Baling Prices

eye4iron

Member
On our family farm we have a person that bales the pastures for us. We do not have cattle and he does. The arrangement for years has been this. He bales the pastures. Approx 100 bales. Half of the bales are his for doing the baling. The other half he buys from us at a fair price. 6 X 5 bales @ $35.00. Is this a normal arrangement?
The reason I'm asking is I talked to a friend that just bought a farm in mid to southern Mo. and he had his pastures baled for him this summer. Easy ground to bale. No ruff ground or hills. He told me the person that baled his ground baled 220 bales and bought them from him for $5.00 each. Large round, he did not know the size.
So is this a normal arrangement? I'm curious. Is he getting taken or are we getting a good deal on our farm? We all know the common agreements on row crop. Halves, 1/3 - 2/3's, cash rent. Is there a common rule or arrangement for hay ground? Thanks for anyones views or input.
 
In my area of Missouri the standard price is the guy who does the work gets 2/3 the bales and the owner of the land 1/3. I have done it that way many many times as have people I know who bale hay do
 
That sounds like about 45 dollars a ton which is a REALLY LOW PRICE. Beer can hay sells for that here.
 
Lets use my friends bale numbers (220) and compare the different arrangements.
1. His arrangement; 220 bales @ $5.00 each is $1100.00 for him.
2. Our farms arrangement; 220 bales - farmer takes half and buys the other half for $35.00 per bale. $3850.00 for us. ( both the owner and the farmer split the fertilizer bill)
3. 2/3 farmer - 1/3 landowner. Farmer gets approx 147 bales. Buys the other 73 bales for $35.00. $2550.00 to the landowner.
If #1 farmer sells the bales for $35.00 to someone else his profit before time and baling expenses is $6600.00.
If #2 farmer sells the bales for $35.00 to someone else his profit before time and baling expenses is $3850.00
If #3 farmer sells the bales for $35.00 to someone else his profit before time and baling expenses is $5150.00
Landowner #2 is getting a better deal compared to the other landowners.
Farmer #1 is getting the best deal compared to the other farmers.
Any ideas or thoughts?
 
I am familiar with the 50-50 or 1/3-2/3 deal.

Hay prices have fluctuated a lot the past 5 years, your $35 is a little low at this time, but probably ok for a long term relationship between the 2 of you. Tad below market price tho?

The $5 deal I don't quite understand, not a familiar arrangement.

In the end it is whatever makes both sides happy..... Can be other considerations involved, other favors between folk to balance it out, some areas making hay qualifies land for tax breaks and the money for hay is not important, as you mention fertility expenses, or lack of keeping fertility up, costs the fella with the equipment more in the short term. Mines the soil for the fella owning the land in the long term, but takes away value from the fella with the equipment more so.

Paul

Paul
 
Another way I look at it, land owner 1 doesn't much care, wants a little beer money for some land he won't put any money into. The hay will be less and less each year, and lesser quality as no fertility put back in? It may be poorer land, rock or sand or other issues making it just not as productive, so the fella with the equipment has to work harder to get any value from his work.

The other 2 split costs are putting money back into the crop, good hay, long term relationship, the value of the crop will continue to improve.

Both situations are probably priced right, I would say the $5 setup tends to decrease in value over time and will be less bales over time, and priced right for that lack of investment.

The split costs deals show a concern for good yield, good hay by both sides, and has more value to both hay quality and volume should increase.

One landowner is viewing it as getting rid of waste hay, one is viewing it as a valuable crop, and the prices reflect that.

Both are probably priced right based on that?

Paul
 
All the replies are excellent points. Thank you for the point of views. I'm happy with our families arrangement. I'll show this thread to my friend and let him ponder on it for awhile. I think the only advice I'll give to him is to make sure it is fertilized properly so the land doesn't get used up.
 
We have some old meadow ground that we no longer use as we don't milk cows anymore. But we have the same arrangement as the $5 a bale.

If he doesn't bale it, it is bushhogged.

If he bales it its a win win, he gets cheap grass hay, we don't waste diesel fuel and we make a small amount of money on it.
 
Neither one of you is getting a good deal. 6x5 bales should weigh around 1400 pounds (perhaps more). There will be 1.428 bales per ton. AT $35 per bale, that's $50.00 per ton. That's a good deal for the farmer. PLUS.........you and he are splitting the fertilizer bill. You HAVE to subtract that on a per bale basis in order to know what you are netting. We also need to know what your friends bales weigh. Are they 6x5 or 4x4 or somewhere in between? Still, at $5 per bale, it sounds cheap. But, do the math and don't leave out the expenses. If your friend has zero expenses and zero labor then his net isn't that much lower than what you receive, especially if the bales are 4x4's Do the math.
 
(quoted from post at 08:46:48 07/30/13) Neither one of you is getting a good deal. 6x5 bales should weigh around 1400 pounds (perhaps more). There will be 1.428 bales per ton. AT $35 per bale, that's $50.00 per ton. That's a good deal for the farmer. PLUS.........you and he are splitting the fertilizer bill. You HAVE to subtract that on a per bale basis in order to know what you are netting. We also need to know what your friends bales weigh. Are they 6x5 or 4x4 or somewhere in between? Still, at $5 per bale, it sounds cheap. But, do the math and don't leave out the expenses. If your friend has zero expenses and zero labor then his net isn't that much lower than what you receive, especially if the bales are 4x4's Do the math.

I broke the scenarios down to apples to apples for an example. Let's do the math. If we receive $3850.00 for our half of the bales and subtract $600.00 for our half of the fertilizer our net is $3250.00. ( approx. $29.50 per bale) Still much more than his $1100.00. ($5.00 per bale.) I'll ask him if he knows the bale size on his place. If his bales were only 800 lbs. That would be 2 1/2 bales per ton. At $50.00 per ton that would be $20.00 per bale. That $20.00 per bale figure is still low compared to ours but much higher than he is receiving now. But if it is a win win situation for him and he's happy, good for him.
What is the average going rate this year for fescue hay per ton in Mid. MO.?
 
By the way. What is the average cost to have someone close by come and custom bale your hay and the owner keeps it. (6X5) Is it charged per bale? Let's keep with the end result approx. 220 bales.
 
My son actually does that. He has a neighbor come over that cuts, rakes and bales his hay in 5x6 bales (fescue) and he is charged $15.00 per bale and my son keeps all the hay. I don't have a big round baler (only small square) otherwise I'm sure I'd get to do that for free also.
 
"Around here" most all beef cow hay is sold by the bale. Usual prices vary from 35-$40 per bale. "Most" big rounds weigh in the 1200 pound range. So the math says we're in the $65-$70 per ton range. Quite frankly, very little hay is sold in this area, most all is fed by the producer. Last year quite a lot was purchased in the $40 per bale range due to the drought. I've never figured out why folks are determined to sell by the bale....other than they know their bales don't begin to weigh what they think.
 
(quoted from post at 14:26:39 07/30/13)I've never figured out why folks are determined to sell by the bale....

Because not everybody has a scale handy to weigh the bales so by the bale is just easier.

For instance the nearest scale to me is 20 miles one way, is only open Mon-Fri 9-4. I would gladly sell hay by the ton but 90% of my hay deals are done outside that time frame, so I am forced to sell by the bale.
 

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