AG and Natural Resources

PRICING HAY

The practice of purchasing forages, especially hay by small scale buyers, has for many years been based primarily on a visual appraisal by the buyer, without the guarantee of quality or nutrient content. Visual estimates are an essential part of hay evaluation to detect mold, foreign matter, leafiness, color, odor, stemminess, leaf attachment, sunbleaching, maturity, etc. When used alone they are unreliable as indicators of forage nutrient content. This requires a laboratory analysis.

Animal performance depends on the quality of the ingredients in the ration. Feeding value is determined by the concentration and digestibility of the nutrients. Forage has economic value because of the production it can generate. Higher quality forages are more efficient, since less forage is needed to produce the same quantity of animal product. If the market is working effectively, buyers will bid up the price of higher quality forage until the added profits from its use are offset by a higher forage price. Thus, growers of higher quality forage should expect to receive a price premium. While there are several methods for adjusting forage prices, the price ultimately will have to fall within the bounds of the local forage market that is controlled by supply and demand.

The basis for equitable pricing is testing for nutrient content. Forages change considerably in nutrient content during the growing season. As a forage crop matures the crude protein content decreases and the fiber content increases. Forages that are rained on in the field during the curing process will increase in fiber percentage, due to leaching of soluble nutrients. Any increase in fiber content is associated with a decrease in digestibility.

Feed pricing guidelines must be: (1) easy to understand, (2) based on a simple, fast, inexpensive test, (3) designed to reflect the relative difference in animal performance as related to feed quality, and (4) fair to both the feed producer and the purchaser.

To calculate an adjusted price for an individual hay you need to have a starting point. The hay grower’s associations of Washington, Idaho and Oregon jointly support the Tri-State Reference Alfalfa Hay Test as a standardized method of testing. The Tri-State method provides you with test result values for percent dry matter (DM), crude protein (CP), and acid detergent fiber (ADF) and a calculated value for total digestible nutrients (TDN). The reference standards for alfalfa hay on a 100% dry matter basis used to compare against are: 18.5% (CP), 32.0% (ADF), and 58.7% (TDN). This is comparable to the USDA quality designation “Good”.

Once these values are established it is a simple calculation to adjust what your hay is worth compared to the price of the reference hay. For example if the hay you want to compare has 20% CP, 30% ADF and 60.3% TDN on a dry matter basis and the price of hay of reference quality is $90 per ton the adjusted price would be calculated as described below. Since the hay in question is higher in CP and TDN and lower in ADF a higher price is justified.

Adjusted price =

Price of reference hay X % CP of compared hay   X   % ADF of reference hay*

                                         % CP of reference hay         % ADF of compared hay

*The reason reference hay is on the top is because this is an inverse relationship. In other words for ADF the lower the better.

Adjusted price = $90/ton X 20% X 32% = $103.78/ton

                                        18.5%    30%

This same method with a little variation can also be used with other hays. Instead of using an ADF adjustment and the Tri-State standards the grower and buyer need to agree on the standards and price for a reference hay of the same type (hay typically grown in the area).

For example, the agreed upon reference hay is 90% DM, 14% CP, and 50% TDN on an as fed basis with a price of $80 per ton. The following calculations would be used to obtain the adjusted price. A price is to be determined on a grass hay that tests 87% DM, 12% CP and 48% TDN all on an as-fed basis. Since the hay in question is lower in CP, TDN, and DM, a lower price is justified.

Adjusted price =

Price of reference hay X % DM of compared hay

                                     % DM of reference hay

                                 X % CP of compared hay    X   % TDN of compared hay

                                     % CP of reference hay         % TDN of reference hay

Adjusted price = $80 X 87% X 12% X 48% = $63.63/ton

                                    90%     14%      50%

The key to fair pricing of hay is information. Testing and accurate information for reference hay prices are essential. Wet chemistry testing is more accurate, but near infared (NIR) testing is quicker, cheaper and almost as accurate.

For some special use hays, such as horse hay, the major factors in pricing are visual quality (mold, dust, color, weeds, etc.) and supply and demand. The highest nutrient quality hay is not necessarily the best for horses.

References:

EB1268, Forage Pricing Methods
UI/C15348, Buying and Selling Alfalfa Hay, Corn Silage, Barley
EM 2568, How to Determine the Monetary Value of Columbia Basin Alfalfa Hay.

Compiled by John Fouts. For more information, contact WSU Extension, (509) 477-2048.

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