 and 20,000 bushels, respectively, compared to the HMEC systems. As shown in Figure 4, the ear corn picker system had approxi- mately a 8.27 and 8.13 per bushel advantage over the full bin dryer-picker-sheller combination for volumes of 5,000 and 10,000 bushels. When compared to the automatic batch dryer system listed in Figure 4, the ear corn system had lower annual costs of 8.45 and 8.10 per bushel for 5,000 and 20,000 bushels, respectively. Total annual costs for the crib systems begin to rise at volumes greater than 15,000 bushels due to higher harvest losses. The concrete silo-snapper head system had higher costs of 8.52 and 8.17 per bushel over the ear corn-picker system for 5,000 to 20,000 bushels. The sealed storage system indicated higher 77 costs of approximately 3.50 and 8.10 per bushel for HMSC over concrete silos for 5,000 and 20,000 bushels. In Figure 4 the ear corn system had savings of 3.58 and 3.10 per bushel over the sealed storage system for 5,000 and 20,000 bushels. Sealed storage systems and portable and automatic batch dryers have approximately equal costs at volumes of‘ 20,000 bushels in Figure 4. However, concrete silos main- tain a 8.10 per bushel advantage at the 20,000 bushel level over alternative drying and sealed storage systems due to their relatively low investment and Operating costs. Determining Breakeven Cost Between Dgying Systems And Alternative Storage Systems Dairy farmers are faced with the problem of trying to determine the breakeven point between drying systems, high moisture corn and low moisture ear corn systems in an era of rising energy costs. Annual energy inflation rates ranging from 10% to 80%rwere used to determine the break- even points. When calculating the breakeven points, it was assumed that electricity, propane and gasoline had comparable inflation rates, while a static 7% inflation rate was used for repairs, labor and new machinery. Thus when a 40%»inflation rate was used for energy inputs, the general inflation rate remained at 7% for repairs, labor and new machinery. 78 As shown in Figures 5 to 8, annual energy inflation rates greater than approximately 20% economically Justify changing from drying systems to high moisture corn systems. When compared to drying systems, sealed storages and con- crete silos had lower annual costs per bushel at higher inflation rates because minimal amounts of energy are re- quired to Operate these systems. In sealed and concrete silos, energy usage is limited exclusively to mechanical loading and unloading. Due to greater investment costs, sealed storage systems had higher annual costs per bushel than concrete silos. Cribs had the lowest annual cost due to the rela- tively nominal investment and Operating costs. Cribs had the highest labor requirements Of all storage systems. Consequently, considerable physical labor is required for loading and unloading. Cribs are not greatly affected by rising energy costs because substantial quantities Of physi- cal labor are substituted for energy inputs in the Opera- tion of these systems. Although portable and automatic batch dryers have comparable investment costs, portable batch dryers had the highest annual costs. The portable batch dryer is Operated by a 70 horsepower gasoline tractor which has greater energy input costs than the electricity required tO power the electrical motors on the automatic batch dryer. Even though batch in bin dryers have higher investment costs Annual Cost per Bushel 79 $7.00 - 6.00 r- Portable 5.00 - Batch . \ Dryer 4.00 - Automatic Batch 3.00 r- Dryer _. Batch in 2.00 Bin Dryer . 1.00 .. . / . . \ . / Sealed Storage + .50 - . ., \ Concrete Sito‘n/l/o c " {—7 Crib 1 L l l o 10% 20 % ‘ 40 % 60% 80 /o tnllatlon Rate Figure 5. Ten percent to eighty percent inflation rates for energy inputs--S,000 bushels. Annual Cost per Bushel 80 $7.00 '- 6.00 r- Portable Batch Dryer \ 5.00 - 4.00 - 3-00fi' Automatic Batch Dryer 2.00 '- ‘ Batch in 1.00 "' V l‘ v - 0// Sealed Storag/ .50 - . ' + . / * ’7‘ Concrete Silo ‘ / D P 7" Crib l l l 1 4° 10% 20 °/o 40 °/c 60 % 80 /o lnllation Rate Figure 6. Ten percent tO eighty percent inflation rates for energy inputs--10,000 bushels. Annual Cost per Bushel 81 $7.00 - 6.00 - Portable Batch Dryer 5.00 "' \ 4°00 .. Automatic Batch Dryer 3.00 - 2.00 - Sealed Storage 1.00 - .50 '- . J 'i W Crib l L t to, __lo’ 10% 20 % 40 °-e. 60 o 80 o lnllation Rate Figure 7. Ten percent to eighty percent inflation rates for energy inputs-~15,000 bushels. Annual Cost per Bushel 82 57.00 - 6.00 Portable Batch Dryer \ 5.00- 4.00 b 3'00“. Automatic Batch Dryer 2.00- Senled Storage 1.00 - Concrete Silo Crib l 1 1 L_ J 10°. 20". 40“. 60“~ 80”» lntlation Rate Figure 8. Ten percent tO eighty percent inflation rates for energy inputs--20,0000ushels. 83 than automatic and portable batch dryers, greater effi- ciencies in propane utilization have resulted in lower annual costs at inflation rates greater than 40% for batch in bin systems. Tabulation of Survey Data In early November, 1978, a mail survey (Appendix I) was sent to 9,000 Michigan dairy farmers. A total Of 1275 surveys (14.2% response rate) were returned by Decem- ber 31, 1978. Counties were classified according to region. The regions are shown in Figure 9. The regions being used in this study are the same as those delineated by the Michigan Agricultural Reporting Service. Thus, data compiled in this study may be compared to future Michigan Agricultural Reporting Service studies. Corn acreages and herd sizes were grouped into five categories and are as follows: 1 to 50, 51-75, 76-100, 101-150 and 151 to high. The corn acreages and herd sizes were arranged in this manner because the author hypothesized that herd sizes and corn acreages were influenced by the types Of corn storage systems utilized on dairy farms. Soil capability and growing season are the limiting factors in the Michigan dairy industry. There is an in- creasing number Of dairy farms and larger corn acreages as no“ .- olU-Il ”0"“ CROP REPORTING REGIONS Figure 9. Michigan crop reporting regions. 