# Corn on shares vs. hay myself



## biker250

Hey guys, new to the forum here but been reading a bit and searching around and haven't found anything on this topic yet, so here it goes:

I own about 55 acres of tillable ground in southwest Indiana that is broken up in several fields. Biggest field is about 22 acres, another 20 acre field, a couple 5 acre fields, etc... They are all located right next to each other all on the same piece of property.

Currently, we have a farmer that rotates corn & beans and takes 2/3 profit and we get 1/3 profit. It's been this way for 15+ years. The only expenses we pay for is lime if he deems it necessary.

If I'm crunching my numbers right, I could nearly quadruple my profit if I turned all 55 acres to hay and did it all myself. Of course there would be some costs associated like fuel & hired help to move the small bales around, but for the most part, my profit would increase tri-fold anyway. I realize quite a bit of capital investment would need made to get started. I don't own a tractor or any of the equipment required to make hay.

I love physical work and am not afraid to sweat. I split several cords of wood per year with a maul, I don't own a hydraulic splitter. I've put up hay in years past and don't mind it.

What is your guys' opinion on the matter? Do you think I should just keep taking my 1/3 check and not have to put in any work, or do you think I should bust my butt and at least triple my money?

Thanks for any input.


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## JuniorMechanic97

I think you should check out around your area for other hay farmers and give it a try first. If you still want to do it, then absolutely, it's hard work but rewarding.


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## swmnhay

It always looks good on paper. 

In a perfect world you may make 3x as much.But as we all know this isn't a perfect world.

Weather,repairs,bad accounts are all variables that are hard to control and can change bottom line sevearly.

Eq costs can be higher then a guy thinks also.

Yields may not be what you think either.

And Gross and Net are 2 different things.


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## somedevildawg

Take it from me....take the 1/3....how much does that work out to per acre at the end of the year?

Ain't no way to put this business on paper, it just don't pencil out right, need some "fuzzy" math to make it work.....and a whole lotta luck


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## Tim/South

It depends on where you are at this point in your life. If you are young enough to invest some years then you may want to give it a shot.

There is a pretty steep learning curve on hay. You also have all your eggs in one basket, spread out over three cuttings of hay. Hay is not like corn or beans. Once you make the decision to cut hay then you are at the mercy of Mother Nature. With row crops you just wait until the ground dries out, then harvest. Hay can become over ripe while we wait on the weather.

It is easy for a new comer to become overwhelmed by the hay business. I am helping a friend who is in his third year of hay. He still will not cut his hay unless I am cutting the field close by.

If you are relatively young and have some money to invest in equipment then it should work. If you are going to depend on the hay to make payments then I would keep my current deal.


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## R Ball

Yep, I sure would not take on a payment to raise hay on a small scale. Just dosen't add up
To be a good decision.


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## NewBerlinBaler

Biker250 -- Here's another argument in favor of going forward with your idea...

There are tax advantages to working the land yourself that don't apply if you're just renting your farmland to someone else. The $$ can be significant, especially if you (or your spouse) have off-farm income and you don't currently have any big write-offs.

You may be able to recover your startup equipment costs very quickly.

IRS Publication 225 - "A tax Guide For Farmers" spells it all out. If you're not into reading arcane documents, talk to a CPA who specializes in Ag.


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## swmnhay

NewBerlinBaler said:


> Biker250 -- Here's another argument in favor of going forward with your idea...
> 
> There are tax advantages to working the land yourself that don't apply if you're just renting your farmland to someone else. The $$ can be significant, especially if you (or your spouse) have off-farm income and you don't currently have any big write-offs.
> 
> You may be able to recover your startup equipment costs very quickly.
> 
> IRS Publication 225 - "A tax Guide For Farmers" spells it all out. If you're not into reading arcane documents, talk to a CPA who specializes in Ag.


If you are making money haying after expences there is not a tax advantage as far as NET income.Then you get to pay MORE taxes.

If you loose money haying and have other income there maybe a tax advantage but you still LOST money.

There maybe be a state property tax benefit if you farm it yourself vs renting it out.Every state is different.


