Hay prices not going down?

[3MR]

My point is that hay has a fair market value whether you grow it or not. If you can't be profitable with bought hay then you aren't going to be profitable with homegrown hay. The latter way is making money off hay and saying the cows earned it. This same logic is why thousands of people lose money on their cows and think that they made money. Poor cost accountability and poor business skills.

I dissagree, sorry; If you grow it yourself you dont have to pay yourself the same fee the hired guy is paying himself, therefore you have less input cost and cheaper hay, thus saving you money.

Just a different way of lookign at it.

 

[Beef11]

I dissagree, sorry; If you grow it yourself you dont have to pay yourself the same fee the hired guy is paying himself, therefore you have less input cost and cheaper hay, thus saving you money.

Just a different way of lookign at it.

It is called opportunity cost, If you figure correctly it tells you where your money is made and or lost. If done you inncorrectly you have a mess and you really don't know if and where you make money. Many a cattle operation would be better off to sell the cows, sell hay and rent pasture. They don't know this because they bought a pencil that lies.

 

[Caustic Burno]

I dissagree, sorry; If you grow it yourself you dont have to pay yourself the same fee the hired guy is paying himself, therefore you have less input cost and cheaper hay, thus saving you money.

Just a different way of lookign at it.

It is called opportunity cost, If you figure correctly it tells you where your money is made and or lost. If done you inncorrectly you have a mess and you really don't know if and where you make money. Many a cattle operation would be better off to sell the cows, sell hay and rent pasture. They don't know this because they bought a pencil that lies.

Truer words have never been spoken it takes 20 bucks a roll to roll my own. That 30,000 dollars in hay equipmentand that 40,000 dollar tractor are free also.

 

[backhoeboogie]

In our area, hay prices doubled in one year. However, diesel, labor, fertilizer, water in all probably didn't increase production costs overall 100%.


I think again, a lot reflects supply and demand and a touch of "greed" with hay suppliers on jumping on the bandwagon while "life is good."

$35 a bale for irrigation. That is a fact jack.

$13 a bale to have it baled. That is a fact too.

Atleast $4 a bale for fertilizer. I can't actually give factual numbers here because they are not calculated. It could be more but I won't bother with actual. We are already at $52 a bale because of the drought.

Property taxes. Fence repairs around the hay field.

Then there is the lease money for land I lease for hay.

I sold hay at $80. I have people offering $150 but didn't take it. I didn't gouge. I even sold some at $50 and there are posters on this board who can testify to that since they bought it at that price. And you are calling me greedy? Come on.

You are out of hay and asking for high quality fire ant free hay. At $80 I probably made $10 a bale.

If it rains this year and fertilizer doesn't go up again. I will make more profit at $50 a bale than what I made at $80 a bale last year.

I had person after person thank me for irrigating. They were simply glad they could get good hay.

RAB would you sell your cows at a loss and at 50% of the market value? If not, you are a very greedy person yourself.

I am not going to take a huge loss on hay. I simply won't irrigate during the drought if I could not sell it and pay for the irrigation.

My cows, the few I have and the few I have bought back, will have plenty of hay you can rest assured.

I will help out other farmers too. If one even implies that I am greedy selling the hay to him at $80 when there are offers at $150 from people I don't know, well I just won't help him out any more. Hopefully I won't need irrigation and I can let it go for $50. That will pay for the lease and fertilizer and baling plus give me a few extra nickels to hold back hay for my own cows.

 

[MikeC]

Boogie. Most folks don't really know what it cost to produce good hay. :shock:

From another thread written by the Head Agronomist at Auburn:
"Typically, fertilizer comprises half or more of the expense associated with pasture or hay production."

And this was written a few years ago.

If the shoe was on the other foot, hopefully we would all sell our hay just as you are doing.

 

[Gate Opener]

backhoe, one of the people that we bought hay from made(profit) as much as appx. $27 per 4x5 (loose) roll. We had to pay to get someone to load it and then we hauled it about 90 miles to home.

 

[backhoeboogie]

Thanks to both of you for your replies. Yes it does cost several nickels to produce horse quality coastal.

This year I will have some surplus hay for sale. How much is going to depend on the weather. Much of it is already spoken for. But there will be some to market. I am not going to be holding it and housing it "just in case" someone may need it.

The '05 drought here was the absolute worst ever recorded locally and that is why I attained irrigation capability. But I also cut way back on the number of head I was running. This fall I bought some back. Not many.

If it is a wet year, I will likely have much additional hay and I will sell it for reasonable prices. I am not going to take a loss on it.

 

[Running Arrow Bill]

Backhoe...

