Evaluating Hay Equipment Costs

Wondering whether a bale accumulator is worth the investment? Dreaming of a large square baler? Or drooling over your neighbor's self-propelled stacker?

Take a page from Keith Dickinson, who compared several bale handling systems under different scenarios to help growers determine which would work best for their circumstances.

Dickinson, an ag business management educator with Penn State Cooperative Extension, updated and added fixed equipment costs to an existing hay enterprise budget. “The typical enterprise budget only incorporates the costs of operating equipment and assumes you're already owning it,” he says.

“What I was finding, in working with clients, was that the type of equipment you choose is a real important factor in profitability. But also important is the size of your operation,” Dickinson says.

Growers should look at who or what they'd produce hay for and know what's a fad or trend before making long-term decisions, he cautions.

Dickinson compared the costs of new large round, large square and small square bale systems, all of which include the costs of a 9' mower-conditioner, a 17' tedder and a 9' rake.

He stresses that the prices mentioned here are estimated and that growers should compare the differences in system costs rather than specific amounts.

A round bale system, handling 800-lb bales with a bale spike for a front-end loader, costs $42,450. A large square bale package (mid-size bales) with forks for a front-end loader costs $109,650, Dickinson estimates.

Four small square bale systems were examined; one was further categorized as pull-type vs. self-propelled. They are: 1) a bale accumulator system with a hay grapple for a front-end loader, $65,350; 2) a kicker baler system, $50,350; 3) a towable bale stacker system, $74,350, and a self-propelled one, $150,350; and 4) a bale bander setup with forks for the front-end loader, $100,850.

Which system is most profitable for an individual grower depends on the number of acres harvested, how close fields are to storage locations, what hay will sell for and other costs, Dickinson says. He urges growers to closely examine their budgets before making machinery decisions.

In a June 2008 presentation, Dickinson assumed breakeven acreage levels based on grass hay at $160/ton, a 4-ton/acre yield, fertilizing for high yield, diesel fuel at $4.50/gallon, $15/hour for equipment operators and $9/hour for hand labor.

The number of acres each system needed to break even under the above scenario would be: round bale, 23; large square, 59; kicker baler, 29; bale accumulator, 35; towable bale stacker, 41; self-propelled bale stacker, 83; and bale bander, 56.

“But I wanted to throw a few ‘what if' scenarios in, because what happens if the price of hay suddenly drops? Part of the consideration is not necessarily how much money you can make in good years, but how well you could weather the storm in bad years,” Dickinson says.

If a grower fertilized for a 4-ton yield and only got 3 tons/acre, the amount of acres each system needed to break even would be: round bale, 161; large square, 395; kicker baler, 223; bale accumulator, 207; towable bale stacker, 308; self-propelled bale stacker, 674; and bale bander, 481.

If hay dropped in price by $40/ton, breakeven acreage required would be: round bale, 193; large square, 469; kicker baler, 362; bale accumulator, 238; towable bale stacker, 350; self-propelled bale stacker, 729; and bale bander, 492.

The amount of acreage needed to net a $10,000 profit at $160/ton and a 4-ton yield: round bale, 78; large square, 114; kicker baler, 86; bale accumulator, 88; towable bale stacker, 96; self-propelled bale stacker, 139; and bale bander, 111.

To net $50,000, systems required the following acreage: round bale, 298; large square, 332; kicker baler, 316; bale accumulator, 301; towable bale stacker, 316; self-propelled bale stacker, 360; and bale bander, 332.

Assuming 150 acres of hay and a hay price that's the same per ton regardless of bale size, Dickinson compared net incomes of several systems. Round bale systems came out on top with $23,043 in net income. Next in line were: bale accumulator, $21,580; kicker baler, $21,051; towable bale stacker, $19,758; bale bander, $16,984; large square, $16,541; and self-propelled bale stacker, $12,058.

“But it's a matter of what fits your farming operation best; each system has its advantages and disadvantages,” says Dickinson.

Growers close to urban markets have to determine if a small bale size will increase their hay's marketability or if they can reach larger-sized farms that want trailer loads of hay. Local market fluctuations as well as yield potential and fertility significantly impact a grower's costs and returns, he adds.

“I always emphasize that no two farms are alike in terms of the resources they have available and what needs they may have,” says Dickinson.

“Some guys may really enjoy spending time on their tractors. Maybe they're blessed with a large number of children who enjoy getting out on a hay wagon. Those are all considerations. Just really evaluate and look for the solution that fits your farm the best.”