Guidelines for Estimating
Alfalfa Hay Production Costs
Date:
March, 2008
This guide is designed to provide planning information and a format for calculating the costs of production in a forage enterprise. The production costs included in this budget were not obtained from a survey of producers, nor do they necessarily represent the average cost of production for alfalfa hay in Manitoba. The assumptions on which the costs were calculated are clearly defined in the supporting pages. They were developed by using a combination of recommended practices and methods followed by many producers. When interpreting the costs contained in this budget for an individual situation, adjustments may be necessary. Each assumption must be examined and adjustments made where necessary. The budget can be useful for comparative purposes. Comparison of costs can be made with other similar farms; comparing farm costs over time; or comparing actual results with projections made earlier. Disclaimer: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility of the user. If you require assistance with developing your individual budget, please contact your local Manitoba Agriculture, Food and Rural Initiatives office.
Alfalfa Hay Cost of Production Input Assumptions Land Total Acres Market Value per acre
300 acres $625 $/acre
Years of Production 1 (establishment year) 2 3 4 5 6 Total Yield Average Yield Years rotation
Yield tons/acre 1.2 2.7 3.1 3.1 2.9 2.7 15.7 tons 2.6 tons/acre 6.0 years
Seed Cost Certified alfalfa seed cost per lb Seeding rate(lbs/acre) Custom seeding cost ($/acre)
Fertilizer Nitrogen Phosphate Potassium Sulfur
Herbicide Establish/burn off Annual Field Fuel Costs Fuel Price
$/lb $0.60 $0.80 $0.243 $0.26
$3.25 $/lb 10.0 lbs/acre $0.00 $/acre
Establish lbs/acre 0 35 30 15
$/acre $7.00 $0.00
$1.04
Annual lbs/acre 0 35 30 15
Establish Field Operations Cultivate (fall) Burn Off Cultivate Seed/fertilize Swath Bale
Times Over 1 1 1 1 1 1
Width Feet 40 60 40 40 16 16
Speed MPH 5 6 5 5 5.5 5
Tractor HP 175 100 175 175 100 100
Annual Field Operations Fertilize Swath Bale
Times Over 1 2 2
Width Feet 40 16 16
Speed MPH 7 4.5 4
Tractor HP 100 100 100
Moving Costs (Custom Rate) Pickup, load, unload and stack ($/bale) Average round bale weight (lbs) Repairs & Maintenance % rate of investment Crop Insurance Establish Premium $ Coverage (/acre) Annual
Premium (DFA 12) LTA Coverage Level $ Coverage (/acre)
$4.00 $/bale 1,500 lbs
2%
$2.88 $/acre $40.00 $5.96 $/acre 1.798 tons/acre 70.0% $138.77
Land Taxes Cost per acre
$4.00 $/acre
Miscellaneous (Establish & Annual) Miscellaneous Costs Twine Costs
$5.00 $/acre $1.00 $/acre
Interest Interest on Operating Investment interest rate
6.5 % 3.5 %
Capital Costs Capital Costs Land Market Value Machinery Investment Storage Investment
Machinery Tractor 175 hp Tractor 100 hp Cultivator Sprayer/fertilizer Truck & Trailer Round Baler Mower Conditioner Total Machinery Storage
Alfalfa Cost/Acre $625 $145 $30
Useful Life
Salvage Value
10 20
10% 0%
Market % Allocated Allocated Value to Alfalfa Alfalfa $150,000 5% $7,500 $85,000 10% $8,500 $30,000 5% $1,500 $100,000 5% $5,000 $0 40% $0 $35,000 35% $12,250 35% $8,750 $25,000 $425,000 $43,500 $9,000
Total Investment
$434,000
