Posted on March 3, 2014 @ 07:32:00 AM by Paul Meagher
Me and my wife purchased a 62 acre farmstead property in our home town about 4 years ago. Much of the land consisted of hay fields. Up until last year, the hay fields were just an expense for me. I had to hire someone to come in once a year and drop the hay just to keep the hay fields in good condition. I had started accumulating second-hand farm equipment since we purchased the place. Last year I needed a second hand hay rake and baler to round out the equipment I would need to make square bales of hay myself. I decided to go for it and partnered 50/50 with my brother-in-law to make and sell the hay (he also had the full compliment of square-bale hay making equipment so we had two mowers and balers going as we were making it). The farmstead came with a big old barn whose massive roof I had reshingled the previous year so it was being underutilized. We decided we would make the hay and store it in the barn until we got sale for it. Here is us filling up the barn with hay bales.
I'm videoing the event. My brother-in-law is the guy at the top of the mow throwing the hay to the back of the barn. Because I don't live at the farmstead now (mostly a spring/summer/fall residence) my brother-in-law, who lives in the area, is handling the calls for hay. We sold some hay to date but were starting to get concerned that we would have quite a bit left in the barn by spring (which would make it harder to sell and create storage issues for any new hay I would make this year). I was just informed this morning that we now have sale for 1400 bales. My brother-in-law ended his email with "We should have made more". I'm quite emboldened by the success of this hay making venture. I'll recoup my machinery investments, labor investments, and make a small profit. The hay was money in the bank as far as I was concerned. I had already paid out all my expenses to make it. When it was sold it would be like I was cashing out my investment. Cha-ching!
The moral of the story for me was that I was correct to recognize the opportunity and to make the necessary machinery investments to realize that opportunity. Farming is a hard business to make money at, and many farmers go broke buying too much equipment, or equipment that is too expensive, but the reality is that I couldn't make a sellable product, hay bales, without buying a rake and baler last year. I could have lost a good amount of money in this venture if the hay did not sell, but I'd never know if I would or not if I did not make the investment. The barn would have also been a useless asset if I did not start using it for it's intended purpose - to store hay. I'm not going to get rich making hay, but it is an important stream of income for the farm that can be used to fund other farm projects. Maybe the farm will show up as source of revenue rather than a tax deduction on next year's tax return. For that to happen, I may have to ramp up hay production this year while some of my other farm product investments (1600 grape vines and 180 apple trees so far) mature enough to become additional sources of farm revenue. My long term plan is for around 6 streams of income from the farm, two of which are now being realized (hay production, farm vacation accommodations).
In my theory of entrepreneurship I discuss the importance of developing multiple lines of business. This is what I'm doing with my farming venture. I'm not necessarily looking for the next big innovative idea, I'm looking for the next revenue stream that might pan out. For me, hay production is one new revenue stream that appears to be panning out. It is also good productive physical exercise to counteract the effects of too much time spent indoors in front of a computer monitor. On the farm, I also use sheafs of hay for thick mulch around my grape vines (to suppress weeds and winterize), as a growing medium for potatoes (embed seed potato between sheafs), and when it rots out it is a source of soil fertility for the grape vines and my garden. The square bale format is ideal for these purposes and is another reason to make them beyond any direct income they might generate.
Hay Production Investments For My Farm Startup