# Starting Hay Farm?



## EDavi_ (Sep 29, 2015)

So I'm thinking of starting a farm. I'll start out growing alfalfa and then eventually move into grain as well as growing alfalfa. The alfalfa is just to get the farm established and get a nice amount of money coming in. I will be selling the alfalfa to a Hay Export company, I already talked to them about prices and they said they pay $180-$200 per ton so all of my calculations are based on $180. The farm I'm looking to buy is a 7000 acre farm in Saskatchewan costing 5 million dollars. It is currently a beef farm but I will turn it into a hay farm. I will only be using about 4000 acres for the first number of years and that leads into my first question is it worth renting out the other 3000 acres? I will be building a 300x600 metal building that I will store the hay in to keep it out of the elements. I will take 300x100 of that and it will be a workshop/equipment storage. I estimate that will cost about 2 million dollars. The equipment that I will get will be all new Deere with star fire receivers and auto trac the whole works. I will have 3 7270R with front hitch and PTO along with 3 triple cutter mower conditioners that will cut 45 acres a hour. I will also have 3 6140R that will have loaders. I will have 3 L340 Big Balers (so 3x4x8 bales). I will have 3 30 foot wheel rakes as well as 3 30 foot teaders. I will get 6 32 foot bake wagons for hauling from the field to the barn. I will also have some other equipment such as skid steers and wheel loader fork lift and just some other stuff. I will also have 3 Circle C bale stackers so I estimate about 4.3 million dollars for the equipment. I believe it should cost about $275 a acre to grow alfalfa so it should cost me 1.1 million dollars. But I'm planning on getting 5 tons per acre out of the ground each year (not sure how accurate that is, thoughts?) but anyway 5 tons at $180 per ton is $900 but times that by 4000 and you have 3.6 million dollars. So I have 3.6 million of income minus 1.1 million for planting and everything so I'm at 2.5 million it will be about 800,000 for the land payment each year so I'm at 1.7 million and then it should be another 900,000 for equipment payments leaving me with $900,000 plus I have to pay the employees I think 5 employees plus my self will be sufficient I'll pay $20/hr @ 40 hrs a week average. So that about $210,000 in paying the employees. Leaving me with $690,000 which it will then be $300,000 year for payment on the building leaving me with $390,000 for other expenditure and profit. What do you guys think will I be able to make enough money and be successful? After I pay of the equipment which will be in a 60 month term I'll have another $900,000 which will be great. Which in hopefully 12 years I can turn those last 3000 acres into grain. What do you guys think about my plan? Anything I'm forgetting? Or would you change it? And if I end up producing more then 5 tons a acre I'll be making even more money. How many cutting will I be able to get each year?


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## swmnhay (Jun 13, 2008)

1.Did you just win the lottery?
2.Do you have a golden spoon?
3.Are you just dreaming?


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## EDavi_ (Sep 29, 2015)

Partially dreaming but also have the ability to get the money. haha


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## Teslan (Aug 20, 2011)

Out of all that hay you are going to have some on any given year not be worth $180/ton. Some you might have to give away. Plus that is the price for right now. It can go up or down on any given year also. Also why do you need the bale wagons and skid steers if you are planning to have the Circle C stackers? For 3x4s you would be better served with good wheel loaders.


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## glasswrongsize (Sep 15, 2015)

It is way too early in the post for my usual sarcastic, poorly informed opinion, and I know I should do less broadcasting and a little more tuning-in... but I can't help myself

"That don't sound too bad...if all you desire to have is a little mom and pop operation/hobby farm." 

Sorry. :mellow:

73, Mark


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## EDavi_ (Sep 29, 2015)

The bale wagons are for getting the bales from the field to the barn because I'd be able to get way more on those then just the bale stacker. And the skid steer is just for odd jobs like moving things and clean up you know


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## EDavi_ (Sep 29, 2015)

And id work out a contract with them to maintain a fair price


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## Fossil02818 (May 31, 2010)

Putting $12 million into an investment of hay farming? OK, assuming one has that level of capital there are many other opportunities at significantly lower risk. Do you really love making hay? Your back of the envelope business plan may pencil out if all goes well. Don't forget that Mother Nature bats last. Growing and harvesting any crop has less predictability than non agricultural business ventures. If you love growing and curing forage its a satisfying venture. If you're viewing it as a business opportunity you had better be willing to suffer some losses.


