Quantcast

Jump to content




Sponsors

Today's birthdays

No members are celebrating a birthday today

Recent Topics


Photo
- - - - -

Row Crop Vs Hay Profitability


  • Please log in to reply
9 replies to this topic

#1 rjmoses

rjmoses

    Hay Master

  • Members
  • 2,292 posts
  • LocationNear St Louis

Posted 24 February 2012 - 04:31 PM

I was just on the phone with my insurance agent going over corn/beans crop insurance. Put all the data into a spread sheet, then figured out the reverse equivalent for hay sales per ton.

In short, the average yield in my county is 42 bu/ac for beans, 142 bu/acre for corn. Spring lock in price for beans is $12.47, corn is $5.70.

My insurance will pay a guaranteed minimum income based on lock in price and county average yield. So I figured the reverse (ignoring input costs for the moment) to figure what hay should cost/ton to be income-equivalent to beans and corn. Here's the spread chart, based on a 70%, 80%, and 100% of price and yield.

------------County----Spring-----Per Acre-----------Income Per 25 Acres
-----------Average----Price-------income--------70%--------80%---------100%
Beans------42--------$12.47-------$524---------$9,165----$10,475----$13,094
Corn ------142--------$5.70--------$809--------$14,165----$16,188----$20,235
------------------Tons/
------------------Acre
Hay To-----------2.5---------------------------------$146-------$167--------$209
Beans------------3-----------------------------------$122-------$139--------$174
Equivalent-------3.5---------------------------------$104-------$119--------$149
Tons/Ac----------4------------------------------------$91-------$104--------$130

Hay To-----------2.5---------------------------------$226-------$259--------$323
Corn--------------3-----------------------------------$188-------$215--------$269
Equivalent-------3.5---------------------------------$161--------$185--------$231
Tons/Ac----------4-----------------------------------$141--------$161--------$202


Using this chart, if I achieve 70% of the county average yield for beans, I am guaranteed an income of $9,165 per 25 acres. At 100%, I have an income of $13.094. For corn, I am guaranteed and income of $14,165 for 25 acres at 70% and $20235 at 100%.

For my hay yield at a given tons/acre (figured at 2.5 to 4.0 tons/acre), I calculated the equivalent price per ton for beans and corn.

To match the 100% bean yield, my hay at 2.5 tons/acre must sell for $209/ton (plus input cost differentials obviously.); $324/ton for corn equivalent

Food for thought.

Ralph

Edited by rjmoses, 24 February 2012 - 06:39 PM.

  • downtownjr and vhaby like this

#2 mlappin

mlappin

    Hay Master and Moderator

  • Moderators
  • 6,516 posts
  • LocationNorth Liberty, Northern Indiana

Posted 25 February 2012 - 07:58 AM

Our county averages are about the same, fortunately we surpassed them a LONG time ago. Shooting for a consistent 60 bushel/acre for beans and 175 for corn. Last fall my ground averaged 51 b/a on beans and 205 b/a on corn. This year I'm going to try to track the hours involved in hay and row crops. Regardless of how you make your hay, it's still far more labor intensive than row crops. This is especially true since we've gone to no-till.

Far as crop insurance, I only have it to make the bank happy. I've never had a crop failure and if I use it strictly to guarantee income, then I failed on the marketing end of the operation.
  • downtownjr likes this

#3 haybaler101

haybaler101

    Hay Master

  • Members
  • 1,252 posts
  • LocationCarlisle, Indiana

Posted 25 February 2012 - 10:47 AM

I posted a few days ago in another thread about this, but for Alfalfa to compete with an average corn crop on my farm @ $6 corn, I need 5 ton per acre at $210/ton on the alfalfa. Amazing enough, corn and alfalfa have almost identical variable input costs on my farms, they are within $10/acre of each other. As I posted the other day, my price for lowest quality hay this year will be $175/ton (100 RFV or less) and $0.175 per RFV point above 100.
  • downtownjr likes this

#4 Toyes Hill Angus

Toyes Hill Angus

    Hay Master

  • Members
  • 611 posts

Posted 25 February 2012 - 11:50 AM

Everything mentioned above is valuable to help make the decision whether or not you should chase the mighty row crop dollar. For some, who are on low topsoil (shallow), poorly drained (no place to run drainage to), very dry or very hilly ground thses are also factors that need to be considered. It is all one big game of chance, every outcome needs to be looked at closely.


In order to get the $209/ton mentioned above here it would have to be in small squares and it would be to a horse customer. I can't imagine anyone loaclly paying 70 or 80 dollars per bale for 3X3X7 bales, but that is about the range that you are talking.

Maybe there really is too much hay in this area yet?

