Fair profit per hay bale

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cowboy43

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With the cost of fertilizer, seeds, seed bed preparation and custom baling cost or even with an established grass with fertilizer. If a person kept accurate cost to produce each bale. What would you consider a fair profit per bale over cost when it is sold to another person. Hope this question makes sense .
 

TexasBred

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cowboy43":1d7l6iw6 said:
With the cost of fertilizer, seeds, seed bed preparation and custom baling cost or even with an established grass with fertilizer. If a person kept accurate cost to produce each bale. What would you consider a fair profit per bale over cost when it is sold to another person. Hope this question makes sense .
With this year's drought it seemed all rules went out the window but in the past the hay market changed very little from year to year so everyone pretty much just stayed in one range of prices. It's nobody's business how much cost you have in the hay but no reason to discount it either unless you just want to.
 

whitewing

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cowboy43":210imnmc said:
With the cost of fertilizer, seeds, seed bed preparation and custom baling cost or even with an established grass with fertilizer. If a person kept accurate cost to produce each bale. What would you consider a fair profit per bale over cost when it is sold to another person. Hope this question makes sense .

I doubt this will actually answer your question, but I'll give it a shot anyway. Just last night I was running some numbers on my costs to bale for others.....in other words, they provide the pasture, I cut and bale, and I leave with 50% of the bales. The great majority of those bales I'll likely sell as that's where I'll really make my money, as opposed to just using them for cattle feed.

The easy stuff to figure included the costs of baler twine and the salaries for those who help me. The tougher stuff included the costs of equipment usage, vehicles, etc.

In a nutshell, and especially with some of the unknowns, I figured if I can't make at least a 66% profit before taxes, I might be better off not accepting the work.
 
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cowboy43

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I know this year will be uncertain as to what hay will sell for, with the drought and Texas hay supply liquated ,but as of now we have had good rainfall to get good underground moisture , and I know the rain may stop tommorrow, I sold my cow herd out and with good pairs going from 1500 to 2000 dollars, and today I saw 555 lb hfs. selling for over $1000 and bred hfs. selling from 1500 to 1800 dollars, I am searching for something else this year. I figure I can put in 70 to 80 arces of hay for what 6 or 7 cows will cost and they will not make profit this year. That is why I am asking what the miminum fair price above cost would be. I also know it it a gamble if it stops raining , but I believe it will be a good market for hay this year.
 

JSCATTLE

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Only problem with being in the hay business is when you have hay everyone has hay . I stopped selling hay about 4 years ago . There were guys selling hay for cheaper than what it cost me for fertilizer . I'm sure they never ran the numbers . Ill let it sit in the barn before I give it away . I make more money baling for others .
 

Suzie Q

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That is the thing with hay. It doesn't matter what your costs are:- Fertilizer, machinery, irrigation. You can't sell it for more than anyone else at the time of selling. Great if you can keep it in a shed and wait for the price to go up, but sheds can only hold so much and they also cost money to build and you have no money coming in while you are waiting. But still have to pay for the diesel, electricity, oil, seed, etc.
 

user1

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The market is what dictates the price you get. Unless you can offer something the other hay sellers are selling, such as service or quality.
 

OklaBrangusBreeder

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Interesting question....

* My Dad and I bought a new 60 acre bermuda grass hay farm about this time last year. We bought a slightly used JD 467 baler, a new JD 830 MoCo, and a new Rhino SWR-10 wheel rake. All together, we spent $50,000 on hay specific equiment. If you spread that over a 5000 bale life, you get $10 per bale in direct equipment costs (assuming you don't include the two tractors which we already had).

* Now keep in mind that last season was the hottest and dryest in Oklahoma in the last 50 years. So, the production that we got off the field was about a third of what I think it would do in a "normal" year. But the "variable cost" for us (which included fertilizer, diesel, and net wrap) was right at $30 per bale.

* So (not counting our time) I would say we had $40 per bale in the hay that we made last year. Given the dry year, we ended up keeping all of it ourselves and not selling any. But, I would say a 25% profit on top of the $40 cost would be the minimum that I would have considered selling the hay for.

Granted, last year was not a "typical" year (at least I hope not), but $50 per bale would have been my minimum had I had any of it for sale.
 

Angus Cowman

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OklaBrangusBreeder":30ld1sqo said:
Interesting question....

* My Dad and I bought a new 60 acre bermuda grass hay farm about this time last year. We bought a slightly used JD 467 baler, a new JD 830 MoCo, and a new Rhino SWR-10 wheel rake. All together, we spent $50,000 on hay specific equiment. If you spread that over a 5000 bale life, you get $10 per bale in direct equipment costs (assuming you don't include the two tractors which we already had).

* Now keep in mind that last season was the hottest and dryest in Oklahoma in the last 50 years. So, the production that we got off the field was about a third of what I think it would do in a "normal" year. But the "variable cost" for us (which included fertilizer, diesel, and net wrap) was right at $30 per bale.

* So (not counting our time) I would say we had $40 per bale in the hay that we made last year. Given the dry year, we ended up keeping all of it ourselves and not selling any. But, I would say a 25% profit on top of the $40 cost would be the minimum that I would have considered selling the hay for.

