Managing the Cost of
Hay
Stacy Hambelton
Ag Business Specialist
What Does My Hay
Really Cost
Would I be Better Off To
Put up My Own Hay?
or
Hire a Custom Operator
or
Purchase Hay
Assumptions Used in These
Examples




Example Farm Has Adequate Tractor Power
for Hay Making so, No Tractor Depreciation
Included
No Labor Included
No Land Costs Included
No Salvage Value is used because of the
years of use
Fixed Costs


Occur after the machinery is purchased
Occur whether or not the machine is used





Depreciation
Taxes
Interest
Insurance
Housing
Put up My Own Hay
• 50 Acres
Fixed Cost
• 2 Tons/A
• 1 Cutting / Acre
New Value
Expected Life
Fixed Machine Costs
Depreciation
Interest (avg over 5yrs)
Insurance & Housing
PP Taxes
Total Fixed Cost
Disk Mower Rake 17' Bailer
Total
Per Acre Per Ton
$ 14,000.00 $ 4,000.00 $ 28,000.00 $ 46,000.00 $ 920.00 $ 460.00
20
20
20
$ 700.00
8% $706.00
2% $ 280.00
$ 9.20
$ 1,695.20
$ 200.00
$202.00
$ 80.00
$ 2.30
$ 484.30
$ 1,400.00
$1,413.00
$ 560.00
$ 17.80
$ 3,390.80
$
$
$
$
$
2,300.00
2,321.00
920.00
29.30
5,570.30
$
$
$
$
$
46.00
46.42
18.40
0.59
111.41
$
$
$
$
$
23.00
23.21
9.20
0.29
55.70
Variable Costs

Variable machinery costs are involved in
the operation of machinery





Fuel
Oil
Lubrication
Repairs
Other (Twine)
Put up My Own Hay
Variable Costs – Machine
Disk Mower
Variable Costs
Cut Acre
Fuel
$
3.08
Oil & Lubrication 15% $
0.46
Repairs
$
0.56
Twine
Custom - Haul (On Farm $3.74/bale)
Rake 17' Bailer
Cut Acre Cut Acre
$ 0.96 $ 1.73
$ 0.14 $ 0.26
$ 0.10 $ 2.52
•
•
•
•
Total
Per Acre Per Ton
$ 288.75 $ 5.78 $
$ 43.31 $ 0.87 $
$ 158.91 $ 3.18 $
$
$
50 Acres
2 Tons/A
1 Cutting / Acre
Diesel $3.85/gal
2.89
0.43
1.59
1.00
7.48
Put up My Own Hay
Variable Costs
Plant Nutrient Removal
Cool Season Grass
Nitrogen
Phosphorus
Potassium
Fertilizer Cost
Lbs/Ton
$/Lb
Total
45 $
0.59 $ 2,655.00
12 $
0.44 $ 528.00
50 $
0.38 $ 1,900.00
Per Acre
$ 53.10
$ 10.56
$ 38.00
Per Ton
$
26.55
$
5.28
$
19.00
$ 5,083.00 $ 101.66 $
50.83
Put up My Own Hay
Fixed Hay Machine Costs + Variable Costs
New Value
Expected Life
Fixed Machine Costs
Depreciation
Interest (avg over 5yrs)
Insurance & Housing
PP Taxes
Total Fixed Cost
Farmer Owned Equipment
Disk Mower Rake 17'
Bailer
Total
Per Acre Per Ton
$ 14,000.00 $
4,000.00 $
28,000.00 $ 46,000.00 $ 920.00 $
460.00
20
20
20
$
8%
2% $
$
$
700.00
$706.00
280.00
9.20
1,695.20
$
$
$
$
200.00
$202.00
80.00
2.30
484.30
Variable Costs
Cut Acre
Cut Acre
Fuel
$
3.08 $
Oil & Lubrication
15% $
0.46 $
Repairs
$
0.56 $
Twine
Custom - Haul (On Farm $3.18/bale)
Custom - Mow, Rake, Bale (5x5 -1000 lbs, $18.40/bale)
Purchased Hay
Plant Nutrient Removal
Lbs/Ton
$/Lb
Nitrogen
45
$
0.59
Phosphorus
12
$
0.44
Potassium
50
$
0.38
Fertilizer Cost
Total Variable Costs
Total Costs
$
$
$
$
1,400.00
$1,413.00
560.00
17.80
3,390.80
Cut Acre
0.96 $
0.14 $
0.10 $
1.73
0.26
2.52
$
$
$
$
$
2,300.00
2,321.00
920.00
29.30
5,570.30
$
$
$
$
$
46.00
46.42
18.40
0.59
111.41
$
$
$
$
$
23.00
23.21
9.20
0.29
55.70
$
$
$
288.75
43.31
158.91
$
$
$
5.78
0.87
3.18
$
$
$
$
$
2.89
0.43
1.59
1.00
6.36
$
$
$
Total
Per Acre Per Ton
2,655.00 $ 53.10 $
26.55
528.00 $ 10.56 $
5.28
1,900.00 $ 38.00 $
19.00
$
5,083.00
$ 101.66
$
$
50.83
63.10
$ 118.80
Custom Hire Costs
Mow, Rake, Bale, Haul

