Thursday, March 20, 2008

Buy, Rent, Or Hire ... Machinery

My chapter book report from Ron Macher's book, "Making Your Small Farm Profitable", combined with the link provided by Kelli of Sugar Creek Farm (and the other comments in the post) led me to the question of ... "Buy, Rent, or Hire?" In fact it almost sounds like a game show, maybe I should look into the possibilities! But, back to the question at hand. I really started thinking about what to buy, what to rent, or what I should hire done. And to be perfectly honest I was mostly thinking about hay.

I know that no winter will ever be the same, but if next winter is anything like this winter I will need about six or seven small square bales of hay each day to feed our Dexter herd at it's expected size. That does not take into consideration any other livestock we add. Let's just say that we need to feed that much hay for 3.5 months ... we are looking at roughly 683 bales for our cattle alone. I bought some $2 a bale hay this year and it was okay, not great for lactating cows, but good enough for the steers and dry cows. If I wanted some quality hay I know that I would have to pay more than that. Let's just say I can find some for $3.50 per bale ... we are looking at $2,390.50 for small squares, and we hope that is enough. Of course I could go with some big round bales, but there are plenty of things to consider when going that route.

One question brought up in the comments was that 20 acres or so of pasture/hay ground didn't seem like enough to have a baler/rake/mower. I think that is a very valid question and one that I think I need to examine. So, let me just throw out some numbers.

If I were to assume that I am going to have a tractor (at least at some point) of 50 hp or more I would have enough power to bale hay. So, I could go the buying route, but not include the cost of the tractor because I would have it anyways. In my neck of the woods where big rounds are king I have seen plenty of nice working New Holland or John Deere balers selling for the $500 range in classifieds and at auction. A used side-delivery rake will cost less than that as will a pull behind sickle bar mower. None of this equipment is top of the line, but it is usable on a small amount of land, relatively inexpensive, and our family knows how to work on this kind of stuff. I'm thinking I could buy the stuff for $1,500 give or take. That is lower than the cost of the hay for one year and I could use it multiple years. Of course I need to factor in maintenance costs and the fact that I would have to do the work. On the flip side if I was going to have extra hay I could sell it.

On the subject of renting ... I am clueless of the costs. But, I would probably have to rent from a local farmer who may also be planning on using the baler and equipment. That would mean that I would have to work around their schedule and that doesn't always work when we are talking about hay.

Finally, I could hire the hay done. According to this great chart that Kelli pointed me to the average mowing per acre price is $10.70, the average raking per acre price is $5.65, and the average per bale cost is $0.48. It wouldn't take all 20 acres to get the 683 bales I needed, but just by taking the per bale cost we can see that it would cost at least $327.84 for the hay plus the other expenses. I believe Kelli mentioned that they cut and rake their hay so this does look like a good possibility if you can do that. One downside of course would be the timing, but they may be more likely to get it done if there is money involved instead of just shares or if they were renting you equipment.

There are lots of things to consider in this. But, I think one thing is for sure ... it would be silly for me to buy in hay when we could make it on our own. Grazing our 19 head of Dexter cattle won't allow us to bale the entire amount, but when we have some good spring growth we should be able to bale a nice chunk of it (and maybe get a second cutting if we are lucky).

Any thoughts...?


Rich said...

Don't forget to factor in the long term goal of implementing MiG.

I thought one of the advantages of MiG was the fact that at certain times of the year (spring lush) excess forage could (or should) be removed as hay to keep the forage quality high in your paddocks. Owning your own equipment would give you more flexibility to cut and bale a few paddocks at the exact time you wanted in order to maintain the forage quality of your paddocks. Then after a few years, after you have built up a sufficient surplus of stored hay, you can start increasing the amount of livestock you are grazing.

As a related side note, I was in western Iowa last summer, and it seemed like everybody was cutting and baling the roadsides, the borders around cornfields, etc. With all the activity, I came to the conclusion that either hay must be a pretty valuable commodity in that area and/or the local farming community takes great pride in the appearance of their properties.

Yeoman said...

Something that is sometimes done here, that you may or may not wish to consider, is placing your cattle on cornstalks in the winter.

The way this works is this. After the cornfarmers have harvested, they have a lot of corn lying around. And they have the stocks. You can sometimes make a deal with them to place your cattle on the corn, particularly if they've been unlucky and lost a field due to hail (good feed, but bad for the farmer).

This is sort of leasing feed in place, so to speak. They don't have to cut, and you don't have to throw bales.

There's other varieties of this, I'm sure. But throwing range cattle on farm ground for the winter is quite common here. People will even truck cattle a couple of hundred miles to do that (no me, last time we did that we drove them overland 30 miles, by horseback and all).

Just a thought.

Ethan Book said...

You are correct Rich, making hay during the spring or other times when you grazing can't keep up with the growth is one of the huge benefits and the flexibility of owning would be great!