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## EDavi_ (Sep 29, 2015)

I love farming (currently am a farmer) but I also love making money and for the first 10 years the hay making really is just to establish the farm and get some income and produce money so we can grow as a farm and be a large farm. Like I said in 12 years I want to be into grain as well and maybe in 25 years if all go wells and we can afford it move into some livestock. I just love farming it's where my life is and what I want it to be. It my dream to own my own cash crop.


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## OhioHay (Jun 4, 2008)

It appears that you will have to finance this venture through a bank or investor. What experience do you have in agriculture, raising alfalfa, and managing an operation of that size? Do you have signed contracts with the hay exporter? How much working capital do you have to start this operation? Have you factored in the extra cost, lower production, and lower quality of the seeding year? All questions you will have to satisfy for financing. There will be many more too. If you don't mind me asking, how old are you?


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## hog987 (Apr 5, 2011)

Have you ever put up hay before? At best maybe figure half of your hay crop will be worth the 180/ton and the rest will go down from there. Depending on where you are in Sask you may or may not get 5ton per acre per year, Depending on where you are you might get 3 cutting in the south or maybe only 1 in the north. If you are going to have that much hay you will need to get into livestock sooner than you think. Its either feed the poor hay to livestock or just about give it away to some cowboy.

To get that big that fast is a good plan for a massive failure. There have been a few farms in Western Canada that got big fast. Made all the papers about the nice operation and within a few years had a foreclosure sale.


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## deadmoose (Oct 30, 2011)

Sounds like a solid plan. Can I have your banker's contact info? I'm hoping he can help me with a big oceanfront development.


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## FarmerCline (Oct 12, 2011)

From what I have heard the export hay buyers are extremely picky about the quality of hay......makes horse people easy to please from what I have heard. It is highly unlikely that your going to make the majority of the hay or even half of it to meet their standards and with the volume of hay you would have you better find out if you would have another market for it.

Also I didn't see you list any tillage, planting, or spraying equipment in your list of purchases.

Personally if it were me and I had that kind of money to spend I might buy the farm and start out farming a little smaller to get my feet wet and rent out the rest. I also feel it might be easier to start out growing grain than it would be alfalfa hay.


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## shortrow (Feb 21, 2012)

What's holding you up? Get after it.


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## stack em up (Mar 7, 2013)

I don't see any inputs like seed, fertilizer, and herbicide. 4000 acres of alfalfa @ $400/bag seed that covers 2.5 acres at 20 lbs to acre equals out to $640,000 in seed alone. Don't know what your fertilizer recs are but that is also a major input. Nothing in there for twine, net wrap, or fuel.

Keep tickling the calculator...


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## shortrow (Feb 21, 2012)

EDavi_ said:


> I love farming (currently am a farmer) but I also love making money and for the first 10 years the hay making really is just to establish the farm and get some income and produce money so we can grow as a farm and be a large farm. Like I said in 12 years I want to be into grain as well and maybe in 25 years if all go wells and we can afford it move into some livestock. I just love farming it's where my life is and what I want it to be. It my dream to own my own cash crop.


What are you currently growing? Please tell us about your current operation.


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## EDavi_ (Sep 29, 2015)

I don't have any tillage, seeding or spraying equipment because I cant justify the cost of them for how much they will be used so ill just rent or get a custom operator. Right now I don't own my own farm im just a manager of a dairy farm. 150 milking cows averaging 37.8 liters a day. about 900 acres. This my per acre cost estimates.

$42.50-seed

$42.80-fertilizer

$25-Herbiside/insecticide

$16.75-Fuel

$9.83-Machinery operating

$5.66 crop insurance

$5-other cost

$7-land taxes

$30-labour

$37.50-land investment cost

$35-machinery investment/deprecation

I was thinking of going straight into grain but based on the profit that I was estimating it wasn't much. maybe im doing my calculations wrong? I never new the exporters were that picky so that would change it a lot.


