Hay Prices and Buyers

I've been part of a hay operation in IL for about 2 years. I help produce the hay as well as market the hay. This year, we put up over 52,000 small squares of hay--straight alfalfa and grass mix. I've been watching the markets and have seen how certain markets (like the price of milk) will trickle down to affect the market price of hay. I also have customers that watch the prices of hay at auctions and think that we should have comparable prices right out of the barn. My boss knows down to the penny how much it costs to produce a bale of hay (he's a numbers guy) and he isn't about to give the stuff away. He has a floor price for each type of hay we sell but I have been running into customers that want our bottom price or even lower. It doesn't help when other producers haven't figured the cost of production into their sale price and undercut the folks that are trying to make a decent profit. Our profit margin is only around 10% - 15% per bale. I have been talking with hay buyers from other states and they want to buy our hay but the freight costs will usually turn them away or they will ask us for a cut in the price of the hay to offset that. We can only come down so far. Perhaps they think since gasoline prices have dropped that other fuel prices must have dropped. All I know is that I am starting to see a trend of persnickety hay buyers (more so than usual) when it comes to large purchases. I understand, its a lot of money for hay and freight but when I average out the freight costs per bale it usually is around $1 to $1.50 per bale for a 200 mile delivery. We're hoping the weather becomes "more wintry" and that will increase the need for more hay. I guess its just feast or famine. I'm just wondering how everyone else is doing in selling their hay.

Hay Prices and Buyers