Guidelines for Estimating
Hay Production Costs
2016
in Manitoba
.................................................
Guidelines For Estimating
Hay Production Costs - 2016
Date: January, 2016
This guide is designed to provide planning information and a format for calculating the costs
of producing a forage crop of 100% alfalfa or alfalfa grass mixture for the purpose of feeding
livestock or export in Manitoba. General Manitoba Agriculture, Food and Rural
Development (MAFRD) recommendations are assumed in using fertilizers and chemical
inputs. These figures provide an economic evaluation of the crops and estimated yields
required to cover all costs. Costs include labour, investment and depreciation, but do not
include managmement costs, nor do they necessarily represent the average cost of
production in Manitoba.
The assumptions on which the costs were calculated are clearly defined in the supporting
pages. They were developed using a combination of recommended practices and methods
followed by many producers.
These budgets may be adjusted by putting in your own figures. As a producer, you are
encouraged to calculate your own costs of production for your alfalfa hay crops. On each
farm, costs and yields differ due to soil type, climate and agronomic practices.
www.manitoba.ca/agriculture
This tool is available as an Excel worksheet at:
or at your local MAFRD GO Office. The Farm Machinery Custom and Rental Rate Guide
is also available to help determine machinery costs.
Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry.
Interpretation and use of this information is the responsibility of the user. If you need help with a budget, contract
your local MAFRD GO office.
Guidelines:Hay Production Costs
2
Hay Production Costs - 2016
Alfalfa Hay
Year 1 Forage
Establishment
1
Alfalfa-Grass Hay
Annual (Years 2 to 6)
$/acre
Production Costs
$/acre
$/ton
$/pound
A. Operating Costs
Forage Seed & Treatment
Nurse Crop Seed
Establishment (amortized)
Fertilizer
Herbicide/Insecticide
Fuel
Machinery Operating
Machinery Lease
Rental and Custom
Crop Insurance
Other Costs
Land Taxes
Interest on Operating
Total Operating
$42.50
$54.50
$25.00
$13.56
$9.83
$2.40
$8.00
$5.80
$5.00
$7.00
$4.77
$178.36
$24.49
$54.50
$0.00
$8.59
$9.83
$2.40
$12.00
$11.06
$5.00
$7.00
$3.71
$138.58
$8.16
$18.17
$0.00
$2.86
$3.28
$0.80
$4.00
$3.69
$1.67
$2.33
$1.24
$46.19
B. Fixed Costs
Land Investment Costs
Machinery Depreciation
Machinery Investment
Storage Costs
Total Fixed
Total Operating & Fixed
$37.50
$28.08
$7.02
$1.50
$74.10
$252.46
$37.50
$28.08
$7.02
$1.50
$74.10
$212.68
$30.00
$282.46
C. Labour
Total Costs
Year 1 Forage
Establishment
2
Annual (Years 2 to 9)
$/acre
Production Costs
$/acre
$/ton
$/pound
$0.0041
$0.0091
$0.0000
$0.0014
$0.0016
$0.0004
$0.0020
$0.0018
$0.0008
$0.0012
$0.0006
$0.0231
$36.00
$9.06
$72.27
$25.00
$11.09
$9.83
$2.40
$7.20
$5.80
$5.00
$7.00
$5.24
$195.89
$21.75
$28.53
$0.00
$5.98
$9.83
$2.40
$9.76
$9.17
$5.00
$7.00
$2.73
$102.15
$8.91
$11.69
$0.00
$2.45
$4.03
$0.98
$4.00
$3.76
$2.05
$2.87
$1.12
$41.87
$0.0045
$0.0058
$0.0000
$0.0012
$0.0020
$0.0005
$0.0020
$0.0019
$0.0010
$0.0014
$0.0006
$0.0209
$12.50
$9.36
$2.34
$0.50
$24.70
$70.89
$0.0063
$0.0047
$0.0012
$0.0003
$0.0124
$0.0354
$37.50
$28.08
$7.02
$1.50
$74.10
$269.99
