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At last year’s prices, I think you’d have about $33,000 in fertilizer for 50 acres of bermuda. A couple of years ago when fertilizer was more affordable (relatively speaking), that number would have been about $18,000.
Figuring Cost per Roll
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Thanks for the adjusted Fertilizer Numbers!
Ill do two more calculations with free land, equipment, and barn.
First, with fertilizer at 33,000 instead of 45,000
and
Second, with no fertilizer at all (but also halving the yield to 3 tons/acre as a result)
Here we go:
Fertilzer at 33,000:
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.
$33,000 Fertilizer
$3,000 Property Tax
$5,000 Prop and Equipment Insurance
$5,000 in diesel
Current totals here: $73,500
Divided by 600 rolls = $122.50 Break even cost per roll
Now lets do without fertilizer:
No Fert at all:
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.
$0 Fertilizer
$3,000 Property Tax
$5,000 Prop and Equipment Insurance
$5,000 in diesel
Current totals here: $40,500
Divided by 300 rolls = $135 Break even cost per roll
...with free land, barn, and equipment
Ill do two more calculations with free land, equipment, and barn.
First, with fertilizer at 33,000 instead of 45,000
and
Second, with no fertilizer at all (but also halving the yield to 3 tons/acre as a result)
Here we go:
Fertilzer at 33,000:
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.
$33,000 Fertilizer
$3,000 Property Tax
$5,000 Prop and Equipment Insurance
$5,000 in diesel
Current totals here: $73,500
Divided by 600 rolls = $122.50 Break even cost per roll
Now lets do without fertilizer:
No Fert at all:
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.
$0 Fertilizer
$3,000 Property Tax
$5,000 Prop and Equipment Insurance
$5,000 in diesel
Current totals here: $40,500
Divided by 300 rolls = $135 Break even cost per roll
...with free land, barn, and equipment
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You make an excellent case of not round baling any hay for sale to the public. The scenario you propose simply can't make money. Cows and horses still need to eat though, so something has to give.
Another reason why we round bale is to get hay off of the field quickly that can't be baled in a timely manner or has been rained on. The hay has to come off to get the next cutting ready and so it is marginal hay that gets sold at cost. Otherwise, we have to burn it. Hurts the bottom line big time though. We didn't factor that into our projections originally but we do now.
I will propose a financial model that I think works based upon personal experience and what I know about other hay operations close by.
Small squares at the volume level of 20,000 to 30,000 seems to be best way to make a living off of hay production in Indiana and the upper midwest. Charging between $6-$10 per bale depending upon quality with an average of $8.00 for 30,000 bales nets you $240,000. In indiana, particularly with all of the rains over the past few years, we are getting 80 bales per acre 1st cutting, 40 bales per acre second cutting, and a late 3rd cutting can get us 30 bales/acre. That gets us to 150/small squares per acre per year. You need 200+ acres to get to 30,000 small square bales. You aren't going to buy all of the land but you will rent probably 150 acres. Generally hay land will be smaller parcels that bigger farmers don't want to deal with so rents will be lower. $100 to $150/acre can be had. 150 acres at $125/acre average is $18,750 per year. No taxes to pay on that. You will need two people though full-time for 3 months. Usually one guy is retired and doesn't need high wages or health benefits and won't tear up equipment because he is in a hurry. We don't use any of those chemicals you mention because horse people don't want that. It is pure alfalfa or mostly alfalfa. I think your above costs are high in some areas and low in others. For 200 acres, it would be more like $15,000 for labor $10,000 for diesel, $2500 for prop and equipment insurance.and $25,000 for land costs. $52,500.00. You could add another $10,000 for chemicals and $10,000 for fertilize but that's for all 200 acres. Let's say you want to pay yourself $80,000.00. $240,000 gross revenue - $72,500.00 in expenses - $80,000 for a salary leaves $87,500 for expenses associated with selling/trucking the hay all winter long, marketing costs, storage costs, land loan, equipment loans, replanting alfalfa fields every 5 years or so, newer equipment, etc. You will chew up every dollar you make for something. You can still make money at 10,000 bales but you can't make a living off of it. I didn't include round baling custom fees or custom small square baling but that can add another $10,000 in revenue in above analysis.