85 one moves towards more intensive agriculture in southern Michigan. There is a smaller percentage of land capable of crap production in northern Michigan. As shown in Table 11, less corn is grown in the northern regions because Of the shorter growing season and restricted acreage on which to grow corn. Table 11. Farm Characteristics and Average CrOp Acreage By Region and State Michigan I“‘§"'§ 4 ‘5 6 7"“§“"§ Number Of farms 1275 83 45 59 61 117 183 173 312 159 Average # cows 63 49 62 6O 57 6O 62 53 69 64 Crop (avg. acreage) Corn grain 116 74 52 58 Bl 104 122 106 148 113 Corn silage 55 44 55 6O 47 61 63 4O 58 56 Ray 111 175 140 122 106 124 93 98 115 107 Cats 8: new seeding 34 87 29 42 26 34 31 25 31 32 Pasture 49 66 46 66 27 46 36 3O 29 25 Cash crops 57 4O 24 63 26 91 77 45 48 62 Total tillable acreage 334 272 305 358 267 433 328 289 361 339 (average) Source: Survey data on 1275 farms. Hay acreages increase as one moves north for two reasons. First, if a dairyman is to feed all his cows and has trouble growing corn due to soil limitations, he must 86 grow more hay to replace corn silage. The cooler weather favors growing grass instead of corn. Oats can be grown as an energy crop in the north, particularly in the Upper Peninsula where corn cannot be easily grown. As shown in Table 12, over 56% Of the herds in the survey had herd sizes of 50 cows or less. The average herd size in this survey was 62.7 cows. This was similar to the state DHIA average of 65 cows. Table 12. Frequency Of Herd Size by Region and State W 50 51-75 76-100 101-150 >-150 Region fi37——7% fi37-7% fi37_—7% fi37—-7% fi37—-% Michigan 660 S6 223 19 126 11 103 9 60 5 1 64 77 8 10 4 3 3 4 4 4 2 25 55 9 20 6 l3 5 7 2 5 3 25 64 4 10 5 13 3 8 2 5 4 31 51 17 28 7 11 5 8 1 2 5 66 56 20 17 17 14 10 9 4 4 6 108 59 32 17 20 11 14 8 9 5 7 86 50 46 27 15 9 19 11 7 3 8 139 51 63 20 31 10 37 12 22 7 9 96 60 24 15 21 13 9 6 9 6 Source: 1172 responses from survey data on 1275 dairy farms. 87 Table 13 illustrates that corn grain averages greater than 50 acres were not prevalent in northern re- gions. As one moves south, average corn grain acreage in- creased due to a longer growing season and a larger per- centage Of land available for producing crOps. Table 13. Frequency of Corn Grain Acreage by Region . Corn Grain Acreage Region NO. N02}- H H {tn—{.297 Michigan 532 45 144 12 156 13 136 12 204 18 l 16 53 4 13 2 7 5 17 3 10 50 67 7 16 4 9 3 l 2 32 82 l 3 l 3 2 5 5 7 31 51 8 l3 9 15 6 10 7 ll 51 44 17 15 12 10 18 15 l9 16 88 48 25 14 2B 15 ll 6 31 1? 65 38 17 10 31 18 27 16 33 18 102 33 47 15 46 15 44 14 73 23 64 4O 18 11 23 14 2O 13 34 22 \OOJQO‘UIRWN Source: 1172 responses from survey data on 1275 dairy farms. Dairy farmers were asked (Appendix I, question 8) to mark the number and capacities Of corn grain storage facilities used on their farms. Cribs were the most 88 prevalent storage systems as shown in Table 14. Personal interviews and written comments on survey forms indicated low investment cost as the primary reason for the large number of cribs being used on dairy farms. Many dairy farmers which used cribs were 50 years Old or more. They expressed the concern that they could not afford alterna- tive storage systems in an era of high inflation and rela- tively low farm prices because they expected to retire within the next 5 to 10 years. Many farms use more than one corn grain storage system. As shown in Table 15, 25%rof the farms had a combination of cribs and concrete silos for storage systems. This was expected because Table 14 listed 36% and 22% of the farms having cribs and concrete silos. Table 16 lists the total capacities for all the corn storage systems (Appendix I, question 8) being used on dairy farms. Although Table 14 showed 36% Of the farms utilizing cribs, they accounted for only 5%»Of the total storage capacity listed in Table 16. It appears that cribs are primarily used on farms with smaller herd sizes and corn acreages. The relatively low popularity of bunker silos and wooden grain bins shown in Table 14 was reflected in the limited storage capacities Of these systems in Table 16. 89 .nahmm hnHOo muma no snow hm>nsm Bow“ mochQOOn mooH "OOHOOm e O mm HO O OH NH um OH em m 5 mm mm m s 5H an OOH m em OH 5O RH Om O OH OH mm O m m on moH O OH mH mm mH an m 4H mm an s a HH Om moH O om HH mm NH mm m 4H mm mm O s O mm as m NH mH mH NH OH O m mm m: m e m m: mm m m u O OH 4H 0 0 mm mH e m m Om OH HH O OH O RH 0H s s 4H O m m H mm mH m H a a mm OH O m Om OH m m m OH O mm eH eH O Hm NH O m OH O H a NO Om mum O OOH mH mom OH saw 4 OO mm Hmm nsOHnoHa .... ...... ...... am 3...: ......m ......IA... ...... . ...... nmdooa Hompm OOHOOm noxnsm opouoaoo ll aopmmm madam can OOHmom an maopmmm Owwnoum qHOHo quoo HO honosoonm .¢H manna 90 Table 15. Combinations Of Corn Grain Storage Systems System number % Concrete silo and crib 113 25 Concrete silo and sealed storage 24 5 Concrete silo and steel grain bin 19 4 Concrete silo and wooden grain bin 32 7 Sealed storage and steel grain bin 27 6 Sealed storage and wooden grain bin 5 1 Sealed storage and crib 33 7 Steel grain bin and crib 74 16 Bunk silo and steel grain bin 10 2 Bunk silo and crib 34 8 Bunk silo and other 0 0 Concrete silo and other 3 1 Sealed storage and other 15 3 Steel grain bin and other 7 2 Crib and other 44 10 Wooden grain bin and other 14 3 454 100 Source: 454 responses from survey data on 1275 dairy farms. 91 Table 16. Capacities of Storage Systems System Material Bushels % Concrete silo HMSC 2,609,336 24 Bunker silo HMSC 903,752 8 Sealed storage HMSC 2,880,139 27 Steel grain bin DSC 2,532,065 23 Wooden grain bin DSC 798,768 8 Corn crib low moisture 564,101 5 ear corn Other DSC 546,101 5 Total 10,834,262 100 Source: Survey data on 1275 dairy farms. Dairy farmers were asked (Appendix I, question 5) how corn grain was harvested on their farms. Pickers were inadvertently not included in this question. However, many survey respondents wrote pickers as the means for harvesting corn grain on their farms. Table 17 reported that pickers were used on 21% Of the dairy farms. This was expected due tO the large number of cribs reported in Table 14. The budgeting process (Table 1) indicated snapper heads were one of the least cost harvesting systems. Table 17 reported a relatively low number Of farms utilizing this system. As illustrated in Figure 3, there were higher total 92 .manwm hHHOO OONH so mama hm>nsm aonm OOOOOQOOH mNMH “OOHOOO H N o OH NN On O OH ON mO mm HO O H O OH mm NN OO O ON ON 0O mm NmH O H H NH Nm ON on NH MN 8 mm on mm m N m O NH NN OO OH Hm mm OO Hm HO O o 0 HH mH mN 5N OH NH NN ON Om HO O o o mH 0H ON MH OH NH OH NH ON OH O o o O m CH O OH m OH O NO on m o 0 OH H ON HH ON NH OH O OH O N o 0 OH O NH O NN u NN 5 ON O H H oH HH mmH HN OmN NH NOH HN OON Om ONO naOHOOHs & .OB & .Oz & .oz & .oz & .Oz Or .02 nonpo pmo>nwm noxOHm HOOOOO HOHHOOO OOHnaoo OOHOOm .aoumso Hmmmmam tnOxOHm ampmhm OOHmOm an mampmhm manmO>nOm anoo HO beamsvmnm .BH OHOOB 95 annual costs for HMEC storage and harvesting systems than for HMSC storage and harvesting systems. It was difficult to justify the large number Of combines reported on dairy farms in Table 17. The