$37.50
$28.08
$7.02
$1.50
$74.10
$176.26
$15.37
$11.51
$2.88
$0.61
$30.37
$72.24
$0.0077
$0.0058
$0.0014
$0.0003
$0.0152
$0.0361
$24.00
$8.00
$0.0040
$30.00
$24.00
$9.84
$0.0049
$236.68
$78.89
$0.0394
$299.99
$200.26
$82.07
$0.0410
Your Farm
Profitability & Breakeven Analysis
Estimated Farmgate
Price $ per ton
Yield per acre (ton)
Gross Revenue
Marginal Returns
Over Operating Costs
Over Total Costs (Net Profit)
Operating Expense Ratio
$80.00
2.00
$160.00
$120.00
3.00
$360.00
($18.36)
($122.46)
111.5%
$221.42
$123.32
38.5%
Breakeven Price Per Ton
Operating Costs
Total Costs
Breakeven Yield (tons per acre)
Operating Costs
Total Costs
$0.0600
$73.81
$41.11
$46.19
$78.89
$0.0369
$0.0206
$70.00
1.80
$126.00
$90.00
2.44
$219.60
($69.89)
($173.99)
155.5%
$117.45
$19.34
46.5%
$0.0231
$0.0394
$48.13
$7.93
$41.87
$82.07
1.155
1.972
Value of Standing Hay ($ per pound) 3
$0.0450
$0.0241
$0.0040
$0.0209
$0.0410
1.135
2.225
$0.0249
$0.0236
TDN & Crude Protein Cost Analysis
Cost of TDN ($ per pound DM)
Cost of Crude Protein ($ per pound DM)
$78.89 /ton =
$78.89 /ton =
$0.0712
$0.2337
$82.07 /ton =
$82.07 /ton =
$0.0815
$0.3584
1. Alfalfa establishment (without nurse crop) net cost of $122.46 (total cost minus estimated gross revenue) were amortized over 5 hay production years.
2. Alfalfa-grass establishment (with oat greenfeed nurse crop) net cost of $173.99 (total cost minus estimated gross revenue) were amortized over 8 hay production years.
3. Value of standing hay includes a 15% margin over costs (includes: establishment, fertilizer, pesticide, land taxes, 5% of fuel and labour, 50% of other costs, and 2.5% land
investment costs.)
Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility
of the user.
Manitoba Agriculture, Food and Rural Development
Guidelines: Hay Production Costs
3
Risk & Sensitivity Analysis
Alfalfa
Hay
A. Operating Costs/acre
B. Fixed Costs/acre
Total Costs/acre
Cost per ton
Alfalfa Grass
Hay
$138.58
$74.10
$236.68
$102.15
$74.10
$200.26
$78.89
(@ 3 ton/acre)
$82.07
(@ 2.44 ton/acre)
$120.00
3.00
$90.00
2.44
Estimated Farmgate
Price $ per ton
Yield per acre (tons)
Percent Price Variation
Higher Price ($ per ton)
Lower Price ($ per ton)
Higher Yield (tons per acre)
Lower Yield (tons per acre)
Up
5%
$126.00
$108.00
3.30
2.70
Down
10%
Percent Yield Variation
Up
10%
Down
10%
$94.50
$81.00
2.68
2.20
Higher Margin Scenario - Price Up 5% and Yield Up 10%
Gross Revenue / acre
Marginal Returns
Over Operating Costs
Over Total Costs (Net Profit)
Operating Expense Ratio
$415.80
$253.64
$277.22
$179.12
33.3%
$151.49
$53.38
40.3%
Lower Margin Scenario - Price Down 10% and Yield Down 10%
Gross Revenue / acre
Marginal Returns
Over Operating Costs
Over Total Costs (Net Profit)
Operating Expense Ratio
$291.60
$177.88
$153.02
$54.92
47.5%
$75.72
($22.38)
57.4%
Cost of Production (Cost per Ton) Scenario - Yield Up 10%
Total Costs per acre
Higher Yield (tons per acre)
Cost per Ton
Cost change / ton
$236.68
3.30
$71.72
-9.1%
$200.26
2.68
$74.61
-9.1%
Cost of Production (Cost per Ton) Scenario - Yield Down 10%
Total Costs per acre
Lower Yield (tons per acre)
Cost per Ton
Cost change / ton
$236.68
2.70
$87.66
11.1%
$200.26
2.20
$91.19
11.1%
Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the
responsibility of the user.
