Pricing haylage and baleage – Jon Urness, Vita Plus

Posted on September 25, 2017 in Forage Foundations
By Jon Urness, Vita Plus national forage specialist
Several times a year, a member of the Vita Plus forage team gets a call that starts like this: “I’ve got a chance to buy some haylage from a neighbor, what should I pay for it?”

With wide variation in quality, moisture, and point of delivery, the answer can be a little daunting as it depends on a number of objective and subjective factors.  Let’s tackle the objective ones first because they’re fairly easy.

Let’s assume, for this discussion, a pound of similar quality dry matter (DM) alfalfa from haylage, baleage or dry hay is worth the same once it’s put in front of a cow in the TMR.  We could argue that dry hay may have a little more fiber effectiveness than really wet, finely chopped haylage, but that’s a subjective consideration the buyer will have to take into account.  Assuming all DM is equal, then it’s simply a matter of using a reference feed for our price basis.

Local-tested hay auction prices are a good place to start.  Some auctions post results on the Internet or in local newspapers.  The best information shows an actual analysis, but, more often than not, the sold baled hay is reported in categories based on quality and the packaging, such as large-square, large-round or small-square bales.  For dairy hay, look at the prices for large squares.  Some reports include average prices based on protein or relative forage value (RFV).  I just took a look at such a website, and it was reported in the commentary that large-square bales with 17.3 percent protein and a 146.6 RFV sold for $132.50 per ton.  I’ll use that as my reference feed to price the neighbor’s haylage for sale.

Let’s say the neighbor’s haylage has an analysis and is a little higher quality than the reported auction hay at 20 percent protein, 165 RFV and 40 percent DM.  Let’s adjust for DM first.  The auction hay has 85 percent DM and the haylage for sale is 40 percent DM.  Simply divide 40 by 85 to get a factor on the neighbor’s haylage.  The result is a factor of 0.47, so correcting for dry matter alone, you would pay 47 percent of the auction price on the dry hay for the neighbor’s haylage per ton as fed ($132.5 x 0.47 = $62.35).

We’re not done yet!  Now let’s adjust a little for quality.  In this case, because I don’t know RFQ on either feed, I’ll simply adjust for crude protein (CP).  Once again, to calculate a CP factor, I would divide the higher CP of the neighbor’s haylage (20 percent) by the CP of the auction hay (17.3 percent) to get a factor for adjustment.  The result is 1.156, so the haylage is actually worth 15.6 percent more than the auction hay, which puts the value at $72.08 per ton as fed (1.156 x $62.35 = $72.08).

We’re still not quite done because haylage is not easy to store or transport like the nice, neat large-square bales at the hay auction.  Plus, if the haylage has to be moved, different shrink losses could occur.  This gets subjective, but I would discount that haylage price by 20 percent because of those considerations.

In summary, I would factor the haylage down compared to the auction hay by 0.47 for lower DM, up by 1.156 because of higher CP, and down by 20 percent because of “packaging and convenience” compared to dry baled hay.  The result would be $57.66 per ton as fed for the neighbor’s haylage.

For a more objective approach, Randall Greenfield, Vita Plus dairy specialist, developed a Microsoft® Excel spreadsheet to estimate hay values.

Other factors to consider would be distance to travel, loading the haylage, delivery, and possible shrink, but that is a discussion for another time.

Category: Business and economics
Feed quality and nutrition
Forage Foundations