# Custom rates now vs 25 yrs ago.



## swmnhay (Jun 13, 2008)

Most people here go off the Iowa Custom rate survey.So I was looking it at it today and was reflecting back 25 yrs ago.

25 yrs ago was charging $7 for a 1350 lb rd bale with string.Baler was 16K.Fuel was .60 Labor was $5 hr.
Now $12 for a 1500 lb bale with netwrap.Baler lists for 54K.Fuel is 3.50.Labor is $15

Swathing hay with NH 116 swing tongue that cost 14K? new for $10.Now $15 with a disc mower/cond that cost 3 times as much

Something is totaly out of wack here.


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## JD3430 (Jan 1, 2012)

You're not kidding. I have crunched all my numbers and found I make more money mowing fields than haying them......
I wasn't haying 25 yrs ago and those numbers are shocking.


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## brandenburgcattle42 (Sep 6, 2012)

I agree but there is always someone out there to do it for nothing thus driving custome rates down makes it hard to make a dollar.


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## IAhaymakr (Jun 4, 2008)

You made me stop and figure here. It may not be as bad as it sounds if you factor in the increases in efficiency that we have with today's mowing equipment. I started cutting for hire (and doing my own hay) in the nineties with a 499 new holland. Good machine, but pretty slow. Today we use a 30' Krone disc machine. If we assume for comparison that I cut the same number of hours back then as we do now, and figure all equipment as purchased new, I am actually more efficient now.
My costs for fuel, repairs, depreciation, and labor per acre were $4.49 with the new holland, and like you said we got about ten bucks an acre to cut. There were good fields where we could maybe gross $60 an hour but fifty always comes first. Throw in some gopher mounds and we sometimes only made $25 per hour for man and machine combined. I remember those days too well.
Fast forward to the present and my costs for fuel, repairs, depreciation and labor were $3.92 per acre last year. I charged $12 per acre to cut, so there was actually more profit per acre than with the old machine from 20 years ago. And these days there is much less variability in acres per hour. The self propelled disc machine averaged just over 30 acres per hour for the year in a wide variety of conditions regardless of crop, gophers, etc. 
I should also add that I did not include any expense for the tractor needed to tow the haybine. Mine was an old 4430 back then, and it did other jobs so figure it how ever you like. Bottom line here is that we are just a lot more efficient now than we were back then.


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## carcajou (Jan 28, 2011)

swmnhay said:


> Most people here go off the Iowa Custom rate survey.So I was looking it at it today and was reflecting back 25 yrs ago.
> 
> 25 yrs ago was charging $7 for a 1350 lb rd bale with string.Baler was 16K.Fuel was .60 Labor was $5 hr.
> Now $12 for a 1500 lb bale with netwrap.Baler lists for 54K.Fuel is 3.50.Labor is $15
> ...


I hear you, and for the first time i'm having a hard time making the numbers work. The rising cost of diesel, and the ridiculous price of used mfwd loader tractors has me exploring other options. I hate the idea of buying new tractors but right now it's penciling out better and that scares the hell out of me.


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## hog987 (Apr 5, 2011)

The old adage around here for hay shares is 50/50 and I was just figuring yesterday that it is better to do just custom work instead of those shares. Even worse most people that want those shares on there land dont fertilize. But there is always some one willing to do that cause they need the hay. My figuring was on $15 an acre for cutting and $10 per bale made.


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## carcajou (Jan 28, 2011)

hog987 said:


> The old adage around here for hay shares is 50/50 and I was just figuring yesterday that it is better to do just custom work instead of those shares. Even worse most people that want those shares on there land dont fertilize. But there is always some one willing to do that cause they need the hay. My figuring was on $15 an acre for cutting and $10 per bale made.


I went to a 2/3 share on any hayland i do on shares. I would rather just cash rent and make all my own decisions.


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## hog987 (Apr 5, 2011)

Who usually buys the fertilizer on the 2/3 shares. I got an agreenment with dad on 50/50. But he buys the fertilizer and I get a sales comission to sell his half of the hay. So it really is closer to 2/3. Yes I like cash rent too.


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## Tim/South (Dec 12, 2011)

On 2/3's the fertilizer needs to be split 2/3's.
My only 50-50 is with the land owner paying the fertilizer. I am buying his half of the hay this year.

My view on hay prices is that the hay customer can not afford a price increase because what he is feeding is not bringing more. The horse market is pretty much shot and the packers keep skinning the cattle owners. (Read the Cattle Report sticky in the Cattle section)
Hay producers and cattlemen are struggling and the three largest packers showed a 500 million dollar profit on their cattle divisions last year.
Since the retail consumer can not afford a price increase in beef, the middle man, the packers, are going to have to give a little on one or both ends.


