Successful marketing often entails identifying a niche and filling it with a consistent supply of a high-quality product.
That's the goal of Dakota Premium Hay, a new farmer-based manufacturer of minibales for the equine market. The South Dakota producers who anted up partial funding for the new venture are betting on some premium returns for their specially mixed hay packages.
The new business is based on the packaging concepts of Meadow Land Premium Forages, which went out of business last year after only two years in operation. But that failure wasn't for lack of a good idea, says Joel Dykstra, CEO of South Dakota Ag Producer Ventures (SDAPV), a state-funded ag business incubator.
“Its product concept was a good one, and the market seemed to be there,” Dykstra states. “It was just a case of bad execution.”
SDAPV bought the manufacturing facility — a hay-mixing and bale-making plant in Meckling, SD — and organized the business into a limited-liability corporation. Last summer, the group sold 350 units, or shares, to 122 farmers from around the state.
While investors have no obligation to deliver hay to the plant, board president and plant manager John Haverhals is committed to buying from them first.
“As long as their hay meets our high quality standards, we want to buy from our members,” says Haverhals.
Each load that comes to the plant is tested for moisture content, relative feed value and protein. Bales are broken apart and mixed in fairly precise proportions of alfalfa, timothy and orchardgrass, then rebaled into 2'-square bales weighing about 55 lbs. Bundles of 12 or 18 bales are shrink-wrapped to retain feed quality and make them easy for customers to handle.
Product consistency and dependable, year-long production will win over customers, says Haverhals.
“We've identified that through our market research, and that's what we are committed to providing. We're going to be there, providing high-quality hay 365 days a year.”
He says the plant is turning out about 800 minibales a day and will ramp up to 1,200 per day when it reaches full capacity later this spring. The bales are sold to horse farms and specialty feed stores in Texas, Florida, Missouri, Minnesota and other states.
The price is $5 per bale, plus shipping. That generates about $185 a ton, nearly triple the current market value of a ton of unprocessed or unblended hay.
For more information, contact SDAPV Dakota Premium Hay, LLC, 45568 313th St., Meckling, SD 57044, 605/624-6100 or visit www.dakotapremiumhay.com.