Ohio State University Extension Fact Sheet

Ohio State University Extension

Agricultural Economics

2120 Fyffe Rd., Columbus, Ohio 43210


An Economic Comparison of Three Manure Handling Systems

AE-5-99

Jon Rausch and Brent Sohngen
Natural Resource Economics
Department of Agricultural, Environmental, and Development Economics

Managing nutrients from manure is a critical component of any livestock operation today. Failure to manage nutrients wisely may adversely affect farm income and land, water, and air resources. Presented here is an overview of the types of costs and benefits that producers should address before investing in capital for a manure handling system. Estimates of these costs and benefits are provided for representative operations.

Generally, long-term manure storage is necessary to efficiently utilize nutrients for growing crops and for minimizing adverse environmental impacts. Yet, storage is only one component of a manure handling system. This fact sheet considers all relevant costs of a manure handling system, such as structural, equipment, and labor characteristics (Table 1). Structural attributes define the overall cost of storage while equipment and labor attributes define the costs of land application and manure handling.

The benefits of manure storage come from utilizing these nutrients as a substitute for commercial fertilizer. Depending upon the animal, about 70-80% of the nitrogen, 60-85% of the phosphorus, and 80-90% of the potassium fed is excreted as manure (Klausner). Use of these nutrients as a substitute for commercial fertilizer can be a benefit to the farm operation.

There are other benefits from managing manure properly. Properly managed feedlots, manure stacks, and manure spreading can minimize nutrients entering surface waters and impacts downstream. Nutrient rich waters promote excessive algae and aquatic plant growth which reduces wildlife habitat, and recreational activities, and may increase water treatment costs. In addition, bacteria and other pathogens may enter surface waters with run-off causing other human health concerns. With proper management, these adverse environmental impacts can be minimized.

In Ohio, cost-share programs can help farmers by reducing some of the costs of implementing conservation practices. Currently, Ohio State University Extension, Ohio Department of Natural Resources (ODNR), United States Department of Agriculture (USDA) and Ohio Environmental Protection Agency (Ohio EPA) provide educational, technical, and financial assistance which offset the cost of implementing these types of practices. For a list of cost-share programs available in Ohio refer to Ohio State University Extension Fact Sheet AE-01-97 titled Incentive Programs For Improving Environmental Quality. This and other fact sheets on "Best Management Practices" can be found at: http://www-agecon.ag.ohio-state.edu/faculty/bsohngen/bmp/bmpinfo.html.

This fact sheet highlights the economic aspects of a manure handling system which should be considered before investing in this type of capital. These characteristics are presented in Table 1. Next, three typical manure handling systems are outlined. These systems are: (1) earthen holding pond using a drag-line direct injection; (2) earthen holding pond using a tanker spreader and; (3) stacking pad using a conventional spreader (Table 2). Then, estimates of these costs and benefits are provided for representative operations (Table 3).

Characteristics of Manure Handling System

The four general characteristics defining each manure handling system are shown in Table 1. Three of these characteristics, structural, equipment, and labor, define the costs of owning and operating the system. The fourth characteristic identifies the nutrient benefit of manure as a substitute for commercial fertilizer.

Table 1. Manure Handling System Characteristics
Characteristic Attributes
Costs
Structural
  • size of structure
  • cost of construction
  • cost to build related structures (reception pit, push-off ramps, other)
  • interest rate
  • useful life of structure
  • insurance
Equipment
  • implements needed
  • cost of each implement
  • hours of use for each implement
  • ownership and repair factor for each implement
Labor
  • hourly wage rate
  • value of fringe package
  • uses of labor
Benefits
Nutrient
  • nutrient content of manure
  • value of manure nutrients
  • acres available for manure application
  • soil nutrient levels

A manure handling system begins with a known size of storage structure (Table 1). Not only do the number and type of animals determine size, but also the total days of storage, quantity of feedlot run-off, milk house waste, and annual rainfall (Bulletin 604). Local USDA, ODNR, and Extension offices can provide guidelines to accurately size a manure storage structure to meet current needs as well as options for future expansion. Software is available from USDA-NRCS at http://www.oh.nrcs.usda.gov/engineering to help size structures for current needs. In some cases, push-off ramps, reception pits, liners, and other structures must be built to make the system operational. These additional structures add to the initial investment in manure storage.

