Hay crop ..... business math question ....

Crazy Horse · Jul 28, 2020

Looking for some opinions for what you would consider a fair deal from a small hay field operation. Say that you had about 20 acres of good hay on your own property. You make an agreement with a local cattle farmer to take all the hay ..... here's how it works ....

1)You cut the hay crop
2)Cattle farmer rakes it and bales it into large round bales.
3)Cattle farmer moves it off your property for his own use.

Assuming there are different ways of doing it, what sort of deal would you consider fair? Obviously, the end result would be some money in your pocket based on some kind of agreement.

Thanks for the replies .....

Bruce from Can. · Jul 28, 2020

Sell the hay by the pound. 4 cents a pound for a 800 lb bale, equals $32.00 each. Make the price per pound at whatever the market will handle. Selling by the pound is fair for everyone involved once you have agreed on the price. Doesn’t mater big round , big squares or small squares. Just take a sample load of average bales to a near by scale to establish the average bale weight.

ztrmowers · Jul 28, 2020

i used to do that when i did not have timeto do hay anymore do to shop increasing business. did for several years 40 acre patches the buyer didi it all and i still got 45.00 per large round bale. that was sames i would get if i did all the work and was selling them so ti worked great for me. same income but never touched the fields

Ronnie Budd · Jul 28, 2020

I have about 25 acres that a neighbor puts up for hay. He does it all, mow, rake, bale, transport. He gets 2/3 and I get 1/3. He buys my 1/3 at current market price. I agree, the most fair way is to value it by the pound, or ton.

ss55 · Jul 28, 2020

I can see some problems if you cut the hay when the buyer is not ready or does not like the weather, and it gets rained on, can the buyer then refuse to buy the hay or demand a discount? I would let the buyer control when to cut the hay, or better yet, let him cut it himself.

If you have a local hay market or sale barn, you could check what your local hay prices are that week.

If you need tractor seat time, offer your time and tractor for free or for the cost of your fuel. I know that is a very poor business model, but not if your tractor seat time is entertainment rather than work.

paul · Jul 28, 2020

I would not do the hay cutting.

Let the buyer do all the work, this let’s him control the hay crop and it’s his issue for hay quality. If you cut it and it rains, it’s your fault. If you cut it late, poor quality is your fault.

Who deals with fertility, good hay needs fertilizer, with you involved is it your crop or his crop, who pays to fertilize it?

I wouldn’t do it that way.

Rent the land by the acre, and let him take care of it. For a hay crop you want a 3-5 year lease and there would be a bonus payment for an established good fertile hay crop as it takes a year to establish that, he needs to buy into it with the bonus payment.

If this is a waste 20 acres of grass hasn’t been fertilized or cared for much in a decade then it might be best he gets it for free to keep the weeds down and hopefully he can fertilize, interseeding, or otherwise build it back up for you.

Good hay is worth a lot but costs a lot to maintain. Crappy old hay is fun to play with but often not worth the effort to a real Production cattle guy.

Paul

paul · Jul 28, 2020

Where things get all twisted up is when hay is in short supply and prices skyrocket, is when you won’t get many bales per acre.

Then when hay is everywhere and growing lush and thick no one wants any, price is very low but you have many bales.

So you as the land owner will remember the high prices, and the cattle guy will be remembering the low prices, and both of you will start feeling things are wrong When there is lots of bales or very few bales..... be aware of the nature of hay prices changing rapidly.

Renting the land to him by the acre avoids this. It gives you a solid income you can count on year after year, instead of the peaks and valleys. It gives him the freedom to properly manage the crop and improve it.

Otherwise, good hay well fertilized by you can be share cropped as mentioned, 1/3 to 1/2 to you. Then you sell your portion to him at going prices.

Again if this is some abandoned land and you don’t know the soil ph or when it was last seeded or fertilized, then giving it to him for free or up to 1/4 of the bales would be appropriate.

