Posted by kyhayman on May 29, 2015 at 12:53:44 from (99.196.29.106):
In Reply to: Hay buyers? posted by jhilyer on May 29, 2015 at 07:08:19:
Im not sure what a big time hay buyer is? I guess most people around here consider me one so I'll wade into the mix. As far as small squares go, that's not my market but several of my friends buy and sell several hundred thousand a year. Everyone's dream is to have a contract that guarantees someone will buy 100 percent of production at a premium price and take delivery when the weather is perfect and at the sellers convenience; me included. But that's not how the world works.
The end user wants his or her product when they want it, like they want it, and as cheap as possible. That's usually not realistic either.
As a buyer the cheapest product I buy and the one where I set price is hay purchased in season, that I take immediate delivery of into my storage. Every step of the process is discounted for my risk and opportunity cost. The next cheapest is what is paid in advance, and stored in the farmers barn for me to sell or move prior to the next season. But, it has to be loaded when I need it loaded. Not tomorrow, not the next week, sometimes on very short notice. Often times a freight broker won't have a definite truck for me until mid afternoon for loading that night.
Probably the greatest consideration to selling in quantity is all weather semi access. If the main roads are open I need to be able to get a 53 foot semi trailer with a sleeper cab tractor in, loaded, turned around, and out the DAY the main road is open. Even with 4 suppliers, plus my own barns, there were at least 2 weeks in March this year when we could not sell hay because we couldn't get it to the places we could load trucks. This was a real out of pocket loss to me of almost $15,000. Consequently, I've added more storage here, and road upgrades. But, the sale price isnt going up any so the discounts are at the farmer seller level. Im buying more hay in season delivered into my place and less at a higher price out of someone else's.
The biggest thing about moving a lot of squares, particularly alfalfa mix is being aware that January is when the thoroughbreds start out down in south Florida. If I have to own hay until then, its going to be cheap enough to cover my risk, insurance, and the money thats tied up. Because, just like everyone else. My want list is bigger than my bank account.
Most valuable of all is the hay I buy in season, by the load, out of the farmers barn that can make a semi load of like hay out of the same field of the same cutting. So.... all that and a bag of chips. In no way do I mean to sound harsh or condescending. I've got a guy wearing me out right now wanting me to buy a few thousand square bales left over from last year. He's stuck on $7 a bale, says thats what he sold he for all winter. Which is all well and good BUT. My retail is 8.50 and 50 cents of that is sales tax. Loaders and truckers eat up 2.00 of that to get it on the truck and to its end user. I'm going to make $2.00 a bale to mess with it. So that puts us at $4.50. And then the customer wants it put in the barn so there's another 50 cents that has to come from somewhere.
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