Granted, last year was not a "typical" year (at least I hope not), but $50 per bale would have been my minimum had I had any of it for sale.
Your baling equipment should be able to last for 15000 bales with little to no major repairs if you maintain it properly
I try to trade every 4-5 yr or about 12-15000 bales because that is where I get the most out of my trade in
 

inbredredneck

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I would price your hay exactly the same way most of the posters on this board price their beef, all expenses plus 100%. If it costs you $45 per bale charge $90.
 

greatgerts

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inbredredneck":1dp9cij6 said:
I would price your hay exactly the same way most of the posters on this board price their beef, all expenses plus 100%. If it costs you $45 per bale charge $90.

So, if I have $7500 invested in a bull (been shown all over) and if I wanted to sell him, most people on this board would sell him for $15,000?
 

gimpyrancher

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I'd love to see a comparison between the potential profit of harvesting (let's say) 1,000 bales of hay or buying cattle to consume that 1,000 bales of unharvested pasture and their sale after consumption. What would be the difference in the profit? :compute:
 

whitewing

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gimpyrancher":3srvynmo said:
I'd love to see a comparison between the potential profit of harvesting (let's say) 1,000 bales of hay or buying cattle to consume that 1,000 bales of unharvested pasture and their sale after consumption. What would be the difference in the profit? :compute:

Interesting query gimp. I started harvesting hay (my own) in July of last year, and started harvesting hay for other folks last month. I've raised cattle for a few years now.

All I can say at this point about raising cattle is......... I enjoy raising cattle. :oops: :D
 

inbredredneck

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greatgerts":2b7chvga said:
inbredredneck":2b7chvga said:
I would price your hay exactly the same way most of the posters on this board price their beef, all expenses plus 100%. If it costs you $45 per bale charge $90.

So, if I have $7500 invested in a bull (been shown all over) and if I wanted to sell him, most people on this board would sell him for $15,000?
That seems to be the consensus of the board as a fair business model.
 

gimpyrancher

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whitewing":1hxmfamp said:
Interesting query gimp. I started harvesting hay (my own) in July of last year, and started harvesting hay for other folks last month. I've raised cattle for a few years now.

All I can say at this point about raising cattle is......... I enjoy raising cattle. :oops: :D

Great. You're the one that might be able to help.

If you presently own your equipment, that is one less upfront expense.

My question has to do with start-up. Owning the land debt free. I think I could grow the crop cheaper than harvesting it. So I either increase my upfront equipment needs, let someone else cut and bail at 50% or let cows eat it on the field and should see a profit either way. A black bottom line appears "easier and cheaper" letting the cows harvest the crops then selling them off to realize what income I can gain.

I personally want the animals but self supporting profit has got to be my first priority, at least in the shorter term.

I appreciate the help and your experience. :help:
 

ALACOWMAN

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gimpyrancher":xnmn36ms said:
whitewing":xnmn36ms said:
Interesting query gimp. I started harvesting hay (my own) in July of last year, and started harvesting hay for other folks last month. I've raised cattle for a few years now.

All I can say at this point about raising cattle is......... I enjoy raising cattle. :oops: :D

Great. You're the one that might be able to help.

If you presently own your equipment, that is one less upfront expense.
My question has to do with start-up. Owning the land debt free. I think I could grow the crop cheaper than harvesting it. So I either increase my upfront equipment needs, let someone else cut and bail at 50% or let cows eat it on the field and should see a profit either way. A black bottom line appears "easier and cheaper" letting the cows harvest the crops then selling them off to realize what income I can gain.

I personally want the animals but self supporting profit has got to be my first priority, at least in the shorter term.

I appreciate the help and your experience. :help:
with the cost and upkeep of equipment i never look at it as one less expense,, payed for or not
 

whitewing

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Gimp, there are so many variables in any given situation that I guess it all comes down to what feels right and works best for you.

I like to work. I like driving my tractor and really like baling hay. With the exception of my tractor, all my baling-related equipment has been purchased since June of last year.

In my area there's very little competition from others baling hay. That certainly helps a lot as I've got much more freedom on price-setting and developing the market gradually over time. I've also got my bermuda well-established (not always an easy task here since the weather can be really tricky) and there's lots of demand for bales of bermuda from the horse folks.

The cattle I raise because I enjoy having them but there can be no doubt that the turnover is much quicker in the hay business for me. Just this past weekend I spent time to the west of here making contacts with folks who own lots of cattle but are hurting right now for pasture. With a bit of luck, I'll soon be selling bales of material to them that are not suitable for horses but work fine for cattle.

Anyway, take your time and don't be afraid to make a change in strategy if conditions warrant. Good luck!
 

OklaBrangusBreeder

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gimpyrancher":1vscxrbv said:
I'd love to see a comparison between the potential profit of harvesting (let's say) 1,000 bales of hay or buying cattle to consume that 1,000 bales of unharvested pasture and their sale after consumption. What would be the difference in the profit? :compute:

That's actually a pretty easy formula...

Around here, you can winter a mother cow on five round bales. If I raise five round bales of hay and sold them for say $40 each, I pocket $200 (ignoring the cost of producing the hay).

If I keep those five bales myself, I can sell a $750 calf off that mother cow in the fall.

So no doubt, if you have the land to run the cows, you make more by keeping the hay than selling the hay.
 

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