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## rjmoses

55 acres is a lot of hay. Is there a market for that much in your area? To get it done in a timely manner, you're going to need a fair amount of equipment. Do you want to invest that much? Can you afford it?

And once you lose him as a tenant, would you be able to get him back with the same deal if you change your mind?

*All* of my ideas sound good on paper, but only about 10% turn out to be truly good (if I'm lucky).

Ralph


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## Fowllife

Bottom line, If you WANT to FARM do it. If you want to MAKE more MONEY, don't do it, get a second job or something.

The hay market is all over the place. With high fertalizer cost,equipment cost, and labor you need high hay prices to make a decent profit.

Do you have a barn for storing all your equipment you would need, plus 8,000-10,000 bales of hay? I'm assuming you are talking the small square bale market? I would say that for a building & decent used equipment you will have $100k into it to get started. If you can't, or don't like to wrench on equipment then buy new & double that. There are a lot of numbers you need to crunch to figure out if it makes sense or not. You are not going to be able to sell 10,000 bales for $8/ bale every year.


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## Vol

Excellent advice....$ figures are spot on.

Regards, Mike.


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## swmnhay

You have to remember one of the hardest things about raising hay is the marketing.I've seen guys jump into it then dump the hay a firesale prices to get rid of it and then complain they didn't make any money.Typicaly when these type get into hay is at the high price.They seed it down and by time they get it established the price is lower.This causes cyclical price swings.People get into hay when price is high and get out when price drops.I'm just stuburn enough to stay the course threw thick and thin and have done OK in doing so.Guys that jump in and out of it probably not so good.So I guess my advise is do your homework on the marketing before you jump in with both feet.


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## R Ball

If you don't market it you will not last. You have to have buyers lined up. You also need to do what you,say you are going to do. Stand behind your product and make sure the customer is happy.


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## biker250

Thanks for all the replies.



somedevildawg said:


> Take it from me....take the 1/3....how much does that work out to per acre at the end of the year?
> 
> Ain't no way to put this business on paper, it just don't pencil out right, need some "fuzzy" math to make it work.....and a whole lotta luck


On average, our 1/3 share of corn/beans comes out to about $182/acre. Also, on average, in our area, I hear 100 small bale per acre is expected. At a mildly conservative $3/bale, that would come out to $300/acre. If you get 2 cuttings in a year and both cuttings yield 100 bales/acre, that would earn me $600/acre GROSS income. More than triple what we are currently getting.

As far as what our NET income would be, I don't know how much expense goes into making hay. I realize the capital investment would be decent. But you can't count that when you're figuring your net income. I would deduct fuel & employed help, but what else? Maybe fertilizer if you have to use it every year? Other than that, what are yearly or "every cutting" expenses you can expect? Leather gloves & lots of ice for the water jugs.



Fowllife said:


> Bottom line, If you WANT to FARM do it. If you want to MAKE more MONEY, don't do it, get a second job or something.
> 
> The hay market is all over the place. With high fertalizer cost,equipment cost, and labor you need high hay prices to make a decent profit.
> 
> Do you have a barn for storing all your equipment you would need, plus 8,000-10,000 bales of hay? I'm assuming you are talking the small square bale market? I would say that for a building & decent used equipment you will have $100k into it to get started. If you can't, or don't like to wrench on equipment then buy new & double that. There are a lot of numbers you need to crunch to figure out if it makes sense or not. You are not going to be able to sell 10,000 bales for $8/ bale every year.


Yes, I want to farm, but I also want to make more money. So then what? haha. As far as capital investment, this is kind of what I'm thinking.......

1 older tractor - $8,000 (~60-80 horse)

1 baler - $2,000

1 rake - $800

1 mower - $4,000

1 tedder - $800

I already have 1 8'x18' EZ Trail hay wagon

As far as storage, I have nothing for storage for any equipment or hay. I have a lot of experience as a carpenter/electrician/mechanic/welder so I feel like I can fix almost anything. I also feel like I could build a storage barn needed for everything. It would be an open or maybe 3-sided barn just to keep things dry. Expense wouldn't be that significant compared to a full-blown pole barn. Maybe $10k if I can get my hands on some telephone poles.

