Hay & Forage Forum banner
1 - 20 of 30 Posts

·
Registered
Joined
·
78 Posts
Discussion Starter · #1 ·
I am considering a purchase of 20-25 or so acres here in Texas to hopefully someday build a house on (live in town now with my tractors and toys but things are too crowded, plus i want this land as an investment)

My question is Ive done a lot of things before but never have run a hay operation. I have a ~40 hp tractor and a 30 hp tractor and a flexible working schedule with my day job.

How practical would it be to raise hay on this. How many cuttings could I expect in north/east Texas in a normal year? How hard is it to sell your hay? Should I consider making round bales or squares?

Do i have a chance of actually making money on this? Not looking to get rich, only to cover the cost of equipment, property maintenance/taxes, and a little something for my time. Thanks.
 

·
Hay Master
Joined
·
1,066 Posts
I am considering a purchase of 20-25 or so acres here in Texas to hopefully someday build a house on (live in town now with my tractors and toys but things are too crowded, plus i want this land as an investment)

My question is Ive done a lot of things before but never have run a hay operation. I have a ~40 hp tractor and a 30 hp tractor and a flexible working schedule with my day job.

How practical would it be to raise hay on this. How many cuttings could I expect in north/east Texas in a normal year? How hard is it to sell your hay? Should I consider making round bales or squares?

Do i have a chance of actually making money on this? Not looking to get rich, only to cover the cost of equipment, property maintenance/taxes, and a little something for my time. Thanks.
Your statement reads that you want to purchase the land regardless. Rural living has its benefits, so go for purchasing the acreage.

Regarding a hay business, your tractors may be a bit under powered for running most hay balers except maybe a small square baler. Is the HP mentioned the engine HP or the PTO HP? The PTO HP rating is most used when considering power needed to run equipment.

You realize that a hay business requires the purchase of several items of equipment that aren't necessarily cheap. Then there is the learning curve. I've been through it, and would advise that you go slow by hiring the haying done while you learn the process and determine what equipment you think best suits your needs, and then look for good buys on used equipment unless you need huge tax write-offs. Twenty to 25 acres would not be too much to eventually handle to make small square bales. Round bales in your country likely will not sell well to make the money you want because there is always the guy who sells rounds at near give-away prices.

If you really want to do this hay business, I for one, suggest that you clean up the acreage of whatever grass/weeds are growing on it and either sprig Tifton 85 bermudagrass or, if the soil is well drained and not too acidic in the subsoil (pH above 5.5 to four feet deep) consider planting alfalfa. These forages when made into small square bales will sell at a better profit than round bales.

As you know, the number of cuttings you should get depends on the seasonal rainfall. Tifton 85 in a good year might produce four cuttings. Alfalfa could do five to six cuttings. If haying operations are delayed by frequent rainfall that does not allow a 4-5 day hay curing window, the number of cuttings could be less.

Most people in this area store round bales outside. This is not the best way to store rounds, but will do if all the round bales are sold by fall. If you plan on doing small square bales, a hay storage barn is a necessity. Good hay will sell well in the field and a higher price can be asked when selling out of the barn. It will take time to establish your reputation as a quality hay maker.
 

·
Registered
Joined
·
78 Posts
Discussion Starter · #4 ·
Your statement reads that you want to purchase the land regardless. Rural living has its benefits, so go for purchasing the acreage.

Regarding a hay business, your tractors may be a bit under powered for running most hay balers except maybe a small square baler. Is the HP mentioned the engine HP or the PTO HP? The PTO HP rating is most used when considering power needed to run equipment.

You realize that a hay business requires the purchase of several items of equipment that aren't necessarily cheap. Then there is the learning curve. I've been through it, and would advise that you go slow by hiring the haying done while you learn the process and determine what equipment you think best suits your needs, and then look for good buys on used equipment unless you need huge tax write-offs. Twenty to 25 acres would not be too much to eventually handle to make small square bales. Round bales in your country likely will not sell well to make the money you want because there is always the guy who sells rounds at near give-away prices.

If you really want to do this hay business, I for one, suggest that you clean up the acreage of whatever grass/weeds are growing on it and either sprig Tifton 85 bermudagrass or, if the soil is well drained and not too acidic in the subsoil (pH above 5.5 to four feet deep) consider planting alfalfa. These forages when made into small square bales will sell at a better profit than round bales.

As you know, the number of cuttings you should get depends on the seasonal rainfall. Tifton 85 in a good year might produce four cuttings. Alfalfa could do five to six cuttings. If haying operations are delayed by frequent rainfall that does not allow a 4-5 day hay curing window, the number of cuttings could be less.

Most people in this area store round bales outside. This is not the best way to store rounds, but will do if all the round bales are sold by fall. If you plan on doing small square bales, a hay storage barn is a necessity. Good hay will sell well in the field and a higher price can be asked when selling out of the barn. It will take time to establish your reputation as a quality hay maker.
I actually do need any tax write offs I can get - my day job has been good to me.

How big of a tractor do I need? Im thinking like - maybe 60 pto hp? Would that do well?