The storage structure is only one aspect of the entire system. For each system, a complement of equipment is necessary to fill the structure as well as land apply manure. Therefore, it is necessary to include a complement of equipment as a cost of owning and operating the manure handling system. Ownership and operating costs include depreciation, interest, insurance, housing, and taxes as well as maintenance, repair, fuel, oil, and labor (Table 1). The sum of these costs, on an annual basis, is the cost of owning and operating the manure handling system.

The costs of owning and operating the structure, equipment, and labor for the system have been highlighted. However, contained within each structure is a nutrient source which can replace commercial fertilizer. Thus, manure as a nutrient source has value and provides a benefit to the farming operation (Table 1).

The value of manure can be difficult to determine. From an agronomic perspective, manure has many beneficial characteristics. Aside from its nutrient benefits, manure also improves soil tilth, increases water holding capacity, and promotes beneficial organisms (Bulletin 604). However, a larger volume of manure must be applied to realize these benefits when using manure as a nutrient source. With larger quantities of manure being applied, greater application costs are incurred. Thus, the per unit nutrient value of manure may be less than for commercial fertilizer. Here, the beneficial attributes of manure plus its nutrient value are expected to be equal to the per unit nutrient value of commercial fertilizer. Therefore, commercial fertilizer values are used for nitrogen, phosphorus, and potassium.

Ideally, a manure nutrient analysis will be available to determine the nutrient content of manure in the holding structure. Local Extension offices have guidelines for collecting and shipping samples for nutrient analysis. Alternatively, guidelines for manure nutrient content can be obtained from the Ohio State University Extension publication titled Ohio Livestock Manure and Wastewater Management Guide (Bulletin 604). In either case, the quantity of each nutrient (nitrogen, phosphorus, and potassium) are needed. Using this information, the total quantity of each nutrient can be calculated for the volume of manure in storage.

To maximize the value of manure it should be applied to meet the nutrient requirements of growing crops, assuming other factors such as slope, leaching, and run-off potential are not more restrictive. Since manure is not easily blended to meet a specific nutrient analysis, it is applied at rates which meet the most limiting nutrient for a given crop. Guidelines for determining the limiting nutrient can be found in the Ohio Livestock Manure and Wastewater Management Guide (Bulletin 604). Generally, this limiting nutrient is phosphorus, but may be nitrogen or potassium in some situations. Manure applied at rates other than those for the limiting nutrient may result in over application of other nutrients, increasing the potential for environmental damage. Nutrient utilization plans should be developed and followed to maximize nutrient benefits and minimize environmental damage.

Economic Comparison of Manure Handling Systems

This section compares the costs and benefits of three typical manure handling systems in Ohio. These systems are (1) earthen holding pond using drag-line direct injection; (2) earthen holding pond using a liquid tanker and; (3) stack pad using a conventional spreader. A copy of the spreadsheet template can be downloaded at: http://www-agecon.ag.ohio-state.edu/Faculty/bsohngen/bmp/bmpinfo.html or by contacting the local Ohio State University Extension office.

System Design

Each manure handling system shown is designed for a 80-100 cow dairy. Land available for treatment has a soil-test Bray P1 value of 200 and a low run-off potential. Under these conditions, manure application should be limited to phosphorus removal rates for non-legume crops (Table 10, Bulletin 604). A summary of the structural, equipment, labor, and nutrient characteristics defining these systems is shown in Table 2.