Paul

MJMJ · Jul 28, 2020

Yep, as pointed out there are too many details left unknown. As a person buying/baling the hay, I would have no interest in the landowner cutting it. That sounds like someone trying to milk a few more dollars out of crappy hay.

kyhayman · Jul 28, 2020

Not uncommon around here. You cut and tedder once or twice, they rake and bale for half. Buy your half at market price.

paul · Jul 28, 2020

Obviously if you are friends and neighbors and you share helping each other then you do the mowing and save him a trip driving over, and so forth. Work things out, many do so.

But you asked about business, and so I’m giving the more professional, true business view of it.

Certainly nothing wrong with you pitching in and helping out and all that, swapping favors, depending on the situation. I don’t want to sound too hard and rigid!

Paul

Traditional Farmer · Jul 28, 2020

I cut,rake,bale,etc on the landowners property.I get all the hay the landowner gets the county real estate tax break for having a farmer take hay off the property.I'm offered more hay land than I want to cut.

Absent Minded Farmer · Jul 28, 2020

No, no, no, no! The cattle farmer cuts, rakes & bales. That way the anchor rope is around his ankle not yours. If something happens that's wx related, he's the one going over the side, not you.

I've played the wx game too many times with my own hay & making it for others to think anything different.

Mike

jal-SD · Jul 28, 2020

A beef delivered to your favorite locker, you pay processing & give farmer a part you can both agree on, depending on current market value on the hoof.

john in la · Jul 28, 2020

I agree with TF.

Farmer does all the work and gets all the hay.

Land owner gets the tax break for farm land and gets his field cut for free.

Only thing that makes it complicated that needs a contract is if the farmer wants to fertilizer the field so he gets better hay. Farmer then gets a agreement he will be allowed to cut the field for xx years or the landowner compensates the farmer for the fertilizer he put down.

David G · Jul 28, 2020

I do 50% share crops here, I think 33% market bale price is fair for you to get if you share on inputs. Productive ground has value, unproductive ground takes same effort and yields little for thee effort.

DownNDirty · Jul 28, 2020

That is the exact way it was done where I grew up and my dad did custom hay. 1/3 to the landowner and 2/3 to the hay producer. Landowner could sell it to whoever they
wanted to.
We had this agreement with about 10 different landowners. Only had one issue when one greedy lady changed her mind and decided she could sell it all and she did. 25
round bales at $40 each. We found the purchaser and explained the situation. They were no help, so reminded her of the contract and she said oh well, she sold it.
Sheriff paid her a visit and she got really ------. We got the money and lost that hay lease. The story spread in town and then nobody would cut her hay. What goes
around comes around.

Wheat47 · Jul 28, 2020

Neighbor and I do 1/3-2/3. We sell it for horse hay. I do the work
with my antique equip. Gives us both something to think about.

SETX · Jul 28, 2020

Here it’s a 70/30 or 60/40 split.

The baler gets the higher cut depending on who cuts it.

If baler cuts and bales, he gets 70%. If you cut and he bales then he gets 60%.

GreenAcre · Jul 29, 2020

My advice is stay out of it. Either do the whole thing yourself and use or sell it, or let someone else do the whole thing and keep it, you don't have to mow. No complications and scheduling issues.

BarnyardEngineering · Jul 29, 2020

This "give it away" thinking is a major contributor to farm commodities having no monetary value. Rich, absentee landowners give their hay away for the tax breaks, and it isn't long before farmers are expected to do the same. Ironically, mostly by other farmers.

We sold most of the first cutting to a local farmer for cattle feed. He cut. He chopped. He hauled away.

He PAID for the hay that he took, by the ton, even though he did all the work.

The hay itself has a value. The work involved in harvesting it also has a value.

Traditional Farmer · Jul 29, 2020

When the alternate for the landowner is to pay someone $75 hr to brush hog and pay 80% more real estate taxes then really they are getting paid pretty good letting the hay go for free.
Some farmers in my area get all the hay plus charge the landowner to do it.

Hay crop ..... business math question ....

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