November 19, 2004

Not all farmers able to make hay in marketing forage, expert says

WEST LAFAYETTE, Ind. - Just because a farmer can cut hay doesn't mean he or she is cut out for the cash hay business, a Purdue University Extension forage specialist said.

Before producers jump into cash hay production or expand an existing operation, they should do their homework, said Keith Johnson. That homework includes identifying potential hay buyers and developing a production strategy, he said.

"There are a number of things that go into the successful marketing of hay crops," Johnson said. "Unfortunately, too many people don't plan ahead and think about the complexities of doing it well."

Although hay demand has been strong in recent years - especially as more city dwellers move to rural areas and buy horses - there is not an infinite market for forage, Johnson said. Farmers need to determine whether they want to focus on local, regional or national hay markets. The economics of each will vary, he said.

Farmers cannot approach cash hay production as a part-time job, Johnson said. A producer must invest the time required to harvest a quality product.

"It needs to be a priority," he said. "In the hay production and marketing side of things, we need a quality product. To have a quality product means it needs to be harvested on a very timely basis. It cannot be a secondary, do-it-on-the-weekend type of thing, because when weather is right for making hay, you've got to do it."

Hay quality differs from field to field and from legumes to grasses, Johnson said.

"The level of protein and the amount of digestible nutrients that are in the hay differentiate a high-quality hay versus a lower-quality hay," he said. "In general, legumes such as alfalfa are going to be of higher quality than grasses by themselves.

"People who cash crop hay ought to have an analysis of each of the different cuttings from a field so that they can merchandise that hay knowing what the quality is to the potential buyer. Through that they will find, many times, that the hay may be of higher quality than they expected it to be, or it could be lower."

In addition, a first-time hay producer needs to set realistic goals for both yield and price received, Johnson said.

"Everybody would like to raise that magical 10 tons of production per acre, but that doesn't happen very often and, in some careers, never," he said. "One has to be very cautious in determining a yield goal. Consider the soil resource, weather concerns and pest issues. A more realistic per-acre yield goal for budgeting purposes would be 4 tons of grass hay and 6 tons of alfalfa hay.

"A producer then should be realistic about pricing. Certainly, some of that alfalfa hay probably is going to sell for top dollar at $120 per ton, let's say. But if you get a rain-damaged crop, then all of a sudden it's worth $60 a ton. So as you work through the numbers, be realistic about your assumptions associated with what the value of the crop is that you're merchandising."

Johnson developed a "scorecard" for helping producers determine if they are suited to enter or remain in cash crop hay. Each of the eight statements carries a point value ranging from zero - "never" - to as much as 20 points - "always."

The statements include:

1. "Next to family and religion, producing and marketing hay is the most important thing that I do." - 0-20 points.

2. "I can produce hay profitably 'on paper' with reasonable assumptions about yield, quality and input costs." - 0-10 points.

3. "I have a marketing plan." - 0-20 points.

4. "I can communicate with employees, customers and potential customers." - 0-10 points.

5. "More than half of my business is repeat customers." - 0-10 points.

6. "I use forage testing as a marketing tool." - 0-10 points.

7. "I can grow the business or know when to expand or reduce hay acreage." - 0-10 points.

8. "I seek counsel from professional resources when evaluating concerns of production and marketing." - 0-10 points.

Farmers whose scorecards total 90 points or more possess the skills and experience to run successful cash hay operations. Those with 80-90 points could turn a profit marketing hay. A score of 70 or less indicates a producer might not have what it takes to survive in the business.

Indiana ranked 29th among the states in hay production in 2003. Hoosier farmers produced 2.11 million tons of hay, at an average yield of 3.25 tons per acre. Alfalfa hay made up 1.33 million tons of the total Indiana production.

Additional hay production information is available on the Purdue Forage Information Web site.

Writer: Steve Leer, (765) 494-8415, sleer@purdue.edu

Source: Keith Johnson, (765) 494-4800, johnsonk@purdue.edu

Ag Communications: (765) 494-2722; Beth Forbes, forbes@purdue.edu
Agriculture News Page

Related Web site:
Purdue University Department of Agronomy

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