Land Investment Land cost /acre Total Acres Total Land Cost
$625 300 $187,500
Total Capital Investment
$621,500
100%
$9,000 $52,500
100%
$187,500 $240,000
C. Labour Establish
Annual
hours/acre rate per hour
0.42 $12.00
hours/acre rate per hour
0.63 $12.00
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Alfalfa Hay Cost of Production Summary - March, 2008 A. Operating Costs 1.00 Establishment Cost 1 1.01 Seed 1.02 Fertilizer 1.03 Herbicide 1.04 Field Fuel Costs 1.05 Moving Costs 1.06 Repairs & Maintenance 1.07 Crop Insurance 1.08 Land Taxes 1.09 Miscellaneous Sub-total Operating Cost 1.10 Interest on Operating Total Operating Costs B. Fixed Costs 2.0 Depreciation 2.01 Machinery 2.02 Storage 3.0 Investment 3.01 Land 3.02 Machinery 3.03 Storage Total Fixed Costs Total Operating and Fixed C. Labour Total Cost of Production
Establishment $/acre n/a $32.50 $39.19 $7.00 $13.00 $6.51 $1.50 $2.88 $4.00 $6.00 $112.58 $3.10 $115.68
Annual $/acre $27.58 n/a $39.19 $0.00 $15.38 $13.87 $3.50 $5.96 $4.00 $6.00 $115.48 $3.18 $118.66
Annual $/ton $10.61 n/a $15.07 $0.00 $5.92 $5.33 $1.35 $2.29 $1.54 $2.31 $44.42 $1.22 $45.64
$14.50 $1.50
$14.50 $1.50
$5.58 $0.58
$25.00 $3.19 $0.60 $44.79
$25.00 $3.19 $0.60 $44.79
$9.62 $1.23 $0.23 $17.24
$160.47
$163.45
$62.88
$5.00
$7.51
$2.89
$165.47
$170.96
$65.77
1. The cost of establishing the crop, $165.47/acre, was spread over 6 years at $27.58/acre/year.
Disclaimer: This budget is only a guide and is not intended as an in depth study of the cost of production Interpretation and utilization of this information is the responsibility of the user.
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Guidelines: Alfalfa Hay Production Costs
3
Your Cost
n of this industry.
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Guidelines: Alfalfa Hay Production Costs
3
Assumptions 1. Assumed a total of 300 acres of alfalfa hay at a market value of $625 per acre. 2. Assumed 6 years of production with an average yield of 2.6 tons per acre. 3. Machinery and equipment for the alfalfa hay enterprise included tractors, sprayer, baler, mower conditioner and storage facilities which were valued at $52,500 in total.
4. The budget is based on a round bale production system with outside storage.
Alfalfa Grass Hay Cost of Production Worksheet A. Operating Costs 1.01 Seed Establish
Your Cost
x + =
10.0 $3.25 $0.00 $32.50
x =
0.0 $0.60 $0.00
lbs/acre seeding year cost/lb $/acre
x =
0.0 $0.60 $0.00
lbs/acre cropping years cost/lb $/acre
1.02 Fertilizer Nitrogen Establish
Annual
alfalfa grass mix lbs/acre $/lb $/acre custom seeding $/acre
P2O5
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Guidelines: Alfalfa Hay Production Costs
Establish
4
x =
35 $0.80 $28.00
lbs/acre seeding year cost/lb $/acre
x =
35 $0.80 $28.00
lbs/acre cropping years cost/lb $/acre
Annual
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Guidelines: Alfalfa Hay Production Costs
K2O Establish x =
30 $0.243 $7.29
lbs/acre seeding year cost/lb $/acre
x =
30 $0.243 $7.29
lbs/acre cropping years cost/lb $/acre
x =
15 $0.26 $3.90
lbs sulfur seeding year cost/lb $/acre
x =
15 $0.26 $3.90
lbs/acre cropping years cost/lb $/acre
= =
$39.19 $39.19
$/acre $/acre
$7.00 $0.00
$/acre $/acre
Annual
Sulfur Establish
Annual
Establish Cost Annual Cost
5
