How to Price Standing Hay
Whether you’re buying or selling, pricing a single cutting or a full year’s crop, there are resources available to determine a fair value for standing hay.
Robert Tigner, Agricultural Extension Educator for the University of Nebraska, advised using current USDA hay reports to arrive at a starting value for harvested hay. “Then we need to subtract harvest costs from these reported hay prices,” he stated.
If you don’t have a good handle on harvest costs, this Kansas State University spreadsheet can help in calculating machinery costs. Custom harvest rates, like these in Nebraska and these in Iowa, are published in many states as well.
This initial calculation of [hay price-harvest rates] determines the cost per ton of hay. But of course you don’t know how many ton you’re buying or selling until it is harvested. “Obviously the best way is to weigh the total harvest and determine the value accordingly,” said Tigner. “Sometimes that isn’t possible, so a sample of the hay harvested can be weighed, and then the total calculated.”
Another method of evaluation is to count the stems per square foot, although trials evaluating this method have produced mixed levels of accuracy.
“A third way is to scissor-cut several random, 1-square-foot sections to get an average yield, and then multiply by 43,560 to get yield per acre,” Tigner suggested. “But don’t forget to correct for moisture.”
Tigner said he also is often asked, “How much should I pay for a specific cutting?” Again, actual harvest weights are the most accurate. Another option is to use a percentage of a cash rental rate to pay for a single cutting.
In a 3-cut system, the first-cutting yield is about 40% of annual yield, while the second and third cuttings yield about 30% each. In a 4-cut system, that breakdown is about 35-25-20-20. So if a buyer wants just the first cutting of a 3-cut alfalfa field, then multiplying the cash rental rate by .4 is a way to calculate the price.
The University of Wisconsin also has developed a “Standing Hay” app to help with calculating the true value of a standing crop.
“All of these methods are a starting point in negotiation,” Tigner advised. “Ultimately, a fair price is the one upon which both the buyer and seller agree.”
Thu, 05/07/2020 – 10:58
Source: Dairy Herd