The big question as most of you pointed out is finding buyers for the hay. There definitely isn't a market for this much hay in my area. However, I know of a couple guys that hay a few hundred acres of hay around Indianapolis and they truck their hay across the country. So in my mind, I'm thinking if I could tap markets that aren't local, I could still sell it.....


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## NDVA HAYMAN

So, how about just renting the land out by the tillable acre? From what I have been hearing, land rent has been pretty high. Just a thought.


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## R Ball

Sounds like you have money envy. Yep it brings all those dollars however you spend 
Most,of it on seed, fertilizer, @ etc. Money dosen't come easy . Most of the time dosen't 
Come at all farming.


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## Lazy J

You get you 1/3 for having no skin in the game other than the land. With the hay everything will be at risk. Good luck.


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## Tim/South

NDVA HAYMAN said:


> So, how about just renting the land out by the tillable acre? From what I have been hearing, land rent has been pretty high. Just a thought.


This is a good suggestion. Rent to the highest bidder.

Two things a person quickly learns in the hay business.

One is to have dependable equipment.

Two, is to have a back up plan. This means someone you can call if you get in a bind. It can be a friend, neighbor, equipment dealer....anyone you can rent, borrow or hire to bail you out when you are in a bind.

Most farmers can fix the common ailments of michinery. What a hay farmer does not have is the luxury of time to make those repairs. The window to make hay is usually a short one.

The cutter has to cut.

The rake has to rake.

The baler has to bale and the tractor used to run these items must produce.

Many hay crops have been lost due to simple equipment failure. It is not like we have an extra day to replace a bearing or work on knotters or wait for a part to come in.

Making hay is a very intense farming endeavor.

Two years ago I made a promise. If the Good Lord called me home in a hay field, it would not be while I was working on a piece of equipment that was state of the art 15 years ago, in 100 degree heat.

Contracting the baling may be an option to consider.


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## FarmerCline

My opinion is if you like to farm and like to grow things farm your land, if your just doing it for money keep doing it the way you are now or rent the land. When I first started hay farming three years ago everyone told me not to get into it because there's not much money or its too hard of work but I did not listen and kept a positive attitude but I love to work the land and watch things grow and while there's not a ton of money in it some can be made if you do everything just right but there is a lot of risk involved. It takes a true passion to be in this business and be successful. I don't want to discourage someone from getting in to it but if your just doing it to make some cash and don't truly love the work I would suggest not to get in to it.

As others have said 55 acres done right is a lot of hay. I think it might be hard to find good reliable equipment in the prices you listed and remember you can't afford a breakdown when the hay is on the ground. Also that 55 aces is going to need to be cut in a timely manner when the weather is right and the hay is ready so your going to need some equipment that is fairly high capacity to get the job done. And remember when buying older cheaper priced equipment even though the initial cost might not be much when it breaks down in the field and you have hay that gets ruined it just cost you big dollars with all the crop you lost. I'm not saying it can't be done it just takes a passion and a positive attitude that your going to make it work out that everyone doesn't have. You might could try a portion of the land to see if you like doing it and learn on before you jump into the whole 55 acres.


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## AndyL

I totally agree with the above post. 18 and 19. You need a backup and you best have a passion for making hay. I think only hell is hotter than the hayfield. If you have a love for working the land and a passion for making hay, then I would jump in. Maybe just start with 10 or 20 acres first year. Then you'll have some insight into haying. I'd love to be making hay right now, just waiting for another weather window. They seem rare this year.


