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Wednesday, July 28, 2010

The Folly of Baling Grass straw

I can see the page count indication drop as I drone on about farming, by my only commentators are farmers anyway.
The grass seed harvest is underway in our neighborhood. The straw is baled and sold for export to Japan and Korea. The word is that they have an excess of protein from their fishing industry and they import the grass straw as they desperately need the roughage.
The straw price is very good right now. From $75-$85 a ton. The key to profitability is on nailing down two things. Is the price quoted on delivered material? If so, then deduct $10 per ton for hauling, and how much do you have to pay for the straw.
The straw used to be free. But... As it always happened, the fellows who wanted to be big time operators came in and started a ferocious competition for the straw. No straw or hay baler person can resist as $.50 per ton profit and so they started paying the farmers for the straw. The delivered price was kept somewhat low key but a couple years ago it started hitting the $75 price range. That lasted but a short while. The rabid straw balers started sporting new balers and service truck and took vacations in the Bahamas. After that the stumpage price started to climb.
Once fertilizer also started to climb many farmers would not let straw leave their farm for less than $20 per ton stumpage.
This year the clever short-pants baler guys were offering $40 a ton for stumpage. Many have gone to those really big balers.
I have a three-string Hesston 4690. I will not promise to pay more than I can afford to pay. Thus, I have barely 100 acres when I need about 500 acres. I am trying to avoid baling any straw off of our farm as we need the P and K back in the soil. Not to mention our lack of organic matter.
So, yesterday I baled four truck loads of nice green fescue straw. I had to rake it three times to get it dry enough to bale. I had to tell the neighbor that it was my field and make him stop baling. He was very apologetic and I got all, "hey it is ok, honest mistake, go ahead and pick up what you baled." Then i started kicking myself as there was no point in being that nice. I shouldn't have let him pick up his bales as I ended up being one block short of 4 truck loads.
But, I could not get the stuff dry. It needs to be below 16 percent moisture for export. One side of the bale would be 8 percent and the other would be 20 percent. I have a moisture tester in the bale chamber. Few other balers have those, despite the efforts of my 91-year-old father who spends his days selling moisture testers.
I think the neighbor baled all the straw he got out of my field at 18 to 20 percent moisture. So, in the end I am glad I didn't get his bales.
But, here is the price break down.  I think I am getting $80 per ton at the press. This means $10 for hauling right off the top so we are at $70. Now I hope I can get by with $30 to the farmer so that gives me $40 per ton. My cost is close to $28 per ton with one trip with the rake. So, I'll be optimistic and say I have $30 a ton in this straw. My profit is $10 per ton. So if there was 100 tons I made $1000 in two days. Total income should be $8000 and of that I kept $1000. I can live with that.
But, I may only get $70 per ton... depending on how fast they straw gets hauled out of the field. Now I'm not making anything...
I guess you see where this is going.
In short, I'm working my arse off, our stacker needs $4000 in tires and has what I guess to be a $1000 hydraulic problem, the baler needs $2000 in knives, knotter parts, and plunger rails, I owe my neighbor something like $3000 for hauling hay and another $2500 for him paying me rent on a field he backed out of doing and I have sold $0 in hay. Would I not be better off staying in the house and sleeping all day? What is the point in doing all this work to essentially be lucky to break even?
That that is the question of farming in a nutshell...
For a more positive view go visit Ed Winkle! He will give you a free breakfast!

4 comments:

  1. Thats the trouble with all those numbers Budde. When you start adding up all the expenses in this farming operation and the projected income, sometimes it looks a little depressing. I try not to do too much of that. As long as I enjoy the work and call it hobby farming I guess I am making a profit. If I ever started paying myself an hourly wage I would probably be "in the red". :0)

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  2. And after 35 years you can chuck it all in and play the fiddle and the banjo. That's my story. At least I'd been practicing, especially on nights after knocking myself out doing something practically necessary but financially worthless, or when the piglets were all dying from some new and horribly virulent disease incubated in the factory confinement units that have ruined our countryside.

    Ralph's right. The chance to be outdoors and play with farmer toys, even recalcitrant ones, and the opportunity to work alongside family were why I kept at it so long in spite of the numbers. Even the illusion of independence may have value...

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  3. I've been at this closer to 40 years and still can't play the fiddle and banjo like my Uncle used to.

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  4. I can't play fiddle, guitar, jews harp, harmonica, or washtub base... I'm not sure how I will support myself.Amateur cartoonist?
    I just finished baling the bulk of my straw. Out of say $16,000 worth of straw and a weeks work I get to call $500 a clear profit. If I had two balers and did twice the volume I think my profit would be like $1,500 so I guess it just goes back to economies of scale.

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