STILLWATER, Okla. – Livestock owners can save money and time with an awareness of the economics behind harvesting, buying and selling hay.
Eric DeVuyst, Oklahoma State University Extension agricultural economist, said producers should compare the costs of baling hay or paying someone else to harvest it.
SUMMER HAY PRODUCTION BREAKDOWN OPPORTUNITY COST
DeVuyst recommends factoring in the custom rates of the area: baling a 5-footby- 6-foot hay round at 1,400 pounds would cost around $28 for custom cutting, raking and baling. Producers should also consider a land charge. Even if the land is owned, not rented, DeVuyst said landowners are actually paying rent to themselves internally for about $20 to $30 per bale.
HAY NUTRIENTS: PRAIRIE HAY
One of the most overlooked numbers in hay production is the cost of nutrients in a bale. For native, prairie hay, nitrogen is not a factor, but there is about 2 ½ pounds of phosphorous in a bale of hay.
2 ½ pounds phosphorous = $5 per bale (per 1,400-pound bale of hay) Total cost of a bale of hay including land, custom rates and nutrient uptake is about $51 per bale for a 1,400-pound bale with a 1.1 tons per-acre yield.
“Hay prices in the summer are $35 to $55 per bale, depending on size and quality, so if you’re selling hay for $50 per bale, you’re pretty close to breaking even on economic costs,” DeVuyst said. “You’re turning an accounting profit because the phosphorous and land charge are opportunity costs –essential expenses paid to yourself. If you’re receiving less than $50 per bale, you’d better check if that’s sustainable over time.”
HAY NUTRIENTS: BERMUDA
Bermuda hay requires about $7 per bale in phosphorous application each year. Some nitrogen is lost to volatile conditions and tissue growth that is not harvestable in the lower parts of the stems, but the typical nitrogen application rate is 200 pounds per acre per year, the equivalent to about $13 of nitrogen per bale.
DeVuyst said herbicide is needed if producers plan to market the hay as “weed free.” The total cost to a landowner for producing Bermuda hay is about $58 to $60 per bale for a 1,400-pound bale.
“Looking at the hay markets and what’s advertised, Bermuda is selling for about $60 per bale, so if you can put that bale up and sell it for $60 a round, you’re going to turn an accounting profit and break even on economic costs.”
FALL HAY PRODUCTION
In the fall months, some producers are still wrapping up hay in eastern and central Oklahoma, but producers need to determine if it’s cost-effective to continue running the baler.
“In terms of crude protein in the low 3% range and the variable costs of a bale of hay at about break even on a per ton basis, it costs about $55 per bale to harvest hay right now,” DeVuyst said.
He explained at this point in the season, land costs are not a factor; it’s a “sunk cost,” meaning whether hay is baled or not, land charges are incurred. The numbers show that baling hay late in the season is at best a break-even scenario. Hay baled in September does not have the same crude protein percentage as forage harvested earlier in the summer. Producers would incur the expected variable costs of baling hay but would also have to purchase range cubes to feed their animals adequate protein.
To buy late-harvested, protein- deficient hay plus range cubes needed to supplement crude protein, DeVuyst said it would cost the equivalent of $68 per bale, considering the variable cost of baling hay and purchasing supplemental protein. Based on nutrient content, that’s $20 to $30 in additional expense per bale for hay baled now versus forage harvested in July.
“Test hay before you buy it. Put a probe in it, and make sure you’re getting what you think you’re buying,” he said. “Hay harvested late is probably costing more money than it’s worth. Protein levels will fall quicker into the mid-2% range, and you’ll be way behind whether buying or baling it.”
DeVuyst explains the economics of baling hay and the relative value of hay in two segments of SUNUP, the agricultural production television show of OSU Extension.
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