For a hay producer or user, the decision to work with a broker can feel like a last resort — everyone has a horror story about a crooked broker. However, dealing with an honest broker who is well-versed in the market can have many advantages that can save a farmer or customer time, resources, and money.
The core of a broker’s role is to move products to market, which requires empathy, a deep understanding of the market, and transparency to both producers and buyers. Asking good questions, considering all factors, and doing the appropriate research are necessary first steps in choosing a suitable hay broker.
A successful producer-broker relationship should benefit both parties. Rather than having to delve into the marketing and sales side of their hay, farmers can focus on production. While selling direct to customers can sometimes translate into a higher price per ton, the trade-offs of time spent lining up deals and taking on the financial risk of selling to new customers will often cancel out the potential extra profit margin. When dealing with a brokerage, the producer’s scope of responsibility is reduced to accurately grading and communicating the quality and quantity of the product they are looking to sell.
A trust-built relationship
In building a new producer-broker relationship, transparency on both sides is key. The producer must be able to trust the broker to know the market, get them a fair price, have access to the market, follow through on payment schedules, and move the amount of hay they have committed in a timely fashion. The broker must be able to trust the producer to honor any commitments made on inventory and quality of the hay and to communicate effectively on loading times and paperwork requirements.
Producers must also be able to trust a broker’s judgment of market price, time frame needed to move a certain quantity of product, and the follow through. A good broker will be able to provide an honest assessment of these factors and hold to them, even if they aren’t the answers a farmer is looking for. Relationships that involve both parties’ livelihoods will inevitably be high-stakes and can feel charged, so starting small, asking for references, and keeping lines of communication open are all key in making sure the relationship will be mutually beneficial.
Do your homework
For a producer vetting a potential new broker, learning about where and how they operate is an appropriate first step to discern if they are a good fit. Which areas of the country do they do the most business in? Do they specialize in the export market, horse market, or dairies and feedlots? For example, a broker with experience exclusively in the feedlot market may not be able to accurately grade and market horse-quality hay. While a locally based broker may have the bulk of local customers and more experience with regional products, a more generalized broker will be insulated from changes within a local market.
Finding out how long a broker has been in business and getting references from other producers they work with will also mitigate risk. What are their typical payment terms and do they stick to them? Will they only be able to move your hay during years the market works in their favor, or are they in it for the long haul?
For all its scope, the hay world can be a tight-knit place, so maintaining a good reputation is key for brokerages and producers alike. While doing the appropriate research on potential new business relationships will weed out poor candidates, ultimately the only way to build trust is to consistently execute on commitments.
Service comes with a cost
Many of the same principles apply for buyers or end users deciding if they want to work with a hay broker. How much time does the customer typically invest in finding the type of hay they want and setting up freight and delivery? Are they able to find the products they need locally, or do they often have to supplement with hay from feedstores?
Going through a broker may not be the cheapest option, but the quality of hay and the service may be worth it. For small businesses like feed retailers or equine operations, owners often do not consider the cost of their time. Even if they are able to save $1 per bale on a load of hay they sourced directly from the producer, the hours spent calling farmers to find the hay they want and setting up logistics to ship it may mean that they don’t come out ahead.
There is a certain level of security that comes with using a broker to buy hay as well. Quality brokerages will offer an option to reject loads and/or apply discounts if hay arrives that does not match a customer’s expectations. One cornerstone of a broker’s job is negotiating, so if the price of a load of hay needs to be reworked with a farmer or trucking company because of quality issues or damage during shipping, that responsibility falls squarely on the broker to advocate for the customer and make it right.
For customers looking for products that do not grow locally, the ability to rely on a broker for quality control is another benefit. Where it may not be feasible for a customer in Florida to fly to Arizona to look at hay before buying, most brokers do travel to gauge hay quality for themselves before selling it.
Clearly describe hay needs
Equally important for hay buyers working through a broker is to assess their priorities in order to communicate them clearly so that the best possible match can be found. The cheapest hay won’t be the best hay, and “good hay” means something different to each individual. The more specific and straightforward a customer can be about their unique needs, the better their experience working with a broker will be.
Are delivery dates and times flexible or is there a strict schedule? Do they need high relative feed value (RFV) hay, does it need to have fine stems, and how important is the cutting of the hay? Is the customer feeding high-end performance horses, cattle in a feedlot, or exotic animals in a zoo? Using specific terms to describe the desired qualities of the hay rather than simply asking for “premium” or “good” hay will help to avoid misunderstandings.
Be clear about other aspects of the service needed, such as loads per year needed, price range, time frame for shipping, and any additional requirements like an unloading crew or the type of truck that can be offloaded. Clarify these items before any real negotiation starts so both parties are well informed.
While the title of “hay broker” often has a negative connotation, brokers have a vested interest in doing right by their customers in order to sustain business and gain long-time relationships. Many brokers are also livestock or horse owners, so finding one with experience in or knowledge of a customer’s type of operation can make them better able to empathize with those needs and challenges.
Anyone entering an exploratory conversation with a potential new hay broker should come away feeling as though they have a better understanding of the hay and forage market, the broker understands their priorities, and they have a clear idea of the broker’s experience and how they operate. As with any new business relationship, finding a broker who will take the time to listen to and understand a producer’s or customer’s needs often rates higher in importance even than years of experience or loads sold. The desire to provide excellent service and commitment to moving product to market separates average brokers from great ones.
This article appeared in the March 2024 issue of Hay & Forage Grower on pages 28-29.
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