Ideas on Reverse Contracting Hay

[Jogeephus]

I was approached this week by a cattleman who has asked me to raise hay for him. Assuming we get rain, I will be able to produce all the hay I need for next year off two cuttings. He wants to buy the other two or three cuttings I could make. I'm not in the hay business and don't care to be. But, all I have to do is bale it and he will take it from the field. He has offered to pay me on a per roll basis which is ok except I really don't care to put out the extra money for fertilizer when I don't actually need it and each application will be several thousand dollars. So I was wondering, how would it sound if I get him to pay for the fertilizer and have the ground fertilized per the soil test like I always do, then do it on halves. This could yield me about 750 extra rolls with no expense in them other than fuel and time. True, I'll be giving up a little since the land is mine but I'll be gaining by the hayfields being fertilized and maintained as they should be. Any thoughts, suggestions or ideas would be appreciated. (And no I'm not interested in buying a bunch of cows to graze the hayfields. ;-) :lol: ) (might entertain letting it get rank and spending my spare time fishing though :nod: )

 

[EAT BEEF]

If he will go for it do it,not much risk for you.jmho

 

[1982vett]

Only risk to you I see is giving up half the hay before you have met your needs, but that is countered by not haveing to pay for the fertilizer.

If someone came to me with that offer I think I would jump on it.

 

[Jogeephus]

Thanks for your opinions. I want to be fair and this is a little different angle than how it is normally done here. I want it to be a win/win deal with each of us sharing the risk of rain or bad weather - or possible increase in fertilizer cost. To me, this way seems fair and will prevent me from extending myself financially. I don't know what he will say to this but I know I'm not interested in putting a bunch of money into fertilizer on a definite maybe sales scenario.

Vett, this won't be a problem as his offer extends only to my surplus cuttings. I have a bunch of surplus this year and my first two cuttings should give me more than enough to do me next year and these cuttings will all be within my fert. budget.

 

[Chris H]

I see a lot of risk on the other guys part. What if he pays for the fertilizer and then it doesn't rain, or do you irrigate? Or, what if it starts raining and you don't get it made in good shape, then he'd have put out money for fertilizer and get trash hay in return.

Risk on your part, he's supposed to pick up the bales? What if he doesn't get there in a timely manner and the bales are still sitting there when you're ready to make the next cutting?

 

[bigbull338]

heres another spin on your idea.he could pay half the fert bill.that way both of you share the same risk.an if you wanted to you could sell him your half of the hay.at the price he is paying for what he buys.

 

[Jogeephus]

Chris, you make a good point about his risk. This is why I wanted to get some opinions before I made the offer. I want to be fair but I don't want to assume all the risks because I'm not doing it for my benefit. I'm in good shape and don't want to assume his problems but I don't mind working with him to help him out. (He lost 200 acres of land this year and has several hundred registered cows.) He is ticky about his hay and he knows I am too. But I just can't see taking his problem and putting all the financial liability on my shoulders cause I don't want to be in the hay business and quite frankly he has deeper pockets than I do.

As for him leaving the hay in the field. I don't think he would do this as he has plenty of help. But if he did, I could move it but this would be the end of our little arrangement cause personally I don't really care one way or the other. This deal will benefit him more than me cause he needs the hay and I don't.

But whatever I do, I want to be fair.

Bigbull, only problem I see with this is I will be baling hay for him for free if I did this. He would need to pay me a baling fee as well. My rough calculations put my fertilizer costs and baling costs nearly equal. He will still get his hay for less than market price and I won't have to excede my fertilizer budget.

 

[MikeC]

heres another spin on your idea.he could pay half the fert bill.that way both of you share the same risk.an if you wanted to you could sell him your half of the hay.at the price he is paying for what he buys.

Why should Jo assume ANY risk? He already said he doesn't need the extra hay. :roll:

 

[Jogeephus]

Mike, in your opinion would it be more beneficial to work and fertilize your hay fields or do you see any harm in them just sitting idle for half the summer?

 

[MikeC]

Mike, in your opinion would it be more beneficial to work and fertilize your hay fields or do you see any harm in them just sitting idle for half the summer?

Things to consider when selling hay off your property.

1- Compaction damage by traveling over fields.
2- Loss of Secondary or Macro/Micro Nutrients (not replaced by conventional commercial fertilizers)
3- Stress to plant roots from pushing production of top growth.
4- Wear and tear of equipment. (Every used hour leads to the inevitable end of it's lifetime by the same proportions.)
5- Time alloted to others' hay means that other jobs will be neglected by the same amount.
6- The list goes on and on...........

