Thoughts for Drought: Purchasing Forages

Periods of drought are challenging to any producer, but they can be especially stressful for livestock producers who must maintain minimum forage inventory levels to carry their herd over winter. Buying supplemental forages during the growing season may be an economical way to increase forage inventory before prices increase. This article is the third part in a series of preparing for and planning for managing forages in times of moisture stress. 

Considerations for Purchased Forages

Buying hay should be simple. Go to the auction or find a neighbor on Facebook, make sure it looks and smells good, agree on a price, and load it up. It should be that simple, but it isn't. Quality is essential when purchasing hay. Price is important. How do we find the right balance between both?

Negotiating and asking a hay producer to come down on price can be a difficult subject to broach. A lot of this ability depends on the supply of hay in that area and how many people are selling it. Before asking to come down on price, remember, the person producing the hay has fuel, herbicide, fertilizer, equipment, etc. so it isn't 'cheap' to make hay. During a very dry year, where everyone is short on hay, negotiating on price is going to be even more difficult. During surplus hay years, there may be more flexibility to just move inventory. Rather than negotiating price, it is often best to look for the best value.

Hay is variable by nature-species, maturity, weed content, storage, and so on. Get on Facebook or read the local paper and find a couple different places selling hay. Go visit two or three places and see what product they are selling. You may know right off the bat that you don’t want their product, or you can use these considerations to determine which one is your best value.

Let's start with the easy things. How does it look, feel, and smell? If you have made or purchased hay before, you already know what "good" hay should be.

Visual Considerations

• Color - Good hay should be green in color- this can range from bright to a little faded- but the key is green. If it is a very faded green to yellow, the hay either shows signs of age or has more stems than leaves. With more inspection of stemmy hay, you will likely find more crop seed heads. Headed crops show the maturity of the plant and indicate a lesser quality. If you see signs of black or gray, this could mean moisture issues and mold.
• Weeds - While doing a visual assessment, look for weeds and brier-type plants. The presence of weeds is important for two reasons. First, you can potentially introduce a new weed species onto your property, and two, there can be an increased rate of animal refusal. Hay with weeds can still have an 'ok' forage quality when tested, but still, be cautious when purchasing.

Smell Considerations

• If the visual inspection doesn't show an abundance of mold, give it a good sniff. If it smells good, that's a good sign. Good hay will have a fresh, almost sweet smell. If it smells musty or moldy, it probably is.
• If the hay is baled with high moisture (above 20%), it can turn brown and have a tobacco smell. Avoid this hay when possible. Although it will be very palatable hay, some protein will be tied up and unusable for the animal.

Touch Considerations

• You have probably been touching it the whole time you have been looking and smelling it, so how does it feel? It should have leaf tissue, not just stems. The stems that are present should be smaller. Rubbing a handful of hay should feel soft from leaf tissue, unlike holding the bottom of a straw broom.

Sensory considerations will get you a long way in the buying process, but as stated earlier, things are more complex than they seem. Forage testing is now a large part of purchasing forages and should also be considered.

Nutritional Value

• Crude protein, CP, and Neutral detergent fiber, NDF, are things to look at in a forage analysis. Guessing at these values can leave your livestock under-performing, or it can have you feeding too much of something to an animal that has much lower requirements.
• Know your livestock and their needs. Measuring Forage Quality, by the University of Minnesota Extension, is an excellent resource for interpreting forage analysis and determining what forage suits your livestock's needs.
• If you work with a nutritionist, they should be a good resource for determining pricing of forages based on their quality.

Determining the Cost of Hay

I've had several conversations regarding the cost of hay recently. One person, trying to determine what to charge for essentially renting hay ground, reasoned that if the renter was going to sell small square bales for $5 or more per bale, then they ought to have at least $2 per bale as their share. Another person told me that if there is a lot of grass growing that gets made into a lot of hay then hay will again be cheap ($100/ton?) as in past years. The cost of producing hay can be determined from the value of nutrients removed plus the equipment costs. Whether hay is actually worth what it costs to produce it is yet another question.

