“What's the going rate for standing hay?” That's a cut and dried question, pardon the pun. It's the answer that isn't easy to determine.
“Virtually every Extension agent in the country gets that question many times in a year,” sighs Mike Rankin, a University of Wisconsin crops and soils Extension agent. “I tell producers that what the market bears for standing hay and what that product may actually be worth are two different numbers.”
But he suggests growers look at what bare land is renting for, taking into consideration land and soil-type variations. Then look at the value of the forage coming off the land. In his county, three cuttings of good-quality alfalfa can rent for $100-125/acre in areas where bare ground cash rents are $50-60/acre. Or for $140-200/acre where bare ground rents range from $75 to over $100/acre.
Start With Actual Rent
“I tend to work backwards with growers,” he adds, starting with an actual rental figure, say $120/acre. “If you figure 4 tons of dry matter/acre in terms of season yield, then you have invested $30/ton of dry matter.
“If someone figures it's going to cost another $35/ton to get that harvested over the course of three or four cuttings, that would be a total of about $65/ton of dry matter invested in that crop,” Rankin says.
Compare that to what good-quality alfalfa usually goes for in Wisconsin — around $100/ton — and you see how renting standing hay can be a good investment, he adds.
Yet it comes down to the amount of risk a renter wants to take, says Keith Johnson, Purdue University Extension forage specialist.
“In a dry-weather year, he's not going to get much.” And if it rains at the wrong time? “The value isn't $100 or $120/ton; it's $50-60/ton or chopped back on the field,” he says.
Renter and landowner must spell out expectations. Rankin and Johnson suggest written agreements, especially if land will be rented long term. Yet even in renting one or two cuttings, both parties should know what could be earned in either good or bad weather.
Contract adjustments are important. “This year, there may be potential for winter injury; there has to be some agreement that the price will be adjusted based on what the productivity looks like. Don't commit to a price until you know what a stand looks like coming out of winter,” Rankin suggests.
“We also make adjustments if it's an alfalfa-grass mix versus pure alfalfa and if the stand is thinned out,” he says.
The agreement should make clear who's going to apply fertilizer — and how much, based on a soil test, Rankin says. And consider the cost of hauling the harvested crop.
“I once convinced a producer to rent alfalfa for $200/acre because, in his situation, that made good sense. Bare ground rents were more than $100/acre, it was a productive stand, and the field was right across from his farm. It looked to be a better situation to put up some good-quality alfalfa than to try and buy it,” Rankin says.
“You have to look at the value of the hay at the moment and project what the potential yield for a cutting or season will be,” Johnson adds. “Frankly, the best way to do that with the least risk is after the fact — after harvest.”
Fae Holin is senior associate editor of BEEF sister publication Hay & Forage Grower Magazine.