An Opportunity for Added Profit
Growing forage as a cash crop is an excellent way to get higher net
returns from your land base – either by selling to the local feeder
market or selling internationally.
In the past 10 years, Manitoba hay has made an excellent name for
itself as more producers have developed international markets. Their
customers recognize a quality product and are willing to pay for it,
despite the added transportation costs. Dairy producers in Wisconsin,
North Dakota and South Dakota need quality hay, and have proven to be
very good customers. Additionally, processed Manitoba timothy has
created a niche for itself in the Japanese marketplace, and there are
now three timothy-processing plants in the province to accommodate
Manitoba producers who want to export.
They are:
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Canadian Greenfield Forages Ltd., Teulon;
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Intermountain Forage Ltd., Dauphin;
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Sunridge Forage Ltd., Russell.
If you’re considering getting into cash hay, there are many benefits.
You can make more money on hay land compared to the same amount of land
that would be used for grain production, so you don’t need to increase
your land base to remain profitable. Agronomic benefits include
increased soil fertility, less weeds, and improved soil structure.
Check it Out First
Before you get into cash hay production, it’s important to do some
homework to ensure you’re heading in the right direction:
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Talk to several hay brokers to find out the status of the U.S.
market, and talk to timothy processors to find out about market
potential in Japan and elsewhere. A list of brokers is available from
your local Manitoba Agriculture, Food and Rural Initiatives office, or
at www.manitobahay.ca .
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If you’re considering alfalfa, check into transportation costs to
the lucrative U.S. dairy markets.
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If you’re looking at an alfalfa/grass mix, the horse market is an
option – either locally or out of province. Ask around and see what
you can find out.
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If you’re considering timothy, which has done well in the Asian
market because of its fibre content, see if there is a processing
plant in your area. Or will it be worth your while to ship to a
distant facility? See what you can arrange in the way of selling
terms.
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Investigate the local feeder cattle or beef cattle markets. Feeder
cattle operators may buy high-quality timothy and other grasses, or
alfalfa/grass mixes, while producers wintering beef cows may want your
lower-quality hay. Local markets are a good way to save on
transportation costs and to avoid the details of hauling arrangements.
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Consider cereal and timothy straw to sell as horse and dairy
cattle bedding, and to ginseng producers.
Whatever you decide, try and line up buyers ahead of time, a practice
that is highly recommended by those in the business.
Is
Cash Hay For You?
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ADVANTAGES |
DISADVANTAGES |
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A good option for diversification.
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Less inputs.
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Good residual effects of nitrogen in the
soil if crop is taken out.
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Less acreage required than cereal for
same income (better returns per acre).
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Protection from wind and water erosion.
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Spreads workload out over the entire
growing season.
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Provides summer employment for older
children.
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Potential for excellent returns.
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Initial equipment investment is high.
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Learning curve; potential for mistakes.
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More summer hours, longer hours.
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Crop insurance currently does not address
export alfalfa.
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Narrower window than grain for harvest.
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Low quality in poor growing years makes
crop hard to sell.
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Need something each year to utilize lower
quality forage that will be produced.
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A Quick Lesson on Quality
Manitoba’s climate is capable of producing high-quality hay, but in
order to facilitate this quality there is no substitute for good
agronomic practices. These include a clean field, appropriate variety
selection, good crop establishment, proper fertility rates, and a good
weed control program.
You must be willing to put in the extra effort to obtain the kind of
quality that sells. You must also be willing to put in the effort to
cut, bale and store your hay so that it is free of moulds and/or sun
damage. Deterioration of this type is simply not acceptable in any
market!
Relative Feed Value
For most hay, the ideal relative feed value (RFV) – a standard
domestic and foreign industry measure of quality – is 150. However,
knowing the market will help determine the exact RFV. For example, hay
for the dairy market requires a much higher RFV than hay for the
feeder calf market.
It should be noted that timothy hay for processing and for some
horse markets is appraised more on visual appearance rather than on
feed value.
When to Cut for Maximum RFV
Alfalfa reaches 150 at the early to mid-bud stage, and not at the
late-bud/first-bloom stage that has traditionally been the signal to
cut. Alfalfa/grass mixes reach this critical number sooner. However,
because RFV can drop by up to 15 points after harvest, the crop often
needs to be harvested at 165. For more information, contact your
Manitoba Agriculture, Food and Rural Initiatives office.
Relative Feed Quality (RFQ)
In order to improve on the accuracy of the RFV concept, researchers
have now developed a new measure called relative feed quality (RFQ) as
a way of evaluating high quality forage. This analysis, which is now
being used in the northern U.S. dairy states, is based not only on
digestible fibre but also on a revised total digestible nutrient (TDN)
analysis, to provide an energy estimate of the feed. Research
indicates that RFQ provides a more accurate assessment of a forage,
and will likely be the system used in the future.