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## Fowllife

biker250 said:


> Thanks for all the replies.
> 
> On average, our 1/3 share of corn/beans comes out to about $182/acre. Also, on average, in our area, I hear 100 small bale per acre is expected. At a mildly conservative $3/bale, that would come out to $300/acre. If you get 2 cuttings in a year and both cuttings yield 100 bales/acre, that would earn me $600/acre GROSS income. More than triple what we are currently getting.
> 
> As far as what our NET income would be, I don't know how much expense goes into making hay. I realize the capital investment would be decent. But you can't count that when you're figuring your net income. I would deduct fuel & employed help, but what else? Maybe fertilizer if you have to use it every year? Other than that, what are yearly or "every cutting" expenses you can expect? Leather gloves & lots of ice for the water jugs.
> 
> Yes, I want to farm, but I also want to make more money. So then what? haha. As far as capital investment, this is kind of what I'm thinking.......
> 
> 1 older tractor - $8,000 (~60-80 horse)
> 
> 1 baler - $2,000
> 
> 1 rake - $800
> 
> 1 mower - $4,000
> 
> 1 tedder - $800
> 
> I already have 1 8'x18' EZ Trail hay wagon
> 
> As far as storage, I have nothing for storage for any equipment or hay. I have a lot of experience as a carpenter/electrician/mechanic/welder so I feel like I can fix almost anything. I also feel like I could build a storage barn needed for everything. It would be an open or maybe 3-sided barn just to keep things dry. Expense wouldn't be that significant compared to a full-blown pole barn. Maybe $10k if I can get my hands on some telephone poles.
> 
> The big question as most of you pointed out is finding buyers for the hay. There definitely isn't a market for this much hay in my area. However, I know of a couple guys that hay a few hundred acres of hay around Indianapolis and they truck their hay across the country. So in my mind, I'm thinking if I could tap markets that aren't local, I could still sell it.....


Well if you really want to farm then I'm sure you will find a way to make it work. I'm just going to start at the begining of your post & point out some thing for you.

1. I wouldn't call $3/bale mildly conservative. I would budget this number or lower. That is what it is currently selling for in my area. The prices last year were crazy high.

2. I don't think you will get 200 bales/ac on just 2 cuttings, but it may be posible with he right mix.

3. Depending on the type of hay you plant fertalizer will run $50-150 per ton of hay. At 5 tons of hay per acre you are at $250-750/ac just for fertalizer.

4. Capital purchases need to be figured in your NET profit. Even if you have the money in the back you are still losing interest. If it is under your bed though then maybe not.

5. Expenses - fuel, grease, twine, oil, equipment repair/maintence

6.If I were to hay 55 acres I would have at least 2 tractors, probably 3. I would be looking at a $8-10k square balers & a $3-5k round baler. Double your mower price & triple your rake & tedder. I would also want an accumulator or pickup hagon also. If not you will want 4-6 more wagons. You may hting it is overkill right now, but you will soon realize it is not.

7. You will not build a barn for all your hay & equipment for $10k unless you get some free material. You will need a 40'x80' or larger.

8.It is hard to find buyers unless you have good hay, or have cheap hay. High quality hay is the only hay that is worth shipping.

9. I would also put up some fence (this is were the round baler comes in) & get some cows. You will end up with rained on, over ripe, or weedy hay, feed it to your own cows. And cows more so then calves.

10. You will have 40-60 hours per cutting at a minimum just to cut, rake, & bale, plus that many more man hours to stack in a barn unless you have it automated.

I'm not trying to talk you out of it, just make you more informed. I had the same thoughts as you a few years ago. When you look at ALL the numbers though it isn't as rosey.

Why not buy a tractor, no-till planter, and spraying & plant corn. Have someone come in & custom harvest it for you. There is more gross & net dollars in that & a lot less hours. If I didn't like raising livestock, and like to make hay this is what I would do.


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## mlappin

Several things here, a few have already been pointed out.

A huge difference between net and gross.

If you want any hay to harvest after the first few years, fertilizer is a must.

I've had a lot of buyers of a round bale or two a month stop buying because they were going to raise their own hay and save a ton of money, most come back eventually and just buy it. A lot of hidden expense and aggravation in making hay.

You'll have more than you figure in equipment expense, not just repairs but since your in Indiana and I can't see your county being much different than mine, once you buy the equipment you get to pay property tax on it, also figure on paying property tax on any storage you erect.

Most importantly, is their a Mrs. Biker250? Or a serious girlfriend involved? Are they going to understand when you can't goto a birthday party, family reunion, or other event you promised you could because the hay is ready to bale now and it will be raining by morning as the forecast has changed again?

