What is the Economic Cost of a Bale of Hay?
Introduction
Summertime in Oklahoma is hay baling season. Native grasses are typically baled in late June to mid-July. Bermudagrass is usually harvest in June through September and sometimes left stockpiled (uncut) for fall grazing. While market prices of hay are published by USDA AMS (see Hay Reports), less is published about the economic cost of putting up a bale of hay. Producers often omit the opportunity cost of nutrients taken up by forages and the opportunity of owned land. If these economic costs are not considered, producers might be selling hay at an economic loss.
Nitrogen
Bermudagrass hay with 12% protein is 1.9% nitrogen (0.12 × 0.16 = 0.019.) (Coover undated). Nitrogen fertilizer is usually not applied to native grasses , but bermudagrass hay meadows are fertilized at least annually. Even if no nitrogen is lost due to volatilization or other plant uses (e.g., root growth), a ton of bermudagrass needs at least 32 pounds of N. However, Oklahoma State University reports more than this minimum is necessary to reach yield goals. Oklahoma Cooperative Extension Service recommends 50 pounds of N per ton of bermudagrass after the first ton of production. So, assuming a 3-ton goal, 100 pounds of N are recommended (Redfearn et al., 2016). With urea (46-0-0) prices at $525 per ton (applied), N costs $0.57 per pound which equates to $57 for a 3-ton yield goal or $19 per ton for bermudagrass hay.
Phosphorus
Native hay typically is 0.18% phosphorus, or 3.6 pounds of phosphorus per ton of native hay (Beck et al., 2021). Bermudagrass hay is typically 0.24% phosphorus, or 4.8 pounds of phosphorus per ton of bermudagrass hay (Beck et al. 2021). Many soils in Oklahoma have low levels of phosphorus. Continued haying without applying P2O5 further depletes phosphorus levels, affecting yield and potentially altering plant species present. So, there is an implicit value (or an opportunity cost) of phosphorus removed by haying.
Diammonium phosphate (DAP) is commonly used as a source of phosphorus. DAP contains 18% N and 46% phosphate (P2O5). To find the pounds of phosphate needed to replace the pounds of the phosphorus taken up by hay, the pounds of phosphorus are divided by 0.43. For example, a ton of native hay with 0.18% phosphorus has 3.6 pounds of P. To replace 3.6 pounds of P using P2O5. 8.37 pounds of P2O5 is required. Since DAP is 46% P2O5 , 18.2 pounds of DAP is needed per ton of hay to replace P taken of. Similarly, a ton of bermudagrass is 0.24% P. So, to replace the P taken of in bermudagrass hay (per ton), 24.3 pounds (0.0024 × 2000 / 0.43 / 0.46) of DAP is needed. A worksheet is provided in Table 1 to assist with calculating phosphorus and potassium removal costs.
To calculate the cost of P replacement on native grass, the price of DAP (applied) is multiplied by the pounds needed. At a price of $810 per ton for DAP (applied), 24.3 pounds of DAP costs $9.84 per ton of native hay.
1 Native hay with 7% protein contains 1.12% nitrogen as protein is 16% nitrogen. (0.07 × 0.16 = 0.0112).
Since DAP contains 18% N and bermudagrass requires N application, we assign the N the same value as if it was supplied with urea, $0.57 per pound of N. A pound of DAP then has $0.10 worth of N ($0.57 × 0.18). At $810 per ton (applied), or $0.405 per pound, for DAP, the cost of phosphate from DAP is $0.663 per pound. Converting to cost per pound of P, divide the cost of phosphate by 0.43 to get $1.54 per pound P as supplied by DAP. Then, 24.3 pounds of P as supplied by DAP (net of N value) costs $37.42 per ton of bermudagrass hay.
Potassium
Both native grass hay and bermudagrass hay are about 0.15% potassium (K) (Coover undated). Much of Oklahoma has soils with K levels above sufficiency. However, in soils with low levels of potassium, there is an opportunity cost to potassium removal via hay production. One ton of hay has 30 pounds of potassium. Potash (0-0-60), which is 60% K2O, is currently about $515 per ton (applied). To convert one ton of K2O to pounds of K, divide 2000 by 1.2046 which is 1660.3 pounds. Since potash is 60% K2O, multiply 1660.3 by 0.6 to get 996.2 pounds of K in one ton of potash. Last, divide the cost of a ton of potash, $515, by 996.2 to get $0.52 as the cost of a pound of potassium as supplied by potash. Since native grass and bermudagrass hay have 30 pounds of K per ton, each ton of hay removes $15.60 worth of potassium.
Table 1. Calculations for Phosphorus and Potassium Removal and Cost.
Land Charge
For rented land, the per acre land rent is used to calculate land cost. For owned land, the rental rate represents the opportunity cost of land—that is the value of the next best use for owned land. Land rental rates vary across Oklahoma. For our purposes, we use $20 per acre for the land rental rate. Oklahoma State University reports pasture rental rates from producer surveys (Sahs 2021). The last survey was conducted for 2020-2021.
Pesticides
Pesticides are generally not used on prairie hay unless noxious weeds are present or selling weed-free hay. Pesticides are more commonly used on bermudagrass hay for weed control. Also, fall armyworms can be a problem in both native hay and bermudagrass hay meadows but usually are not present in relevant numbers until after native hay has been cut. Bermudagrass grass may need to be treated for armyworms and several pesticides are labeled for use in Oklahoma (see CR-7193). Harvesting bermudagrass may be the most economical means of controlling a fall armyworm infestation.