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## swmnhay (Jun 13, 2008)

IAhaymakr said:


> You made me stop and figure here. It may not be as bad as it sounds if you factor in the increases in efficiency that we have with today's mowing equipment. I started cutting for hire (and doing my own hay) in the nineties with a 499 new holland. Good machine, but pretty slow. Today we use a 30' Krone disc machine. If we assume for comparison that I cut the same number of hours back then as we do now, and figure all equipment as purchased new, I am actually more efficient now.
> My costs for fuel, repairs, depreciation, and labor per acre were $4.49 with the new holland, and like you said we got about ten bucks an acre to cut. There were good fields where we could maybe gross $60 an hour but fifty always comes first. Throw in some gopher mounds and we sometimes only made $25 per hour for man and machine combined. I remember those days too well.
> Fast forward to the present and my costs for fuel, repairs, depreciation and labor were $3.92 per acre last year. I charged $12 per acre to cut, so there was actually more profit per acre than with the old machine from 20 years ago. And these days there is much less variability in acres per hour. The self propelled disc machine averaged just over 30 acres per hour for the year in a wide variety of conditions regardless of crop, gophers, etc.
> I should also add that I did not include any expense for the tractor needed to tow the haybine. Mine was an old 4430 back then, and it did other jobs so figure it how ever you like. Bottom line here is that we are just a lot more efficient now than we were back then.


Number of acres is key to efficientcy also.If a guy can spread it over more acres it can make a huge difference in costs per acre,mainly depritiation.I'd guess you are cutting 10 X the acres now with the Big M as the 499?

I cut my hay acres in 1/2 a few yrs ago and went to corn.My costs for eq per acre/bale for hay jumped substancialy.


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## discbinedr (Mar 4, 2013)

Don't forget that 5 bucks doesn't go near as far today as 20 years ago.


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## JD3430 (Jan 1, 2012)

The problem here is, like mentioned above, there's always someone out there who will bale hay for a loss.
It would be nice if those folks realized that were supposed to make a profit in this business, not just break even. After I look at payments, fuel, fertilizer, insurance and other costs, I understand why most of us have other jobs, or are a full time farm owner selling beef, milk etc. to make ends meet.
I remember having a conversation with a hay broker that told me "whatever you do, do all of us a favor and sell your hay for at least $6 a bale. That way we can all make money"


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## Tim/South (Dec 12, 2011)

JD3430 said:


> The problem here is, like mentioned above, there's always someone out there who will bale hay for a loss.
> It would be nice if those folks realized that were supposed to make a profit in this business, not just break even. After I look at pay,nets, fuel, fertilizer, insurance and other costs, I understand why most of us have other jobs, or are a full time farm owner selling beef, milk etc. to make ends meet.
> I remember having a conversation with a hay broker that told me "whatever you do, do all of us a favor and sell your hay for at least $6 a bale. That way we can all make money"


The retired guy with hay equipment willing to work at a loss to keep from being bored does not realize he is losing money. He does not want to know. He is in demand and feels productive.
One old guy in our area still does the round bale package for $10 and will boast he is making money at that. Leaves a bad taste if you quote more because people think you are making a huge profit.

Then you have the "Get in-Get out" guys who are convinced custom guys are rich. They get in for a year or two, then get out. Who ever buys their equipment has the same notion that they can make hay cheaper because they are special.

I am not even sure the current cattle prices are going to make feeding worth while. Right now goats are bringing more per pound than calves just off their momma. If we had the cattle prices of last year I would be doing a happy dance.

There will be a time when things will change. The present course can not continue with hay farmers just hanging on and getting by.


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## carcajou (Jan 28, 2011)

Tim/South said:


> On 2/3's the fertilizer needs to be split 2/3's.
> My only 50-50 is with the land owner paying the fertilizer. I am buying his half of the hay this year.
> 
> My view on hay prices is that the hay customer can not afford a price increase because what he is feeding is not bringing more. The horse market is pretty much shot and the packers keep skinning the cattle owners. (Read the Cattle Report sticky in the Cattle section)
> ...


I really like the way you think but i have a gut feeling with the lack of slaughter capacity we won't see the packers make any less. The cow/calf producers will just get less revenue and i'm sure most expect it already.


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## Teslan (Aug 20, 2011)

Compare the value of the bale of hay to 25 years ago and it's not all that much higher either so why should custom rates be much higher?


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## Tim/South (Dec 12, 2011)

carcajou said:


> I really like the way you think but i have a gut feeling with the lack of slaughter capacity we won't see the packers make any less. The cow/calf producers will just get less revenue and i'm sure most expect it already.


From what I have read the slaughter capacity is pretty much the same. The plant that closed was working at half throttle. Those employees were offered jobs at another plant that was also not at full capacity.
With cattle about all off wheat fields right now and those numbers about used up, there will be even less head to offer off the farms.


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## slowzuki (Mar 8, 2011)

Hay here in 1985 was about 2$ a bale. I can still find hay for sale for 1.50$ a bale if I look hard. Another 5 years and a lot of the boomers will be finally getting out of haying, renting their land out and dispersing old equipment. Lots of these guys currently stop haying as soon as they have a major break down as its the wakeup they haven't been charging enough to replace equipment.


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