Table 2. Structural, Equipment, Labor and Nutrient Characteristics for Each System Identified
 Liquid-Drag LineLiquid-TankerStack-Conventional
Structural Characteristics
Total Capacity1.3 million gals.1.3 million gals.3,174 tons
Construction Cost$2.50/cubic yard$2.50/cubic yard$5.50/sq. ft.
Other Cost of Const.$6,500 (reception pit)$6,500 (reception pit)$5,000 (wetland)
Interest Rate8%8%8%
Insurance per year$200$200$200
Life Expectancy25 yrs.25 yrs.25 yrs.
Cost-Share Avail.$5,000$5,000$5,000
Equipment Characteristics
 Tractor 1Tractor 1Tractor 1
 Tractor 2Tractor 2Spreader
 Chopper PumpChopper PumpSkid Loader
 ToolbarTanker 
 Irrigation Equip.Tractor 3 
 Tractor 3  
Labor Characteristics
Barn Cleaning300 hours/yr300 hours/yr300 hours/yr
Equipment Set-Up15 hours/yr5 hours/yr5 hours/yr
Nutrient Characteristics
 Lbs./
1,000 gal
Value/
Lb
Lbs./
1,000 gal
Value/
Lb.
Lbs./
ton
Value/
Lb.
Total Nitrogen12 lbs$0.2512 lbs$0.259 lbs$0.25
Total Phosphorus12 lbs$0.2512 lbs$0.254 lbs$0.25
Total Potassium20 lbs$0.1520 lbs$0.1510 lbs$0.15
Acres Available220220220
Corn Yield Goal150 bu/ac150 bu/ac150 bu/ac
Application Speed5.82 ac/hr3.9 ac/hr1.73 ac/hr
Limiting NutrientP2O5P2O5 P2O5

First, the two liquid systems are identical in their structural characteristics (Table 2). Both systems scrape manure to a reception pit where it is held until it flows by gravity to the holding pond. The cost of this additional structure adds to the total cost of the holding facility. All milk house waste and feedlot run-off is diverted into the holding pond, increasing the capacity requirements of the holding structure. These structures typically cost about $2.50 per cubic yard of volume to build. Here the annual rate of interest is 8% and the life expectancy for these structures is 25 years.

Equipment requirements for these two systems are similar. Both systems require three tractors and a chopper pump to move manure into and from the structure (Table 2). The drag-line system requires an injection toolbar as well as irrigation equipment for continual operation during periods of manure application. The liquid tanker system uses a typical liquid manure spreader for land application.

Each of these systems uses about the same amount of labor each year to scrape the barn and for other daily chores (Tractor 3). However, the drag-line system requires additional labor to set-up, tear-down, and monitor the irrigation line during land application. Additional labor requirements for this system can be significant, especially if it has to be moved frequently, increasing the annual cost of owning and operating the system.

Since these two systems are identical, except for the method of manure application, the nutrient content and value of manure land applied will be the same (Table 2). Both systems have the same number of acres available for treatment, and are applying at rates to meet the phosphorus requirement of grain corn. The drag-line system is a continuous application, therefore the speed at which manure can be land applied differs. The liquid tanker requires continual trips to the field, which may increase the total time required to land apply manure.

The stack pad system (Table 2) differs from the two liquid systems in three general ways. First, the structure is sized for 90 days of storage requiring the structure to be emptied four times per year. This type of system uses more bedding, which absorbs water, and re-directs milk house waste and feedlot run-off away from the manure storage structure. These sources of water are directed into a wetland, which is an additional cost of the system shown here. Solid and semi-solid manure systems require less total storage capacity because less water is added. However, the total cost of building this structure may be considerably higher because of the building materials.

Secondly, the stack pad system requires the least amount of equipment to move manure from the structure for land application. Here, one tractor, a conventional spreader, and skid loader are used. Reducing the complement of equipment necessary to operate the system may reduce the fixed costs, but may increase the overall time spent land applying manure. In other words, systems with larger capital requirements may be spending less time each year spreading manure or they may better be able to coordinate manure hauling during slack periods of the year.