Manitoba Agriculture, Food and Rural Development
Guidelines: Hay Production Costs
4
Estimated Yield of Forage - Tons per Acre 1
Years
1
2
3
4
5
6
7
8
9
10
11
Total Yield
Average Yield
Years production
Years rotation
Alfalfa
tons/acre
2.0
3.2
3.2
3.2
2.9
2.5
Alfalfa-Grass
tons/acre
1.8
(establishment year)
2.9
2.9
2.7
2.5
2.3
2.2
2.1
1.9
15.0
3.00
5
6
19.5
2.44
8
9
Forage Analysis
Crude protein DM (CP)%
Energy DM (TDN) %
As fed moisture %
Alfalfa
19.2
63.0
12.1
Alfalfa-Grass
13.1
57.6
12.6
1. Users are reminded to adjust fertilizer rates when making changes to forage yields.
Forage yields are based on FA#6 average yields with an IPI of 1.25
Manitoba Agriculture, Food and Rural Development
Guidelines: Hay Production Costs
5
Seed & Treatment
Crop
Alfalfa Hay
Alfalfa hay
Alfalfa-Grass Hay
Alfalfa-grass hay
Oat greenfeed (nurse crop)
Seeding Rate
per Acre
Price
per Unit
Cost
per Acre
10 lb
$4.25 /bu
$42.50
10 lb
1.25 bu
$3.60 /lb
$7.25 /bu
$36.00
$9.06
Fertilizer 1
Fertilizer Type
Nitrogen: (urea) 46-0-0
Nitrogen: (NH3) 82-0-0
Nitrogen: (liquid) 28-0-0
Phosphorus: 11-52-0
Potash: 0-0-60
Sulphur: 20.5-0-0-24
MES S15: 13-33-0-15
Crop
Alfalfa Hay
Alfalfa hay
Alfalfa-Grass Hay
Alfalfa-grass hay
Oat greenfeed (nurse crop)
Bulk Price
$/tonne
$536
$820
$344
$779
$507
$449
$776
Actual Nutrient
$/lb
$0.529
$0.454
$0.557
$0.568
$0.383
$0.397
$0.640
Nitrogen
Usage
100%
0%
0%
-
Sulphur
Usage
100%
0%
Amount of Actual Pounds of Elements Applied Per Acre
Nitrogen
Phosphorus
Potash
Sulphur
$/acre
lbs $/acre
lbs $/acre
lbs $/acre
lbs
Total
$/acre
0
$0.00
45
$25.55
60
$23.00
15
$5.96
$54.50
0
50
$0.00
$26.43
30
50
$17.03
$28.39
30
30
$11.50
$11.50
0
15
$0.00
$5.96
$28.53
$72.27
The fertilizer recommendation will vary depending on the soil type, climate and crop rotation. MAFRD recommends that
soil test sampling and analysis be conducted each year to produce a better baseline for fertility. It costs $0.50 to
$1.50/acre for custom sampling and analysis.
1. Users are reminded to adjust silage yields when making changes to fertilizer rates.
Chemicals
Crop
Alfalfa Hay
Alfalfa hay
Alfalfa establishment
Alfalfa-Grass Hay
Alfalfa-grass hay
Oat greenfeed (nurse crop)
Weed
Control
$/acre
Insect Forage
Control Removal
$/acre
$/acre
Total
Cost
$/acre
$0.00
$15.00
$0.00
$0.00
$10.00
$0.00
$25.00
$0.00
$15.00
$0.00
$0.00
$10.00
$0.00
$25.00
Manitoba Agriculture, Food and Rural Development
Guidelines: Hay Production Costs
6
Operating Costs
Interest Rate on Operating
Hay machinery repair
5.50%
3.50% (% of total investment)
Land Taxes ($/acre)
$7.00
Fuel Cost ($/litre)
$0.85
Bale Weight (lbs.)