budget- ing process indicated that combines had the highest annual cost per bushel for volumes less than 15,000 bushels. Since 70% Of the survey responses were from dairy farms growing 100 acres Of corn grain (9,000 bushels) or less, it appears that other factors in addition to cost entered into the decision for combine ownership. Dairymen have a shorter workday in the fields than cash crOp farmers due to the time required for chores and management of the dairy herd. Thus high capacity harvesting equipment is required so that crops can be harvested during relatively short periods of time. In some areas custom harvest may not be available. If a dairyman grows corn grain and other cash crops (oats, wheat, dry beans, soybeans) he may be forced to own a combine so that he will be able to harvest his crOps. Otherwise, he will be compelled to change his crOp- ping program. Pride and prestige rather than economics could rationalize combine ownership on some farms. The number of farms which utilized custom harvest may be misleading due to an error in the construction Of the survey (Appendix I, question 5). From this question it was impossible to determine whether all or part Of the corn grain was custom harvested. 94 The other category of harvest (Appendix I, question 5) included those farms which employed hand picking or the corn was shocked with a binder and shredded. This infor- mation was determined from reading survey responses. These harvesting systems were primarily found on farms with corn grain acreages Of less than 50 acres. Dairy farmers were asked (Appendix I, question 6) the reasons for using their present harvest system. Low labor requirements and no problems with the present har- vest system were the major reasons for using present har- vest systems as shown in Table 18. Table 18. Reasons for Using Present Harvest System l7 Reason Number % Low labor requirements 263 22 NO problems with present system 393 33 Adequate rate of harvest 227 19 Changing to another system requires large investments 238 20 Other 72 6 Total 1193 100 Source: 1193 responses from survey data on 1275 dairy farms. When dairy farmers were asked (Appendix I, question 7) if they planned to change harvest systems, 84% indicated 95 they planned to maintain present harvest systems. In Table 19, the remaining 16% signified that slow rate of harvest and Obsolescence were the primary reasons to change systems. Table 19. Reasons to Change Harvest System W Reason Number % Plan to keep present system 958 84 Slow rate of harvest 57 5 Present harvest system is worn out or Obsolete 57 5 High repair costs 12 Other 57 5 Total 1141 100 Source: 1141 responses from survey data on 1275 dairy farms. It was impossible to perform chi-square analysis on questions 10 and 11, Appendix I, due to inconsistencies in the response rate. Farmers were requested to list the three mOst important advantages and disadvantages for the corn storage systems being used on their farms. Cross checks revealed that for several storage systems there were responses in question 10 and 11, Appendix I, than the number Of storage systems reported in question 8, 96 Appendix I. The statistical analysis of questions 10 and 11 (Appendix I) was hampered by several problems. Eleven advantages and disadvantages were listed for each sys- tem. With a maximum Of three responses being marked for each system, eight reaponses were left unanswered. Thus, the author did not know how the dairymen felt about the remaining responses. The design of questions 10 and 11 should be modi- fied in future surveys. A maximum of four factors should be listed for each question, consequently it would be easier to determine which factors statistically influ- enced selection of a storage system. By presenting a large array Of responses in questions 10 and 11, it was possible some dairymen marked responses they had not previously considered. Thus, some Of the responses may not have been true indicators of a dairyman's concept Of the advantages and disadvantages for the storage systems being used on his farm. 97 Dairymen were requested to indicate (question 12, Appendix I) improvements desired for present storage sys- tems. As shown in Table 20, farmers intend to expand dry and high moisture corn facilities at nearly equal rates. Table 20. Farmers Planning to Expand Present Storage Sysums System Number % Concrete silo 147 19 Bunker silo 62 8 Sealed storage 163 21 Steel grain bin 132 17 Wooden grain bin 15 2 Corn crib 178 23 Other 77 10 Total 774 100 Source: 774 responses from survey data On 1275 dairy farms. Reasons for changing storage systems are shown in Table 21. The responses to Appendix I, question 14 were summarized in Table 21 into two categories. Group A inclu- ded all responses to question 14 while Group B included only the responses to question 14 who had indicated in question 8 the type Of storage system used on their farms. Over 40%iof the farmers reported they would switch storage systems if the new storage system would increase 98 Table 21. Reasons Farmers Change Corn Storage Systems Percent Of Responses Reason Group A Group B Harvest more acres per day 10 Present system has limited capacity 16 Present system worn out and/or Obsolete 6 3 High drying costs 7 1 Anticipate rising energy costs in the future 6 Reduction in handling after harvest l4 7 Lower storage costs 5 5 Greater mechanization Of storage system ‘ 10 6 Mechanized unloading 10 14 Expect to increase milk production 14 41 Other 2 8 Source: Survey data on 1275 dairy farms. Note: Group A a 951 responses Group B a 415 responses from farms with the storage system known. milk production. By raising milk production the dairymen expected increased profits. This was contradictory to the responses: high drying costs and anticipated rising energy costs in the future. Decreasing variable costs in the Operation of a storage system will also increase profits. Thus it appears energy costs will not have a large impact 99 on selection of corn storage systems. Mechanization of handling and unloading were the most important reasons to change storage systems. Thus a reduction in labor inputs rather than costs were the pri- mary reasons to change systems. The author could not jus- tify the differences in responses between Groups A and B in Table 21. Dairymen were asked if they planned to change corn grain storage systems in question 13, Appendix I. The pOpu- larity of concrete silos, sealed storages and steel grain bins in Table 22 indicated that farmers were planning to implement storage systems which could be easily mechanized. Table 22. Farmers Planning to Change Storage Systems. New System Listed by Percentage System Number % Plan to keep present system 780 81 Concrete silo 56 6 Bunker silo 2O 2 Sealed storage 40 4 Steel grain bin 40 4 Wooden grain bin 0 0 Corn crib lO 1 Other 20 2 Total 966 100 . Source: 966 responses from survey data on 1275 dairy farms. 