This does imply an ideal year and that may not keep happening. That's why you need 300 acres most likely. In Texas to get these same yields, you may need 700+ acres, I don't know. Last time I was there, I saw nothing but brown grass and Round Bales for sale at $120 a bale. The small square financial model doesn't lose you money on every bale though. There are guys doing 30,000 bales on this forum too. I am not one of them but trying to get there. I can see the path though. We have a horse track nearby and that is definitely helping our business model. I am also hoping to tap into the Amish with some excess hay that the track doesn't take. This is where the regional aspects help out. Being close to both gives us a market that some don't have or can't truck the hay without being priced out of the market. If you only focus on hay, you only work really hard for 4 months out of the year. You will spend a day a week on average selling hay at 50 to 100 bales per load the rest of the year. You can stay busy as always. Leaves you free to get a walmart greeter job in the winter.
Guys that are buying Bale Barons at $90k aren't doing it to lose money on every bale they sell. Guys that buy triple tractor mounted mowers at $150k aren't buying them to lose money. They have figured it out. However, back to your point, round baling isn't why they buy that equipment. Small square baling is only feasible with automation and it has come about with the accumulators, grapples and tying systems like the Bale Baron. You can continue to round bale but it is just one of many tools that can and should be used as a wholistic hay business. You can't use it as your only tool for the reasons you mention above. There are probably guys on here that specialize in round baling and do make money and maybe they can speak up and explain how. I don't see it and neither do you.
Another reason why we round bale is to get hay off of the field quickly that can't be baled in a timely manner or has been rained on. The hay has to come off to get the next cutting ready and so it is marginal hay that gets sold at cost. Otherwise, we have to burn it. Hurts the bottom line big time though. We didn't factor that into our projections originally but we do now.
I will propose a financial model that I think works based upon personal experience and what I know about other hay operations close by.
Small squares at the volume level of 20,000 to 30,000 seems to be best way to make a living off of hay production in Indiana and the upper midwest. Charging between $6-$10 per bale depending upon quality with an average of $8.00 for 30,000 bales nets you $240,000. In indiana, particularly with all of the rains over the past few years, we are getting 80 bales per acre 1st cutting, 40 bales per acre second cutting, and a late 3rd cutting can get us 30 bales/acre. That gets us to 150/small squares per acre per year. You need 200+ acres to get to 30,000 small square bales. You aren't going to buy all of the land but you will rent probably 150 acres. Generally hay land will be smaller parcels that bigger farmers don't want to deal with so rents will be lower. $100 to $150/acre can be had. 150 acres at $125/acre average is $18,750 per year. No taxes to pay on that. You will need two people though full-time for 3 months. Usually one guy is retired and doesn't need high wages or health benefits and won't tear up equipment because he is in a hurry. We don't use any of those chemicals you mention because horse people don't want that. It is pure alfalfa or mostly alfalfa. I think your above costs are high in some areas and low in others. For 200 acres, it would be more like $15,000 for labor $10,000 for diesel, $2500 for prop and equipment insurance.and $25,000 for land costs. $52,500.00. You could add another $10,000 for chemicals and $10,000 for fertilize but that's for all 200 acres. Let's say you want to pay yourself $80,000.00. $240,000 gross revenue - $72,500.00 in expenses - $80,000 for a salary leaves $87,500 for expenses associated with selling/trucking the hay all winter long, marketing costs, storage costs, land loan, equipment loans, replanting alfalfa fields every 5 years or so, newer equipment, etc. You will chew up every dollar you make for something. You can still make money at 10,000 bales but you can't make a living off of it. I didn't include round baling custom fees or custom small square baling but that can add another $10,000 in revenue in above analysis.
This does imply an ideal year and that may not keep happening. That's why you need 300 acres most likely. In Texas to get these same yields, you may need 700+ acres, I don't know. Last time I was there, I saw nothing but brown grass and Round Bales for sale at $120 a bale. The small square financial model doesn't lose you money on every bale though. There are guys doing 30,000 bales on this forum too. I am not one of them but trying to get there. I can see the path though. We have a horse track nearby and that is definitely helping our business model. I am also hoping to tap into the Amish with some excess hay that the track doesn't take. This is where the regional aspects help out. Being close to both gives us a market that some don't have or can't truck the hay without being priced out of the market. If you only focus on hay, you only work really hard for 4 months out of the year. You will spend a day a week on average selling hay at 50 to 100 bales per load the rest of the year. You can stay busy as always. Leaves you free to get a walmart greeter job in the winter.