Can you handle dealing with a constantly changing forecast without stressing yourself to stroking out? Takes a good three days from mowing to baling to get it dry enough, do you have the disposition to handle not being able to mow when you want to and instead having to wait on the weather? Do you have a day job? Really hard to consistently make quality hay that will cover your expenses if your at work when the hay needs tedded, raked or baled.

Not saying it can't be done, but have seen a lot of people start to make hay with $$$ in their eyes and most if not all quit within five years. With the crazy weather we've been having the last decade lots of veteran haymakers are also saying screw it and going all row crops or just plain relaxing during the summer.


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## biker250

Thanks for the continued input.

I still haven't made my mind up on the 55 acres, but here is where I'm at:

We have 55 tillable acres that are currently in corn/beans.

We have 5 acres that are currently in hay. I have to hire somebody to cut/rake/bale this for me.

So regardless of the 55 acres, I still want hay equip. because I'm tired of being last on the list to get my hay baled. Here it is, late June and my hay is still standing. It was ready to be cut 4 weeks ago. And forecasted rain for the next week to boot. So kind of changing topics, but I'm looking at hay equip. and doing my research, and have a couple questions.

First, I have found a good condition 14t baler for $900. I think I'm going to buy this baler. Now I'm trying to decide on the tractor. I have a lot of uses for a tractor around the homestead. We have 150 acres total, so there's a lot of work to be done around the place. I'm really wanting to get a JD 4020 diesel in the case that I expand the hay operation someday or maybe even try the corn/beans thing myself, but will that much HP tear up the 14t baler?


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## Fowllife

I understand being last on the list & don't blame you there. With only the 5 acres currently as long as it is in good shape it should work for you. If you expand your hay acres you will more then lickly want something newer/bigger. Starting small will give you a good idea if you want to add more hay acres.

As long as the slip clutch is set right & the spear bolts are correct you shouldn't tear anything up. Those 2 things are there to protect the baler from being tore apart.

With your set up, I would be lokoing for a similar tractor. With that much HP you can pull a 6 row planter & 15' bean drill, and smaller tillage equipment if you want.


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## haybaler101

biker250 said:


> Thanks for the continued input.
> 
> I still haven't made my mind up on the 55 acres, but here is where I'm at:
> 
> We have 55 tillable acres that are currently in corn/beans.
> We have 5 acres that are currently in hay. I have to hire somebody to cut/rake/bale this for me.
> 
> So regardless of the 55 acres, I still want hay equip. because I'm tired of being last on the list to get my hay baled. Here it is, late June and my hay is still standing. It was ready to be cut 4 weeks ago. And forecasted rain for the next week to boot. So kind of changing topics, but I'm looking at hay equip. and doing my research, and have a couple questions.
> 
> First, I have found a good condition 14t baler for $900. I think I'm going to buy this baler. Now I'm trying to decide on the tractor. I have a lot of uses for a tractor around the homestead. We have 150 acres total, so there's a lot of work to be done around the place. I'm really wanting to get a JD 4020 diesel in the case that I expand the hay operation someday or maybe even try the corn/beans thing myself, but will that much HP tear up the 14t baler?


Have you compared weather forecast to what is actually happening with the weather? At least if your hay is still standing, you have a chance. Most everything cut in SW IN so far this year has been baled too wet, got rained on a bunch, molded or all of the above. And this dramatically reduces both net and gross profit plus a huge amount of stress. As far as you 1/3-2/3 deal, if $182 is all you are making, you might keep an eye on your tenant when he is hauling off the grain. My share crop landlord made that last year in the drought with 30 bushel beans. Corn the year before was $325/acre. You dirt is either poor or your tenant is screwing you. I am in SW IN also and I am big time in hay for this area and I also do row crops. I need 5 ton of alfalfa per acre at $200/ton to be competitive with corn on my good ground, expenses are very similar for the two.


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## haybaler101

Biker250, where exactly are you at?


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## Tim/South

The 4020 is a solid tractor. It is better to have too ugh tractor than not enough. It will take some learning time to throttle down and not over power the baler.

With 150 acres I believe the 4020 would be a big enough tractor to do the heave chores as well.


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