100 The selection of these systems reaffirmed the findings Of Table 21. Table 21 stated that mechanization Of unloading and reduction in handling after harvest were important reasons to change storage systems. The response rate from the owners Of sealed storage systems may be biased. The A. 0. Smith Company encouraged Harvestore owners to reply to the survey. A. 0. Smith sup- plied photo cOpies Of the surveys to Harvestore owners. Several photo copied surveys were received and included in the survey data. A higher proportion of Harvestore owners may have replied to this survey compared to the owners of alternative storage systems. Consequently, the findings of Tables 16 and 22 may have been biased. Dum et a1. (1978) recommended grinding before ensil- ing in concrete and bunk silos to reduce storage losses. Table 23 showed that not all farmers utilizing these sys- tems followed this recommendation. The manufacturers Of sealed storages systems do not recommend grinding before ensiling because the systems are airtight. Eleven percent Of sealed storage system owners reported grinding before ensiling. Perhaps these farmers had storage losses from the sealed silo in previous years. Thus, grinding has resulted in a reduction in storage losses on these farms. The manufacturers of sealed stor- age systems encourage rolling HMO prior to feeding. This was reflected in the high percentage of sealed systems 101 Table 23. High Moisture Corn Processing Practices By Storage Systems ‘— ____-; -—‘ 1 Concrete silo Bunk silo Sealed stora e Practices NO. % NO. % NO. Ground before ensiling 127 78 15 71 23 11 NO grinding be- fore ensiling but processing before feeding 7 3 Hammer mill 6 4 86 Roller mill 29 18 6 29 175 Total 162 21 205 Source: 388 responses from survey data on 1275 dairy farms. utilizing roller mills. Table 24 showed 55 percent of the farms utilize group feeding. Thirty-six percent of the farms reported HMO being fed as a complete ration. It appears that dairy- men are feeding HMO on the basis of production so that over conditioning problems may be avoided in the later stages of lactation. The other category Of HMO feeding included feeding HMO in magnetic feeders and as a top dress to high producing cows in stanchion barns. Table 25 summarized the changes encountered by dairymen when they switched from dry corn to HMO systems. The reduction in fat cows and displaced abomasums could be attributed to the higher level of nutritional expertise 102 Table 24. High Moisture Corn Feeding Practices Practice Number % Group feeding Yes 211 55 NO 187 47 598 100 Place of feeding Parlor 99 22 Complete ration 165 36 Other 191 42 455 100 Average pounds fed per day 19.9 Average number Of feedings per day 2.1 Source: Survey data on 1275 dairy farms. held by dairymen feeding HMO. Dairy farmers were asked (question 16, Appendix I) to list where HMO was used on the farm besides feeding the milking herd. The number of dairy farms reporting HMO be- ing fed to calves, heifers, dry cows and "other animals" are as follows: 305, 205, 146, 43. Survey responses in the "other animals" category included goats, swine, dairy beef and pet Black Angus steers. Tabulation Of survey responses was handicapped by several problems. Due to an error in survey design, it 103 was not possible to determine the number of farms which had multiples Of a system (e.g. cribs). The response rates to survey questions 6 through 19, Appendix I, was low. Thus it was difficult to summarize the results due to missing data. Table 25. Change in Disorders After Changing to High Mois- ture Corn Increase Decrease NO Change Total Disorders NOT-—7% NOT_——7% .NO. % NOT—-—_% Mastitis 34 11 7 2 270 87 311 100 Ketosis 32 11 16 5 253 84 301 100 Metritis 15 5 29 10 249 85 293 100 Fat Cows l9 6 97 30 209 64 325 100 Displaced abomasums l7 6 6O 21 205 73 282 100 Other 2 5 7 18 31 75 40 100 119 Source: Survey data on 1275 dairy farms. Survey Response A 14.16% response rate (1,275 surveys) was generated from the 9,000 surveys sent to Michigan dairy farmers. Personal interviews revealed a feeling Of frustration among many dairymen for the increasing volume Of forms they are 104 being requested to answer from state and federal government agencies. Consequently, many dairymen answered only those forms that were required for the Operation of their farms. Dairymen did not return the survey for several rea- sons. Some dairymen did not complete the survey because they felt they had little to gain from the survey. It ap- peared to them that the survey information would not bene- fit the Operation of their farms. Other dairymen returned uncompleted survey forms because they felt it was an inva- sion Of their privacy. Several dairymen noted in personal interviews that the survey appeared complicated and time consuming. Thus, many dairymen were reluctant to complete the entire survey or only answered the first four or five questions because it took more than ten minutes to complete. It was difficult to quantify verbal responses into specific categories. Personal interviews would be a more effective method Of determining the dairymen's Opinions towards the harvest and storage systems being used on dairy farms. Although this method is more time consuming, it would be more efficient since the interviewer would be ex- posed to a larger variety Of Opinions, some of which would never be written as responses to the survey. Then the re- searcher would be able tO categorize responses into groups. Thus the researcher and not the dairymen decides the group- ing of responses for each question. 