Will Hay Pay in 2022?

You may still be in shock of your fertilizer quote and the thought of what it will cost to fill your farm fuel tank this spring. Those increases do sting but there are other hidden costs that aren't as visible. Hay yield is closely tied to nitrogen rates and soil fertility. As every hay farmer knows it is not just about yield when it comes to hay, quality is a key factor. You may be thinking, what do I need to charge for my hay to make a modest profit?  On top of that will I be able to get the price I need since there is no standard price for hay which is good thing but also a negative at times. No two farms are alike and general assumptions are just that, general assumptions, but here are some things to consider.

Grass hay requires nutrients of course. It doesn't really care if it comes from synthetic or organic sources such as granular fertilizer or poultry manure. 1 ton of grass hay removes 50 units of nitrogen, 15 units of phosphorus, 50 units of potassium from the soil. So, an annual yield of 4 tons per acre will remove 200-60-200 units of N-P-K. We don’t want to apply all those nutrients in the spring however, but rather split them and apply it based on the expected yield for each cutting. Here is where it gets tricky. If your first cutting would typically yield 2 tons per acre and use about 100 units of nitrogen. The soil can provide some of that nitrogen based on organic matter content and manure history. You also don't what to over apply nitrogen and have the hay get too tall and thick and fall over, creating a lower quality hay due to dead plant material in the hay. Typically, we would recommend about 75 units of N for first cutting. With the price of all nitrogen sources now exceeding $1/unit ($1000/ton urea = $1.08/unit) you can't afford to waste it. Let's assume you don't need phosphorus, but you do need potassium. That too is nearly $1000/ton. One ton of Potash 0-0-62 contains 1,240 units of K₂0 and comes out to ($1000/1240) $0.80/unit of K₂0. One ton of hay will remove 50 units of K₂0, about $40 in K₂0 at today's price. This is where soil testing pays off. If your soil test results come back with your K₂0 level in the optimum range, you will not see a yield reduction if you do not apply potash this season. You will need to apply potash in the near future due to the removal of the hay crop but maybe it will be cheaper to do so this coming fall or next spring. Maybe your soil test levels are below optimum, this is where potash applications this season will improve hay yield and quality. Remember it is best to split apply potash to avoid luxury consumption, where the grass takes more nutrients than it needs because it is there, like a teenager at a smorgasbord.  After first cutting you probably should fertilize for at least another ton of hay per acre so about 100# of urea and maybe some potash depending on your soil test levels. Another consideration is to not apply potassium after first cutting and wait until after 2^nd cutting along with more Nitrogen.

Calculating fertilizer prices. Photo: Andrew Frankenfield

The next significant expenses are labor, fuel and equipment costs, they are all sort of related and go together. People often look to published custom rates from universities to put a value on the cost of a trip across a field. The best numbers are your own, however it is easier to use someone else’s numbers. If you want to calculate your machinery costs Iowa State University has a good webpage. The other thing to remember about custom rates is that they were based on what people were charging the year before. I would expect custom rates need to go up by 20-25% this season, for all the reasons mentioned above: labor, fuel, equipment costs, maintenance, and repairs.

According to Iowa State it takes about 1.25 gallons of diesel fuel to cut, rake and bale per acre. If your fuel cost last year was $2.50/gallon and this year it is $5.00/gallon it will only cost you a little over $3 more per acre and if you get 2 tons/acre first cutting, it is only $1.50 per ton more.

Ok now with all that out of the way let's look at what an enterprise budget for grass hay might look like.

Assumptions include:

• 4 ton per acre yield with 3 cuttings.
• 40-pound small square bales are made with a bale accumulator system. 
• Soil fertility: P is optimum, and K is slightly below optimum.
• Nitrogen is applied as 28% UAN with Prowl H20 in the spring and after 1^st cutting.
• Fertilizer prices: 28-0-0-2s(treated)=$615/ton, Potash 0-0-62=$878/ton, 26-0-26 (treated urea)=$1,050
• All operations are done by the farmer using adjusted 2021 custom rates from Iowa.

The example above comes out with an average cost of $245/per ton or $4.90 per 40-pound bale out of the field with no storage costs factor in a $0.75 storage cost per bale and you are up to $5.65 per bale with no delivery price factored in. Remember this is not your cost of production so I encourage you to calculate your own breakeven value and use that in your decision making relating to your hay enterprise.