Finally, the nutrient content of manure from this type of system is more concentrated because water has been excluded from the system. Therefore, the total volume of manure to be moved is also less. In some situations, this may provide a means of transporting excess nutrients off-farm which is more economical than other types of systems.

Costs and Benefits

Table 3 provides a summary of the economic costs and benefits for each of these systems. The structural, equipment, and labor costs determine the annual cost of owing and operating the system. These costs are then compared with the nutrient benefit of manure as a substitute for commercial fertilizer. The net annual cost of each system is the cost of owning and operating the structure, equipment, and labor necessary to make the system operational, less the nutrient value of manure.

Table 3. Cost of Owning and Operating System
 Liquid-DragLine Liquid-TankerStack-Conventional
Fixed Costs
Structure$2,662/yr$2,662/yr$5,023/yr
Equipment$378.01/hr$140.27/hr$94.80/hr
Cost of Labor$10/hour$10/hour$10/hour
Ownership Summary
Annual Cos$19,901$16,821$15,983
- Nutrient Benefit$8,135$8,135$12,199
= Net Annual Cost$11,766$8,686$3,785
Land Treatment Summary
Application Rate4,625 gal/ac4,625 gal/ac14 tons/ac
Acres Required282282224
Acres Available220220220
Cost/ac Treated$53.48/ac$39.48/ac$17.20/ac
Excess Nutrients Available
Excess Volume (gals., tons)285,430285,43056
Additional Acres62624

Manure Nutrients

For many operations, manure is applied at rates to meet a limiting nutrient, such as phosphorus. This reduces application rates and therefore increases the number of acres needed for land treatment. Where land available for treatment is limited, excess nutrients and manure will remain in the holding facility. However, from a practical standpoint the structure must be routinely emptied to remain operational. Here three scenarios are presented to handle excess nutrients available for land application. These are: (1) sell excess nutrients; (2) over apply excess nutrients on land already treated, and; (3) give excess nutrients away.

When manure nutrients are applied to meet a limiting nutrient, excess nutrients may be available to sell. The first scenario captures the sale of these excess nutrients at market value (Table 4). By selling these nutrients at market value, the owner captures the revenue from this sale which offsets the cost of land application. If the value of the nutrients exceeds the cost of land application, the total cost of owning and operating the manure handling system is reduced.

Table 4. Excess Nutrient Summary
 Sell ExcessOver Apply ExcessGive Away Excess
 Dragline TankerStackDraglineTankerStackDraglineTankerStack
Value of Nutrients$2,282$2,282$218($2,282)($2,282)($218)($2,282)($2,282)($218)
Application Cost$4,852$4,311$243$4,852$4,311$243$4,852$4,311$243
Net Application Cost$2,570$2,029$25$7,134$6,593$461$7,134$6,593$461
Net Annual Cost$14,336$10,715$3,810$18,900$15,279$4,246$18,900$15,279$4,246

Scenario two, over application of nutrients, increases the annual operating cost of the system (Table 4). By over applying nutrients no additional benefit is realized, i.e., yield does not increase. Therefore, over application has a zero benefit, at best. However, by not selling the excess nutrients, an opportunity to increase farm revenue is lost, and the cost of this lost opportunity is the value of the nutrients which could have been sold. In addition, the cost of land applying these excess nutrients is incurred by the owner. Therefore, there is a net cost for over applying excess nutrients. The cost of the lost opportunity to increase farm revenue plus the cost of land applying the manure, increases annual operating costs.

In many situations, neighboring land is available for applying excess nutrients, but the value of these nutrients is not realized by the owner of the system. Scenario three captures the costs associated with giving these nutrients away (Table 4). This scenario produces the same economic consequence as does over applying. That is, the opportunity to generate additional revenue from the sale of these nutrients is lost because they are given away, while incurring the cost of land application. However, there are benefits from giving the nutrients away that are not captured here. Moving these excess nutrients off-farm may reduce the risk of causing environmental damage. By moving the excess nutrients to areas where they can be utilized by growing crops reduces the potential these nutrients will move off-site, causing damage. The value of this benefit accrues to those downstream in the form of better water quality and wildlife habitat. Although there is not a direct benefit to the farmer, there may be an indirect benefit through better managing their risk or liability from environmental damage.

