Gary Steele was frustrated he couldn't locate enough quality hay for his Nisland, SD, beef-cattle operation last year. So, this summer, he and a Wyoming broker started a live-streamed, online video hay auction, called WHB Video Hay Auctions, based in Wyoming.
Steele usually puts up alfalfa and alfalfa-grass mixed hay from 600 irrigated acres and sells what he can’t feed to his 700-head, cow-calf herd and 650-head beef feedlot.
“But last year was a tough year. We had the drought, and then the spring was so late in getting here,” he says. The tight supply situation forced him to buy a large amount of hay out of Canada, sight unseen. “There was no test on it. Some of it was good, some of it was bad, and the trucking costs were pretty high.”
After Steele discussed his frustrations with Tom Baer, of Western Hay Brokers in Burns, WY, they decided live video auctions could help sellers market their hay and give hay buyers a better idea of its quality before buying.
As part of their business plan, they hooked up with DVAuction, Norfolk, NE, which conducts online livestock auctions and has held farm equipment auctions. They also lined up a trucking brokerage, Griffin Freight, of Stevensville, MT, to offer “affordable” transportation to auction customers.
“That’s a key component in what we’re trying to do,” says Baer. “You can figure a typical freight rate is around $4-4.50/mile. But because the trucking company can arrange for backhauls, you can bring that down to $2-3/mile.” That means more money for sellers and buyers.
When a seller wants to consign hay to an upcoming auction, WHB sends out a representative with a video camera. Footage is taken of the hay for sale and of the seller describing the hay in detail. The rep also collects a hay sample and ships it for analysis to Weld Laboratories, Inc., a certified, forage-testing lab in Greely, CO.
At the auctions held so far, WHB first live-streamed its on-site auction on the Internet. Buyers unable to attend in person could bid on hay as it was offered. Hay featured in videos is bid on immediately after.
Video-auction sellers specify minimum acceptable bids. If the bids aren’t met, sellers keep their hay. “That’s one of the benefits of a video auction for sellers,” says Steele. “If you take your hay to a traditional auction, you pretty much have to sell it at whatever price you’re offered because it costs too much to haul it back home again. With a video auction, the hay stays in the seller’s yard until it’s sold.”
Those sellers pay upfront fees that cover the cost for a rep to video and take samples as well as for advertising. The fee is based on how much hay is consigned. For example, a consignment of up to 100 tons would cost $6/ton; for a 1,000-ton load, it would be $3/ton. The seller pays WHB a 7% commission on hay sold.
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WHB’s first, full-fledged video auction was held in July at the Western Hay Brokers site in Burns. It featured 21 hay lots and attracted more than 300 online viewers. Buyers were from Colorado, Nebraska, Wyoming and Texas.
“The video auction opens up a lot of doors for sellers,” Baer says. “You’re not limited to selling your hay to people who live just down the road from you. Potential buyers from all over the country and, for that matter, all around the world, can sit in their offices, see your hay and bid on it.”
There are similar advantages for hay buyers. “You can get an idea of how the hay looks,” says Steele. “And you have the lab analysis, so you know how the hay tests. Also, you don’t have to travel to the actual sale site to bid. If you’re in Alabama or Wisconsin or Pennsylvania, you can bid on hay out of Montana.”
Final sales and viewer numbers aren’t in for the second video auction held earlier this month. But Baer expects they’ll be similar to those for the July auction, maybe even a little better.
So far, most video-sale hay has come out of Montana, Nebraska, South Dakota and Wyoming. But Steele and Baer are confident they’ll be able to attract hay from other areas and sell it from anywhere in the country. “It’s like any other startup,” says Baer. “It takes a while to get the word out.”
As interest in the video auction builds, they hope to offer two or three video auctions per month. Their next video auction is slated for noon (MDT) on Sept. 21. For more information, contact Baer at 307-703-4020 or firstname.lastname@example.org, Steele at 605-580-0152 or email@example.com or visit the Western Hay Brokers website.
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