The cost of hay
The cost of producing hay will be weighing heavy on the minds of most producers heavier this coming season than probably ever before. Especially if you live in Pennsylvania & New York States. With the cost of diesel hovering around $4.50 gal. for the last 3-4 months, one can only brace for the undoubtedly higher prices as we near the Memorial Day (1st cutting) & 4th of July (2nd cutting) holiday’s. It happens every year folks, and I doubt it will be any different this coming year. Diesel will most likely be the largest input cost for all of us, so lets try and figure out now what we’ll be spending to put up quality hay in the coming months so we’re not surprised in the fall when we start selling whatever surplus hay we will hopefully have.
Lets start at the "ground level". According to the 2008 Penn State Agronomy Guide, each ton of grass hay removes 50 pounds of nitrogen, 15 pounds of phosphate (P2O5) and 50 pounds of potash (K2O). Using average bulk fertilizer prices, urea (46-0-0) $750 per ton; DAP (18-46-0) was quoted at $1,150 per ton and potash (0-0-60) $700 per ton. Using these antiquated prices to replace the nitrogen, phosphate and potash removed in a ton of hay resulted in a cost of $84 per ton! Besides the fertilizer cost, there should be something figured in for spreading the fertilizer. Using the 2014 Pennsylvania Farm Custom Rates, the average cost for spreading dry bulk fertilizer will be $10.60 - $10.70 per acre.
However, hay can be produced without fertilizing. We’ve been doing it for over 15 years!
So, should fertilizer cost be part of determining the cost of hay? That all depends on how you maintain you fields and pastures. If you have a good balance of grasses with legumes like red clover and alfalfa, the legumes will feed the grasses and replace the nitrogen that the grasses will normally deplete from the soil if grown alone. The same goes for your pastures. If you don’t rotate your animals and allow your forages ample rest/re-growth periods your "replenishers" such as the Clovers and Alfalfa will die out and your pastures will suffer greatly in a matter of 2-3 years. If maintained properly, you might only have to "Over-seed" legumes into your hay fields and pastures every 6-8 years, and with Alfalfa costing $300.00 a bag that only covers 3-4 acres, that cost will mount quickly.
Every year I hear producers say they will fertilize in the future, or they are waiting for fertilizer to get cheaper because it is too expensive. Seriously!? Do you really think any input costs like fertilizer are going to decrease? That would mean the chemical companies would be willing to make less money. Funny huh?
I’m just happy we don’t need to fertilize any of our 150 hay acres. A little extra time spent planning now will save you thousands of un-necessary costs in the very near future. Don’t be in such a hurry to do what the neighbors are doing or what a Chemical company tells you that you "need" to do.
The next part of calculating the cost of hay production is machinery or equipment expense. I used average cost figures from the 2014 Pennsylvania Farm Custom Rates. (These rates are based on survey responses of Pennsylvania farmers). Your own equipment costs will vary based on your local diesel fuel costs, and if you know what they are, plug those in. For those who don’t know, this is a good place to start. Mowing/conditioning is valued at $18.10 per acre, raking at $11.00 per acre and large round bales are $8.40 per bale. Wrapping is an additional $6.90 per bale in addition to the $8.40. If you still feed small square bales, it’ll cost $2.10 per bale. Than you have to figure in your delivery costs if your customers can’t haul your hay themselves. And the BIGGEST cost will be your time. What is your time worth? Yes, there are A LOT of variables to coming up with a fair price that will attract customers and at the same time help you make a living or at least help supplement your main income.
You can get exact prices for your area and additional costs for other custom work by visiting farmprogress.com and going to the USDA 2014 Machinery Custom Rates.