As for the Iowa boys baling the ditches ... I think that is because of a couple of factors. With high corn and bean prices most land is in row crop now, so people were making hay in the water ways and ditches. Also, hay prices have been extremely good this year so that factors in ... Oh, and some of our Iowa farmers like to have good looking ditches!

Yeoman - Turning cattle out on corn stalks is done all the time. One reason we wouldn't do it is because we are going to be marketing our animals as grassfed. In our area there were A LOT of cornstalk bales put up this year to help supplement forages.

Yeoman said...

I've never seen a baled stalk. Interesting to know that's done.

Steven said...

Local farmers said that they had never seen corn stalks baled in our county.... until this year. People were baling like crazy. But you have to add stuff to it to make it palatable. Also, you have to give alot of minerals because some local guys have had cows that were fat on corn stalks die of starvation.

Blair H. said...

You already know my thoughts on this subject, but I thought I'd add a little more. Here in the west, one of the first things that someone buying a cattle ranch that's losing money does is get rid of the haying operation. I know you are wanting to be a farmer, not specifically a cattle rancher, but it's deceptive to think you are saving a lot of money by growing and cutting your own hay.

QuiltedSimple said...

We have the equipment - for us in Ohio, it's easier to do your own than waiting on someone to get to you to custom bale your hay - the rake we've had for 15 years or so, the baler for about 10? Both were brought used.

Cornstalk bales also make great bedding - far better than straw, especially when it's really wet. It's very absorbent, and at least around us, most farmers will just let us come in and roundbale it for nothing, just to get it out of the field.

Ethan Book said...

Blair H - I was wondering if you could explain in more detail why they cut out the haying operation on failing ranches out west. I would be interested in hearing some of the details.

Our family has been using the same New Holland baler for over 30 years now and it is still going strong, so I wouldn't have a problem buying something used because I know they can last. I just saw a used 3-point John Deere sickle mower for $200, and a rake won't cost much more if any more around here. So, if I can get the set up assuming I have a tractor and the family/time to do the work would it still be better for me to buy $1,500 - $2,000 per year for hay?

I guess another factor would be the MiG. If I'm going to have to clip the grass anyways when it gets ahead of my grazing does it not make sense to bale it?

Just throwing it out there ...

Kramer said...

It makes sense to bale it but you have to realize that when you cut hay off your land, you are pulling those nutrients from the soil. When your cow grazes your forage, they replace those nutrients through urea and manure.

This is where note taking and documenting come into play. Have a map of all your paddocks and always keep the dates of when your cows were in them. You will then always know how much rest each paddock has received.

But by documenting which paddocks you have baled off of, you will know which paddocks to feed your cattle hay on. As long as you are feeding your hay on your property, you will be placing those nutrients back in the ground. Otherwise, minerals and natural fertilizers will be pulled from one paddock and possibly placed on another. In MIG, you want to eventually have a balanced system throughout your property, resulting in predictable Average Daily Gains and overall health of the animals.

Ethan Book said...

Jason - You bring up a good point. When we make hay from our land we are using the nutrients from our animals and then adding them back to our land. Feeding the hay back on the same paddock that it was taken from would be ideal, but probably better suited to a place like Texas. In Iowa we have a thing called ... snow ... so we can't always have them winter on the same paddock we hayed from.

One way around that is the hay shed and sacrifice lot such as Joel Salatin mentions in his books. That way we can collect all the nutrients in one place to then add them back to our land.

I suppose that in some ways making hay from your own land is similar to you reasoning behind a closed herd. You can know what your livestock is eating and have control over it.

Hay seems to be a bit of a necessary evil, but it doesn't have to be all bad. In fact I kind of enjoy making hay! That being said, I am always interested when I read things about stockpile forages such as tropical corn for winter grazing. I'll be looking forward to results from that research!

Blair H. said...

The reason why our ranch cut haying out was that we were putting up a couple hundred tons a summer, and the cost of buying new equipment or repairing old equipment quickly took any advantage out of it for us. In our area (western NV) buying used equipment usually means buying something that will be guaranteed to break down. When you consider that our place is first and foremost a cattle ranch, and that we were spending 70% of our costs on haying and equipment, it was a real wakeup call. Say if you stop haying on 1,000 acres, and sell all our your tractors and equipment, and stop fertilizing heavily, you are left with 1,000 acres to stockpile winter forage and a lot less expenses. Buying hay from off the ranch means we are bringing in nutrients, and we have a good hay broker that gets us good cheap "cow hay" that might have mold in it but is great for cows. Our philosophy is to minimize the amount of tractors or specialized equipment on our operation, and feed as little hay as possible. If we get a thick snow crust we run the horses in a field before turning the cows out, they will paw through and break ground.

Ethan Book said...

Thanks for the details Blair H ... I think that does point out a couple of things. First of all, it could possibly take 10 to 20 years for our baler to bale the amount of hay that you are talking about doing in one year! So, that is why we can get by with used equipment. Secondly, after we have a MiG system in place that is working for us the amount of inputs we will have to add to the soil to produce hay (in Iowa of course) is going to be minimal ... so that is a cost that would be less here. And finally, I think we are on the same page as far as equipment goes. The less time I spend on the tractor and the more time I can do things on foot the better off I am and our farm is, but I think it is important to look at the economics of buying equipment in our situation.

