Lets take a look at our fictional character "John DuGood"
John has a full time job, has a little money saved up, and wants to get into the hay business.
He sets his sights on buying a 50 Acre Tract, that is magically already planted and ready for Bermuda hay operation. 500k
He decides he is going to go all American and get John Deere hay equipment, maybe 200k worth of: 2 Cab tractors with loaders, cutters, a rake, tedder, baler, gooseneck, spray rig Maybe 250k....
John also decides to have a barn built to hold about 600 rolls, fully enclosed and graded with dry floor. say 100k
to make this easy, for our calculation to follow, lets suppose that ALL of the ABOVE is free, that's right, absolutely free for his use. (though he will have to pay property taxes and property and equipment insurance in this example)
Its January 1st.
So he adds up what he thinks he'll spend during the year:
$10,000 Chemicals (maybe 2 pre emergent applications, a glyphosate application, and figures in a fall army worm treatment.)
$10,000 Unexpected/Repair/Maintenance/Accident, Etc.
$7,500 Labor (if exist), suppose 250 tractor hours (not including "hook up and grease gun dance" prep) the whole year.
$3,000 Property Tax
$5,000 Prop and Equipment Insurance
$5,000 in diesel
Current totals here: $85,500
Now lets take the average annual yield per acre of Bermuda when well maintained and fertilized: 6 tons/ acre
Now lets calculate an expected yeild in 1000 lbs rolls. 50 acres X 12,000lbs. = 600,000 lbs = 600 rolls per year
Now we take our annual cost (assuming free equipment, land, and barn) of 85,500 and divided that by 600 rolls
and we get a cost (a break even cost) of $142.50 per roll
If John sells all 600 rolls for 120 each, he will make (-lose): 142.5- 120 = 22.5 loss per roll x 600 rolls = -13,500 per year
Selling all 600 rolls @ 120.00 each, nets John a loss of -13,500 per year. With free equipment, barn, and Land....