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Do hay discounts hurt or benefit growers?

Katlyn Uhart for Progressive Forage Published on 01 March 2018
loading hay

Feed is the most expensive and one of the most necessary products in a ranch budget, making it no surprise that ranchers love a good discount on hay. Hay producers, on the other hand, have to decide whether or not that discount is worth the risk to their businesses.

Discount prices on hay can attract more customers and keep long-time buyers coming back; however, sale prices can be an added stress in the business that some growers want to avoid.

Producers like Cody Jensen feel that discounted hay prices encourage customers to keep coming back to the same grower. Jensen grew up in rural Utah where he says he learned that if sellers are willing to give an inch on their prices, especially when people are buying in bulk, then customers are more likely to return and remember the favor. This is especially true in small, tightknit communities.

“It’s one of those things where they’re buying so much from you that you kind of have to give back,” Jensen says.

The U.S. Department of Agriculture lists feed as the highest expenditure for farmers and ranchers across the country. It’s no wonder that producers are searching for the best available price on such an essential product. When there are so many options to choose from, hay producers are hard pressed to stand out from the crowd. Bulk sales at a decreased price can be a way to build a relationship that benefits everyone.

Meanwhile, some hay growers feel that discounts can actually harm their business more than it might help. After working for hours over the summer, it can be disheartening when they have to drop the prices on their product. This is especially true for growers who see a huge turnover in their customers. Not everyone will come back for more hay, so there is little incentive to offer discounts.

Since growers have a never-ending pool of people to market to, they don’t have to worry about selling hay for a lower price. Some hay producers have the mentality that someone out there will pay full price, so there’s no reason to sell their hay for less than its original price. Many small-time hay growers will even charge more than what their hay is worth because they know the person buying will not know the difference.

However, this might hurt small operations more than it helps. When producers are charging the same amount of money for old hay as new hay, there’s less incentive for buyers to help growers go through the old crop. Rosalee Rieman, a hay producer from western Nevada, says she believes a discount on hay would encourage more people to buy from local producers.

“Some small hay producers overprice their hay,” she says. “That makes people go to the bigger producers.”

Rieman has seen hay crops from the previous year go to waste simply because the producer refuses to lower prices from when the hay was harvested. To make room for the crop of the current year, she says it makes the most sense to drop prices on the old hay. This way, buyers feel better about getting older hay for cheaper prices. Growers benefit from the old hay being removed and customers believe they got a better deal.

Lowering the prices on old hay in this way can build the trust necessary between seller and buyer for a prolonged professional relationship, lowering the turnover that the producers are wary of. A compromise such as this is beneficial to both sides, making the chances of future dealings more likely.

Agriculture as a business is built on relationships forged out of trust, honesty and occasionally cheap prices. Although not all producers are willing to drop their prices on hay, many of them want to build a relationship with their customers. It can feel counterproductive in a business to offer discount rates, yet Jensen says that it’s an integral part to connecting with hay buyers.

Though lowering prices can be a risk, doing so increases the chances of long-term customers and stability. Negotiating in this way elicits a better producer and consumer relationship, profiting both sides in the long run.  end mark

Katlyn Uhart is an agricultural communications student at Utah State University.

PHOTO: Hay is loaded for resale in western Wyoming. Photo by Lynn Jaynes.

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