Your cost analysis is probably the "most accurate" when it comes to "true" costs.

No one should do anything at a loss (if humanly possible).

A lot of the ROI (Return on Investment) for cattle depends on where and what one sells them for. The biggest crunch for profit seeking is with the producer that sells cattle "by the pound". Seedstock producers have to watch their nickels also (obviously).

We have found a major supplier in Canada for semi-loads of hay delivered...at same price per pound as our local supplier(s). All quality hay. Go figure...

People buy hay where they can find it at a price that is relative.

As hay prices increase, we are just obliged to increase the Quality of our Longhorn stock so we can get better prices for them (by the each, not by the pound).

 

[3MR]

I dissagree, sorry; If you grow it yourself you dont have to pay yourself the same fee the hired guy is paying himself, therefore you have less input cost and cheaper hay, thus saving you money.

Just a different way of lookign at it.

It is called opportunity cost, If you figure correctly it tells you where your money is made and or lost. If done you inncorrectly you have a mess and you really don't know if and where you make money. Many a cattle operation would be better off to sell the cows, sell hay and rent pasture. They don't know this because they bought a pencil that lies.

Im not sure what you are actually saying. But if a business considered the cost of making a poduct as the same as the cost of purchasing a product then no business would ever make any money as their cost of operation would always be equal to their income.

Also, you would have a real hard time explaining the difference in prices from one producer to the next. Walmart would be loosing money because they had to subtract the difference between what they sell a product for and what the competion sels a product for from their gross.

Cost of production is the cost of production, nothing more.

 

[Beef11]

Im not sure what you are actually saying. But if a business considered the cost of making a poduct as the same as the cost of purchasing a product then no business would ever make any money as their cost of operation would always be equal to their income.

Also, you would have a real hard time explaining the difference in prices from one producer to the next. Walmart would be loosing money because they had to subtract the difference between what they sell a product for and what the competion sels a product for from their gross.

Cost of production is the cost of production, nothing more.

It has very little to do with cost of production it has everything to do with value.

Let me put it in a scenario

you have 100 cows that have cost of about 250 a year not including hay. You buy hay at 120 a ton and buy 2 tons per cow taking your costs up to 490 per cow. OR 49k for 100 cows

Neighbor has same situation but grows his own hay and can do it for 30 a ton he figures it would only cost him 310 a year per cow. Or 31K for 100 cows

Seems all well and good unless you have anybody who knows anything about business look at your books.

Hay production is a seperate venture and has a seperate profit center. It is accountable for making a profit. Farmer B didn't figure that he could rent his hay for 120 a ton and made 24k off of the hay he fed to his cows it cost him that when he fed it the beasts. He could have rented his pasture out at 20 a month for 8 months and had another 16k he would have saved all of the medical expenses, labor, fuel, interest on capital and depreciation on machinery.

If you grow hay, do it to make money and be able to tell if you do. Hire a good accountant and take some business classes and keep a realistic view on expenses.


Good Luck

 

[MoGal]

I don't think hay prices will go down for the fact that mother nature dictates whether you have a good crop or not (lets face it, very few people have the setup for irrigation). I don't think the drought situation is gonna change very much (drought may not be in Texas and Oklahoma but could be somewhere else).

Although hay seems plentiful in this area, no one got the same yield as they did the year before.

Fertilizer is going up.

Hay crops are being turned into corn crops (more profitable).

I read where a cotton farm in Mississippi is planting 3500 acres in corn this year and I'm sure there are plenty others who are/will be switching over to corn.

We're planting a small patch of alfalfa/orchard grass hay (15 acres) but the family has the equipment already (square baler instead of round baler so I will have to see about either having it custom baled or using someone else's baler). Next year we will buy our own round baler.

I figure we will need 120 round bales (900-1000 lb bales) to start out for next winter as we fed 44 round bales from Thanksgiving to 12/31 and even though it only cost $28.00 per bale that's too much expense and we'll have better quality hay(growing our own) than just feeding fescue hay.


But like any crop, mother nature has to cooperate to get it planted and harvested.

 

[mnmtranching]

Went tp a beef producers meeting the other night. Believe me there are a lot of folks drueling about that 4$ corn. Lots of hay ground will be plowed.

 

[3MR]

Im not sure what you are actually saying. But if a business considered the cost of making a poduct as the same as the cost of purchasing a product then no business would ever make any money as their cost of operation would always be equal to their income.

Also, you would have a real hard time explaining the difference in prices from one producer to the next. Walmart would be loosing money because they had to subtract the difference between what they sell a product for and what the competion sels a product for from their gross.