Moisture Content
Moisture content varies for different types of markets, although
dryer is generally better. Export markets require 12% moisture or
less, while domestic markets range between 14 and 18%, depending on
bale size and density. Hay processors require 12%, but many of them
have dryers in order to assist producers in drying to this level.
Moisture testing of all hay – but especially timothy – is
recommended, using either a Koster or a microwave test, which are more
reliable than a hay probe. The latter is especially unreliable with
timothy.
Feed Analysis
A feed analysis will determine moisture content, relative feed
value, crude protein, phosphorus, and total digestible nutrients. It
is essential in determining if the hay meets the criteria of the
desired market. A list of accredited labs is available from Manitoba
Agriculture, Food and Rural Initiatives, although some customers may
want the testing done at their own testing facilities.
The Right Bale Size Is Essential
It’s important to know the requirements of your market, as well as
the cost of transportation, before you select your bale size and type.
If you’re fixed to a particular baling option, this becomes a limiting
marketing factor. For example, round bales are usually sold in the local
market because there are transportation difficulties in shipping to the
U.S. As well, some buyers south of the border do not have the equipment
to handle this type of bale. The U.S. dairy market prefers square bales
– either in small, medium, or sometimes large sizes.
Silage, too, will limit market scope because the high moisture
content makes it too heavy – and thus costly – to transport very far.
However, a local and U.S. export baled-silage market is showing signs of
development.
Tips for Finding Customers
- Produce and protect a quality product – the first and most
important marketing strategy you can develop.
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Join the Manitoba Forage Council! There are many marketing
benefits.
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Consider using the services of a hay broker. This individual is
usually a producer with plenty of experience marketing his own hay,
and he/she knows far more about the marketplace than the average
seller does.
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Get your name put on as many lists of sellers as possible, using
the internet. To submit your name to Manitoba Agriculture, Food and
Rural Initiatives’ electronic listing, contact your local ag rep or
forage specialist.
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Search online for lists of buyers (both domestically and
internationally), and contact as many as you need to.
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Obtain the list of buyers and their requirements from World Dairy
Expo, available to Manitoba Forage Council members.
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Take out classified ads in local, provincial and foreign farm
papers.
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Let it be known that you are selling hay – by personally calling
on prospective buyers, by attending forage events, and by talking to
people at local events, coffee shops, etc.
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Use local or U.S. auction marts to sell your hay – and to
establish contacts.
Developing Good Customer Relations
Just like any other business venture, marketing hay requires sound
business practices that ensure maximum return for your product.
Knowing your cost of production and your shipping costs is essential
so that you can price appropriately. Equally important is knowing what
others are charging. To find this out, you can check with hay brokers,
in newspapers, on the internet, and with any contacts that you have.
If you are marketing into the U.S., your quoted price should include
delivery and should be set in U.S. dollars per imperial ton. You should
also specify whether loading is included. And remember, a pre-priced
load of hay will sell faster than one that is subject to negotiation.
Once you establish your customers, it’s important to develop a good
relationship with them. Honesty is the best policy; what you describe is
what you deliver!
In order to ensure yourself against the risk of a bad sale, check the
customer’s credit reputation and reliability for paying. Advance or
partial advance payment by certified cheque is also an option.
If you use the services of a hay broker (either domestic or foreign),
remember that there will be a fee or commission involved. This amount
can vary from broker to broker, so it’s a good idea to shop around.
However, cost isn’t the only consideration; a good broker is one with a
reputation for getting the best price for his/her clients.
As with your customers, check on your hay broker to ensure that
person is financially reliable and will pay you for your hay. Look for
someone who is interested in building a business relationship through
repeat transactions with you, and if you’re uncertain about him/her at
first, try working out an arrangement for an advance or partial advance
payment. Ask for a certified cheque; this is the most reliable method of
payment.
Shipping to the U.S.
Commercial Transport
A commercial transport is the most economical form of shipping to
the U.S. Often, truckers who have hauled a load into Canada are
looking for a back haul – something to create revenue on the way
back – and costs can be surprisingly low.
However, there can be drawbacks. Trucks may not always be
available when you need them, and some truckers may refuse to ship
hay because of load shifting and fire hazards. As well, open loads
must be tarped in the U.S. – and some truckers are not willing to do
this. Others may not be willing to load and unload, or may be late
for loading and delivery. Often, too, there are problems getting the
transport into small driveways.
It’s a good practice to check the references of the trucker. Some
producers have run into problems with truckers who are interested
only in quick cash, and not in providing the kind of service that
will result in repeat business.
Rail/Piggyback
More often than not, using rail to ship hay directly to a client
is too costly – unless the load goes to a major distribution centre.
