# Rental rates and fertilizer/lime



## W Bench Farms (May 19, 2016)

I am working on renting a hayfield about 35 acres that is part of a pasture that I already rent. Trying to come up with a plan that will be fair to both me and the landlord. Ohio doesn't really have a rental rate for the eastern part of the state. We do quite a few different things with the ground we have. Some is free, some the owner gets a part of the hay, and others we pay rent on, most is $20-30/acre. Hay in this area goes for $20-40/bale, depending on quality. We can sell $30 hay every day, $40 hay takes a little more work. Fertilizer removal rate on this field would be about $71.50/acre (64-46-120 applied). Our 4x5 bales weigh 800-1000 lbs. An average 1st cutting would give us about 5 bales/acre. This year we were a little below that on average. Ohio average yield is about 2.5-3 tons per acre, which we get pretty close to. It costs us about $12/bale to make a bale on the 5 bale average, which does not include rent or fertilizer. That does include equipment, fuel, labor. Landlord will also want lime. 2 ton/acre applied is about $91/acre here. I need to take soil samples before I make any decisions just to be sure where we are. This ground just been mowed 2-3 times/year. Other farmers in the area, but owner isn't going to let anyone take it for free.

I said all of that to say this. If I break this all down to a cost per bale on our 5 bale average: Fertilizer $15.23 + Production $12 = 27.23/bale. If we jump up to 7 bales/acre fertilizer costs go down, so bale cost is $22.88. Not including rent or lime. Hauling costs $5/bale.

I'm thinking instead of a rent per acre to offer a rent per bale, in the neighborhood of $4-5 per bale. At our 5 bale/acre average, this would be around $20/acre, which is pretty typical of our rent. It would also give me an incentive to a really good job, because as my production increases my cost to make a bale goes down. Also, the landlord would make more the more hay I make. Would this be a good way to approach the owner? My only concern is if he wants $10/bale, I don't think that I can make that work.

On lime, who is responsible? As I said, I haven't pulled any soil samples yet. Hay hasn't been removed from this field in 3-4 years, it's just been mowed. We probably wouldn't have to apply lime every year, maybe every 2-3 years depending on pH. At $91/acre for 2 ton applied, we're looking at $6-10/bale additional for lime.

So, using these figures on let's say 7 bales/ac/year (hoping more fertile fields=more hay) 3 tons/ac

$12 Production

$10.21 Fertilizer

$4.33 Lime (2 T/3 yrs)

$5 Hauling

$5 Rent

$36.54 grand total to make a bale

$85.26/ton estimate

So, long story short....will this work? Any other suggestions? Do my numbers line up with yours?

I have my scratch pad of figures if anyone would like to take a look.


----------



## r82230 (Mar 1, 2016)

I have a spreadsheet that was posted back about December of 2019, that might help you (along with custom rates for different operations).

As far as your current numbers, I'd have to ask "How far are you hauling to have $5 bale charge?" If delivering to customer, then that would be in addition to the price per bale.

The rest of your numbers look fair, IMHO. Lime is every 3-5 years application in my case. But you might have left out the 'cost' to establish the desirable hay too. 

Now, with all that being said, what if you presented your above figures to your landlord, drop the $5 a bale rent in exchange of a profit per bale split? The more work hay would get you half of $8.50 a bale, while if yields are down, your cost would be reduce. If yields are up, you both get a piece of the reward. 

Go ahead and hit me, isn't my first stupid idea. 

Larry


----------



## somedevildawg (Jun 20, 2011)

Let me get this straight. You make 7 bales to the acre for the year? At a estimated cost of about $35 per bale and you struggle to get $40 a bale for the hay? Is that correct? If those numbers are correct, he needs to be paying you.....you can't afford to pay him anything. You are doing him a service keeping it in production. I suppose the blame can be attributed to the weak market? Idk....my costs are about the same, I typically figure about $33 a bale costs.....but I sell at about $50 and I make 15-25 bpa a year. I just don't see how you can possibly pay anything if what I'm understanding is correct.....
I agree on the $5 hauling per bale to be high, how far away do you have to go and how many can you haul per pull?

I certainly couldn't pencil in the lime, although it's penciled in, in your cost per bale.....i have a couple of fields that I keep the landowners area that I don't rent cut with the Bushog, around pastures, ponds, etc. I probably get the screws in the end....


----------



## W Bench Farms (May 19, 2016)

This is a reply I posted to the same questions in a different forum. Should clear a few things up. I appreciate all of the comments. They give me some things to think about.

Thank you for all the comments. To answer some of the questions:

Last price I had on lime from the coop was $38/ton and $12-15/acre for application.

4x5 bales are about as big as you see here if you are moving them any distance. Narrow roads make it tough for wide loads. I just moved a semi load last week, and was ditch to ditch on a township road. Hay here is sold by the bale, not ton. Guys don't realize how much more hay is in a 5x5 or 5x6, so you're not going to get paid for more hay in a bigger bale.

The farthest I haul hay from the field to pasture is about 40 miles. I load anywhere from 23-26 bales on a semi. Round trip takes about 3-4 hours for travel, loading and unloading. 25 bales x $5/bale hauling is only $125. If I had to hire it done a semi would cost me $75/hour at least.

A lot of the ground here is reclaimed strip mine ground. This particular field is not. Even though we usually get plenty of rain, this year a cold May/June and dry July cut yields 25-35%. We're in 135-145 bu corn ground, so production isn't really as good as you would think.

My cost of production for junk hay is $12/bale, which sells for $20-25. Good hay sells for $40-50. I feed most of my hay, so I can still produce it for less than I can buy it for. I'm looking ahead to possibly making more hay and selling some. I wouldn't contribute to the cheap market. If it doesn't sell I will feed it.