1,500
Labour Cost per Hour
$20.00
Alfalfa Hay
Alfalfa Grass Hay
Establishment Production Establishment Production
Field Fuel Cost ($/acre)
$13.56
$8.59
$11.09
$5.98
Crop Insurance ($/acre)
$5.80
$11.06
$5.80
$9.17
Other Costs ($/acre)
$5.00
$5.00
$5.00
$5.00
Rental and Custom Work
Seeding ($/ace)
Application ($/acre)
Mower/Conditioner ($/acre)
Baling ($/bale)
Bale Moving ($/bale)
General ($/acre)
Total ($/acre)
$0.00
$0.00
$0.00
$0.00
$3.00
$0.00
$8.00
$0.00
$0.00
$0.00
$3.00
$0.00
$12.00
$0.00
$0.00
$0.00
$0.00
$3.00
$0.00
$7.20
$0.00
$0.00
$0.00
$3.00
$0.00
$9.76
1.5
$30.00
1.2
$24.00
1.5
$30.00
1.2
$24.00
1
Labour Hours per Acre
Hours per acre
Total ($/acre)
# Hired
Staff
2
0
0
0
1
Crop insurance: (2015 rates) Establishment Insurance for $80/ac coverage. Annual Insurance for 80% Select
Hay coverage in MASC (FA 6) with LTAY alfafa <= 4 years, yield 1.907 tons/acre and LTAY alfalfa grass <=
4 years, yield 1.529 tons/acre.
# of
Months
2
0
0
0
Acres
Hours
Farmed Per Acre
420
1.52
420
0.00
420
0.00
420
0.00
Total
1.5
Field Fuel Usage
Crop
Alfalfa Hay
Alfalfa hay
Alfalfa establishment
Alfalfa-Grass Hay
Alfalfa-grass hay
Oat greenfeed (nurse crop)
Number of Field Operations
SP
harrow
air drill
sprayer hay rake hay bine
0.75
2.42
0.42
0.26
1.48
round
baler
1.32
spin
spreader
0.42
Trucks
3/4 ton
pickup
0.5
L/acre
cultivate
1.29
tandem
disk
1.85
10.10
15.95
0
1
0
2
0
2
0
1
0
1
3
2
3
2
3
2
1
0
0.5
0.5
7.04
13.05
0
1
0
2
0
2
0
1
0
1
2
0
2
1
2
1
1
1
0.5
0.5
Manitoba Agriculture, Food and Rural Development
7
Guidelines: Hay Production Costs
Fixed Costs
Land value ($/acre)
Total Hay acres
Depreciation Rate
Investment Rate
$1,500
600
10.0%
2.50%
Hay Storage ($/Acre)
Land cost ($/acre)
Machinery Investment ($/acre)
$37.50
$280.83
Machinery Depreciation cost ($/acre)
Machinery Investment cost ($/acre)
Machinery Lease cost ($/acre)
Total ($/acre)
$1.50
$28.08
$7.02
$2.40
$37.50
Owned Equipment Inventory and Current Values
Market
Forage
Value
Usage %
$100,000
50%
$40,000
50%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
Power & Misc Equipment
MFD Tractor 100HP
2WD Tractor 60HP
Total
Seeding, Tillage, Spraying
Cultivator
Harrow 50ft
Air tank
Air drill 40ft
PT sprayer
Total
Owned Equipment TOTAL
Market
Forage
Value
Usage %
$10,000
20%
$10,000
20%
$10,000
20%
$30,000
20%
$7,500
20%
$0
0%
$0
0%
$0
0%
$67,500
$168,500
Forage
Allocation
$50,000
$20,000
$0
$0
$0
$0
$0
$0
$70,000
Forage
Allocation
$2,000
$2,000
$2,000
$6,000
$1,500
$0
$0
$0
$13,500
Harvest Equipment
Mower/Conditioner
Hay Rake
Baler
Market
Forage
Value
Usage %
$35,000
100%
$15,000
100%
$35,000
100%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
Forage
Allocation
$35,000
$15,000
$35,000
$0
$0
$0
$0
$0
$85,000
Market
Forage
Value
Usage %
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
Forage
Allocation
$0
$0
$0
$0
$0
$0
$0
$0
$0
Annual
Forage
Usage %
Lease
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
Forage
Allocation
$0
$0
$0
$0
$0
$0
$0
$0
$0
Annual
Forage
Lease
Usage %
$9,600