That half summer that your grass sits idle is doing it a world of good.

It's your call, but I wouldn't do it for a song and dance. ;-)

 

[bigbull338]

the reason i said that is because yall dont think like i do.now heres my hardnose thoughts on it.let that guy stand all the fert cost.an jo bale an get half of the hay.an the guy buy the other half.i wont put fert out at all.an if i sell standing hay it goes for $6 a bale.

 

[Jogeephus]

Bigbull, one of my concerns has been letting the fields stay idle. I was concerned about this. Also, I'm afraid that if I just let him bale the hay himself he might be tempted to cut the fertilizer back which would deplete my nutrient reserves. I've invested a lot in the soil and don't won't to lose ground here. Your idea about splitting the cost of the fertilizer cost is fair as long as he will pay me for the baling and all. But honestly, the only way I could do this would be to have the cow account borrow money to pay its share and I really don't need to do this cause I really need to stick to a budget this year if I'm going to see black. But like you say, I could probably sell him my half but I'd still have to pull money in from outside the cattle account.

I can graze all but two of the hayfields. So I might just limit the offer to these two and let the cows graze the hayfields unfertilized but I'm afraid it will go rank on me pretty quick. But a rest might not hurt it either.

 

[MikeC]

the reason i said that is because yall dont think like i do.now heres my hardnose thoughts on it.let that guy stand all the fert cost.an jo bale an get half of the hay.an the guy buy the other half.i wont put fert out at all.an if i sell standing hay it goes for $6 a bale.

If you never put out fertilizer, I can fully understand why your standing hay goes that cheap. :roll:

Problem is.........people usually get what they pay for............

They might be paying too much. :lol: :lol:

 

[1982vett]

Jogeepus, my situation is quite similar to yours except I have enough left not to need to bale any this year. In our area, their is enough hay sitting in the fields from last year to keep hay prices below production cost. So in my situation, and I think most commercial hay producers would not do this, is to use the hay fields for grazing. I believe I should still do some fertilizing but I do not have to apply at the rates to produce a hay crop. Fewer trips across the hay patch should save on equipment wear and tear, fuel savings, as MikeC stated. It should also take grazing pressure of the usual pastures.

Only thing I am having trouble with is not trying to go for the maximum hay production. I did that last year and am hoping to recoup some of that effort this year. Will have to learn to redirect that focus to pastures.

 

[bigbull338]

well lets see.you boys get teed off when you know im 1 uping yall on hay.an making as much or more hay than yall.an your pouring the fert to the fields todo it.the bales we put up last year weigh 1500lbs.twice what most of yalls hay weighs.so when you figure that i put up 520 4 by 5 bales.an that was off 120acs.for a pre ac ave of a tad under 4.5 bales to ac.if the rain haded killed us.that would been close to 700 4 by 5 bales.an add to that sold 80 bales for $31 a bale.an 80 bales standing for $6 a bale.wich means our hay cost was almost 0.

 

[grannysoo]

I just can't see taking his problem and putting all the financial liability on my shoulders cause I don't want to be in the hay business and quite frankly he has deeper pockets than I do.

To me, this is the deciding factor. Nothing wrong with helping friends and neighbors, but the well being of my family and my checkbook must come first.

If he wants the hay, let him pay for the fertilize and then split the hay in a way that is agreeable to both of you. I don't see that you should be taking any financial risk in this situation because it is not of much benefit to you.

Nothing wrong with letting the fields take a rest....

 

[bitterweed]

Are you sure about the Wt. of A 4x5 bale (1500 lb.)? A lot of hay in a small space.

 

[bigbull338]

Are you sure about the Wt. of A 4x5 bale (1500 lb.)? A lot of hay in a small space.

i didnt say a 4 by was 1600lb.i said a 4 by 5 was 750lbsan a 5 by 6 was 1500 to 1600lbssome 2 4 by 5s to 1 5 by 6 bale.an if your running the big jd baler your looking at 2.5 4 by 5s to 1 5 by 6 bale

 

[Jogeephus]

Only thing I am having trouble with is not trying to go for the maximum hay production. I did that last year and am hoping to recoup some of that effort this year. Will have to learn to redirect that focus to pastures.

I know exactly what you mean. Kinda gets in your blood don't it. :nod:

Thanks to everyone for their opinions. Your comments were helpful and will give me the different views I was looking for to make a decision on.