Guys that are buying Bale Barons at $90k aren't doing it to lose money on every bale they sell. Guys that buy triple tractor mounted mowers at $150k aren't buying them to lose money. They have figured it out. However, back to your point, round baling isn't why they buy that equipment. Small square baling is only feasible with automation and it has come about with the accumulators, grapples and tying systems like the Bale Baron. You can continue to round bale but it is just one of many tools that can and should be used as a wholistic hay business. You can't use it as your only tool for the reasons you mention above. There are probably guys on here that specialize in round baling and do make money and maybe they can speak up and explain how. I don't see it and neither do you.
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47 Posts
Here is a scribble I made where first cut (of 3 cuts) is rolled, while 2nd and 3rd cuts (of 3 cuts) is squared.
Actually it list results for:
"all rolls" ,
"all sqaure",
and
"1/3 roll 2/3 square"
![Font Parallel Rectangle Screenshot Number]()
Actually it list results for:
"all rolls" ,
"all sqaure",
and
"1/3 roll 2/3 square"
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202 Posts
You can see how things start to turn around with the squares mixed in.
However, you can't round bale the entire first cutting and make it work. I see your comment about weedy, but our hay is not weedy. Alfalfa first cut grows way before the weeds in our area and chokes them out. Weeds show up after first cutting in June and hang around into late August though so we do get them. We try to cut every 28 days to mitigate weeds and optimize alfalfa quality. 1st cut alfalfa does have bigger stems but horses will still eat it and separate them out. If you have lots of weeds, then get some Prowl on there in early spring. First cut, represents nearly 55-60% of your overall harvest. You only round bale when you have no choice or someone pays you to just round bale their hay as a custom job. That loss of -$6,600 disappears when small square baling everything. Then you make $20,100.00, don't you? You might make $5,000 doing custom baling to offset some small squares getting wet or overdone. You will sell someround bales as bad hay just to get rid of them because you had to bale before it rained or after it rained. Quickest way to get it off of the field once dry.
One other issue that we have ignored is the use of preservative and wrapping wet hay. Preservative can be used to bale faster or if rain is coming but adds to your cost. When you want to do 30,000 bales, you will need the time saving advantages of preservative. Some female horse owners can't pick them up though since they weigh 80lbs.. Wrapping from what I can tell does protect the dry hay sitting outside or makes it a lush bale for cows eating the wet hay, but doesn't add much to the value and people aren't willing to pay much more from my experience. They will pay just about what it costs to do the wrapping.
Main thing is you have a plan now to not lose money on every bale you make. This whole exercise also makes you reevaluate what hay you make, the equipment you have, the customers you need, etc.
However, you can't round bale the entire first cutting and make it work. I see your comment about weedy, but our hay is not weedy. Alfalfa first cut grows way before the weeds in our area and chokes them out. Weeds show up after first cutting in June and hang around into late August though so we do get them. We try to cut every 28 days to mitigate weeds and optimize alfalfa quality. 1st cut alfalfa does have bigger stems but horses will still eat it and separate them out. If you have lots of weeds, then get some Prowl on there in early spring. First cut, represents nearly 55-60% of your overall harvest. You only round bale when you have no choice or someone pays you to just round bale their hay as a custom job. That loss of -$6,600 disappears when small square baling everything. Then you make $20,100.00, don't you? You might make $5,000 doing custom baling to offset some small squares getting wet or overdone. You will sell someround bales as bad hay just to get rid of them because you had to bale before it rained or after it rained. Quickest way to get it off of the field once dry.
One other issue that we have ignored is the use of preservative and wrapping wet hay. Preservative can be used to bale faster or if rain is coming but adds to your cost. When you want to do 30,000 bales, you will need the time saving advantages of preservative. Some female horse owners can't pick them up though since they weigh 80lbs.. Wrapping from what I can tell does protect the dry hay sitting outside or makes it a lush bale for cows eating the wet hay, but doesn't add much to the value and people aren't willing to pay much more from my experience. They will pay just about what it costs to do the wrapping.
Main thing is you have a plan now to not lose money on every bale you make. This whole exercise also makes you reevaluate what hay you make, the equipment you have, the customers you need, etc.