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## stack em up (Mar 7, 2013)

Where are you getting alfalfa for $100 bag?


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## OhioHay (Jun 4, 2008)

Do you have the down payment on the land, machinery, and building loans?


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## swmnhay (Jun 13, 2008)

Add a 2-300 more per acre and you will be closer to actual costs.


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## Teslan (Aug 20, 2011)

If you plant 4000 acres of alfalfa in one year I have no idea what the tillage and the planting will cost ya. Except it will be a fortune. Are there custom operators in you area even equipped to handle that size of acreage? Your seed if you plant good ole Ranger variety based on what my seed dealer is charging at $4.25 at 20lbs an acre would cost you $340,000. If you do RR alfalfa, but you probably won't since you are exporting it, it would cost about $680,000. But say you plant conventional you will most likely either have to plant in the fall to have a full harvest the following year. Or if you plant in the spring you will have to plant oats or something with it, which shouldn't bring you anywhere near $180 a ton. RR alfalfa if your season even somewhat resembles my area you will be lucky to get 3 tons an acre the first year if planted in the spring. But you could get high dollar for that.


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## EDavi_ (Sep 29, 2015)

Thanks guys I'm seeing how this is a bad idea


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## OhioHay (Jun 4, 2008)

Can I ask why you are looking at starting on such a big scale?


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## glasswrongsize (Sep 15, 2015)

I don't think anyone here wants to rain on your parade, and I personally admire the
testicular fortitude to even think of attempting such an adventure. Plus you exhibit
the insight to ask for others' opinions before jumping in with both feet. I am NOWHERE close to estimating on that scale, but these guys are pretty smart. I wish for
everyone to have success. It may be hard to hear opinions that are contradictory to
your ambitions, but I, for one, don't wish to see someone have a financial loss of
a magnitude which could make one think of suck-starting a revolver.
73, Mark


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## NewBerlinBaler (May 30, 2011)

Some may think this isn't on topic but since we're discussing spending a huge amount of capital to start up a new business...

Anyone read George Will's recent column about the presidential candidates? He blasts everyone: Bernie, Hilary, etc. But he really lays waste to Trump. Trump claims he's qualified to be president because of his money management talents, he's worth a few billion.

Several think tanks have analyzed his financial performance over the years. If he'd invested the $200 million he inherited from his dad in 1982 in an index fund, he'd be worth around $13 billion today So he's spent 30+ years developing real estate (and making news) - but he's actually lost about $10 billion !!!!!!!!!

Point is, if you're going to put big $$ into starting up a farm - or any business, you need to benchmark your potential earnings from that business against what that money would make in a well-managed investment fund.

Gary


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## EDavi_ (Sep 29, 2015)

Mark I don't know you but I respect you! Nobody's raining on my parade ya it's a dream that I'd love to for fill but I don't want to be bankrupt for the rest of my life I asked this question because I knew I needed help I knew things like this need many opinions and everyone isn't afraid of stating there opinion. I was only thinking of the good and just not even thinking of the bad but after reading the responses you see what you didn't think of


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## Lewis Ranch (Jul 15, 2013)

Invest 10 million to make 300k.. Sounds like one hell of a deal, count me in!


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## hog987 (Apr 5, 2011)

Its not a bad idea to get into haying just not a good idea to borrow the money and jump into that many acres all at once. Also not a good idea to only have once source to sell the hay to.


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## swmnhay (Jun 13, 2008)

A few things in your plan you need to re think.

You will always get some weather damaged hay that will be worth less.

Never put all your hay in 1 building that amount anyway.And with all the equipment it would make one hell of a fire.I just received FB pics of 2 hay fires in last 2 days!!!

Your. yields look optimistic for Canada,not sure where you are at but I presume a shorter growing season so 5 ton seems pretty optimistic to me.

Market prices change,what happens if price drops to $80 a ton when expecting $180.Can you survive a few yrs of low prices?


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