When you own a farm, you are at the mercy of outside factors that you cannot completely control. We can do our best to work with the weather, promote animal health, navigate commodity prices and manage labor shortages, but at the end of the day, we can only manage so much. While we cannot dictate the price of milk or grain sold, we can set the price for forages sold off the farm.
Forages generally stay local and are not a traded on the commodity market, making it easier to set the price. While you probably won’t sell much hay if you set the price above a going local rate, not all hay is created equal.
Quality hay will sell itself, especially for the horse and dairy markets. Lower quality hay will still sell, but marketing it as goat or utility hay may be more attractive than simply calling it “mulch hay.”
You may be tempted to discount the price of your hay to get it out of the barn, but you should remember the cost to make that ton of forage to recoup your costs. At a minimum, you should be calculating the cost of nutrients you are removing from the hay.
Each forage species will remove a different amount of nutrients, but generally, each ton of dry hay will remove approximately 45 pounds of nitrogen, 15 pounds of phosphorous and 45 pounds of potash. Those are nutrients that will need to be replaced with fertilizer or manure. At current fertilizer prices, each ton of hay contains approximately $60 worth of nitrogen, phosphorous and potassium. Add in the value of other nutrients, and that cost will increase.
We also need to consider the cost of other consumables, net wrap, twine, etc. All need to be included. The last time I checked, they were not giving away net wrap, and the cost worked out to be a about $1.25 for each 4-by-5 round bale.
Each small square bale will contain about $0.10 worth of twine. You also need to pay yourself for the time to cut, rake, bale and of course for handling and any storage.
According to the 2024 Ohio Custom Rate Survey, the average cost to cut, ted and rake hay is approximately $37/acre, and an additional $12 for each round bale left in the field. You can find the survey at farmoffice.osu.edu for more details.
If we take all those numbers into consideration and assume that we make four 1,000-pound bales per acre, each bale is worth approximately $51 in nutrients, consumables and time. This price still does not include the actual hay itself, any herbicide applications, storage and transportation costs, and other expenses.
I encourage everyone to calculate how much it costs your farm to make a ton of forage and use it as a baseline to set your price.
Selling hay can be a blessing and a curse. Selling extra hay can be a significant source of income for your farm that offers cash flow during the summer. If you have facilities to store hay, the cash flow may continue well into the winter. Selling hay to customers also negatively impact your work schedule, and when someone doesn’t show up (on time or at all), it can be frustrating.
If possible, storing hay until winter can offer increased prices as demand goes up when supply is dwindling. Some hay producers have implemented a stepped pricing strategy increasing the price of hay to recover storage costs. For example, hay out of the field will be the lowest cost with price increases in September and then again in December for remaining hay.
Whatever strategy you choose to implement, it has to work for you but consider the cost of production, storage and hassle when setting the price.
