Day,
Thank you for your most helpful reply. Is it worth the expense to buy this equipment and produce small 50 pound hay bales hoping to sell for $3-$5? I have over 250 acres that grows grass which produces over 700 hundred large square bales weighing from 900 - 1200 pounds each which I receive $3 for each large bale. I would like to harvsts my own hay and make a considerable amount more. Thank you.
Terence,
First, a few thoughts on the rent you are now receiving.
As I understand it, you are "renting" your 250 acres in return for a payment of approximately $2,100/year (700 bales @ $3/bale). This works out to $8.4/acre year. This is not purely a "cash rent" situation in that you are assuming some production risks -- if there is a poor (good) growing season, you receive less (more). However, you don't have any price risk -- you receive $3/bale regardless of hay price variation from year to year.
Using 1200 pounds/bale, the land is producing 420 tons/year or 1.68 tons/acre/year. I don't know where you are located, but your average hay yield is below the national average for 2010 -- 1.95 tons/acre (
http://usda.mannlib.cornell.edu/usda/current/CropProdSu/CropProdSu-01-12-2011_new_format.pdf).
I am not aware of any reported data on rents for hay land for each of the individual states. However, the USDA reports average cash rents for pasture for the individual states. The US average was $11/acre in 2010 (
NASS - Charts and Maps - Farm Values and Cash Rents). I'm not sure about the relationship between hay land and pasture rents in the various states, but in Iowa, the hay land rents are considerably higher (
http://www.extension.iastate.edu/publications/fm1851.pdf)
Whether your rent is fair to you and the farmer is your call. There is considerable variation in rents within and across counties.
Now, to the economics of producing the hay yourself -- can you obtain a return to your land (after allowing for returns to your labor, management, and risks) greater than $8.4/acre per year? The answer depends on your revenues and costs of producing hay. The agricultural economics departments in many land-grant universities publish prototype enterprise budgets for forages that you can modify as needed to reflect your situation. Here's an example for NC --
Forage Budgets.
Note that a substantial investment in equipment may be required.
Note that you will have to include the costs of maintaining the hay land (e.g., liming, fertilization, etc.)
Note the labor requirements -- they will not be trivial for 250 acres.
You should also be thinking about the storage and marketing of your hay crop.
You should also be aware that you will face both production and price risks if you DIY.
Steve