But, most importantly I think I'm glad I live in Iowa! Not just because of the climate and the great soil/growing conditions that we normally have, but also because even though land can be pricey here I truly believe I can "break" into farming and even approach or make full-time on my 40 acres (and possibly expanding to rented land in the future). In those arid regions of the US it would be that much more difficult, but from others I have talked to it is still possible.

Yeoman said...

To add to what Blair stated, where I run my cattle, they had a hay farming operation, a substantial one at that, some 30 miles away. Ultimately it was sold too, as it simply wasn't cost productive for the ranch.

I wasn't involved in the hay farming operation, although my wife had been at one time, but I wasn't in favor of selling it. From time to time, there's been some discussion of trying to farm again, but so far it hasn't happened.

Out here it seems hay farmers, at least in this county, tend to be dedicated farmers. That is, they may raise livestock, but only as a sideline to their main business, farming. Cattlemen mostly stick to cattle. Hay farming is very time intensive, at least here, and most stockmen couldn't farm hay if they didn't have help. There are plenty of ranches that do both, but they have the labor (probably family members) to do that.

Yeoman said...

Of course, the plus side of farming your own hay would be, presumably, that you'd be less subject to the wild market fluctuations in hay prices, and could assure the quality of the hay.

JRG said...

Hi again, since I'm here I've been reading some of the other threads and they are right up my alley.

Dave Pratt who runs the 'Ranching for Profit' schools did a detailed financial analysis of all the ranches involved in their Executive Link program. One of the things he was looking at was return on assets (ROA), one of the better measures of true profitability and sustainability. He found the ranhces with the least amount of farming activities were most profitable and those with the most farming were least profitable. It was a very straight line relationship. That is why so many here in the West are trying to get away from making and feeding hay.

Several ranches I know have gone from feeding 2 1/2-3 tons of hay/cow every winter to feeding less than 1/2 ton/cow in about a five year time period. Those are the people who are ready to cope with $4/gallon diesel. Most of it has been done by changing their land use strategy to graze the irrigated land in the summer, rather than making hay, or stockpile it for winter grazing. Some have switched their permits to grazing public rangeland in the winter. Most also have moved to later calving seasons.

Burke Teichert, who is the general manager of several of the Mormon church Deseret Ranches, once summed it all up for me when he said, "The only bad thing about ranching is farming"


Ethan Book said...

JRG - Getting away from hay is the ultimate goal ... I agree with that. But, as you mentioned they haven't totally gotten away from it yet. I think one difference is that I am talking about "farming" and others are talking about "ranching".

I guess one thing I would throw out is that if ranchers are going to all be buying their hay then that means that there will be "farmers" out there that are only growing hay so the can sell to the ranchers. I'll let others decide if this is a good thing or a bad thing, but it is probably better for the rancher than it is for the hay "farmer".

Dave_Flora said...

I think your approach to feeding hay really depends on what sort of outcome you want your animals to have during the winter. I mean, there is the 'american idea' that daily weight gains should be maintained throughout the year, which would make heavy hay feeding imperative (and expensive!). However, by having stockpiled forage, selling off steers/excess cattle, and accepting some "slower growth" in your breed stock over the winter, the amount of hay (and expense) you have to have is less.
Also, regarding hiring hay work done, never forget how powerful a tool barter can be for those situations. It takes an established relationship, but offering something in trade will often lower or eliminate the costs of having hay made. Community is a powerful thing...

Ethan Book said...

Dave - Good thoughts. It is important that your growing steers and calves gain over the winter, but they can gain slowly in the winter and then make up for it in spring and summer ... it is proven.

Selling off excess cattle and steers is not something I want to do in a direct market/closed herd system though. I think there is a place for hay and a place for stockpiled forages. The key is to have the right balance and work for the lowest inputs possible.

Barter is a key, and I'm glad you brought that up ... I am all about trading work for work :) Or, if I'm on the receiving end I'm all about trading nothing for work ;)

JRG said...

Hi Ethan,

Actually we used to live in the Midwest farming country in Missouri. We finally got to the point of making no hay and feediing no hay. We did it by maintaining a base beef cow herd, but our cow number was based on what we could graze through the winter, not summer stocking as most cow herds are.

All the excess spring forage we used to make into hay, we brought in custom grazed animals to use it all and just made sure to have them gone by Aug 1. Then everywhere they had grazed, we stockpiled for winter cow feed. We even took fall-calving cows all the way through winter with nothing but stockpiled pasture. Mostly fescue, but we had a lot of other stuff too.

BTW, we were just 60 miles below the Iowa border. Grazing cost us about 1/3 of what hay feeding would have.

Yes, there will be a place for 'farmers' to keep making hay so 'ranchers' can buy it.

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