Know your needs when pricing hay

For The Journal

Published Thursday, September 11, 2008

As a buyer or seller of hay, what works for you? In the end, the buyer and seller are working towards a price that gives both a reasonable chance to make a living — a return for their share in labor, management, capital and risk.

You'll find a number of good references in the "Forage Quarterly Newsletter," on the University of Minnesota Extension forages website at www.extension.umn.edu/forages. Read the newsletter for details on the references in this article.

For the landowner, many articles suggest an investment return on the value of the land as one factor.

This is valid. But keep in mind there are situations where the price someone can afford to pay for harvesting hay from the land will not cover a targeted return on the land value because of other factors affecting land values.

Here's a summary of other ideas:

Compare markets. USDA provides market information for a variety of feeds, including hay. Use a web search for "USDA Hay Market."

It may be good to ask, "Are the dynamics in a different market area relevant for where you're buying or selling hay?"

You can track Sauk Centre hay auction prices at the Extension forage website from September to May.

Hay prices based on other commodities. There are formulas for calculating hay and other feed prices based on the price of other sources for fiber, protein, and energy — commonly soybean meal for protein and corn for energy.

What if distiller products or another feed material is a cheaper source of energy or protein? Would you use that as a base for comparisons?

Availability, feasibility and convenience in using alternative feeds might be factors in what gets used for a comparative value for individual farms.

The MnSCU Farm Business Management programs provide excellent tools for learning how to get at your numbers. Go to http://www.mgt.org. FINBIN is a Web database of farm management analysis information in Minnesota at http://www.finbin.umn.edu.

Consider what's important to you in the market place. Know your needs and your numbers related to income, expenses and goals. Your voice should be part of "what the market says."

Note: If you do not have access to the websites given in this column, call Extension's Farm Information Line at (800) 232-9077, or you may contact me at (320) 968-5077 or (800) 964-4929.

Dan Martens is a crops educator with University of Minnesota Extension.

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Dan Martens is a crops educator with University of Minnesota Extension.