Thanks for the support everyone. You are right - I want and plan to buy the land regardless, its just a question of what will I do with it (besides live there and store my stuff on it) once I have it. You guys are great, thanks again!
 

·
Registered
Joined
·
3,982 Posts
I actually do need any tax write offs I can get - my day job has been good to me.

How big of a tractor do I need? Im thinking like - maybe 60 pto hp? Would that do well?

Thanks for the support everyone. You are right - I want and plan to buy the land regardless, its just a question of what will I do with it (besides live there and store my stuff on it) once I have it. You guys are great, thanks again!
I would go with something 80+ HP & w/FEL (you already have smaller stuff for raking, pulling empty wagons, etc.)

Larry
 

·
Super Moderator
Joined
·
15,769 Posts
If your suggested land is suitable, I would recommend getting into the pecan business.....good future here, good export future, a nice long term investment, and would allow for slow equipment growth in the beginning. The hay industry is highly competitive and is in a slump presently unless your utilizing the hay yourself. The pecan industry is not affected by the elements quite as much as the hay industry....it can be, but usually not as much.....especially if you can irrigate.

Regards, Mike
 

·
Member
Joined
·
547 Posts
Welcome Anonsky. Somethings to consider...

Tax write-offs can be tricky - especially for a relatively small farm like the one you plan to buy. You can show a loss but only for a few years. After that, the IRS expects you to make a profit. Hence, huge capital expenses (like an 80+ hp tractor to make hay on 25 acres) will require a much longer time period for you to reach profitability and that could get you in trouble. If you have a well-paying off-farm job, you have to be even more careful about this. If the IRS classifies your operation as a "hobby farm", all of your write-offs will be disallowed and you'll owe back taxes and penalties.

Best to talk to an accountant about this. Often times, accountants provide free initial consultations so it may not cost you a cent to get educated.

Gary

PS The two tractors you now have are plenty big for that size operation.
 

·
Hay Something
Joined
·
1,450 Posts
Not to derail too much here, but I have not heard of the IRS hobby farm classification before. Is that something based on # of acres, or % of total income?

Tax write-offs can be tricky - especially for a relatively small farm like the one you plan to buy. You can show a loss but only for a few years. After that, the IRS expects you to make a profit. Hence, huge capital expenses (like an 80+ hp tractor to make hay on 25 acres) will require a much longer time period for you to reach profitability and that could get you in trouble. If you have a well-paying off-farm job, you have to be even more careful about this. If the IRS classifies your operation as a "hobby farm", all of your write-offs will be disallowed and you'll owe back taxes and penalties.
 

·
Registered
Joined
·
4,723 Posts
IIRC hobby farm is one that doesn't show a profit in 2 out of 7 yrs when someone has other major off farm income. A full time farmer that doesn't have other off farm income doesn't fall under this category
 

·
Registered
Joined
·
22 Posts
Let me preface this with the statement that I'm not an accountant, I'm just conveying what's been conveyed to me in the past. I agree with the suggestion above to speak with a local tax accountant as a safeguard.

The IRS can determine that a business (farm or other) is considered a hobby if it produces no income for the first three of it's existence. So if you started a business in 2013 and showed no income through the end of 2016, they could come after you for any/all of the write-offs you've taken for that business. That's not be confused with taking a loss. If you're showing income, but showing more expense than income, that is not considered a hobby. A colleague of mine had a consulting business for 20+ years and was audited twice and he said all they could accuse him of was being a bad businessman because his business lost money every year. But because he always showing some level of income, it was considered a legitimate business.

Keep in mind, as with anything, if you try to abuse it, it will likely catch up with you. If you try to write off a $70k tractor to make $100, you'll probably raise some eyebrows.
 

·
Senior Member
Joined
·
1,042 Posts
How big of a tractor do I need? Im thinking like - maybe 60 pto hp? Would that do well?

Thanks for the support everyone. You are right - I want and plan to buy the land regardless, its just a question of what will I do with it (besides live there and store my stuff on it) once I have it. You guys are great, thanks again!
I would think a 60 HP would be on the low end of what I would want with the upper end being 80 HP. The other thing to consider is how you are going to handle the hay. If you do rounds, you definitely need a loader. If you do small squares and want to mechanize things with an accumulator and grap, you'll need a loader... long story short, plan on getting a loader tractor and make sure it has a strong enough front end to handle the loader.

If you wanted to, you could also check around locally and see if there are any farms in the area that might be willing to work the land for you. This doesn't let you play on the tractors quite as much, but saves you a lot of time and aggravation.
 

·
Registered
Joined
·
1,466 Posts
You can make money on hay - but IMHO for the acreage you have, I'd recommend top quality square bales. IMHO the amount of acreage you have will keep you very busy if you have a full time day job. To make great hay, you need very good equipment and/or older - but with back-ups, i.e. two square balers. One thing to consider in your operation if you have a full time day job is the amount of wrenching and what can practically be done with limited evening hours after work. A good example of this is - mower conditioner. Rolls or impellers speed up drying and can take a day out of the hay time-line. Sickle haybines are great and reduce the overall hp (IMHO a disc mower conditioner is your max hp driver for small squares) requirements, however a discbine can extend the hours you can cut without plugging the sickle long after the dew has fallen.