Harvest and Hauling Expense
To capture the opportunity cost of hay harvest, custom rates are used. The latest custom rate survey from Oklahoma Co-operative Extension Service has a median cost of $25 per bale for a five-foot wide bale for all harvest activities (Sahs, 2022). The median cost for hauling 5-foot width bales is $5 per bale.
Cost Summary
The costs described above are compiled in Table 2 for both prairie (native) hay and bermudagrass hay.
| Production Costs | Cost per bale | Cost per ton |
|---|---|---|
| Nutrients (Nitrogen) - 1.12% | ||
| Nutrients (Phosphorus) - 0.18% | $ 5.16 | $ 7.37 |
| Nutrients (Potassium) - 0.15% | $ 0.00 | $ 0.00 |
| Land Rent - $ 20 / ac | $ 12.73 | $ 18.18 |
| Pesticides - $ 0 / ac | $ 0.00 | $ 0.00 |
| Harvest Cost | $ 28.00 | $ 40.00 |
| Hauling | $ 5.00 | $ 7.14 |
| Total Cost | $ 50.89 | $ 72.70 |
| Production Costs | Cost per bale | Cost per ton |
|---|---|---|
| Nutrients (Nitrogen) - 1.60% | $ 12.78 | $ 18.26 |
| Nutrients (Phosphorus) - 0.24% | $ 6.88 | $ 9.83 |
| Nutrients (Potassium) - 0.15% | $ 0.00 | $ 0.00 |
| Land Rent - $ 20 / ac | $ 4.67 | $ 6.67 |
| Pesticides - $ 12 / ac | $ 2.80 | $ 4.00 |
| Harvest Cost | $ 28.00 | $ 40.00 |
| Hauling | $ 5.00 | $ 7.14 |
| Total Cost | $ 60.13 | $ 85.90 |
Hay Prices
The costs of hay production need to be compared with prices received for hay (please see the USDA Agricultural Marketing Service reports prices from recent hay sales). Historical prices from USDA National Agricultural Statistics are summarized for the past 20 years in Table 3. Note, the hay prices reported in Table 3 are an average of prairie and bermudagrass hay prices. This means that prairie hay prices were lower than the averages report and bermudagrass hay prices were higher than the reported values. If a producer’s economic cost of production often exceeds market price, it may be advisable to purchase hay instead of continuing to bale hay.
| Year | $ / ton | $ / 1400# Bale |
|---|---|---|
| 2023 | $ 107.00 | $ 74.90 |
| 2022 | $ 112.00 | $ 78.40 |
| 2021 | $ 113.00 | $ 79.10 |
| 2020 | $ 101.00 | $ 70.70 |
| 2019 | $ 100.00 | $ 70.00 |
| 2018 | $ 94.00 | $ 65.80 |
| 2017 | $ 80.00 | $ 56.00 |
| 2016 | $ 78.00 | $ 54.60 |
| 2015 | $ 79.00 | $ 55.30 |
| 2014 | $ 85.00 | $ 59.50 |
| 2013 | $ 95.00 | $ 66.50 |
| 2012 | $ 116.00 | $ 81.20 |
| 2011 | $ 108.00 | $ 75.60 |
| 2010 | $ 74.00 | $ 51.80 |
| 2009 | $ 76.00 | $ 53.20 |
| 2008 | $ 76.00 | $ 53.20 |
| 2007 | $ 71.00 | $ 49.70 |
| 2006 | $ 88.00 | $ 61.60 |
| 2005 | $ 56.00 | $ 39.20 |
| 2004 | $ 46.50 | $ 32.55 |
*Source: USDA National Agricultural Statistics Service (2024).
References
Beck, P., Lalman, D. & Moehlenpah, A.. 2021. “Nutritive Values of Feeds” in Beef Cattle Manual 8th Edition, Oklahoma Cooperative Extension Service, Stillwater, Oklahoma: Oklahoma State University.
Coover, J. Undated. “Unaccounted Costs: Nutrients in Hay.” Available at: https://www.wildcatdistrict.k-state.edu/featured-topics crops-soils/news-articles/4.16.21%20JC%20Value%20of%20Hay%20Column.pdf (accessed 5-August-2024).
Redfearn, D., Arnall, B., Zhang, H. & Rice, C.. 2016. “Fertilizing Bermudagrass Hay and Pasture,” Oklahoma Cooperative Extension Service Factsheet PSS-2263. Available at: https://extension.okstate.edu/fact-sheets/fertilizing-bermudagrass-hay-and-pasture.html (accessed 11-July-2024).
Royer, T.A.& Talley, J.L. 2022. “Management of Insect Pests in Rangeland and Pasture,” Oklahoma Cooperative Extension Service Current Report CR-7193. Available at: https://extension.okstate.edu/fact-sheets/management-of-insect-pests-in-rangeland-and-pasture.html (accessed 18-July-2024).
Sahs, R. 2021. “Oklahoma Pasture Rental Rates: 2020-21,” Oklahoma Cooperative Extension Service Current Report CR-216. Available at: https://extension.okstate.edu/fact-sheets/oklahoma-pasture-rental-rates-2020-21.html (access 11-July 2024).
Sahs, R. 2022. “Oklahoma Farm and Ranch Custom Rates, 2021-2022,” Oklahoma Cooperative
Extension Service Current Report CR-205. Available at: https://extension.okstate.edu/fact-sheets/oklahoma-farm-and-ranch-custom-rates-2021-2022.html (accessed 18-July-2024).
USDA National Agricultural Statistics Service. 2024. Quick Stats Lite. Available at: https://www.nass.usda.gov/Quick_Stats/Lite index.php (accessed 05-August-2024).