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I bought a couple of cage wagons years ago from a guy north of me about an hour who stopped square baling in the field and started round baling everything. All he ended up doing was blocking up his square baler in his shed and rebaling everything right into an elevator that dropped into a ez trail wagon. Said he could get all the fields done and put away by himself faster than when he was Square baling. And he could bale squares in the middle of winter or in the rain in his shed. All he would do is use his skid steer drop a bale on the unroller and just count bales as they went up the elevator into the wagon when somebody needed a load. He'd bring them 100 bales dump them on the ground and leave and come back and start again. Wouldn't start selling until after Christmas. Said by then barns have been feeding a while and knew what they needed for hay to last the winter and he could charge a buck or two more because most other bay guys where sold out by then. Always thought that was rather clever.
I'm pretty sure the Farmall H he was using had four flat tires and the exhaust was piped right out the side of the building. But you get the speed and efficiency of rounds out in the field but the money of squares. Always wondered if that was a viable option. I wish I would have taken a picture or two. This was back before camera phones we're really big.
I'm pretty sure the Farmall H he was using had four flat tires and the exhaust was piped right out the side of the building. But you get the speed and efficiency of rounds out in the field but the money of squares. Always wondered if that was a viable option. I wish I would have taken a picture or two. This was back before camera phones we're really big.
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I have seen this on YouTube. Commonly called "rebaling", I think. Doesn't work for me on Alfalfa. It would be high leaf loss for the second bales produced. You could get by with it on mostly grass hay. You also would have to put all of your round bales in the barn or wrap them, I would think. He had a one man operation though.
There is an outfit in Indiana that does this only they use big squares and actually slice them, then compress them. Slicing/compressing machine is the only one in the state they claim. They sell to horse tracks too, a pallet at a time.
I like to sell hay in March/April/May. Most are out of hay and will pay a premium in that time period as implied.
There is an outfit in Indiana that does this only they use big squares and actually slice them, then compress them. Slicing/compressing machine is the only one in the state they claim. They sell to horse tracks too, a pallet at a time.
I like to sell hay in March/April/May. Most are out of hay and will pay a premium in that time period as implied.
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$12,500
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Thanks for the genuine help and suggestion, you and the others are a big asset to this forum. I really appreciate the time you've taken to write this advice !
How do you arrive at that?
Thanks!
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How does anybody afford to feed cattle at the prices you guys mention ~125 a bale?
UP here in the frozen north hay sells for less than half that price.
UP here in the frozen north hay sells for less than half that price.
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I got the same problem. I can't even get half of $120 for dry hay with wrapping. I visited Texas last year and saw them selling bales that I couldn't give away. However, I believe the extreme drought in Texas plus the need to cover more acres to get the same amount of hay pushes the prices up down there. I wish I had a road worthy semi and big square baler sometimes. This is where the regional aspects of haymaking come into play. Same market dynamics don't exist everywhere. There are many other guys from Texas on forum that might be able to shed light on this. They also have a lot of cows in Texas that need hay.
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It was my best guess based on things I poked around the internet on., and something I saw.
I'm certain I'm wrong.
Humbly your student.
Thanks for the help!
I'm certain I'm wrong.
Humbly your student.
Thanks for the help!
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47 Posts
I'd looked at some invoices from the fert supplier. Not many, I just happened to find two of then one from 19 another from 20.
Each was for 17.2 tons for a 60 acre place.
With higher nitrogen numbers.
Not sure how often per year it has been applied in the past.
Haven't had that conversation yet.
Anyway I naively figured 17.2 tons x 3 cuts = something over 50+ tons
But I'm certainly way off, not sure what the other applications looked like those years.
Each was for 17.2 tons for a 60 acre place.
With higher nitrogen numbers.
Not sure how often per year it has been applied in the past.
Haven't had that conversation yet.
Anyway I naively figured 17.2 tons x 3 cuts = something over 50+ tons
But I'm certainly way off, not sure what the other applications looked like those years.
JD 2840, Ford 8000, Ford 8n, Ford 3600 (in progress); NH H6750, NH 850
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I'm also in Indiana, but raise mostly OG and fescue.
I try to do as many squares as I can, because as stated, they make me more money. But I'm honestly short on customers that want small squares every year. Even the horse people seem to be moving to rounds.
The vast majority of my sales are 5x5 round bales to locals feeding cattle. We typically get a "premium" for our rolls because almost all of our hay is extremely clean. Last year my average price for a 1100-1300 lb roll was $50-55 per bale, not including delivery. We have to justify our price to customers due to the fact that, at least in our area, almost all of the other hay on the market is full of weeds. Seems like anyone making hay around us will just roll into a pasture/field that has been untouched for years, bale it and sell it. Which is fine to a point. I guess I am doing the same on ground just acquired that I'm trying to get in shape. But I adjust the price accordingly.
