The last few months I have been mentioning how grain has been taking acres out of hay production in 2011. This was due to high grain prices along with other variables, (read this post), so I wanted to write a little update for the horse owners out there.

As of today, Soft White Wheat (SWW) can be contracted for $6.53 a bushel delivered to Mid Columbia Producers on the Columbia River. Now I use 100 bushel as my target yield but that is a pretty conservative number, many guys get as high as 150 bushels/acre but using 100 bushels that is an income of $653/acre.

Orchard Grass hay is mostly sold in the fall for market price and very little is contracted.  The are many factors that goes into the hay price and it is very hard to predict as a farmer what to expect per ton. I have been using $200 a ton as my price for next year, it might be higher, but I don’t think I will be willing to go lower based on my outrages input costs projections. I use 4 ton/acre as my yield which is also conservative but I rather come out ahead at the end of the year than below my expectations.  4 ton means $800/acre income for the year.

So I am expecting around $650 an acre for my wheat, and $800 an acre for hay, now Hard Red Wheat, (HRW) can sometimes pencil a little better than SWW but I don’t have the latest price for September and I am planning on growing SWW in 2012.

Now for inputs, I figure my SWW inputs right at $475/acre with out equipment, and my hay inputs to be $520/acre also without equipment. So before equipment costs,  hay looks like a clear winner  but once equipment comes into the picture, hay starts looking more and more rough.

Wheat takes one piece of equipment to harvest, a combine. I figure my equipment cost per acre to be around $20 per acre, and cheaper the more acres I harvest.  Hay however takes a swather, rake, baler and stack wagon or other means to get the hay off the field, as well as tractors to run all the implements. I figure at least $100 per acre for the equipment costs in the harvesting. Now that number gets cheaper somewhat the more acres you do, but I think it illustrates the picture very well.

So in the end, wheat with an income of $653 and an expense of $495 leaves a conservative profit margin of $158 an acre. Hay has an income of $800 and an expense of $620 per acre for a profit of $180 an acre. So on paper, hay still looks a little better, even after the large equipment expense. But as a farmer, there are other factors that are not reflected on paper. Hay must be irrigated all season, while wheat is finished in July, and it sure feels good to shut the pumps off early.  Another factor is that wheat can be contracted and there is no worry about selling the wheat at the end of harvest.  Hay has to be sold to the clients and the farmer usually has to deal with many people buying the hay and most is not sold until November or December.  Another big issue is that orchard grass that is spring planted takes most of season to get established so the farmer has to think a whole year away on spring planted grass. 

I will be getting some new land in 2012 to farm and at this point with these current prices I will keep the best fields in orchard grass, but any fields that have any sign of weakness will be disked under and put into wheat. The land that I grew wheat in last year will be mostly put into seed peas or another legume to break the desease cycle, except for some acres that were fallow before I put in wheat in 2011.

If you have any questions please comment!

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