What is standing hay worth?

By Gary Sliworsky
Ag. Rep

What is standing hay worth and what is a fair price? The price of standing hay is what the market determines it is, not necessarily what we think it should be. From the seller’s point of view, the price should cover the cost of production and provide a profit. However, there are limits to what buyers can and will pay that are related to the price of livestock, as well as the availability and price of other forages.
There is a tremendous range in standing hay prices. In recent years, we have seen prices from zero to over 3¢/lb of dry hay produced. The cost of production for a hay crop is typically at least 2¢/lb. However, the market does not always recover this. Some years, standing hay might trade from 1.5 to 2¢/lb for first-cut. Hay prices are often extremely volatile until after 1st cut, when there is a better idea of what the hay supply will be for the year.
When hay supplies are low during dry years or following winterkill, standing hay will be in demand and worth more. Poor pasture years, when hay is fed during the “summer slump”, also results in greater demand. The amount of spring inventory “carryover” from one year to the next can have a big impact. .
There are a few factors that can affect the price:
Cutting Date & Percent Alfalfa - The earlier the date of cutting and the better the quality, the more the standing hay will be worth. Hay cut later will be worth less per pound, but there will be more pounds. Hay stands that contain more alfalfa are usually worth more.
Yield, Weeds & Age of Stand - Higher yielding fields will be worth more per pound because the fixed harvesting costs per acre are spread over more lbs. Generally, newer stands are worth more, while hay fields that have been seeded down for a number of years will be weedier, lower yield, and worth less.
Location - The location of the field relative to the buyer is important. A livestock producer may be willing to pay more if he doesn’t have to haul long distances. A seller needs more than one interested buyer in order to bargain a higher price.
Occasionally, standing hay is given away to avoid the down-side of leaving it in the field. The fixed costs, such as establishment, have already been paid regardless of whether or not the crop is harvested. As a minimum, a producer may want to recover the variable costs, which include the nutrient removal.
To accurately determine the pounds of hay sold it is helpful to weigh some bales or wagon loads. Pounds of haylage can be converted to a dry hay equivalent by adjusting for percent moisture.
It is important that you make your own assumptions and calculate your own costs to determine what you feel is an acceptable price. Then negotiate the best you can. Crop budgets and custom rates are available on the Ontario Ministry of Agriculture, Food & Rural Affairs website at www.omafra.gov.on.ca/english/busdev/analysis.html.