Establishing a Fair Price for Standing Hay

Determining a fair price for standing hay isn’t an exact science; rather, it requires an estimate of hay market price and a method to determine yield.

 

“Hay prices are difficult to establish as they are affected by a combination of factors such as spring inventory carryover, pasture conditions, feed competitors, cutting date, quality, yield, and location,” says Dean Dyck, farm business management specialist, Alberta Agriculture and Forestry (AF). “As we saw in 2015, hay supplies were low coming into the year and pasture conditions were poor. This caused hay to be in demand and prices rose substantially. Only after silage and greenfeed crops were harvested did we see a softening in the price. This year, a mild winter allowed hay supplies to rebuild somewhat but pasture conditions were poor in the spring.”

 

Current hay prices are less readily available than prices for wheat, canola or barley. There is often large regional variation in price because of the cost of transport and local supply and demand. Typically, hay prices do not settle until about the end of October when hay, greenfeed, silage and salvaged cereal crops are harvested. Current asking prices are available on the Alberta Agriculture and Forestry’s website under Alberta Hay and Pasture Directory. Agriculture Financial Services Corporation (AFSC) also publishes historical forage price data for all regions of the province.

 

“Basic economic principles should factor into the pricing decision,” says Dyck. “If you’re the seller, the price should be based on the estimated market value of hay in the bale less the expected harvest costs (the cost to cut, bale and haul hay) and an allowance for weather risk. This weather risk would be at least 10 per cent for grass hay and as high as 30 per cent for alfalfa, reflecting the loss in nutritional value due to poor weather.”

 

Harvesting costs are available through AFs 2015 Custom Rate survey or the online Machinery Cost Calculator.

 

“If you’re the buyer, there will be a limit to what you can and will pay, depending on the availability, quality and price of other forages. The decision should compare the price of the bale of hay versus the cost savings of purchasing the crop standing in the field. Buying a standing crop can provide more quality control, the forage you want, and be from a location that minimizes the cost of transport. The price of livestock and the cost of feeding should also factor into your price decision point.”