Regional Hay School - Mountain Grove, MO
3/25/2014
Managing the Cost of
Hay
What Does My Hay
Really Cost
WOULD I BE BETTER OFF TO
Stacy Hambelton
Ag Business Specialist
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





Put up My Own Hay
• 50 Acres
Fixed Cost
Variable Costs
• 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

Variable machinery costs are involved in
the operation of machinery


$
8%
2% $
$
$
700.00
$706.00
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
$
$
$
$
$
Depreciation
Taxes
Interest
Insurance
Housing
23.00
23.21
9.20
0.29
55.70



Fuel
Oil
Lubrication
Repairs
Other (Twine)
1
Regional Hay School - Mountain Grove, MO
3/25/2014
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
Put up My Own Hay
Variable Costs
Plant Nutrient Removal
Per Acre Per Ton
$ 288.75 $ 5.78 $
$ 43.31 $ 0.87 $
$ 158.91 $ 3.18 $
$
$
2.89
0.43
1.59
1.00
7.48
Cool Season Grass
Lbs/Ton
$/Lb
Total
45 $
0.59 $ 2,655.00
12 $
0.44 $ 528.00
50 $
0.38 $ 1,900.00
Nitrogen
Phosphorus
Potassium
Fertilizer Cost
50 Acres
2 Tons/A
1 Cutting / Acre
Diesel $3.85/gal
Put up My Own Hay
$
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
0.96
0.14
0.10
$
$
$
$
1,400.00
$1,413.00
560.00
17.80
3,390.80
Cut Acre
$
$
$
Fertilizer Cost
Total Variable Costs
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
Total Costs
Fixed Costs – None


No Machinery is Purchased
Variable Costs

Purchased Hay


Mow, Rake, Bale, Haul
50.83
63.10

Fixed Costs – None

Variable Costs

No Machinery is Purchased
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
$
$
6.36
36.80
Per Ton
$
26.55
$
5.28
$
19.00
Fertilizer Cost
Total Variable Costs
$
$
50.83
93.99
$ 118.80
Purchase Hay

$
$
50.83
Custom Hire Costs
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
New Value
Expected Life
Per Ton
$
26.55
$
5.28
$
19.00
$ 5,083.00 $ 101.66 $
Fixed Hay Machine Costs + Variable Costs
Fixed Machine Costs
Depreciation
Interest (avg over 5yrs
Insurance & Housing
PP Taxes
Total Fixed Cost
Per Acre
$ 53.10
$ 10.56
$ 38.00
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
2
Regional Hay School - Mountain Grove, MO
3/25/2014
New Equipment
Summary
Total Fixed Cost
Comparison
Farmer
Owned
Equipment
Custom
Hay
Purchased
Hay
Per Ton
Per Ton
Per Ton
$55.70
Total Variable Costs
$63.10
Total Costs
$93.99
$ 118.80
$93.99
Used Equipment
Comparison
$85.00
$85.00
• Disk Mower $3,000.00
• Rake
$1,000.00
• Bailer
$6,000.00
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
To Reduce Costs
Consider
•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

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
Baling
for Us
3
Regional Hay School - Mountain Grove, MO
3/25/2014
To Save Some Money
Consider
Strip Grazing
Perimeter Fence

Timeliness, It Is Important In Harvesting
Quality Forage

Advantage of Owning your Equipment

Temp Fence


Winter Water
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%
Pumpkin Pies
June 1
TDN 59%
Protein 7.4%
June 15
TDN 45%
Protein 5%
Wedding Cakes
4
Regional Hay School - Mountain Grove, MO
3/25/2014
Additional
Considerations


Consider Legumes with the Price of Nitrogen
Where are you feeding your Hay? Nutrient
Placement
Questions & Discussion
Balage
Weather Man
Days
vs.
Dry Hay
1
2
3
4
Thanks to Wesley Tucker for his large
contribution to this Presentation
Red Clover Balage
98%
75%
40%
16%
Digestibility of Alfalfa Balage
70
-----------Baleage -----------
65
IVDMD (%)
_________________________________
Treatment
CP
NDF
_________________________________
--------%------RC balage
21.1
35.7
RC hay
16.3
49.8
__________________________________
% Accuracy
60
Hay
55
50
45
40
(60% moisture at baling)
54%
49%
43%
22%
Moisture Content at Baling (%)
5
Regional Hay School - Mountain Grove, MO
3/25/2014
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

Quality is Improved
Crude Protein
15.6
11.6
TDN
66
61
Rel Feed Value
106
93
Ryegrass Balage Comparison to Hay
Treatment
CP
TDN RFQ
%
%
Ryegrass Hay
14.7 b 62.4 c 133 b
Ryegrass Balage 16.3 a 65.9 a 174 a
Bermuda Hay
16.1 a 62.9 b 116 c
ADG
lbs/hd/
d
Ryegrass Hay
14.7 b 62.4 c 133 b 1.26 b
Ryegrass Balage 16.3 a 65.9 a 174 a 1.94 a
Bermuda Hay
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
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
Unpublished data, Calhoun, GA, 2009, Dennis Hancock
P<0.10
Costs

Treatment
CP
%
TDN
%
RFQ
DIRTI-5
Plastic
 4-6 mil
 Depreciation
$28,000
 5 years
 30% salvage value
 $28,000 - $8,400 (salvage) = $19,600

$3.50

$2.00
$19,600/5 years =
$3,920
6
Regional Hay School - Mountain Grove, MO
3/25/2014
DIRTI-5

Depreciation


Interest


$28,000 * 3% = $840
Taxes & Insurance


$28,000 * 7% = $1,960
Repairs & Maintenance


$3,920
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
$28,000 * 1% = $280
Total =
$7,000 per year
Does it Pay?
 IT
DEPENDS!!!
What are your dry matter
losses currently?
Free Barn?
Cost of hay due to waste
% waste
0
1200
10
$7.83
20
30
400
$19.50 40
50
Typical Forage
Harvesting Losses
Hay cost
$ / bale
$ / ton
35
70
38.89
77.78
43.75
87.50
50
100
58.33
116.66
70
140
Field curing
-26%
Harvesting
-14%
30% Left
~580 lbs
Storage
-35%
Feeding
-30%
7
Regional Hay School - Mountain Grove, MO
Optimum
Management
Field curing
-12%
Does it Pay?
 IT
DEPENDS!!!
What are your dry matter
losses currently?
What is the value of what you
are feeding it to?
Harvesting
-8%
70% Left
~1,400 lbs
3/25/2014
Storage
-5%
Feeding
-8%
Forage
Cost of
Gain
$.55
$1.20
Forage Cost = $100/ton
8