However, a piggyback system – sending a loaded flat deck van/trailer
via train to a major centre and then trucking it from there – is a
feasible option for long hauls. Contact CNR or CPR for more details.
Hauling On Your Own
If you are able to invest in a highway tractor-trailer unit, or
you have access to one, hauling your own hay can be an option. It
provides the opportunity for face-to-face marketing and personalized
service that will ensure the customer is satisfied. However,
vehicles with farm plates are restricted from back hauling, thus
making very long distances uneconomical because you cannot create
revenue on the way back. One advantage, at least, is that there is
no duty on hay entering the U.S.
Hauling into the U.S. requires a number of pre-travel
arrangements:
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a mileage log book (maximum driving time is 11 hours per day);
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a fuel log book;
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amber fuel (purple fuel is subject to a fine of up to $2,000);
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essential permits (see box on next page);
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U.S. dollars (recommended);
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extra medical insurance (recommended).
For further details and driving regulations in the U.S., visit
www.fmcsa.dot.gov (Federal Motor Carrier Safety Administration).
U.S. Highway Regulations
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Over-dimension loads must be flagged with 18-inch square
flags (red, orange or yellow).
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Mirrors must extend past load width.
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Each row of bales must be strapped from front to back.
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Night hauling of round bales or over-width loads in not
permitted.
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In Minnesota: – round bales must be hauled with flat sides
facing front and back; – over-width loads are only permissible
at certain times of the year.
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Maximum gross vehicle weight is 80,000 pounds.
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Contact the transportation department of the state(s) you
will be travelling through for further details regarding
transportation regulations specific to that state.
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Permits Required to Haul Hay in the U.S.
DOT Number
Required by each state’s Department of Transportation to
ensure safety regulations are met. Must be displayed on vehicle.
No fee for farm-plated vehicles. Minnesota: 651-291-6150; North
Dakota: 701-250-4346.
IFTA Registration
International Fuel Tax Agreement requires all carriers to
register. Registration decal must be displayed on vehicle;
registration must be carried in cab. Annual fee of $65 and $4
per set of decals. Phone: 945-3194 (Winnipeg) or 1-800-782-0318.
Liability Insurance
Manitoba minimum is $1 million on tractor trailer units
carrying non-dangerous goods. Some states require proof of
liability insurance and additional coverage. Contact your MPIC
agent.
Manitoba Safety Inspection
Vehicles must be safety inspected in Manitoba. Contact your
MPIC agent for inspection outlets.
Medical Examination and Certificate
Certificate forms available from the Manitoba Trucking
Association, 25 Bunting St., Winnipeg, R2X 2P5. Phone: 632-6600.
Minnesota Hay Permit (over-width/overweight loads)
Annual fee of $24 U.S. per bale type, or $20 per trip (five
days). Phone: 651-405-6000.
North Dakota Hay Permit (over-width/overweight loads)
Permit only required for out-of-dimension loads. Seasonal fee
of $50, or $20 per trip. Phone: 701-328-2621.
NAFTA Certificate
Cost of $25 per year. Requires services of a customs broker;
check the yellow pages.
Drug Testing Card
Required by truckers in order to cross the U.S. border. Call
633-7439 (Winnipeg) for information.
Permits Required by the U.S. Bioterrorism Act
To protect the country from threat of international
terrorism, the U.S. Bioterrorism Act, which took effect
December, 2003, requires the following:
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If you are brokering hay, you must register with the U.S.
Food and Drug Administration (FDA) under the Registration of
Food Facilities regulation. If you ship your own hay, and only
yours, this is not required. Phone: (301) 575-0156.
Website:
www.fda.gov/oc/bioterrorism/bioact.html
Email:
furls@fda.gov
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Whether you are a broker or an individual, you must give
prior notice to the FDA before you ship. Use contact info
above.
Please note that the above information was accurate at the
time this publication was printed, but may be subject to change.
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For More Information
- Your local Manitoba Agriculture, Food and Rural Initiatives office
- Manitoba Agriculture regional forage specialists
Ashern 768-2781
Beausejour 268-6014
Brandon 726-6409
Dauphin 622-2012
Carman 745-5672
You Can Help Reduce Greenhouse Gas
Feeding animals more high-quality forage can help reduce their
production of methane gas, one of the components of greenhouse
gas. For more information on greenhouse gas, and how livestock
producers can do their part to help reduce it, visit the following
two websites.
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This information is posted with permission. The
following agencies worked collaboratively and provided funding support
for this publication:
Partial funding for this publication was provided by the
Greencover Canada Program, a five-year, $110-million Government of
Canada initiative designed to help producers improve
grassland-management practices, protect water quality, reduce greenhouse
gas emissions, and enhance biodiversity and wildlife habitat.
For
further information on Greencover Canada, please visit
www.agr.gc.ca/env/greencover-verdir
or phone 1 866 844-5620.
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