What is in this article?:
- Can you afford to bale hay in 2013?
- Can be profitable addition
• Profitable hay producers should identify markets and consistently produce a quality product that meets the needs of their customers, know the total cost of production, and seek to price their hay to generate a profit over all costs.
During the winter months, many producers finalize their projected crops acreages for the coming year.
Numerous farms in Virginia produce hay to sell as a cash crop and/or feed to livestock during the winter months and times of drought.
Some farmers give little consideration to these questions about their hay enterprise, how much does it cost to produce a ton of hay or does baling hay generate a profit or loss?
Virginia Tech crop budgets show that it costs $155 to produce a ton of mixed hay.
Using late winter 2013 fertilizer prices, the budget shows there is $72 worth of fertilizer in a ton of mixed hay. Since every bale of hay that leaves a field is exporting nutrients from that field, the nutrients must be replaced to maintain fertility. Otherwise, nutrient levels will be depleted.
Frequently, producers make hay because they own the equipment.
The question that needs to be asked is, can the hay enterprise generate sufficient returns to cover both the variable (e.g. fuel, labor, repairs, twine) and fixed costs (e.g. depreciation, insurance, interest, taxes) of owning hay equipment?
In the long-term all costs, fixed and variable, must be covered to have sufficient funds or borrowing capacity to replace equipment and machinery that wears out or becomes obsolete.
Dairy farmers and horse owners demand higher quality hay and routinely pay higher prices for hay that meets their quality standards. To consistently sell into this premium market hay must be bright green, leafy, soft and free of dust, mold and weeds.
Quality must be the primary focus to serve this market.
Based on historical prices in the Shenandoah Valley, hay producers have consistently received $200-$225 per ton for premium mixed grass/alfalfa and grass hays.