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New season, new rules

FG Editor Darren Olsen Published on 01 April 2010

With the 2010 season ready to start into full production soon across the country, many growers are wondering how to make this year better than last.

Most experts agree that with higher milk and beef prices forecast, hay prices will also be up somewhat over the closing months of last year.

In addition, we are in somewhat of a quality hay shortage headed into the new season, so growers who are able to capitalize on quality look to have a good growing year.

The question that looms revolves around the fickle financial environment that seems to be a much bigger part of forage production that existed just a year or two ago.

Unfortunately, the handshake deals that have been a long-time part of agriculture are becoming a thing of the past. The new environment is asking producers to become businessmen first and growers second. With that being said, the following practices should become part of every hay transaction, no matter how big or small.

Paperwork is no longer optional. Every person you deal with in 2010 should be willing to sign a contract. It doesn’t have to be complicated, but a good contract, signed and dated by both the buyer and seller, should cover several important points:

  • Contact information. The name, address, phone number and, if applicable, bond number should be listed on the contract.

  • Terms: These should include total bales sold, approximate weight, price per ton, FOB or delivered and test results, Protein, ADF and TDN.

  • Payment: It should be noted how the hay is to be paid for – cash, check or other terms and when the money is due.

  • Other items: Other items that should be addressed in the contract are insurance, stack cover, hay delivery or removal dates, exact location for delivery (this is very important if delivering to a large feedlot or dairy with multiple sites) and any other notes that would help clarify the contract.

  • Signatures: The contract is only going to be of value if there are signatures and dates from both parties.

It should be noted that if a person is hesitant to sign a contract with you, it might be a sign they are not in a position to be buying hay. I have heard it said several times lately that some producers are reluctant to have people sign a contract.

If that is the case, tell them that your lenders are now requiring you have signed contracts. Any bank you deal with will be glad to back you up on this point, as it is also in their best interest that you do your due diligence to get paid in the end.

Also, when it comes to paperwork, be sure to have lab tests and weight receipt from a certified scale saved with every load that goes out.

Even if the hay is being tested and weighed by the buyer, it is critical you get your copy of the paperwork. Not having it will make it very hard to collect in the long run if problems come up.

A picture is worth a thousand words. With digital cameras and a simple Internet connection, you can quickly show potential buyers what your hay looks like.

Several sellers reported loads being rejected in 2009 because the hay didn’t "look good." Be sure the buyer knows what they are getting before you have to haul your hay back. With money being tight, looks should be the last of your worries when it comes to selling hay.

Do a credit check on new buyers. Although you might not want to, it is important to do a quick check with potential buyers’ banks to make sure they have the funding for the hay. Unless you are getting cash up front, be sure to take the time to know the money will be available. If they won’t provide the information, move to another buyer.

Hay testing is a must. If you want to earn the most money for your hay this year, testing will be critical. Be sure you and the buyer agree on the testing facility beforehand or utilize one that is certified to test hay. If in doubt, contact your county extension agent for qualified testing facilities in your area.

Quality will count in 2010, and you will want to know where your hay stands in this regard.  FG