According to the Penn State Agronomy Guide, each ton of grass hay removes 50 lbs. of nitrogen, 15 lbs. of phosphate (P₂O₅) and 50 lbs. of potash (K₂O). Using average bulk fertilizer prices, Urea (46-0-0) $685/ton; DAP (18-46-0) was quoted at $810/ton and potash (0-0-60) $683/ton. Using these prices to replace the nitrogen, phosphate and potash removed in a ton of hay resulted in a cost of $75/ton. Since I was using DAP to replace the phosphate removed, this also provided about 6 lbs of nitrogen. The remaining 44 lbs was replaced using urea. Besides the fertilizer cost, there should be something figured in for spreading the fertilizer. The average cost for spreading dry bulk fertilizer is about $10.00/acre.

It is true that hay can be produced without fertilizing? I see it happen all the time. So, should fertilizer cost be part of determining the cost of hay? Yes, because each ton of hay removes those nutrients whether they are replaced or not. It is a matter of pay now or pay later. The soil can get mined to the point where it is no longer practical to produce hay. To restore soil to good productivity, one must takes a massive investment to restore soil fertility. Every year I get phone calls where people say they will fertilize in the future, or they are waiting for fertilizer to get cheaper because it is too expensive. If your soil fertility levels are good, and you are pretty sure fertilizer prices are going to decrease, then go ahead and delay fertilizing. However, you should still include some fertilizer charge into your hay cost calculation based on that future fertilization.

The next part of calculating the cost of hay production is machinery/equipment expense. I used average cost figures from surrounding states. Your own equipment costs may vary, and if you know what they are, plug those in. For those who don't know, this is a good place to start. Mowing/conditioning is valued at $20/acre, tedding at $10/acre, raking at $12/acre and large round bale baling at $12/bale. Since we talk about hay in terms of price/ton, these per acre costs will have to get converted into costs /ton. Here is where fertility will pay some dividends. As tonnage yields increase, the machinery costs of mowing, tedding and raking decrease on a per ton basis.

Let's consider an example where hay production is at 4 tons per acre per year and we are looking at first cutting of 2 tons/acre and large round bales weighing 1000 pounds. The machinery costs are $10/ton for mowing, $5/ton for tedding, $6/ton for raking and $24/ton for baling. If we need to ted once and rake once before baling, our total machinery cost is $45/ton. Adding the machinery cost to our fertilizer quote ($75.00) results in a total hay production cost of $120/ton. This does not include the cost of spreading fertilizer.

Don't forget about establishment costs of hay fields, lime, and maintenance herbicide applications. Establishment herbicide applications are estimated at $25/acre. Seed costs of $4.00 per pound and a 15 pound seeding rate results in seed costs around $60/acre, and $20/acre to plant with a no-till drill or $7.50/ton over 4 years. Two tons of lime at $50/ton applied at establishment equals $100/acre ($7.00/ton) and, $20/acre ($5/ton) for annual herbicide application. Total of these establishment costs equals $20/ton.

Fertilizer ($75/ton) + Machinery Cost ($45/ton) + Establishment ($20/ton) = $140.00/ton.

I almost forgot, what are you paying for land rent? $30, $50, or $100/acre? Do't forget to add that on to the cost of the hay.

If you pay $40/acre, you are up to $150/ton.

Then again, maybe the best situation is to find a neighbor or some other person who likes to make hay and hasn't pushed a pencil on the costs. You just might run into a good deal.

This Dairy Sense article published by Penn State Extension last year included a review of Pennsylvania hay auction all-hay prices from the previous 10 years. Note the seasonal trends in hay prices over the course of a year; most hays reach their lowest price per ton from July to September. If you have cash available to purchase forage, you may consider buying some of your supplemental forage needs in-season. Be judicious-don't purchase forage for the sake of purchasing if you don't have adequate storage space to protect that investment. You may also find neighbors who are willing to work with you on extended payment terms of 30, 60 or 120 or more days after delivery. Other conditions to consider include agreeing on Purchasing Standing Forages from a neighbor nearby your farm. The spreadsheet included raises some points for both the buyer and the seller to think about when working towards an agreement.

Don't just look at the short-term money exchange to wrap up quality considerations. Consider reducing herd numbers if you can only afford low-quality hay to feed some of your livestock. Purchasing hay can not only reduce animal gain and performance, but it can also result in long-term weed issues on your property. For a complete fact sheet with examples of hay quality, review Important Factors for Hay Quality When Buying Hay by UF Extension.