Edited by Toyes Hill Angus, 04 March 2012 - 10:54 PM.
forgot an "a"

  • downtownjr likes this

#5 haybaler101

haybaler101

    Hay Master

  • Members
  • 1,252 posts
  • LocationCarlisle, Indiana

Posted 25 February 2012 - 12:16 PM

Everything mentioned above is valuable to help make the decision whether or not you should chase the mighty row crop dollar. For some, who are on low topsoil (shallow), poorly drained (no place to run drainage to), very dry or very hilly ground thses are also factors that need to be considered. It is all one big game of chance, every outcome needs to be looked at closely.


In order to get the $209/ton mentioned above here it would have to be in small squares and it would be to a horse customer. I can't imagine anyone loaclly paying 70 or 80 dollars per bale for 3X3X7 bales, but that is about the range that you are talking.

Maybe there really is too much hay in this are yet?


Not going to be a problem to get that for hay this next year at all. Dairy guys are going to pay me or pay somebody from the west even more yet. I do not have enough to supply all the guys I did a few years ago, so bring the money or get your hay some where else. Also, all the dairies here also row crop some ground and can sell some cash grain. There ground will make the same with corn and beans as mine and will also grow alfalfa, this have just elected not to do it, either because of management, equipment, or time. So I will not take a loss on my acres to benefit them.

#6 hay wilson in TX

hay wilson in TX

    Hay Master

  • Members
  • 1,377 posts

Posted 25 February 2012 - 01:18 PM

That is $6 per 55 lb bale or $125 for a 1200 lb Round bale.

200 bu corn potential should have an 8 Ton yield; that may be a problem.

Hay HERE is mostly sold retail while corn is sold wholesale. That might provide a price advantage for you
  • downtownjr likes this

#7 mlappin

mlappin

    Hay Master and Moderator

  • Moderators
  • 6,516 posts
  • LocationNorth Liberty, Northern Indiana

Posted 25 February 2012 - 02:04 PM

I posted a few days ago in another thread about this, but for Alfalfa to compete with an average corn crop on my farm @ $6 corn, I need 5 ton per acre at $210/ton on the alfalfa. Amazing enough, corn and alfalfa have almost identical variable input costs on my farms, they are within $10/acre of each other. As I posted the other day, my price for lowest quality hay this year will be $175/ton (100 RFV or less) and $0.175 per RFV point above 100.


If everybody's numbers are correct, I'm not making near as much having hay on some of this ground compared to row crops. A load of really nice small squares might bring around 210/ton, a load today went for 230/ton, but it was also the nicest small squares I've seen all winter. Most all other hay regardless of shape has been around $150/ton here.

#8 swmnhay

swmnhay

    Hay Master and Moderator

  • Moderators
  • 4,129 posts
  • LocationReading,Mn

Posted 25 February 2012 - 02:18 PM

200 bu corn potential should have an 8 Ton yield;


Here I would say 200 bu corn ground = 6 ton hay ground.
  • downtownjr likes this

#9 mlappin

mlappin

    Hay Master and Moderator

  • Moderators
  • 6,516 posts
  • LocationNorth Liberty, Northern Indiana

Posted 25 February 2012 - 02:36 PM

Here I would say 200 bu corn ground = 6 ton hay ground.


That's about right here as well. All depends on the weather as well, the last several years first cutting as been delayed by a month due to rain. While first cutting that is that late may have a higher volume, the weight just ain't there.

#10 rjmoses

rjmoses

    Hay Master

  • Members
  • 2,292 posts
  • LocationNear St Louis

Posted 25 February 2012 - 06:10 PM

Here I would say 200 bu corn ground = 6 ton hay ground.


200 Bu corn at $6 = $1200. 4 ton hay (more likely hereabouts) to be equivalent = $300/ton while 6 ton = $200/ton.

Economically, it's looking to me like hay production just isn't making much sense nowadays because 1) the price per ton is not there, 2) the volatility of the hay market is much higher, 3) there are no price supports or crop insurance (at least here) available, 4) the cattle market has shrunk tremendously (here), 5) the crop lead time is too long (more about this later), 6) production costs (labor, fuel, etc.) are higher and I'm sure there are a few more things I haven't considered.

I mentioned crop lead time above as a cost we haven't been considering. Here's my thoughts: If I plant a hay field this year (2012), I will only get a partial crop next year (2013). For grass hay, I might get a 30-40% yield; for alfalfa, maybe 50%. I think this is called the "cost of lost opportunity" in economics. If I plan on 4 ton yield and only get 2 tons the first year, then I have "lost" income.

In other words, if I'm planning 4 ton yield and the market price for hay is corn/bean equivalent (what we have been discussing), then if my corn would have yielded $10,000 and I get $4,000 (40% first year yield) for my hay, I have lost the opportunity to make $6,000 by planting corn instead. So, an additional "cost" factor becomes the opportunity lost during the first crop year.

I'm thinking that there's a whole lot more to economics of this hay vs row crop discussion that needs to be looked at. But right now, I'm headed into town for a beer or 3. Maybe more if I keep thinking about hay.

Ralph
  • downtownjr and Toyes Hill Angus like this




0 user(s) are reading this topic

0 members, 0 guests, 0 anonymous users