While I am a young guy, just turned 26, and only been in the business for three years, it's hard for me to talk with a potential customer who just looks at the $/bale. "Why would I buy hay off of you when I can get it from Billy Bob for $40/bale?"
My take on the fertilizer cost are similar. I know I'm skimping right now, but aim to get to a place where I can throw more on and not rob the ground. But last year I only threw on $2200 on 75 acres. A lot of that was on my best square bale field. For perspective, last year I raised a total of 600 5x5 bales and 1600 small squares.
I try to do as many squares as I can, because as stated, they make me more money. But I'm honestly short on customers that want small squares every year. Even the horse people seem to be moving to rounds.
The vast majority of my sales are 5x5 round bales to locals feeding cattle. We typically get a "premium" for our rolls because almost all of our hay is extremely clean. Last year my average price for a 1100-1300 lb roll was $50-55 per bale, not including delivery. We have to justify our price to customers due to the fact that, at least in our area, almost all of the other hay on the market is full of weeds. Seems like anyone making hay around us will just roll into a pasture/field that has been untouched for years, bale it and sell it. Which is fine to a point. I guess I am doing the same on ground just acquired that I'm trying to get in shape. But I adjust the price accordingly.
While I am a young guy, just turned 26, and only been in the business for three years, it's hard for me to talk with a potential customer who just looks at the $/bale. "Why would I buy hay off of you when I can get it from Billy Bob for $40/bale?"
My take on the fertilizer cost are similar. I know I'm skimping right now, but aim to get to a place where I can throw more on and not rob the ground. But last year I only threw on $2200 on 75 acres. A lot of that was on my best square bale field. For perspective, last year I raised a total of 600 5x5 bales and 1600 small squares.
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What were your total cost of doing business last year? From property taxes, insurance cost, to interest payments, to fuel, fertilizer, tires, everything?
JD 2840, Ford 8000, Ford 8n, Ford 3600 (in progress); NH H6750, NH 850
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I'm still trying to build myself up. Last year I purchased my disc mower, JD baler, and am still working on completely rebuilding a Ford 3600. These three expenses were almost 19,000 by themselves.
Outside of those, my total cost for EVERYTHING else, including everything from grease, oil, filters, fuel to repairs and fertilizer was around 18,500.
I did not have any farm insurance last year, but just added a policy a couple months ago.
I also have to correct my earlier post. Between myself and my father-in-law, we both share equipment. We baled 600 rounds total. My count was only 260.
Outside of those, my total cost for EVERYTHING else, including everything from grease, oil, filters, fuel to repairs and fertilizer was around 18,500.
I did not have any farm insurance last year, but just added a policy a couple months ago.
I also have to correct my earlier post. Between myself and my father-in-law, we both share equipment. We baled 600 rounds total. My count was only 260.
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Thanks! We need good, honest, integrity-based guys like you to make proper amounts of income for your hard work.
In a hypothetical calculation in which equipment (and land) were free for you, which they are not (your paying for them) ((and I applaud your efforts heartily!))
your cost per roll is about 71 dollars
$18,500 cost to make the 260 rolls, divided by the 260 rolls = $71.15 each
Hypothetically: if you sell all 260 rolls for $75 dollars each, you made almost exactly $1,000.00 last year (in a hypothetical world- where equipment doesn't wear out and wouldn't eat into that amount)
How much did you sell your rolls for?
Edit: This calcualtion is incorrect if the squared hay mentioned was your's, and not your father-in-laws, let me know about the square ownership distribution, and ill re-calculate it.
Thanks for playing along!
In a hypothetical calculation in which equipment (and land) were free for you, which they are not (your paying for them) ((and I applaud your efforts heartily!))
your cost per roll is about 71 dollars
$18,500 cost to make the 260 rolls, divided by the 260 rolls = $71.15 each
Hypothetically: if you sell all 260 rolls for $75 dollars each, you made almost exactly $1,000.00 last year (in a hypothetical world- where equipment doesn't wear out and wouldn't eat into that amount)
How much did you sell your rolls for?
Edit: This calcualtion is incorrect if the squared hay mentioned was your's, and not your father-in-laws, let me know about the square ownership distribution, and ill re-calculate it.
Thanks for playing along!
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