It is worth noting that the opportunity cost of not selling excess nutrients only applies in those areas where there are markets for manure. If no market exists, there is no opportunity to sell manure and therefore, no lost opportunity from not selling. In such a case, each of these three scenarios would be equal. That is, the value of excess manure cannot be captured in the market, and it is zero (0). Only the cost of land application is incurred. Therefore, the overall cost of the system increases. However, the benefits from not over applying (risk management, water quality, wildlife habitat, others) still exist.

Conclusion

Inadequately managed feedlots, barnyards, and manure stacks, as well as improperly constructed manure handling and storage facilities, and improper manure spreading are leading contributors to surface and ground water contamination (Ohio EPA). Properly managing livestock waste is a growing concern for many individuals in the livestock industry and for society. Voluntary cost-share programs are available to agricultural producers to help offset the cost of implementing conservation practices and minimize the environmental impacts from farming. However, these practices are not without a cost, and producers must evaluate the impact that adoption has on farm income, expenses, and overall profitability.

Provided here is an overview of the economic considerations for manure handling systems using a spreadsheet template. First, a manure handling system is defined by its structural, equipment, labor, and nutrient characteristics. Specific attributes for each of these characteristics are defined and ultimately determine the costs and benefits of the system. Next, a "first-cut" economic evaluation of three manure handling systems is presented using this template. These systems are: (1) earthen holding pond using a drag-line direct injection toolbar; (2) earthen holding pond using a liquid tanker and; (3) a stack pad using a conventional spreader. Specific attributes defining each of these systems is presented in Table 2. Finally, the costs of each system are compared with the benefits and shown in Table 3. Utilizing manure nutrients for growing crops requires applying at rates which meet the most limiting nutrient. Generally, this means more land is needed than available for treatment. Therefore, there are excess nutrients available for land application. Here it is assumed that the structure must be emptied to remain operational. Three scenarios are presented for land applying excess nutrients (Table 4). These are: (1) sell excess nutrients; (2) over apply excess nutrients on treated acres, and; (3) give excess nutrients to a neighbor. For each of these scenarios, the value of the nutrients are compared with the costs of land application. The cost/benefit from any excess nutrients is included in the annual cost of owning and operating the manure handling system.

A copy of the evaluation template can be obtained by contacting the local Ohio State University Extension office, or at the following Internet address:

http://www-agecon.ag.ohio-state.edu/faculty/bsohngen/bmp/bmpinfo.html.

We appreciate the financial assistance of the Natural Resource Conservation Service for publishing this document. In addition, we would like to thank the many individuals who have provided review comments for this publication and associated templates. In particular, the following individuals provided substantial comment and review: Mike Monnin, Kevin Elder, Randy James, Harold Keener, Howard Lyle, Jim Philips, Brian Strobel, and Tammi Brown.

Selected References

Bulletin 472. 13th Edition. Ohio Agronomy Guide. Ohio State University Extension.

Bulletin 604. 1992. Ohio Livestock Manure and Wastewater Management Guide. Ohio State University Extension.

Bulletin E-2567. 1992. Tri-State Fertilizer Recommendations for Corn, Soybeans, Wheat and Alfalfa. Ohio State University Extension.

Klausner, Stuart D. 1989. Managing the Land Application of Animal Manures: Agronomic Considerations. Proceeds from the Dairy Manure Management Symposium. Syracuse, New York. Northeast Regional Agriculture Engineering Service. NRAES-31.

Ohio EPA. 1996. Guide Lines For Livestock Producers. Produced by Ohio EPA for the Ohio Agricultural Service Team.


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Keith L. Smith, Associate Vice President for Ag. Adm. and Director, OSU Extension.

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