Millions of dollars worth of hay are sold in the United States each year. Much has been said and written about various aspects of hay production, hay quality, and related topics, and rightly so, because there are many factors that affect hay value and the profitability of a commercial hay operation or of a livestock operation for which hay is purchased.

There has been much less focus on the interactions of buyers and sellers. Nonetheless, this is also important because the economic well-being of both the sellers and the buyers are affected by the transactions. Furthermore, the well-being of animals that receive much of their nutrition from purchased hay also depends on buyer/seller relationships.

The following discussion addresses a number of points that are integral to successful hay transactions. The perspectives of both buyers and sellers are taken into consideration.

Objectives Of Buyers And Sellers

A commercial hay producer is a businessman. He (or she) wants to produce and sell hay for a profit. A statement that does a good job of summarizing what is required to attain success in business is, "Find a need and fill it." Thus, a seller of hay needs to find a need he can fill with the hay he produces.

Not all hay buyers need and want the same type of hay. For example, the types of hay that a horse producer may want could be quite different from what a dairyman is looking for, and a beef producer may be interested in still another type of hay. Consequently, a seller of hay needs to identify the particular market that he wants to serve.

The better that a hay producer can identify the market he wants to serve and then meet the unique needs of that particular market, the easier it will be for him to market his hay, and the better the price he will likely be able to receive. Some of the considerations which might come into play are forage species, quality, color, smell, feel, and how the hay is packaged.

The objective of the buyer is to obtain hay of the type he ( or she) needs and to purchase it at a reasonable price. Therefore, a buyer needs to know precisely the type of hay he needs. Unfortunately, some buyers don't seem to have a good handle on exactly what type of hay they need. This is likely to lead to either paying more than is necessary, or result in failure to obtain a type of hay that will meet the nutritional needs of the animals for which the hay is being purchased.

The need for a seller to make a profit and the need for a seller to purchase hay at a reasonable price seem to be in direct opposition, but in most cases there is room for both of these objectives to be satisfied. Therefore, for a transaction involving hay to be truly successful, it should please and profit both the seller and the buyer.

Finding The Deal

There are many ways that hay sellers and buyers can find each other. Hay auctions are especially good because they enable people to compare the hay they buy or sell to other hay with regard to quality, appearance, and price. However, not many places in the United States have hay auctions at present, so opportunities to participate in such events are limited.

Most hay producers need to advertise their hay, at least when they first get into the business. There are many ways to do this including periodicals, local newspapers, or through various organizations such as universities or hay associations that have listings (including computer listings) of hay available for sale.

Signs placed in front of the farm are often associated with people who are not really in the hay business year-in and year-out, but even this simple technique is effective for some large scale commercial producers. For example, if the farm is located on a busy highway, a sign may bring in a lot of business, especially from people who are looking to buy small quantities of hay, such as pleasure horse owners.

There are many different ways to market hay, and some work well in certain areas and/or for certain types of hay, while others work better in other situations. The principle to keep in mind is simply: advertising must reach potential buyers.

A concept that should never be forgotten or minimized is that "word of mouth" is extremely important. Perhaps in the hay business more than in most other types of businesses, a lot of product is sold as a result of one person who has had a good experience telling other people about how pleased he was with his dealings with a particular hay producer.

Initial Buyer/Seller Discussions

Even if a seller of hay is striving to produce hay which will be well suited to the market he seeks to serve, not all of his hay will be exactly the same. In addition, some buyers in a particular market will have slightly different needs than others. Therefore, the seller needs to know his product.

The seller needs to be knowledgeable about each lot of hay he has available. This may include details such as color, how stemmy it is, how leafy it is, whether there is any mold present, and so forth. He may also need to take samples and have forage analyses run on each lot, depending on the market he is trying to serve. In addition, he needs to know how much hay he has that falls into various categories.

The initial discussion between sellers and potential buyers normally needs to be aimed at establishing whether a successful transaction is possible. The seller needs to understand what the buyer wants and needs, and the buyer needs to understand what the seller has to offer. This is essential if there is to be a good chance of perfectly matching hay the seller has available with the needs of the buyer.

If the buyer cannot inspect the hay in advance of delivery, the terminology used when hay is discussed can be critically important. For example, what "leafy" means to one person may mean something different to someone else. The same is true for many terms such as " stemmy ," or "bright green," or "soft."

Agreeing On A Price

This can be a touchy area, but is one, which is important to both the buyer and the seller. The ball is in the seller's court first because he sets the price at which his hay will be offered.

In pricing hay, the seller must first calculate his inputs. A hay producer won't be business for long if he is making little or no profit, so determining the cost of his inputs is a first important step in pricing hay. It isn't unusual for a hay producer to overlook some of the costs associated with hay, which can include production, harvesting, advertising, storage, and transport.

Storage is an area in which expenses can be quite easily underestimated if a seller is not careful. Costs in this category can include shrinkage (5 to 10% is possible), storage building depreciation (5% per year is a good figure to use), repairs (2% is usually about right), and taxes and insurance (which vary with location).

Several other factors also influence hay pricing. Nutritive analysis, appearance (which shouldn't be, but in some markets is, more important than nutritive value) and the cost of alternate

feeds can all have an influence. The current market for hay, which is largely influenced by supply and demand, is a final determinant of price.

Hay can be sold either by the bale or by the ton. However, forage quality, the weight of bales, and the moisture content of hay can all vary. Therefore, the real value of a given quantity of hay can vary greatly. Both sellers and buyers need to be aware of all variables, which can affect the economics of hay transactions.

When it comes to agreeing on a price, the buyer has the final word because he has the opportunity to accept or reject the price that the seller offers, and there is a "regulation mechanism" which often comes into play. Hay buyers often talk to other buyers and also to other sellers, which tends to keep the price of hay from getting too far out of line in most cases.

Details Of The Deal

Assuming that the seller has a type of hay that the buyer needs and they can agree on a price, there are still a number of details, which need to be worked out in order for a successful transaction to take place. There is an old saying that "the devil is in the details," and this can certainly apply to the details of buying and selling hay.

Details important to both the seller and the buyer can include the following. How is the hay packaged? How, and for how long, has it been stored? How will it be transported? Who will transport it and/or who will pay for transport? Will there be any difficulty in finding where the hay is to be delivered? Will there be any problem accessing the place where the hay is to be delivered? Will the buyer have refusal options? Who will unload it? What is to be the method and time of payment?

All of these details must be worked out to the satisfaction of both the buyer and the seller. Experienced hay sellers often spend a lot of time on the phone or in face-to-face contact with buyers, especially when dealing with someone to whom they have never sold hay before. With regard to such details, communication is the key to avoiding problems.

Final Thought

There is a final principle that should be mentioned. This is a principle that is important in most businesses, but that is particularly applicable to commercial hay production. It results from the fact that a high percentage of the hay sold occurs in transactions between buyers and sellers that have dealt with each other before. It is: long term success depends on reputation and trust.