105 Communication is the cornerstone Of an effective extension program between the land grant university and production agriculture. Personal interviews indicated a widespread lack Of communication between dairymen and uni- versity researchers. Many dairymen felt the university staff was not aware of their concerns and problems. They mentioned there was a lack Of applied research to the problems they were facing daily in the field. When the author explained the purpose of this survey and how it could benefit them, nearly all the dairymen were eager to complete the survey. Many dairymen expressed an interest to participate in future university research projects, however their participation had never been solicited in the past. Michigan dairymen are an untapped source of research data. More personal contact between dairymen and university staff will develOp a strong constituency at the local level for increased funding Of educational, research and extension programs sponsored by the land grant university. SUMMARY The primary Objective Of this study was to determine at what point farmers will switch from artificially drying corn to either high moisture corn or ear corn systems. An economic framework was developed in which a dairyman will be able to determine the total annual costs on a per bushel basis in constant dollars for potential harvesting and storage systems that are under consideration for implemen- tation on his farm. A survey on corn harvesting and stor- age systems was sent to 9,000 Michigan dairy farmers. Sur- vey results were summarized to determine when dairy farmers will change storage and harvest systems. Total annual cost per bushel for harvesting and storage systems were calculated at volumes Of 1,000, 5,000, 10,000, 15,000, and 20,000 bushels. Harvesting and storage systems considered in this project are as follows: Harvesting Storage 1 row corn picker low moisture ear corn 2 row corn picker automatic batch dryer 2 row picker sheller portable batch dryer 1 row snapper head steel grain bin 2 row snapper head concrete silo for HMO 4 row combine sealed silo for HMO, full bin dryer with stirrators 106 107 Total annual cost per bushel was calculated on a constant dollar basis using the capital investment model, Teleplan III. Cost data incorporated into the analysis are as follows: 10 year planning period, 20% tax bracket, 10% salvage value on harvesting equipment, 30% salvage value on storage systems, 7% inflation rate, 9% electricity and gasoline inflation rate, 11% prOpane inflation rate. Cribs were the least cost storage system due to their low investment cost. Full bin dryers provided the second least cost storage system followed by concrete silos, automatic and portable batch dryers and sealed storage units. Full bin dryers were competitive in price because they could be used for both drying and storage. The full bin dryer had an advantage Of 8.05 and 3.07 per bushel over concrete silos for 5,000 and 10,000 bushels. Full bin dryers were more efficient in propane utilization than batch drying systems. Full bin systems had lower costs Of 8.20 and 8.13 per bushel over automatic batch systems for 5,000 and 10,000 bushels, respectively. Sealed storage was the most expensive storage system due to the high initial investment. Sealed storage systems had higher annual costs Of approximately 3.34 and 8.30 per bushel for volumes of 5,000 and 10,000 bushels compared to full bin drying sys- tems. Two row snapper heads and two row picker-shellers were the lowest cost harvesting systems due to longer harvest 108 seasons and lower investments. Pickers had higher costs at volumes greater than 10,000 bushels due to a delayed harvest season. A one row picker was the lowest cost har- vesting system for volumes less than 5,000 bushels. The four cow combine had the highest annual costs due to the large initial investment. Annual energy inflation rates were allowed to vary from 10% to 80% within the capital investment model to determine the more economical harvest and storage system with rising energy costs. At volumes ranging from 5,000 to 20,000 bushels annual energy inflation rates greater than approximately 20 percent economically justify chang- ing from drying systems to high moisture corn systems. When compared to drying systems, sealed storages and con- crete silos had lower annual costs per bushel at higher in- flation rates because minimal amounts Of energy are required to Operate these systems. In sealed and concrete silos, energy useage is limited exclusively to mechanical loading and unloading. Due to greater investment costs, sealed storage systems had higher annual costs per bushel than con- crete silos. Eighty-four percent Of the farms did not plan to change harvest systems. Low labor requirements and no problems with present harvest system were the major reasons for not changing harvest systems. In the tabulation Of survey data, counties were 109 classified according to region. The average acreages of corn grain and cash crOps were the highest in the southern regions Of the state. Cribs were the most prevalent type of storage sys- tems. Concrete silos, sealed storage and steel grain bins were the next most popular systems. Combines were the most popular harvesting system. Picker-shellers and pickers were the second and third most pOpular harvesting systems. Expectations of higher milk production and increased mechanization Of the storage system were the primary reasons to change storage systems regardless of present storage sys- tem. Eighty-one percent Of the dairymen reported they did not plan to change storage systems. Lower storage costs and rising energy costs were not considered as important reasons to change storage systems. Fifty-three percent Of the farms feeding HMO util- ized group feeding. Thirty-six percent of the HMO was fed in complete rations. It appeared dairymen feeding HMO had a greater understanding Of the cow's nutritional require- ments and the role of HMO in the diet. This was shown by the reduced incidence Of fat cows and displaced abomasums when changing from dry corn to HMO rations. The Objectives of the study were not completely met. Expectations of higher milk production and increased mechanization Of the storage system were the major reasons 110 for changing storage systems. Consequently, it cannot be predicted when farmers will switch from artificially dry- ing corn to low moisture ear corn or high moisture corn storage under the spectrum Of rising energy costs. Eighty- four percent of the dairymen indicated they did not plan to change harvest systems. One percent of the responses reported high repair costs as a reason to change harvest systems. The survey did not contain questions regarding harvest systems dairymen were planning to implement on their farms. As a result, projections for changes in har- vest systems being implemented On dairy farms could not be made. BIBLIOGRAPHY American Society of Agricultural Engineers. 1978. Energy--A vital resource for the United States food system. American Society Of Agricultural Engineers. Aplin, R. D. and G. L. Casler. 1973. Capital Investment Analysis, Grid, Inc., Columbus, Ohio. Baker, F. S. 1969. Losses in filling, storing and pro- cessing high moisture shelled corn. North Florida Experiment Station Bull. FSB 125CC. Berkimer, L. 1979. Personal communication. May 7, 1979. Brooker, D. B., F. W. Bakker-Arkema and O. W. Hall. 1974- Drying Cereal Grains. Air Publishing Company, Inc. Westport, Connecticut. Burrowbridge, D. R. and P. Heopner. 