Is hay production worth it? It can be expensive.
University of Missouri Extension Agribusiness Specialist Stacy Hambelton has broken down the costs involved in producing hay. Hambleton based his breakdown on 2014 data and excluded the cost of labor, land and salvage value, while assuming the presence of the tractor needed for the process and basing his per unit expenses on 50 acres at 2 tons an acre and one cutting per acre.
He estimated the cost of a new disk mower, 17-foot rake and baler at a combined $46,000, with a fixed cost per acre minus depreciation, interest, insurance, housing and personal property taxes of $111.41. The costs to operate the machinery include fuel at $5.78 per acre (assuming diesel at $3.85 per gallon), oil and lubrication at 87 cents and repairs at $3.18.
Perhaps the big expense would be replenishment of the nutrients being removed from the soil to grow the hay. Hambelton figures it would cost $101.66 per acre to replace the nitrogen, phosphorus and potassium (NPK) taken out of the soil by a cool season grass. This all brings the cost per ton of hay produced to $118.80.
It’s a little less, $93.99 per ton, if you bring in somebody else to custom mow, rake, bale and haul the hay. In his example, purchased hay costs $85 per ton.
If the producer uses his own equipment to cut a great deal more hay, the costs become competitive with bought hay; for 200 acres instead of 50, the cost of production per ton drops to $77.03. Hambelton noted among other methods to reduce the cost of cutting your own hay are buying used equipment, or sharing the purchase costs with a neighbor or relative.
“Typically, the biggest price and the biggest driver of the cost of hay is fertilizer costs, or conversely the removal of nutrients from your soil, if you don’t replace them with fertilizer,” Steve Swigert, agricultural economist and consultant with the Samuel R. Noble Foundation in Ardmore, Okla., told Ozarks Farm & Neighbor. “If you want to maintain your soil health and the level of soil nutrient, our guys here would be recommending you take a soil test every three years if you’re harvesting hay off your own place.” If your soil is in need of either potash or phosphorus, certain sources of manure will be cheaper than commercial fertilizer.
While Bermudagrass and other improved grasses have a significant yield response to fertilizer, native grass is limited in its ability to respond.
“We typically don’t recommend fertilizer going on native grass, or putting up native grass as hay in the first place,” Swigert said. “You can see Bermudagrass yields from 4 to 6 tons per acre, to as little as 1 ton per acre in some places. That would depend on what kind of rainfall, and what kind of forage growth you’ve got at that point.” In addition to Bermudagrass, ryegrass and wheat hay are harvested for sale in the Noble Foundation’s part of central Oklahoma.
On balance, producing your own hay makes the most sense if you need it to get your cows from one season to the next while raising a calf. Most years, it’s cheaper to buy on the market than to put it up yourself. Swigert said in years with ample grass – like last year, and possibly this year – a 1,100 pound bale will cost $30 and $40. That price can double in dry years, but the quality of stored hay will deteriorate over time, too. You can influence quality “by cutting at the right stage of maturity and not letting the grass get too mature, and then getting it put up correctly without exceeding some thresholds of moisture to where it will cure in the bale appropriately.”
A few hay sellers are profitable. For instance, you can enter the niche of specialty hay producers who sell to horse owners.
They are clustered in places like Northwest Arkansas and the Dallas-Fort Worth Metroplex, and Swigert said, “There are significant markets for horse quality Bermudagrass hay, most of it small, square bales.”
Or, you can avoid the equipment cost by hiring a custom harvester.
“We’ve got custom operators that don’t have cattle and bale excess grass off places,” Swigert said. “Custom harvesters for individuals that need hay of their own but can’t justify or don’t want to have the hay equipment. Our economists try to position the producer so they need as little hay as possible, knowing that the price of hay will drive the cow costs up significantly.”