15%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
Forage
Allocation
$1,440
$0
$0
$0
$0
$0
$0
$0
$1,440
Total
Trucks & Trailers
enter equipment here
Total
$280.83 per acre
Leased Equipment Inventory
Annual
Forage
Lease
Usage %
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
Power & Misc Equipment
enter equipment here
Total
Seeding, Tillage, Spraying
enter equipment here
Total
Leased Equipment TOTAL
Annual
Forage
Lease
Usage %
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
$0
$1,440
Forage
Allocation
$0
$0
$0
$0
$0
$0
$0
$0
$0
Forage
Allocation
$0
$0
$0
$0
$0
$0
$0
$0
$0
Harvest Equipment
enter equipment here
Total
Trucks & Trailers
1/2 ton pickup
Total
$2.40 per acre
* Leased equipment costs are listed under Operating Costs on the Summary Page.
Manitoba Agriculture, Food and Rural Development
Guidelines: Hay Production Costs
8
Other Assumptions
Fuel Costs:
Includes fuel used for field work, and trucking in inputs.
Machinery Operating Costs:
Includes costs for maintenance, repairs, licenses and insurance.
Crop Insurance: (2015 rates)
Forage Area (FA) #6 - Establishment Insurance at $80/ac coverage and annual
Select Hay Insurance at 80% coverage.
Other Costs:
Includes overhead expenses: hydro, telephone, accounting, buildings, supplies and
insurance, etc.
Land Taxes:
The average for the province was based on land tax assessment and mill rates of a
sample of municipalities growing crops less provincial tax rebate.
Interest On Operating:
Interest charges on operating costs are calculated at 5.5% for six months.
Land Investment Cost:
Land values are based on appoximate average land values in Manitoba. Budget
assumed 2.5% return on land investment
Depreciation:
Assumed 10% on machinery, no salvage value.
Investment Cost:
Assumed 2.5% opportunity cost on machinery.
Estimated Farmgate Values:
Forage prices are based on estimated prices for fall/winter 2014/15.
Storage Cost:
Forage storage costs are estimated at $1.50 per acre.
Profitability & Breakeven Analysis:
Gross Revenue = Price per unit x Yield per acre (eg. alfalfa: $120.00/ton x 3 ton/ac = $360.00/ac)
Net Profit = Gross Revenue - Total Cost
(eg. alfalfa: $360.00 gross revenue - $236.68 total cost = $123.32 per acre)
Operating Expense Ratio = (Operating Cost / Gross Revenue) x 100
(eg. alfalfa: $138.58 operating expense / $360.00 gross revenue = 38.5%)
Breakeven Price = Cost / Target Yield (eg. alfalfa cost $236.68 / 3 ton = $78.89 per ton)
Breakeven Yield = Cost / Price per Unit (eg. alfalfa cost $236.68 / $120.00 ton = 1.97 ton)
Created and maintained by
MAFRD Farm Management
For more information, contact your local
Roy Arnott
Farm Management Specialist
January, 2016
MAFRD GO Office or:
Benjamin Hamm
Farm Management Specialist
Ray Bittner
Farm Production Extension
Manitoba Agriculture, Food and Rural Development
For more information
• Contact your local Manitoba Agriculture,
Food and Rural Development (MAFRD)
Growing Opportunities (GO) Office.
• Visit us at manitoba.ca/agriculture.
ESR-016086
January 2014