1965. 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Feeding value for beef and dairy cattle Of high moisture corn preserved with prOpionic acid. Canadian J. Anim. Sci. 52:73. Fox, D. M. 1976. Systems for storing and handling high moisture corn. Proc. of Symposium on Methods of Improving the Utilization of High Moisture Grain for Cattle. July 22 and 23, 1976. Stillwater, Oklahoma. Goodrich, R. D. and J. C. Meiske. 1976. Influence Of maturity and moisture content on the fermentation Of high moisture corn. Proc. of Symposium on Methods of Improving the Utilization Of High Moisture Grains for Cattle. July 22 and 23, 1976. Stillwater, Oklahoma. Hansen, E. L., G. E. Mitchell, E. E. Hatfield, A. H. Jensen and K. E. Harshbarger. 1959. Harvesting, ensiling and feeding high moisture shelled corn. Illinois Res. 1:3. Harsh, S. B. 1972. Capital Investment Mode1-—Including Buy or Custom Hire, A Teleplan Program Number 03, - Michigan State University, East Lansing. 113 Harshbarger, K. E. 1961. The nutritive Of high moisture corn for dairy cattle. Illinois Res. 3:3. Hillman, D., J. T. Huber, R. S. Emery, J. H. Thomas, and R. M. Cook. 1975. Basic Dairy Cattle Nutrition. Michigan State University Extension Bull. NO. E-702. Hoffman, M. P. and H. L. Self. 1975. Comparison Of arti- ficially dried corn with high moisture corn stored in two silo types. J. Anim. Sci. 41:500. Hoglund, C. R. 1965. Corn harvesting systems. Michigan Farmers' Week Speech, Department of Agricultural Economics, Michigan State University, East Lansing. Johnson, W. H. and B. J. Lamp. 1966. Principles, Equip- ment and Systems for Corn Harvesting. Agricultural Consulting Associates, Inc., Wooster, Ohio. Jones, G. M. 1972. Milk production by dairy cows fed proprionic acid-treated high moisture shelled corn rations for complete lactations. J. Dairy Sci. 55:685. Jorgensen, N. A., H. J. Lasen, G. P. Barrington, R. F. Johannes, and R. P. Niedermeir. 1975. Preserva- tion of high moisture corn with organic acids. J. Dairy Sci. 58:747. Knoblaugh, W. A., R. A. Milligan and M. L. Woodell. 1978. An economic analysis of New York dairy enterprises. Cornell University A.E. Res. 78-1. Lassiter, C. A., J. S. Boyd and E. J. Benne. 1960. Stor- age of high moisture corn in upright silos and its feeding value for dairy cows. Michigan Agri. Expt. Station Quart. Bull. 43:58. Logan, T. R. and D. Hillman. 1975. Preserve the energy and protein of forages. Michigan State University Extension Bull. NO. E-803. Lynch, G. P., N. M. Jacoby, C. R. Benjamin, W. T. ShalkOp and C. M. Chance. 1970. Feeding high moisture, ensiled, moldy shelled corn. J. Dairy Science. 53:1292. Macleod, G. K., D. G. Grieve and M. G. Freeman. 1973. Performance of dairy cows fed acid-treated high mois- ture shelled corn. J. Dairy SOi. 57:439. 114 Maddex, R. L. 1966. Drying shelled corn. Michigan State University Department Of Agricultural Engineering. A.E.I.S. NO. 174. Maddex, R. L. and F. W. Bakkar-Arkema. 1978. Reducing energy requirements for harvesting, drying and storing corn. Michigan State University Extension Bull. NO. E-ll68. Madsen, J. P., H. R. Jensen and V. R. Eidman. 1978. Economics Of owning and operating corn drying and storing systems with rising energy prices. Univer- sity Of Minnesota Economic Report E.R. 78-5. McCafree, J. D. and W. G. Merrill. 1968. High moisture corn for dairy cows in early lactation. J. Dairy Sci. 51:553. McGuffey, R. K. and D. Hillman. 1976. Harvesting, storing and feeding high moisture corn. Michigan State Uni- versity Extension Bull. NO. E-lO30. Merrill, W. G. 1971. The place Of silage in production rations. Feeding high moisture grain silages, Proc. International Silage Research Conference. December 6-8, 1971. Washington, D.O. Michigan Dairy Herd Improvement Association. 1979. Per- sonal communication, May 7, 1979. Michigan Department of Agriculture. 1977. Corn harvest- ing and marketing statistics. Agricultural CrOp Reporting Service. Michigan State University Agricultural Engineering Depart- ment. 1974. Energy in Michigan Agriculture. De- partment Of Agricultural Engineering, Michigan State University, East Lansing. Midwest Plan Service. 1968. Planning grain-feed handling for livestock and cash-grain farms. Iowa State University, Ames, Iowa. National LP-Gas Association. Facts about liquid petroleum gas (LP-gas). National LP—Gas Association Fact Sheet. NO date. Nutrient Requirements of Dairy Cattle. 1978. National Academy of Sciences. Washington D. C. 115 Otterby, D. E. and M. F. Hutjens. 1978. Use Of high moisture corn for dairy cattle. University of Minnesota Agri. Extension Service Dairy Husbandry Fact Sheet NO. 19-1978. Palmquist, D. L. 1970. High moisture corn lowers milk fat test. Ohio Report on Research and Development. 55:117. Ritchey, C. B., P. Jacobsen, C. W. Hall. 1961. Agricul- tural Engineers Handbook. McGraw Hill Book CO., Inc., New YOrk. Saur, D. B. 1973. Grain preservatives for high moisture feed grains, In McGuffey, R. K. and D. Hillman, Harvesting, storing and feeding high moisture corn. Michigan State University Extension Bull. NO. E-lO30. Schwart, R. B. and L. D. Hill. 1977. Comparative costs of conditioning and storing corn. University Of Illinois Ag. Expt. Station A.E.R.R. 152. Speicher, J. A. 1965. Corn vs cornage. Michigan State University Dairy Department Bull. No. D-81. Stevenson, K. R. 1975. The storage and handling of high moisture grain. National Silo Association Handbook. Surbrook, T. C. 1979. Farm electrical energy rates. Mich- igan State University Department of Agricultural Engineering. Synder, D. 1968. Economic considerations Of high mois- ture corn for dairymen. Cornell University Bull. No. A.E. Res. 263. Wiggans, R. G. and O. C. French. Farm storage Of ear corn in the northeast. Cornell University Agri. Expt. Sta. Bull. NO. 926. APPENDICES APPENDIX I Mail Survey Farm location a. Number of milking cows last month dry cows last month County b. Township Pounds of milk sold last month Number of Acreages for the following crops (1977 seasons - owned and rented) a. b. f. 80 Total tillable acreage Corn for grain Corn silage Hay Oats and new seeding All other cash crops Pasture How do you harvest your corn for grain? a. b. Combine Picker-sheller c. Snapper-header (chOpper) d. Harvested by a custom Operator 116 Number of rows 1157 6. What are the reasons for using present harvest system? (Circle those which apply) a. Low labor requirements. . NO problems with present system. Adequate rate of harvest. Changing to another system requires large investments. (DO-00‘ Other, please specify 7. DO you plan to change the harvest system? a. No. b. Yes. If yes, what are your reasons for changing? (Circle those which apply) 1 Slow rate of harvest 2 Present harvesting equipment is wornout or Obsolete. 