How much is alflafa hay worth?

Richard Leep and Dennis Pennington

Department of Crop and Soil Sciences and Barry County Extension Agent

Michigan State University

There are a few values that must be estimated before calculating a price for hay stumpage:

1.      Value of the stored hay crop in its final harvested form assuming ideal harvest conditions

2.      Hay yield

3.      Harvest costs

4.      Risk factor (hay gets rained on, equipment fails, etc.)

The concept for calculating stumpage price is as follows: Value of dry hay equivalent in storage, Minus…harvest cost, Minus…on-farm hauling and storage, Minus…risk factor

Equals...Stumpage Price

The harvest costs used in this article are based on the 1994 figures compiled by MSU Ag Economist Dr. Gerry Schwab.  The figures have been increased modestly to reflect inflation.  In addition, the type of hay made (haylage, large round vales, small square bales) makes a big difference in how much the purchaser should be willing to pay.  Both seller and buyer should agree on how they refer to dry matter content.

Dry matter basis is 100% dry matter and requires con version under all circumstances.  Dry hay equivalent (DHE) assumes baled hay contains 85% dry matter.  Haylage equivalent assumes 42.5% dry matter (one half as much as dry hay equivalent).  The following example is based on dry hay equivalent and haylage equivalent.

Example:  High quality alfalfa stumpage

Estimated value of crop in storage, ideal harvest conditions is $100 per ton (DHE)

Yield: 1.5 tons/acre

Gross value/acre: 1.5 X $100 = $150/acre

Harvest cost:    mow:   $10/acre

                        Chop:    $30/acre

                                    =$40/acre

On-farm hauling and storage:  $10/acre

Risk factor: 20% (Harvest is considered fully successful 80% of the time), therefore, 20% X $150 = $30/acre

Stumpage price:  $150 (value of dry hay equivalent in storage)

-         40  (harvest cost)

-         10 (on-farm hauling and storage)

-         30 (risk factor)

$70/acre (if chopped)

To convert $/acre to $/ton, divide value/acre by yield which is $70 per acre/1.5 ton per acre = $46.66 per ton.  This stumpage price can be converted to $46/ton dry hay equivalent or $23/ton for silage.