Fixed Costs – None


No Machinery is Purchased
Variable Costs
Custom - Haul (On Farm $3.18/bale)
Custom - Mow, Rake, Bale (5x5 -1000 lbs, $18.40/bale)
Purchased Hay
Plant Nutrient Removal
Lbs/Ton
$/Lb
Nitrogen
45
$
0.59
Phosphorus
12
$
0.44
Potassium
50
$
0.38
Fertilizer Cost
Total Variable Costs
$
$
6.36
36.80
Per Ton
$
26.55
$
5.28
$
19.00
$
$
50.83
93.99
Purchase Hay

Fixed Costs – None


No Machinery is Purchased
Variable Costs

Purchased Hay

5 x 5 Bale Weighing 1000 lbs @ $50/bale
$100 / ton
Added Income or Reduction of Expense





Increase stocking because of added land available
Use Ground to Grow Stockpile for Winter Feed
Rent Out Hay Ground
$30/Acre
Purchased Hay / Ton
$0
Total Fixed Cost
Purchased Hay
$100
Added Income -
$ -15
Rent of Hay Ground for $30/Acre
Total Variable Costs
Total Costs
$85
$85
Summary
Total Fixed Cost
Total Variable Costs
Total Costs
Farmer
Owned
Equipment
Custom
Hay
Purchased
Hay
Per Ton
Per Ton
Per Ton
$63.10
$93.99
$85.00
$ 118.80
$93.99
$85.00
$55.70
New Equipment
Comparison
Production
Levels
Farmer
Owned
Equipment
Custom
Hay
Purchased
Hay
Acres
Per Ton
Per Ton
Per Ton
20
$202.36
$93.99
$85.00
50
$118.80
$93.99
$85.00
100
$ 90.95
$93.99
$85.00
150
$ 81.67
$93.99
$85.00
200
$ 77.03
$93.99
$85.00
Used Equipment
Comparison
• Disk Mower $3,000.00
• Rake
$1,000.00
• Bailer
$6,000.00
•Expected Life 10 years
Production
Levels
Farmer
Owned
Equipment
Custom
Hay
Purchased
Hay
Acres
Per Ton
Per Ton
Per Ton
20
$105.19
$93.99
$85.00
50
$79.19
$93.99
$85.00
100
$70.52
$93.99
$85.00
150
????
$93.99
$85.00
200
????
$93.99
$85.00
To Reduce Costs
Consider



Reducing Fixed costs by sharing equipment
with relative or good neighbor
Purchase some used equipment
Taxes can influence the decision to purchase
equipment



Federal Income Tax - 15%, 25%
self-employment taxes -15%
State Income Tax – 6%
Let the
Cow Do
Some
Bailing
for Us
Strip Grazing
Perimeter Fence
Temp Fence
Winter Water
To Save Some Money
Consider

