Pricing standing hay can be a challenge due to multiple cuttings and subsequent harvests throughout the year, along with a lack of a formal commodity market. Add on top of that low hay inventories and rain (Rain is drowning 2019 forage hopes) has caused escalating hay prices. This can make establishing a fair price for standing alfalfa a challenge.

Settling on a price
To establish a fair price, give credit to both the crop owner and the hay buyer.

“Assume 4 to 5 tons of dry matter per acre (dm/acre) for the entire year of dairy quality hay worth $200 to $250 per ton baled (11 to 14 cents per pound of dry matter),” explained Greg Blonde in a working example on pricing standing hay. “Half the value is credited to the owner for input costs (land, taxes, seed, chemical, and fertilizer) and half the value is credited to the buyer for harvesting, field loss, weather, and price risk,” suggested the dairy and forage specialist, who is Waupaca County Extension Agent for the University of Wisconsin-Madison.

“To estimate total annual dry matter yield potential, determine average stems per square foot at several locations in the field, then calculate using this formula: (0.10 x stems/feet squared) + 0.38. Wait until stems are at least 4 to 6 inches and count only the stems tall enough to be cut by the mower,” he said, noting that, “actual yield could be less due to environmental conditions and harvest management practices.”

Suggested price ranges
Using yield distribution estimates from ongoing University of Wisconsin-Extension field research for both a three-cut (40 percent, 30 percent, and 30-percent) and four-cut (35 percent, 25 percent, 20 percent, and 20 percent) harvest systems, the following price range (rounded to the nearest $5) may offer a starting point for buyers and sellers to negotiate the sale of good- to premium-quality standing alfalfa for 2019:

“In this example, the sale or purchase price for all cuttings the entire year would range from $440 to $700 per acre,” said Blonde. “Again, the same price is not always the right price for every situation. Ultimately, a fair price is whatever a willing seller and an able buyer can agree on.”

There’s an app for that
To help farmers and landowners better evaluate the options, Blonde developed a mobile app for pricing standing hay. It offers quick access to current baled hay markets with a projected sale and purchase price for each cutting using individualized yield estimates and harvest cost data.

The app is free to download from the Google Play Store and is also now available for iPhones and iPads through the Apple Store by searching for “Hay Pricing.” The app also includes links to the current Wisconsin Custom Rate Guide and the NCR Alfalfa Management Guide.

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(c) Hoard's Dairyman Intel 2019
June 3, 2019
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