I haven't proposed any numbers to the owner yet. I have just shown some interest in it. Trying to get all my ducks lined up and have some solid facts before I do. Will be pulling soil samples regardless soon. I can't do anything without that to get a baseline. I like a per bale charge for this property, as I won't be taking such a risk up front without having production history.

Changing out the crop on this ground would probably not be an option. Getting sudan dry here is tough, so would probably have to wrap. We individual wrap, but even that market is pretty slim here.

The main reason I am considering this field is I already have pasture rented beside it. If I decide to winter cows there hay would be close to the cows. It would also be a chance to make a little better quality hay. I'm just trying to see what kind of profit guys are seeing on top of their costs, and if my production and input numbers are in line. I may also have a chance to rent the barn to store small square bales in. That is a good market here.

This post really is showing how different farming is in different areas. I appreciate all of the feedback.


----------



## somedevildawg (Jun 20, 2011)

Ya, you might be too cheap with your hauling rates.....
Were the other numbers right....yield, etc. 
With the situation you describe, it would probably be foolish not to pursue renting.....I'm no fan of the per bale agreement and I don't think the landowner would be either but I may be wrong....
I would rather come up with a figure based on a normal yield. Inputs would be a positive for me, not the landowner. The positive for the landowner is fertilized, managed ground. I would probably do the $20 (or whatever your numbers dictate) and see if I can renegotiate down the road....my .02


----------



## 8350HiTech (Jul 26, 2013)

This isn't going to change your costs too much, but why is a semi load only in the low 20s? That's half of a load.

I don't know your soil but the liming frequency sounds high. Are you using a lot of highly acidic fertilizer?

Assuming your costs to bale that you gave include labor, I think it would be appealing considering the secondary benefits of its location, so hopefully you can work something out.


----------



## W Bench Farms (May 19, 2016)

I'm not a big fan of per bale either, but it was one of the things owner mentioned several years ago. I'm still hashing things out on paper, just trying to figure out what will be best.

I have a 40' spread axle I can put 23 on if we push them up. Single row on top. I use it for fields hard to get in to. I have a 48' spread I can get 26 on. I could get 34 on it if I double stack. I don't like doing that because on our narrow winding roads I almost lost a load. I also have to watch height on these straight deck trailers.


----------



## dvcochran (Oct 1, 2017)

W Bench Farms said:


> I'm not a big fan of per bale either, but it was one of the things owner mentioned several years ago. I'm still hashing things out on paper, just trying to figure out what will be best.
> 
> I have a 40' spread axle I can put 23 on if we push them up. Single row on top. I use it for fields hard to get in to. I have a 48' spread I can get 26 on. I could get 34 on it if I double stack. I don't like doing that because on our narrow winding roads I almost lost a load. I also have to watch height on these straight deck trailers.


FWIW, I am a huge proponent of lime slightly above sample standards. I have consistently been able to use lower numbers on fertilizer (45-30-60) with good success. I am in middle TN and it looks like your lime rates are about 1/3 higher. I assume you are talking about ag lime from a quarry and not dolomite? Fertilizer at those rates look about the same.


----------



## slowzuki (Mar 8, 2011)

Something seems off on the semi-numbers, costs a lot to drive a semi around I wouldn’t dream of messing around for that little per bale delivery charge.


----------



## Beav (Feb 14, 2016)

we a do lot of hay based on shares 50/50 if the owner pays 1/2 the fertilizer costs. If they don't want to share the costs we go to 1/3 2/3. we pay market price out of the field for both 4x5 round and small squares, if they don't want the hay for themselves. This has worked well for us and our land owners. We use 200 lbs/acre of pelleted lime in our fertilizer mix because it has a fast release and is used up in one year.


----------



## Edd in KY (Jul 16, 2009)

Why not look at it from the land owners viewpoint. Why did he just mow the vacant fields for several years rather than cropping them or renting them? Why does he lean toward you as the renter? Is he one that is very protective of how his land is treated? Sure, dollars matter but other factors come into play and it does not sound like this guy is willing to max dollars without regard for the other issues. What other issues will be important to him (timing, fences, ruts, etc). The per bale payment (with specified fertilizer and lime inputs from you) sounds fair to me for spreading the risk (up and down) to both parties. Any long term rental agreement (land or buildings) has to be fair to both to last through the cycle.


----------



## siscofarms (Nov 23, 2010)

Per bale rent sounds the same as share cropping . it is . that is the way to do it where the risk are kinda spread out . say you agree to a 1/3 agreement . which is mainly how its done around me . landowner takes care of the lime because its termed as land maintenance . and if its agreed to do a new seeding , landowner pays the seeding , you do field work .

if owner really doesnt want anything to do with it and turns you loose as far as seeding it , fert . etc . its a 1/6 split .

all the above is you stacking hay where owner wants it then its theirs to sell or use or whatever . or you sell or buy his part at a agreed price .


----------



## dvcochran (Oct 1, 2017)

Beav said:


> we a do lot of hay based on shares 50/50 if the owner pays 1/2 the fertilizer costs. If they don't want to share the costs we go to 1/3 2/3. we pay market price out of the field for both 4x5 round and small squares, if they don't want the hay for themselves. This has worked well for us and our land owners. We use 200 lbs/acre of pelleted lime in our fertilizer mix because it has a fast release and is used up in one year.


Around here, and especially if it is your own land & hay that is the problem with pelletized lime; you have to spread it every year. Even if you are putting it in the buggy with your fertilizer there is still the material cost. I have used it to jump start new fields but always follow up with ag lime in the fall. Usually last 3 years (sometimes longer) unless the pH is way off.


----------