3. High repair costs. 4 Other, please specify 8. What kind of corn fOr grain storage facilities (exclude corn silage and haylagg) do you now have on your farm? What is the approximate capacity of each kind? (Circle those which apply) Kind Approximate dimensions and/ 01' capacity Tons Bushels Dimensions a. concrete silo b. bunker silo c. sealed storage (Harvestore) or similar structure d. steel grain bin e. wooden grain bin f. corn crib g. other, please specify 9. Do you plan to continue using your present storage facilities? (Circle one) a. Yes b. NO 10. 1. most important 2. second most important 3. third most important fi Q5“; 90°”: '7 9‘? ‘54“! ’70 '1. A“ ‘% .f OJ! '0',- Q *o ’30,, .O (a c, J. 4), 4°, 45, a a. $345 .g.z 5, g, g, 4, 4“ a e ‘2' o o 4' 4' 0,. ,9 0* o 0" 0a ’o ‘a O ’3 " ’0 (o Q. '04 9 0°, 0 a. I, ’0' 4‘ g i e I <5 ‘5 . , ‘Q %r O» Q: 49' ° 7’ ’ e. 9» ° ’9' 97 or Q! 0 flng 95 q. q; q, ‘84 4% (Q. g? g» <85 Systems ‘0 45» 'e, ‘9, ”a, t; 9. 0.. 4? {so ‘ O 6’0 ~50, 2e, ‘."‘0, ‘5’, ‘51,: "a. (‘7), 0%,. (I. ”’0'. a. concrete silo “' " ’0 *3- b. bunker silo c. gas tight silo d. steel grain bin e. wooden grain bin f. corn crib g. other, please specify 11. Now we want your opinion about the major disadvantages for each of the kinds of corn storage facilities on your farm. Circle the systems used on your farm for each sys- tem by writing: 1. most important 2. second most important 3. third most important 4 00.. ‘1' 6 ~ 4» 0%,. ( ($(O% 6" (ca 0 ‘e 7:- d‘ '1 ’9' 0‘ 64 9' Po 92,- ’9 O“) ‘37? 4% ‘79 7’91 ‘fi‘fi 339%, ”620 or! 0% ’a 04.. .OO O, a" e (- .... Co. .876 if; 0" Q 6?. 3}. 4' 0’ ‘ 70 c} 649 (O ,0 6 C. ((6 $0 QC 0‘. 0*: ‘1’" J 3 'Mg. 2, 4- fir w er a : tgtg 9% “v 4. 9!", 006, z, 0* 0.9% (”.0 9° a0 a}: e. "Lo ’0 i '6 °o ’6 9’ o, 9% ' o 0 a e ’ \Pa 0* 0 ‘6 0 A 4' $r 0' 0 O’ '6 9' Q‘ o $ % I. 60 (a a. concrete 5110 b. bunker silo c. gas tight silo d. steel grain bin e. wooden grain bin f. corn crib g. other, please specify Now we want your opinion about the major advgntages for each Of the kinds of corn for grain storage facilities on your farm. Circle the systems used on your farm. Rank the three most important factors for each system by writing: 12. 13. 14. 15. What improvements would you like to make on your present storage system? all a. b. ZL19 responses which apply. GO to larger harvesting equipment Increased storage capacity 1. concrete silo 5. 2. bunker silo 6. 3. Harvestore 7. 4. steel grain bin Circle wooden grain bin corn crib other, specify Do you plan to switch to a different type of corn storage system? a. NO b. Yes, please circle one 1. concrete silo S. 2. bunker silo 6. 3. Harvestore 7. 4. steel grain bin wooden grain bin corn crib other, specify If you plan on switching systems, what reasons would cause you to change corn corn storage systems? a. b. For use Harvest more acres per day g. Present systems has limited capacity h. Present system is worn our and/or i. obsolete . High drying costs :: Anticipate rising energy costs in the future Reduction in handling after harvest Circle all reasons which apply. Lower storage costs Greater mechanization of storage system Mechanized unloading Expect to increase milk production Other, specify those farmers using high moisture corn, we want to know some things about your of high moisture corn as feed for milking cows. Dimensions of silo used for storage Is the high moisture corn processed before ensiling? 1. No 2. 3. Processed before feeding. Yes. a. hammer mill b. roller mill 4. Group feeding a. No b. Yes 5. Approximate pounds fed per cow per day 6. Number of feedings per day Please circle one ---ground or other, specify If Yes, specify 7. How is the H.M.C. fed? a. parlor b. Circle one c. other, specify complete ration 16. 17. 18. 19. Besides feeding the milking herd, where is H.M.C. used on the farm? Circle all that apply. a. calves (1-12 months c. dry cows b. heifers (13 months-freshening) d. other Amount of corn sold each of the past two years: 2.9.71 222. 1976 9:22 Bu. Tons Bu. Tons a . ear corn __ __ __ .— b. dry shelled corn ______ ______ c. high moisture shelled corn ______ ______ d. high moisture ear corn ______ ______ e. snapped ear corn ______ ______ DO you buy corn? (Circle one) a. NO b. Yes c. If yes, please specify the type and amount purchased since October 1, 1977 and that you plan to purchase befOre the harvest 1978. Tons Bushels (as is basis) 1 high moisture ear corn 2 high moisture shelled corn 3. ear corn 4 dry shelled corn 5. snapped ear corn Since switching to H.M.C. has there been a change in the fOllowing disorders in Decrease Increase No Change the herd? a. mastitis b. ketosis c. metritis d. fat cows e. displaced abomasums f. please specify below Please state any additional comments below. Please return this questionnaire in the enclosed envelope. necessary time to complete the questionnaire. We thank you for taking the 20.8 22.9 25.1 2 mi/hr 27.5 121 Kerne MOisture APPENDIX II Moisture Content Be inning Of Harvest. 33 (Average total field losses,‘% of total yield) 55 Days Average Total Field Losses of Corn as Influenced by Length of the Harvest and Moisture Content at the Beginning of Harvest. Cool, Humid Season, Picker with Spiraled, Lugged Snapping Rolls. Length of Harvest, Calendar 14.5 16.2 17.1 18.1 .8 .5 1 11.8 12.4 13.1 as 1 406295210.8../. 0.10.nw1...l2Z./flu45 111111111 1 7210.14 nw n/.2/0.8 F/.n/.880./nwnw129.. 11111 272 72/84 £69.. 55rm67n/.80./0.an 9nU.6 AW 4. QURUAN 51 2/4 4 5556 7n/.8 £468150wuh82.” 9212/2/nmuu4556 22./4581489urnw 5555544455 5 mi/hr 986655444 0 .- 6n/.80./nw19..94 111122222 54“ 9.. 1130/8 7.n/.6 9h” 566%80flnw1 1111111122 91018640.;21nw 0112545678 1111111111 6 9nU. 752/198 n/. W899012254. 