1.03 Herbicide Establish Annual 1.04 Field Fuel Costs Establish Field Operations Cultivate (fall) Cultivate Seed/fertilize Burn Off Swath Bale Total
Times Over 1 1 1 1 1 1 6
Width feet 40 40 40 60 16 16
Speed mph 5.0 5.0 5.0 6.0 5.5 5.0
Fuel $/ac. 2.15 2.15 2.15 0.68 2.79 3.07 $13.00
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Guidelines: Alfalfa Hay Production Costs
Annual Field Operations Fertilize Swath Bale Total
6
1 2 2 5
40 16 16
7.0 4.5 4.0
0.88 6.83 7.68 $15.38
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1.05 Moving Costs Pick up, load, unload & stack Establish 1.2 x 2,000 ÷ 1,500 x $4.00 = $6.51 Annual
tons/acre lbs/ton bale weight (lbs) $/bale $ /acre
2.6 2000 1,500 $4.00 $13.87
tons/acre lbs/ton bale weight (lbs) $/bale $ /acre
1.06 Repairs & Maintenance Establish* 2.0% x $75 = $1.50
percentage rate investment/acre $ /acre
x ÷ x =
*Investment to establish crop includes tractors, sprayer & cultivator.
Annual** x =
2.0% $175 $3.50
percentage rate investment/acre $ /acre
**Investment in annual cropping includes tractors, mower, baler, truck & trailer & storage.
1.07 Crop Insurance (Forage Designated Area 12) $ coverage/acre Establish $40 = $2.88 $/acre premium Annual
=
1.80 70.0% $138.77 $5.96
LTA tons /acre Coverage level $ coverage/acre $/acre premium
1.08 Land Taxes
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=
$4.00
$/acre
+ =
$5.00 $1.00 $6.00
$/acre twine cost/acre $/acre
1.09 Miscellaneous
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1.10 Interest on operating costs Establish $112.58 ÷ 2 x 5.5% = $3.10 Annual ÷ x =
$115.48 2 5.5% $3.18
subtotal operating average interest rate $/acre subtotal operating average interest rate $/acre
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Capital Costs Machinery Tractor Tractor Cultivator Sprayer/fertilizer Truck & Trailer Round Baler Mower Conditioner Total Machinery
175 hp 100 hp
Storage
$150,000 $85,000 $30,000 $100,000 $0 $35,000 $25,000 $425,000
5% 10% 5% 5% 40% 35% 35%
$7,500 $8,500 $1,500 $5,000 $0 $12,250 $8,750 $43,500
$9,000
100%
$9,000
Total Investment
$434,000
Land Investment Land cost /acre Total Acres Total Land Cost
$625 300 $187,500
Total Capital Investment
$621,500
$52,500
100%
$187,500 $240,000
B. Fixed Costs 2. Depreciation 2.01 Machinery ÷ ÷ = 2.02 Storage
$43,500 $0 10 300 $14.50 $9,000
machinery investment salvage value years useful life acres $/acre storage investment
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÷ ÷ =
$0 20 300 $1.50
salvage value years useful life acres $/acre
x =
$625 4.0% $25.00
cost/acre investment rate $/acre
+ ÷ ÷ x =
$43,500 $4,350 2 300 4.0% $3.19
+ ÷ ÷ x =
$9,000 $0 2 300 4.0% $0.60
storage investment salvage value average acres investment rate $/acre
x =
0.42 $12.00 $5.00
hours/acre rate/hour $/acre
x =
0.63 $12.00 $7.51
hours/acre rate/hour $/acre
3. Investment 3.01 Land
3.02 Machinery machinery investment salvage value average acres investment rate $/acre
3.03 Storage
C. Labour Cost Establish
Annual
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For more information contact your local MAFRI office. Prepared by: Peter Blawat Policy Economist
Glenn Friesen Crop Specialist
Keith Kyle Business Development Specilaist
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