Pricing Hay

By Andrew Frankenfield

Dry weather in southeastern PA has affected the hay yield this year. Reports from farmers of half to two thirds of a crop are common in my area. This reduced supply problem is compounded by the strong demand for hay in the late winter and reduced growth of pastures this summer already.

So the question I am getting is: “How much should I sell my hay for?” That is not an easy question to answer, because of a lot of variables which can include: type of hay, bale size/type, quality, sold out of the field vs stored, picked up vs delivered, auction vs private sale.

As a beginning step, I encourage farmers to understand their costs of production, and compare that figure with the numbers they are hearing to ensure they are making a profit for their hard work.

Let’s assume a lighter yield of 2 tons/acre of first cutting dry timothy hay (5 large square bales per acre).

The equipment costs according to the 2014 PA Machinery Custom Rates, to cut, tet, rake and large square bale are about $78 per acre or $39/ton.

According to the Penn State Agronomy Guide, the typical crop removal of 1 ton of timothy hay is 50-15-50 valued at about $62.50/ton or $125 per acre given a 2 ton yield.

N=$0.60 x 50 = $30.00
P205=$0.50 x 15 = $7.50
K20=$0.50 x 50 = $25.00

Also consider the establishment cost of that hay field which is at least $200 an acre including lime, fertilizer, seed, soil preparation and planting. Averaging 3 tons per acre per year for a 4 year stand, that’s 12 ton. $200/12=$17 per ton.

Annual Maintenance is about $40/acre or $13/ton = Fertilizer spreading, spraying herbicide and miticide.

Land cost or rental value = $25, $50, $100 take your pick! (I’ll say $50 per acre per year, which is $17 per ton)

If we add up all the costs not associated with harvesting you have about $110 per ton invested before you start cutting.

Add the equipment cost of $39 per ton to the $110 you’re up to about $150 a ton and you haven’t even hauled it or stored it yet.

Looking at the PA Weekly Hay auction reports (late-May) I see prices for orchard grass and timothy hay are from $170-$225 per ton are common with a high of $250 for large square bales. Small square bales are selling for $200-$270 with a high of $310.

Looking back to this time last year prices were $160-$280 with a high of $335 for timothy and grass. I was surprised by this, expecting prices this year to be higher than 2014. That still may change, due to the May 28, 2015 report coming out over the light Memorial Day Holiday and busy hay making time.

As you know when marketing your hay, customer service and knowing what your customer wants is critical. If they want small bales there are many machines on the market now like accumulators, stacker wagons, grapples, bundlers and re-baling equipment to increase your efficiency while reducing the labor associated with small square bales. Of course they all come at a price and depending on your scale they may or may not be a good business decision for your farm.

Try the new University of Wisconsin-Extension App for Pricing Hay
Farmers and landowners can get help identifying the price of hay, and/or negotiate the sale or purchase of standing hay through a new smartphone app that can quickly find hay price information. Users of this app can also enter projected hay yield, cutting schedule and harvest costs to calculate a standing value per acre according to the app developer, Greg Blonde, University of Wisconsin-Extension, Waupaca County Agriculture Agent.

The app is free and available for Android smart phones and tablets on the Google Play store by searching for “Hay Pricing” or click this link.

Source:psu.edu