Many scenarios to start haying -- will this one work?

[kfvintx]

I know it has been asked many times and discussed even more than that, but I thought "how about one more" but with some twists.

I have about 70 acres currently planted in good coastal hay. Has been for many years and produced hay even last year with drought here in TX. Only one cut at very end but at least got something. Land is owned and paid for with only property taxes owed each year.

I also have JD 4105 tractor for misc jobs around the ranch including hay spear for moving round bales. I have small monthly payment for this, but would have regardless.

I don't live at the ranch so livestock is not an option right now so I will be selling all hay. This will be first year really for me so just looking for someone to tell me where my math is a complete pipe dream or if close to reality.

With 70 acres producing average 6 ton per acre for the year I should have 420 ton or 840 large rolls (4x5 weighing about 1,000 lb each). I have agreement with person to cut, rake and bale for half so I'm left with 420 bales. Last year prices were ridiculous and sold what I had at $100 each. For this I'm assuming more average price of $50 each for total of $21k per year.

Now for the reason I'm wanting reality check on this operation is my cost.... unfortunately it comes before the income in way of fertilizer. Based on soil samples I know what I need and have quote of $684/ton :confused2: which I plan to put 100lb per acre so I need 3.5 ton for total of $2,400. Free use of applicator to pull behind truck so no cost to apply.

Does this make sense and really how it might work out? The cost of tractor is a given and only additional cost will be diesel used to move them from field to barn (already exists and good for hay storage). No cost for hay equipment or break down or anything like that. No labor invovled except for my time to move once baled. My only real cost is fertilizer but before I spend that I would like some of the great wisdom at TBN to confirm my general business approach to it.

I know I'm not the first to think about testing the water of getting into this and many stories of being careful and if easy everyone would do it and many other useful warnings...... but my circumstances have me getting into without much risk that I can see right now.

I have another 30 acres planted in coastal that needs to be cleaned up from weeds and mesquite and prickly pear to increase production as well. And at some point I'm thinking it makes sense to own the equipment but that is an entirely different thread.

Hopefully a few of you are still reading at this point and will share your wisdom. :laughing:

Thanks.

 

[maleaco]

Good luck!

 

[SandburRanch]

From a business perspective your agreement needs to be in contract form.

Otherwise your plan sounds reasonable and we're hoping the rain falls in a timely manner.:thumbsup:

 

[MotorSeven]

You made $42K last year on half:thumbsup:. I'm a little slow, are you thinking about buying all the hay equipment and doing it all yourself? If so, yes you could go out and by brand new equipment(highly recommended) and take a crack at it this year. Baler-$19K
V-rake-$5K
Tedder-$4K
Cuttter-$10K

But, I hate to bear bad news...but you tractor is too small for the baler. For 70 ac(I cut about 40 and split the work with a neighbor w/his tractor) you really need a 70 horse and a 10.5' cutter(disc or drum). If you have help, then your JD could pull the rake and tedder, while the bigger tractor pulls the cutter and any other implement.

If it were me, I'd pay for the fertilizer or split the cost with the guy doing the work.....even $20K on a regular season is a win win. 4x4 rolls here go for $8-20, so we roll our own....no meat on that bone for anyone else.

 

[kfvintx]

You made $42K last year on half:thumbsup:. I'm a little slow, are you thinking about buying all the hay equipment and doing it all yourself? If so, yes you could go out and by brand new equipment(highly recommended) and take a crack at it this year. Baler-$19K
V-rake-$5K
Tedder-$4K
Cuttter-$10K

But, I hate to bear bad news...but you tractor is too small for the baler. For 70 ac(I cut about 40 and split the work with a neighbor w/his tractor) you really need a 70 horse and a 10.5' cutter(disc or drum). If you have help, then your JD could pull the rake and tedder, while the bigger tractor pulls the cutter and any other implement.

If it were me, I'd pay for the fertilizer or split the cost with the guy doing the work.....even $20K on a regular season is a win win. 4x4 rolls here go for $8-20, so we roll our own....no meat on that bone for anyone else.

No, not buying any hay equipment right now. I know my current tractor is too small and I figure just paying for fertilizer and going in halves with someone is good way to get started and learn a bit. Bonus is having little risk with no major machinery investment.... although one could argue mother nature is a large risk. I'm thinking I could pay for fertilizer a couple times a year and still make a little money in the end after splitting. Not gonna retire on it I know, but more of a learning experience without losing money.

Some day I will get greedy and buy all the machinery and then the questions will really start :laughing:

 

[Redneck in training]

You need to split the fertilizer cost with the partner. I do crop 50/50 with my neigbor for the same reason. I have only small tractor. Spraying, seed, fertlizer, combining etc is paid from whatever we get when we sell and what is left is divided 50/50.

 

[D7E]

Hay sold well this year what about the years when it's $20 a bale or less ?

Keep taking the half and watch and learn .

 

[foreman Etexas]

You sure 100lbs an acre is enough,I put atleast 300/400lbs an acre. As for the moving the bales part,just sell them out of field,for alittle cheaper. Were you located at in Texas? I hope this year goes better but may need some....

Vermeer 5x4 baler "loaded out" $23,240
Vermeer 10 wheel rake $3,500
Krone 7'10 cutter $8,150
Krone 9'2 cutter $8,900
I just got the prices today,thinking about getting my own,just so I can do it when I wont,if price of baling goes up anymore,i will just buy feed and do away with hay all together and run cattle on pastures...

 

[rambler]

There is a lot of risk in farming, and hay is riskier than most. You have extra good year, and some average years, and some dismal years and years.... Don't base your projections on one extra good year.

But yes, that's how it works. I think you are smart to continue the 50/50 agrangement, with the price of diesel and iron these days it's hard to find such a favorable deal for the landowner any more. I would not try to renegociate for the fert to be split as well, I think that would open up a total different arangement.... You might find yourself with an offer of 25% for you, 75% for the custom farmer.......

I'm very surprised 100 lbs of fert is enough, I would not be surprised if you needed 2 - 2.5 times that amount to keep from mining your soils, and to keep enough N on to get a good yield? I'd watch that closely, what blend of fert did you get, how much _actual_ nutrients are you gtting in that 100 lbs? It seems light.

--->Paul

 

[smstonypoint]

I agree with other posters that your fertilizer application rate seems way too low. Are you sure that you are interpreting the results of the soil sample test correctly? The soil sample tests I am familiar with ask the farmer to indicate the crop he/she will be growing.

There are Social Security and other tax issues associated with crop-share leases. You need to check out Leasing Arrangements and Self-employment (Social Security) Tax - File C2-41 March 2010

Steve