Introduction
Hay production costs have risen sharply in recent years.
Fuel is unpredictable, fertiliser prices swing wildly, and machinery is more expensive than ever.
If you’re not budgeting accurately, you’re not truly measuring profit — and many farmers lose money without realising it.
This guide shows you how to build a modern hay budget that reflects the real cost of making each bale.
1. Break Down Your Costs Into Five Core Categories
A proper hay budget begins by listing the five expense groups:
1. Variable costs
Costs that change per acre or per bale:
- fuel
- seed
- fertiliser
- herbicide
- twine or net wrap
- baling wire
- custom work (if hired)
2. Fixed costs
Costs that don’t change based on production:
- insurance
- land payments / rent
- shed repairs
- office expenses
- utilities
3. Equipment depreciation
The value your machinery loses each year.
4. Labour
Paid labour and the value of your own time.
5. Overheads
General business costs not tied to a field.
These must all be included for a true cost per bale.
2. Know Your Field Costs (Per Acre)
Field costs typically include:
✔ Tillage or field preparation
(if applicable)
✔ Seed
Grass and legume mixes vary widely in price depending on species.
✔ Fertiliser
Nitrogen is one of the biggest variable expenses.
✔ Fuel
Fuel costs per acre depend on:
- number of passes
- machinery size
- terrain
- moisture
✔ Sprays & weed control
Essential for high-quality hay.
By calculating all field costs per acre, you can divide by yield to get cost-per-bale.
3. Calculate Drying & Baling Costs
This includes:
✔ mowing
✔ tedding
✔ raking
✔ baling
✔ wrapping (for haylage)
✔ transport from field
✔ stacking and storage
Each machine uses:
- fuel
- labour
- repairs
- depreciation
Add these together for a per-acre operational cost.
4. Machinery Depreciation — The Most Neglected Budget Item
Machines lose value every year, even if they sit still.
Typical depreciation periods:
- tractors: 10–15 years
- balers: 7–10 years
- rakes & tedders: 10–12 years
- mowers: 7–10 years
Calculate depreciation as:
(Purchase price – resale value) ÷ years of use
This gives annual depreciation, which must then be allocated per bale.
5. Factor in Repairs & Wear
Hay machinery wears fast.
Common annual repair budgets:
- mower blades/knives
- baler knotters, chains, belts, rollers
- rake tines
- pickup teeth
- bearings & grease
Rule of thumb:
Budget 5–10% of machine value per year for repairs.
6. Add Labour Costs — Including Your Own Time
Even if you don’t pay yourself hourly, your time has value.
Calculate:
- hours mowing
- hours raking
- hours baling
- hours transporting
- stacking time
- maintenance time
Use a reasonable farm labour rate (example: $15–$25/hour).
7. Storage and Barn Costs
These include:
- building depreciation
- rent or loan payments
- repairs
- pallets & ground protection
- rodent control
- electricity for ventilation
Barn-stored hay is higher value — but it costs money to store.
8. Determine Cost Per Bale
Use this formula:
Total production cost per acre ÷ bales produced per acre = cost per bale
Example:
- $260 per acre total cost
- 100 small squares per acre
= $2.60 cost per bale
You can then price accordingly based on:
- type of hay
- market demand
- bale type
- quality
- packaging
- delivery
9. Include Transport & Delivery in Your Budget
If you deliver hay, add costs for:
✔ fuel
✔ time
✔ wear on truck/trailer
✔ insurance
✔ loading labour
✔ unloading time
Delivery often allows you to charge more per ton — but only if priced into the budget.
10. Reassess Your Budget Every Season
Costs change.
Fuel, fertiliser and parts can spike suddenly.
Review your hay budget:
- before planting
- after first cut
- mid-season
- at year-end
A flexible budget protects your profit margins.
Conclusion
With rising fuel, machinery and input prices, a clear hay budget is more important than ever.
By tracking expenses per acre and per bale, including depreciation and labour, you ensure that your hay operation is profitable — not a guess.
At PremiumHaySupply.com, we use detailed budgeting to keep our hay business sustainable, efficient and competitive.
How to Create a Hay Budget That Reflects Rising Fuel, Seed & Equipment Costs.
Introduction
Hay production costs have risen sharply in recent years.
Fuel is unpredictable, fertiliser prices swing wildly, and machinery is more expensive than ever.
If you’re not budgeting accurately, you’re not truly measuring profit — and many farmers lose money without realising it.
This guide shows you how to build a modern hay budget that reflects the real cost of making each bale.
1. Break Down Your Costs Into Five Core Categories
A proper hay budget begins by listing the five expense groups:
1. Variable costs
Costs that change per acre or per bale:
2. Fixed costs
Costs that don’t change based on production:
3. Equipment depreciation
The value your machinery loses each year.
4. Labour
Paid labour and the value of your own time.
5. Overheads
General business costs not tied to a field.
These must all be included for a true cost per bale.
2. Know Your Field Costs (Per Acre)
Field costs typically include:
✔ Tillage or field preparation
(if applicable)
✔ Seed
Grass and legume mixes vary widely in price depending on species.
✔ Fertiliser
Nitrogen is one of the biggest variable expenses.
✔ Fuel
Fuel costs per acre depend on:
✔ Sprays & weed control
Essential for high-quality hay.
By calculating all field costs per acre, you can divide by yield to get cost-per-bale.
3. Calculate Drying & Baling Costs
This includes:
✔ mowing
✔ tedding
✔ raking
✔ baling
✔ wrapping (for haylage)
✔ transport from field
✔ stacking and storage
Each machine uses:
Add these together for a per-acre operational cost.
4. Machinery Depreciation — The Most Neglected Budget Item
Machines lose value every year, even if they sit still.
Typical depreciation periods:
Calculate depreciation as:
(Purchase price – resale value) ÷ years of use
This gives annual depreciation, which must then be allocated per bale.
5. Factor in Repairs & Wear
Hay machinery wears fast.
Common annual repair budgets:
Rule of thumb:
Budget 5–10% of machine value per year for repairs.
6. Add Labour Costs — Including Your Own Time
Even if you don’t pay yourself hourly, your time has value.
Calculate:
Use a reasonable farm labour rate (example: $15–$25/hour).
7. Storage and Barn Costs
These include:
Barn-stored hay is higher value — but it costs money to store.
8. Determine Cost Per Bale
Use this formula:
Total production cost per acre ÷ bales produced per acre = cost per bale
Example:
= $2.60 cost per bale
You can then price accordingly based on:
9. Include Transport & Delivery in Your Budget
If you deliver hay, add costs for:
✔ fuel
✔ time
✔ wear on truck/trailer
✔ insurance
✔ loading labour
✔ unloading time
Delivery often allows you to charge more per ton — but only if priced into the budget.
10. Reassess Your Budget Every Season
Costs change.
Fuel, fertiliser and parts can spike suddenly.
Review your hay budget:
A flexible budget protects your profit margins.
Conclusion
With rising fuel, machinery and input prices, a clear hay budget is more important than ever.
By tracking expenses per acre and per bale, including depreciation and labour, you ensure that your hay operation is profitable — not a guess.
At PremiumHaySupply.com, we use detailed budgeting to keep our hay business sustainable, efficient and competitive.
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