A weekly report prepared by the staff of the Ministry of Agriculture, Food and Rural Affairs (OMAFRA).
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PUTTING HAY INTO A CASH CROP ROTATION
The soil health benefits of having a perennial forage in the crop rotation are better than any cover crop, because its living roots are in the soil for much longer. Hay prices have been strong over the last couple of years, and there is always a market for high-quality hay. A feasibility study done by the Ontario Hay and Forage Co-op revealed that hay worth $260/tonne ($0.12/lb) can be as profitable as growing corn or soybeans. Based on supply, local markets vary across Ontario and year-to-year in terms of hay prices, but premium markets are much more stable – think dairy, horse and export-quality hay. If growers can meet the specifications of buyers in a premium market, hay can be an excellent cash crop.
Producers must understand their market before they start growing hay. “Quality” means different things to different people, because buyers are trying to match the nutritional value of the hay with the nutritional needs of the livestock they are feeding. Ruminant markets value high protein and high digestible fibre, while horse markets value soft, green, dustfree hay that’s more mature. International buyers all have their own criteria of what good quality hay should be. Producers considering hay as a cash crop should talk to potential buyers to find out what those buyers are looking for and which market is the right fit for their operation – even before they buy equipment or plant anything – to set themselves up for success.
A low-cost way to get hay into the rotation is to trade acres, rent acres to a hay grower, or sell standing hay. This works best for operations whose neighbours have livestock and harvesting equipment. Trading acres or renting out the land lets both producers continue to specialize, while the land gets the benefit of the forage crop. Selling standing hay uses the planting and fertilizing equipment the crop operation already has but shifts the responsibility of harvest onto the buyer. Ideally, the price for standing hay should cover the costs of establishing and growing the crop – including nutrient removal – and add a little bit of profit. However, the local price of baled hay and other feedstuff will influence how much a livestock producer is willing to pay, so a fair price for both parties may take a bit of negotiation.
Share-cropping with some like-minded producers is another way to build a hay enterprise on a crop farm. Working together lowers initial investment in hay equipment, because each partner buys some of what the pair/group needs. It also builds in a harvest crew that can bale and load up the hay quickly, which minimizes wheel traffic damage to the regrowth.
If marketing hay is not appealing…
There are options for producers who just want to grow a great crop and leave the marketing to someone else. Many members of the Ontario Hay Marketing Forum are brokers as well as growers. They have clients all over North America looking for quality hay and often buy from other farmers to fill orders. Contact information for forum members can be found at http://ontarioforagecouncil.com/features/members.
Processors that cube or pelletize hay for the horse and pet feed markets offer contracts to growers. Like other contracted crops, they specify the quality parameters the hay needs to meet. Agronomy support is a key component of meeting those crop specifications. Some processors send out their own agronomists, while others use a third-party service to give their growers advice. Interested growers should contact processors directly to see if they have contracts available.
The Ontario Hay & Forage Co-operative is recruiting members to grow hay for overseas markets. This group of producers understand what buyers in the Middle East are looking for and are developing a network of growers and processing facilities to meet those criteria. Their system revolves around using hay dryers to remove the weather risks associated with making dry hay, then double-compacting the bales to fit the most hay possible into a shipping container. More information about the co-op and their activities can be found at: https://ontariohayandforagecooperativeinc.wildapricot.org/.
There are many options for getting into the hay business that suit different sized farms, equipment investments and amounts of marketing effort. Hay that commands a premium price takes the same level of management as other premium crops (e.g. IP soybeans), but it also offers soil health benefits that cannot be matched by annuals.
Written by Christine O’Reilly, Forage and Grazing Specialist, OMAFRA