Timeliness, It Is Important In Harvesting
Quality Forage

Advantage of Owning your Equipment



Cutting surplus forage when available helps keep forage
vegetative & nutritious
Disadvantage for Custom Harvesting Is Getting
the Equipment There When You Want It
We Should Give Strong Consideration To Forage
Testing All Different Cuttings Of Hay
 Better Management
Bale Quality – Fescue/Clover
June 1
Protein
60%7.4%
TDN59%
TDN
June 15
Protein
TDN
5%
45%
June 1
TDN 59%
Protein 7.4%
June 15
TDN 45%
Protein 5%
June 1
TDN 59%
Protein 7.4%
June 15
TDN 45%
Protein 5%
Pumpkin Pies
Wedding Cakes
Additional
Considerations


Consider Legumes with the Price of Nitrogen
Where are you feeding your Hay? Nutrient
Placement
Questions & Discussion
Balage
vs.
Dry Hay
Thanks to Wesley Tucker for his large
contribution to this Presentation
Weather Man
Days
1
2
3
4
% Accuracy
98%
75%
40%
16%
Red Clover Balage
_________________________________
Treatment
CP
NDF
_________________________________
--------%------RC balage
21.1
35.7
RC hay
16.3
49.8
__________________________________
(60% moisture at baling)
Digestibility of Alfalfa Balage
70
-----------Baleage -----------
IVDMD (%)
65
60
Hay
55
50
45
40
54%
49%
43%
Moisture Content at Baling (%)
22%
University of Tennessee
Demonstration
Baleage
 Mowed on May 17
 Baled & wrapped on May 18
 Dry Hay
 Mowed, tedded, raked, baled May 20 –
23

Results
Balage Dry Hay
Crude Protein
15.6
11.6
TDN
66
61
Rel Feed Value
106
93
Quality is Improved
Treatment
Ryegrass Hay
Ryegrass Balage
Bermuda Hay
CP
TDN RFQ
%
%
14.7 b 62.4 c 133 b
16.3 a 65.9 a 174 a
16.1 a 62.9 b 116 c
Replacement Heifers Gain – No additional supplementation
Ryegrass hay received a light rain shower on it
Unpublished data, Calhoun, GA, 2009, Dennis Hancock
P<0.10
Ryegrass Balage Comparison to Hay
Treatment
Ryegrass Hay
Ryegrass Balage
Bermuda Hay
CP
%
TDN
%
RFQ
ADG
lbs/hd/
d
14.7 b 62.4 c 133 b 1.26 b
16.3 a 65.9 a 174 a 1.94 a
16.1 a 62.9 b 116 c 1.56 b
Replacement Heifers Gain – No additional supplementation
Ryegrass hay received a light rain shower on it
Unpublished data, Calhoun, GA, 2009, Dennis Hancock
P<0.10
Costs

Plastic
 4-6 mil
$3.50
$2.00
DIRTI-5
 Depreciation
$28,000
 5 years
 30% salvage value
 $28,000 - $8,400 (salvage) = $19,600


$19,600/5 years =
$3,920
DIRTI-5

Depreciation


Interest


$28,000 * 3% = $840
Taxes & Insurance


$28,000 * 7% = $1,960
Repairs & Maintenance


$3,920
$28,000 * 1% = $280
Total =
$7,000 per year
Bales:
DIRTI – 5
($7,000)
Plastic
Total
400
800
1200
$17.50
$8.75
$5.83
$2.00
$2.00
$2.00
$19.50 $10.75 $7.83
Does it Pay?
 IT
DEPENDS!!!
What are your dry matter
losses currently?
Cost of hay due to waste
% waste
0
1200
10
$7.83
20
30
400
$19.50 40
50
Hay cost
$ / bale
$ / ton
35
70
38.89
77.78
43.75
87.50
50
100
58.33
116.66
70
140
Free Barn?
Typical Forage
Harvesting Losses
Field curing
-26%
Harvesting
-14%
30% Left
~580 lbs
Storage
-35%
Feeding
-30%
Optimum
Management
Field curing
-12%
Harvesting
-8%
70% Left
~1,400 lbs
Storage
-5%
Feeding
-8%
Does it Pay?
 IT
DEPENDS!!!
What are your dry matter
losses currently?
What is the value of what you
are feeding it to?
Forage
Cost of
Gain
$.55
$1.20
Forage Cost = $100/ton