One of the great things about my job is that on any given day you never know what questions or comments are going come over the phone line. Even after twenty years, there’s the occasional “never before heard” question from time to time. One that doesn’t fall into that category is “How much can I pay for standing hay?” It’s been asked hundreds of times, and I thought I had developed a fairly straight forward and easy approach for formulating an answer. That all changed in 2008 and here’s why......

      First, the value of hay has gone up more than can be explained by annual fluctuation of supply and demand. The baseline value has increased because fuel and fertilizer prices have skyrocketed and so have the values of competing feeds. This makes the alternative of buying standing hay more expensive.

      The value of renting bare cropland has also increased. Renting tilled crop land is different than renting a field of standing hay. In the latter case, you’re really buying a product that is not yet harvested. However, the owner of an alfalfa field must, at minimum, get a bare land price plus the cost of alfalfa establishment prorated over four years, plus the value of nutrients removed by the alfalfa crop. If he or she can’t get that minimum, then there is more value in just renting bare land without the established alfalfa crop (although there is some intrinsic environmental value to growing a perennial crop in a crop rotation).

      Because both bare land values and fertilizer values have increased, the base value needed for the landowner has also increased. Further, this base value is going to differ by location and maybe by field.

      The nutrient value removed by alfalfa has changed dramatically, and has become a major consideration. Let’s look at potassium, the primary nutrient removed by alfalfa at a level of 55 pounds per dry matter ton. For years potassium hovered around $0.13 to $0.14 per pound ($8.00 value per ton removed). Today, we can multiply those numbers by a factor of four. With a four ton per acre yield, the value of potassium removed is somewhere north of $100 per acre. That’s significant and has to be taken into account by both the buyer and landowner.

      So let’s assume prevailing bare land cash rent value is $100 per acre and prorated alfalfa seeding costs (seed plus seeding) are $25 per acre per year. The minimum price needed for standing alfalfa is then $125 per acre PLUS the value of nutrients removed (at least $100 per acre, probably more).

      Okay, what about the buyer’s perspective? On average, it costs between $35 to $40 to harvest a ton of dry matter. Potassium removal will be about $30 per ton. Adding the digits gives us a total investment of $65 to $70 per dry matter ton. With that value comes some weather risk of getting a quality crop harvested. If the owner has decided to charge $125 plus fertilizer (which we already accounted for), our total investment for a four ton per acre yield is about $100 per dry matter ton ($125 per acre divided by 4 tons plus $70 for harvesting and fertilizer). That price is equivalent to paying about $118 per ton for baled hay. Deal or no deal? It’s your call.

      Keep in mind that the process is more important than the actual numbers, as cash rent values, harvest costs, and fertilizer values will vary with each situation. Even at today’s prices, renting standing alfalfa may still be a good deal.....just not quite as good as it’s been in the past.