IMHO - two tractors is a must. Sometimes you need someone raking while you are baling and if you are baling on wagons, a second tractor is handy to shuttle wagons to and from the barn.

Taxes - they cut both ways. You need an accountant and you need a business plan. The plan lays your path forward and the accountant can intelligently inform you (and shield you) as to the IRS rules, deductions, profit/loss, etc.

But once you get the hay up and off the field - all done, pretty good feeling IMHO....

YMMV

Good luck,

Bill
 

·
Super Moderator
Joined
·
15,769 Posts
To avoid being classified as a "hobby farm" you must show a "profit" at least once in a 5 year period along with a few other considerations that have been previously mentioned above....there are several components involved.

Regards, Mike
 

·
Registered
Joined
·
78 Posts
Discussion Starter · #14 ·
I think I can do this fairly inexpensively (famous last words, I know) with used equipment. $6-10k buys me any number of 60-80hp decent looking used tractors off craigslist.

I think I can likely turn a profit on this before 5 years, if I do it. I dont plan on buying new equipment.

1) Can anyone point me to some resources on raising hay? Like, if your grass looks like this, it needs that - type of thing? I've never intentionally gotten grass to grow before although I have had the opposite problem in the past :p

2) What kind of mower could I run with a 60 pto hp tractor? I saw a 9 foot disc mower before, would that run it?

3) How does a guy find a not destroyed hay wagon? I used to work for a shop that had a steady stream of them come in for welding, and these things were DESTROYED and had usually already been cobbled together before we got them in. Some were downright scary and many werent worth the firewood value of their rotten decks. Any reason why I couldnt just use a car trailer/utility trailer?

My CPA doest object to this idea - his only advice is things will look better on paper if i do more than 10 acres, which almost goes without saying. Technically I'm not "employed" anywhere, I'm a "contractor" so that might make this whole adventure look better on paper. Thanks guys!
 

·
Registered
Joined
·
111 Posts
My tractor is about 50 hp and it pulls a 9 ft disk mower fine.

I will be using my 18ft car trailer to do small squares but i have two sons to help get hay as it will take one of us

in the truck, one on trailer stacking, and one in the field throwing on the trailer.

That is our plan till we can get a stack wagon or grapple and accumulator setup or even a couple of regular hay

wagons to pull behind the baler.

Sorry i can help on the grass growing part as i am just learning to do hay myself.
 

·
Senior Member
Joined
·
1,042 Posts
For question 1, I will defer to the members on here that are closer to your location. Markets vary from region to region depending on what animals are prevalent, what types of forage grow well in the area, etc.

For question 2, there are few disc mower/conditioners that a 60 HP tractor would run effectively. The CaseIH 3309 (aka, New Idea 5209 and a few other names/models) would be ok, but you wouldn't play with it. Disc mowers (without a conditioner) would work, but might extend the drying time. A decent sickle mower/conditioner would easily be run on a 60 HP tractor, but is slower than a disc style mower and has more of a tendency to plug... I wouldn't let that stop you from getting one though, I covered a lot of acres with a NH 488 when I was younger.

For question 3, I don't know what to tell you about the wagons... I did rebuild a flat rack for only a couple hundred in pressure treated wood, but I didn't have to do any repair work on the running gear. A utility trailer would work for smaller amounts of hay or if you pick up an accumulator and/or bale grab. If you can find a bale grab but not an accumulator, you may still want to pick it up. Even if you have to form the blocks of hay by hand, the grab will save you a lot of work once that's done.
 

·
Member
Joined
·
3,247 Posts
Okay this is great, guys thanks!

Can anyone recommend a favorite variety of coastal grass? How to find a dealer online or near me?
Coastal is a variety of Bermuda grass. For horse hay in small squares I prefer either Tift 44 or Alicia as they are very fine stemmed and make a very nice looking square bale. For max yield you won't beat Tift 85 and it's a little higher in protein as well but it is larger stemmed and some horse hay buyers don't like it as much. If your planning on baling hay primarily for cows Tift 85 would be the way I would go.
 

·
Member
Joined
·
10,016 Posts
Okay this is great, guys thanks!

Can anyone recommend a favorite variety of coastal grass? How to find a dealer online or near me?
I believe you would be best suited for Alicia or coastal.....it's forgiving (something tells me you're gonna need that ;) ) and probably super (c what I did there, my youngun rubbing off) available in your neck of the woods....probably the cheapest to get sprigged. Not sure, depends on where in Texas, it's a big state....on the other hand, lots of folk on here from the great state...
 

·
Registered
Joined
·
78 Posts
Discussion Starter · #20 ·
Okay, okay, this is great!

Can someone explain (and this is the ultimate in dumb questions) the difference between seeding and sprigging?

Does this coastal bermudagrass really require more than a seedbed and broadcast spreading?!?
 
1 - 20 of 30 Posts
Top