The 2015 haying season will be wrapping up in the next month, and with that many sellers will be pricing the bales they put up this summer. Knowing costs would help provide a lower bound or minimum asking price for hay. Market forces and quality levels also need to be considered.
Before pricing forages producers will want to have a good understanding about the cost of growing a ton of hay, alfalfa or straw. Determining your cost of production ensures that sales are not made below a break-even selling price. Land (ownership expenses or rental rate) and equipment (both ownership and operational) charges will cover most of the costs associated with producing these forages. In the case of grass hay and straw the seed cost is very small, or in the case of alfalfa the seed cost is generally charged to the establishment season only. If small square bales are put up, labor may be a large component when determining cost of production. Other costs may include: twine, fertilizer and its application, and insecticide and its application.
Determine the true cost of production may be difficult for the forage enterprise because other costs are more ambiguous than items like seed, fertilizer and chemicals that are readily available on a per acre rate. Keeping a log of the number of gallons of fuel used during windrowing, raking, baling, loading and hauling is one method to break down total gallons of fuel used into a per acre value. Labor hours could be tracked similarly. Iowa State Extension publishes a yearly custom rate guide, and it is another resource for those determining the value of their forage production costs.
The National Hay, Feed & Seed Weekly Summary report
To find out what hay and forages have been selling for in your area the National Hay, Feed and Seed Weekly Summary report is published by the Agricultural Marketing Service (AMS), a division of the United States Department of Agriculture (USDA). For more information, view the weekly summary of the hay markets across the nation, or view individual state or auction market information courtesy of the USDA.
The summary report is a good resource for those buying and selling hay, alfalfa and straw. The report breaks down alfalfa into quality standards of Supreme, Premium, Good, Fair & Utility based on the Acid Detergent Fiber (ADF), Neutral Detergent Fiber (NDF), Relative Feed Value (RFV), Total Digestible Nutrients ( TDN-100%), TDN-90% and Crude Protein (CP-100%). Grass hay is also broke into categories based on Crude Protein percent. The breakdown provides a good understanding about the effect quality has on the price of the forage.