111111 6162965108 5667789011 111 7926162852 4455667789 890.9..Awnwahnwfiw9m 4455566778 Johnson and Lamp, 1966. Source: 122 APPENDIX III INVESTMENT COST DATA Harvesting systems Total Cost 1 row corn picker 8 4,500 2 row corn picker 8,800 2 row picker-sheller 8,900 1 row snapper head .5 50003+2500 5,000 2 row snapper head .5i8400 +4200 8,400 4 row combine .5 56,000)+7000 25,000 The costs for the 1 row snapper header, 2 row snapper header, and 4 row combine were allocated as follows: one-half cost of base unit + 100%>cost of header attachment. Storage systems Dimensions Bushels Total Cost corn crib 960 8 900 wet holding bin 2,000 2,750 sealed storage 20'x28' 4.945 18,087 sealed storage 20’x56' 6,662 22,815 sealed storage 20'x50' 9,671 27,185 sealed storage 20'x59' 11,605 50,254 sealed storage 20'x80' 16,119 40,127 sealed storage unloader 20' 8,579 sealed storage unloader 20' 10,000 concrete silo 12'225' 1,768 5,582 concrete silo 16'145' 5,051 8,172 concrete silo 20'x60' 10,810 15,914 concrete silo 20'180' 15,722 16,000 concrete silo unloader 12' 5,500 concrete silo unloader 16' 5,500 concrete silo unloader 20' 5,700 Storage system prices include foundation and erection costs. Silo unloader prices include a 5 HP electric motor, labor, and supplies necessary for installation of the unloader. Concrete silo capacities were calculated using 28 per- cent HMSC while sealed storage capacities were calculated us- ing 25 percent HMSC. A heavy duty silo unloader that cost $10,000 was used in sealed storage systems which had heights greater than 60'. 123 APPENDIX III (cont'd) INVESTMENT COST DATA Storage systems (cont'd) Grain bin with aeration system components diameter 18' 21' 27' 33' 33' Capac1ty 2,415bu 4,910bu 9,676bu 16,783bu 20,580bu bin $1,937 $2,826 $4,836 $6,459 $7,892 drying flues 174 180 458 557 557 aeration fan 775 775 775 1,395 1,395 fan motor 195 195 195 295 295 unloading auger 93.50 138.50 183 147 147 sweep auger 103.50 104.50 123 176 176 erection 250 500 1,000 1,500 2,000 concrete 224 248 353 510 510 grain baffle 21 21 21 21 21 2 (1) HP motors 226 226 226 226 226 TOTAL COST $3,999 $5,214 $8,170 $11,286 $13,219 Aeration fans equipped with 5 HP electric motors for 18', 21' and 27' diameter bins, while 7.5 HP electric motors were used on 33' diameter bins. 1 HP motors were used to power unloading and sweep augers. 124 APPENDIX III (cont'd) INVESTMENT COST DATA Storage systems (cont'd) Grain with stirrator drying system components diameter capacity bin drying floor crop dryer dryer controls stirrator grain spreader sweep auger unloading auger concrete 2 (1) HP motors erection TOTAL COST 18' 24' 3,000bu 5,000bu $3,400 $4,167 1,415 2,262 1,911 2,029 69 69 1,478 2,064 299 299 93.50 121 103.50 115 224 300 226 226 500 500 $9,519 $12,152 30' 9,200bu $6,315 3,108 2,180 69 2,180 299 150' 126 450 226 920 $16,164 CrOp dryers were equipped with 7.5, 9.0 and 12.0 HP electric motors for 18', 24' and 30' diameter bins. motors were used to Operate stirrator and unloading and sweep augers. 1 HP electric 125 APPENDIX IV INPUT COSTS (DOLLARSl_PER 100 BUSHELS Labor Propane Electricity Gasoline Harvesting systems 1 row picker $4.17 - - $3.28 2 row picker 2.18 - - 1.71 2 row picker- sheller 2.18 - - 1.71 1 row snapper- header 4.17 - - 3.28 2 row snapper- header 2.18 - - 1.71 4 row combine .83 F - .94 Storage systems corn crib $3.33 - S .05 S .54 portable batch dryer 1.60 $13.25 - 4.03 automatic batch dryer .53 13.25 - .84 wet holding bin .80 - .04 - sealed silo .80 - - .88 sealed silo unloader 1.75 - .12 - concrete silo .80 - - .88 concrete silo unloader 2.63 - .12 - 2415 bu grain bin with aeration 1.68 - .19 - 4910 bu grain bin with aeration 1.68 - .12 - 9676 bu grain bin with aeration 1.68 - .10 - 16783 bu grain bin with aeration 1.68 - .09 - 20580 bu grain bin with aeration 1.68 - .09 — full bin dryer with stirrators 1.68 8.52 1.93 .25 126 APPENDIX IV (cont'd) Assumptions for calculations of input costs: 1. 2. 3. 10. 11. 12. 13. 14. 15. 16. gasoline/hr - .06 x horsepower of engine KHR/hr - .9 x horsepower of electric motor 500 bushel per hour loading and unloading rates from wet holding bin, automatic batch dryer and steel grain using 3 HP electric motor 300 bushel per hour loading and unloading rate for corn crib using 2 HP electric motor 500 bushel per hour filling rate for concrete silo and sealed storage concrete silo unloading rate 150 bushels per hour using 5 HP electric motor sealed storage unloading rate 228 bushels per hour using 7.5 HP electric motor 70 HP tractor required for filling concrete silo and sealed storage Labor costs per bushel = handling rate/$4.00 per hour Labor for unloading sealed storage and concrete storage was charged to the operation of the unloader 1.5 hours to load and unload each 500 bushel batch from portable batch dryer portable batch dryer automatically shuts off when grain reaches desired moisture level grain is automatically unloaded from wet holding bin into automatic batch dryer 3.08/100 bushel labor cost to supervise operation and management of automatic batch, full bin drying system and grain bins aeration systems 13 HP electric motor and 2 (1) HP electric motors were required to operate an automatic batch dryer 2 (1) HP electric motors were required to operate unloading and sweep augers in grain bins 17. 18. 127 APPENDIX IV (cont'd) Gasoline costs of 3.25/100 bushels were charged for hauling wet corn to sealed storage concrete silo, full bin dryer, automatic batch and portable batch dryers a 70 HP tractor was used to haul low moisture ear corn and consumed 2.1 gallons per hour or bushels fuel cost 128 APPENDIX V Unusual Survey Responses Eighty-five percent of the surveys were not returned and completed. The following responses are a sample of the surveys that were returned but not completed due to a variety of reasons: On strike! Sounds like a typical example of bureaucratic waste of time and money. We have no cows and raise no corn, Amen. I refuse to fill out your questionnaire. Mrs. Dairy Farmer. I am a smaller farmer and farm like they did 50 years ago. It would be impossible to answer these questions. I think it would be better if all farmers would go back 50 years. Then there would be no surpluses. When a man has "know how" he should be able to keep it to himself. General Motors does not tell all their se- crets to everyone, why should I tell all mine. I am a small time dairy farmer with a full time job. I do not have time to fill out surveys. I am on Social Security, so I do not farm much. #$%¢&‘ and I'm not just a windy. MSU is a giant country club. Why don't the professors come out and talk to the farmers while they are working. It would do them some good to get some manure on their shoes. We sold our dairy last fall and are now making money with beef cows. I do not believe in mechanization. I pick all my corn and milk my cows by hand. Farmers will use a post paid return envelope for most any- thing. Although surveys were not included, I received the follow- ing items in the survey return envelope: contract for frozen semen tank tractor survey from Agricultural Engineering at Michigan State a land contract. MICHIGAN STQ | m E) TE UNIV. LIBRARIES WWWWMWWWW 8918 312 300701