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Know your needs when pricing hay

Dan Martens Published on 09 February 2009

As a buyer or seller of hay, what works for you?

In the end, the buyer and seller are working towards a price that gives both a reasonable chance to make a living – a return for their share in labor, management, capital and risk.

For the landowner, many articles suggest an investment return on the value of the land as one factor. This is valid. But keep in mind there are situations where the price someone can afford to pay for harvesting hay from the land will not cover a targeted return on the land value because of other factors affecting land values.

Here’s a summary of other ideas:

• Compare markets
The USDA provides market information for a variety of feeds, including hay. Use a web search for “USDA Hay Market.” It may be good to ask, “Are the dynamics in a different market area relevant for where you’re buying or selling hay?”

• Hay prices based on other commodities
There are formulas for calculating hay and other feed prices based on the price of other sources for fiber, protein and energy – commonly soybean meal for protein and corn for energy. What if distiller products or another feed material is a cheaper source of energy or protein?

Would you use that as a base for comparisons? Availability, feasibility and convenience in using alternative feeds might be factors in what gets used for a comparative value for individual farms.

Consider what’s important to you in the market place. Know your needs and your numbers related to income, expenses and goals. Your voice should be part of “what the market says.”  FG

—Excerpts from University of Minnesota Extension News and Information, September 2008

Dan Martens
Crops Educator
University of Minnesota

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