Hay Buyers Should Plan Purchases Early

June 5, 2013 03:10 AM
Hay Buyers Should Plan Purchases Early

By Dennis Stein, Michigan State University Extension

Michigan hay producers are starting the production season with zero surplus supplies so buyers will need to purchase early rather than later.

Farms in the Saginaw Valley continue to plow down old hay and pasture fields which will continue to make a limited hay supply available this year. The winter of 2013 has Michigan starting this growing season with a zero supply of 2012 hay. That puts hay buyers in the position of needing to bid much higher prices to purchase the 2013 hay crop, according to Michigan State University Extension.

With fewer acres in production and most farms trying to rebuild their own inventories, a hay buyer will need to purchase supplies early to be sure they will be able to secure what they need over the next year. In the past, many hay buyers have enjoyed the option of buying hay as they need it.

The current short crop situation will create new challenges for the buyer and possible opportunities for the seller who may be asked to store some hay for later delivery. The value of storage will need to be part of the purchase price or purchase agreement. Hay buyers may want to use resources like the hay seller/ buyers list sponsored by MSU Extension to post your farm’s hay purchase needs on this web page early to identify a local supply if possible. In this type of situation, buyers need to be ready to pay for or at least make a reasonable deposit for the 2013 hay they will take delivery of at some point in the future. This may mean that buyers will need to secure a line of credit from their lenders to help cover the farms cash flow needs of purchasing hay and forage needs.

With limited overall hay production, hay seller’s will be able to see higher first, second and third cutting prices for hay even if it is purchased straight from the field. Hay sellers can expect to be asked to sign hay purchase agreements as buyers work to insure that they are not the farm that is left without enough hay next fall if supply falls short of demand. If the buyer has limited storage, consider how to value extra storage that you may have available.

Most hay users have become more aware and active in finding and purchasing alternative feeds that can be used to replace high priced hay crops for their livestock. Tight supplies for most of the nation have put pressure on nearly every alternative forage to have a price that tracks closely to baled hay prices.

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