Cost of production is the cost of production, nothing more.

It has very little to do with cost of production it has everything to do with value.

Let me put it in a scenario

you have 100 cows that have cost of about 250 a year not including hay. You buy hay at 120 a ton and buy 2 tons per cow taking your costs up to 490 per cow. OR 49k for 100 cows

Neighbor has same situation but grows his own hay and can do it for 30 a ton he figures it would only cost him 310 a year per cow. Or 31K for 100 cows

Seems all well and good unless you have anybody who knows anything about business look at your books.

Hay production is a seperate venture and has a seperate profit center. It is accountable for making a profit. Farmer B didn't figure that he could rent his hay for 120 a ton and made 24k off of the hay he fed to his cows it cost him that when he fed it the beasts. He could have rented his pasture out at 20 a month for 8 months and had another 16k he would have saved all of the medical expenses, labor, fuel, interest on capital and depreciation on machinery.

If you grow hay, do it to make money and be able to tell if you do. Hire a good accountant and take some business classes and keep a realistic view on expenses.


Good Luck

Sorry, I still dissagree. I dont say you are wrong, but I dissagree in that it isnt a lie to do it different. Its perfectly acceptable and many successful businesses do it this way. I have a degree in business administration, so I am not completely ignorant to how it works.

Example: Say you can buy hay for 150 a ton. The producer of the hay pockets 50 bucks. That hay feeds your cow which you sell for 500 bucks. You are left with 350.

You raise your own hay at 100 ton pocketing the 50 bucks. You sell your cow for 500, leaving you with 400 bucks. The value of the hay was still the same, but you wind up with more money in your pocket at the end of the year.

Your logic is that if you dont make all the money you can then you are suffering a loss. I find that faulible logic. If that were the case then I am suffering a loss everyday I dont turn my place into a subdivision. After all that would be the most profitable use of the land.

If your return is more than your investment then you have not suffered a loss, even if you could have made more money doing something different.

 

[Beef11]

Example: Say you can buy hay for 150 a ton. The producer of the hay pockets 50 bucks. That hay feeds your cow which you sell for 500 bucks. You are left with 350.

You raise your own hay at 100 ton pocketing the 50 bucks. You sell your cow for 500, leaving you with 400 bucks. The value of the hay was still the same, but you wind up with more money in your pocket at the end of the year.

More money in your pocket at the end of the year true. You didn't make that extra money in the cattle business, you made it in the hay business. You did not cut cost of production, or increase value on one calf from another. Simply you made money farming and gave the credit to the cattle. My thinking is cattle have to earn their keep and if you give them credit for things you do how do you know if they are really pulling their weight.

 

[3MR]

50 bucks is 50 bucks.

OK, maybe I missunderstood the intent of your original post

Theoretically I agree with you. Give credit where credit is due. This doesnt change the fact though, that in some situations it makes economical sense to produce your own product versus buying it. If you made 50 dollars raising hay versus raising cows you still have 50 dollars at the end of the day. I was under the impression you were advocating not raising the hay at all, because it didnt make econimical sense.

Im guessing you dont subscribe to the "grass farmer" line of thinking either.

 

[kb5iod]

accounting profit vs. economic profit

 

[iowahawkeyes]

Gas is comming back down due to the up comming election.

Is that in reference to some previously locked threads or am I missing something?

 

[Beef11]

Theoretically I agree with you. Give credit where credit is due. This doesnt change the fact though, that in some situations it makes economical sense to produce your own product versus buying it. If you made 50 dollars raising hay versus raising cows you still have 50 dollars at the end of the day. I was under the impression you were advocating not raising the hay at all, because it didnt make econimical sense.

Im guessing you dont subscribe to the "grass farmer" line of thinking either.

There are advantages to raising your own hay, shipping is a big one. Proper accounting lets people see the truth and fix any problems they have in their management. I have seen many good hay operations drug down by a poor cattle operation. I've also seen alot of good cattle operations drug down by poor unprofitable haying enterprises.

As for the grass farmer mentality i understand the logic behind it and it is fairly sound. I consider myself more of a grass transforming operation that has a department in charge of resource procurement and sustainability.

 

[3MR]

If you looked at my pastures now you would think I was a transformed grass storage area. Nothing like a little white snow to make steaming piles of recycled grass stand out. :lol:

 

[preston39]

Recntly on a trip up thru central Illinois and Kansas I never saw so many ..corn land for rent.... signs in big fields that appear to have been laying dormant for some time based on the height and fallen over weeds that were present.

Is there a glut of land comng out of the CRP/other land bank soon?