Rental rates and fertilizer/lime

vendredi 18 septembre 2020

I am working on renting a hayfield about 35 acres that is part of a pasture that I already rent.  Trying to come up with a plan that will be fair to both me and the landlord.  Ohio doesn't really have a rental rate for the eastern part of the state.  We do quite a few different things with the ground we have.  Some is free, some the owner gets a part of the hay, and others we pay rent on, most is $20-30/acre.  Hay in this area goes for $20-40/bale, depending on quality.  We can sell $30 hay every day, $40 hay takes a little more work.  Fertilizer removal rate on this field would be about $71.50/acre (64-46-120 applied).  Our 4x5 bales weigh 800-1000 lbs.  An average 1st cutting would give us about 5 bales/acre.  This year we were a little below that on average.  Ohio average yield is about 2.5-3 tons per acre, which we get pretty close to.  It costs us about $12/bale to make a bale on the 5 bale average, which does not include rent or fertilizer.  That does include equipment, fuel, labor.  Landlord will also want lime.  2 ton/acre applied is about $91/acre here.  I need to take soil samples before I make any decisions just to be sure where we are.  This ground just been mowed 2-3 times/year.  Other farmers in the area, but owner isn't going to let anyone take it for free.

 

I said all of that to say this.  If I break this all down to a cost per bale on our 5 bale average:  Fertilizer $15.23 + Production $12 = 27.23/bale.  If we jump up to 7 bales/acre fertilizer costs go down, so bale cost is $22.88.  Not including rent or lime.  Hauling costs $5/bale.

 

I'm thinking instead of a rent per acre to offer a rent per bale, in the neighborhood of $4-5 per bale.  At our 5 bale/acre average, this would be around $20/acre, which is pretty typical of our rent.  It would also give me an incentive to a really good job, because as my production increases my cost to make a bale goes down.  Also, the landlord would make more the more hay I make.  Would this be a good way to approach the owner?  My only concern is if he wants $10/bale, I don't think that I can make that work.  

 

On lime, who is responsible?  As I said, I haven't pulled any soil samples yet.  Hay hasn't been removed from this field in 3-4 years, it's just been mowed.  We probably wouldn't have to apply lime every year, maybe every 2-3 years depending on pH.  At $91/acre for 2 ton applied, we're looking at $6-10/bale additional for lime.

 

So, using these figures on let's say 7 bales/ac/year (hoping more fertile fields=more hay) 3 tons/ac

$12 Production

$10.21 Fertilizer

$4.33 Lime (2 T/3 yrs)

$5 Hauling

$5 Rent

 

$36.54 grand total to make a bale

$85.26/ton estimate

 

 

So, long story short....will this work?  Any other suggestions?  Do my numbers line up with yours?

I have my scratch pad of figures if anyone would like to take a look.



Rental rates and fertilizer/lime

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