Contracts to sell manure to neighbors

Yesterday I worked with 2 producers who were negotiating contracts to sell some/all of their swine manure from their grow-finish facilities. In one case a neighbor approached the producer about buying manure from a producer who had some fields receiving manure some distance from the storage unit. In the other instance, the producer was constructing a new facility and didn’t have an crop production ground near the new site.

In both cases, the value of the grow-finish swine manure was much higher than we’re used to thinking of. Based on the average lab analysis from last fall’s application and today’s fertilizer prices, we came up with a value of $0.04-0.06/gal, depending on the dry matter content of the manure. If the cost of land application (assumed to be injection) is $0.01-0.015/gal (custom drag line vs owned slurry tank and chopper pump), this leaves $0.03-0.045 in nutrients at the time of application after paying for application costs.

Even if we assume 25% nitrogen loss, manure from our swine facilities is worth a lot. In both cases, I suggested that the producer and the buyer agree on a pricing mechanism for the NPK (and even S and Zn) in the manure. I think they are going to use a local fertilizer dealer and set prices on September 1.

Then the question becomes, should the buyer pay 100% of the nutrient value? Some would argue that application of manure is no different than fall application of anhydrous ammonia – you pay a price per ton for the nutrient, pay for application of the nutrient and have to account for fall/winter/spring losses of the nutrient due to nitrification.

On the other hand, manure is highly variable in nutrient content as it is applied. You don’t get exactly 200 lb/acre of ammonia nitrogen relatively uniformly applied across a field of residue. The buyer will argue that he should pay something less than full nutrient price to account for this variation.

The manure seller can argue back that the unaccounted benefits of swine manure have value. Research consistently shows improvements in soil structure and increased yields for corn on corn when manure is part of the nutrient plan versus using only purchased fertilizer.

What a difference time makes. I remember 10-15 years ago working diligently with pork producers to convince neighboring crop producers that swine manure was a resource. Today we are developing a market with these neighbors where they are not only paying for application costs, but also for some/all of the nutrient value.

This same thought process will be part of future production contracts. Many production systems are struggling with the idea that the contract grower ‘gets’ the manure from a contract finisher while the pig owner pays for all of the nutrients in the manure. I look for contracts in the future to be negotiated with some acknowledgement of the manure value, especially since each finishing space in a grow-finish barn generates about 300-350 gal of manure per year. At $0.06/gal, this is $18-20 of value to the barn owner, not the pig owner.

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