A hay farm's money is made three or four times a year, at each cutting, and sold all year from the barn. Small square bales sell to horse owners for a good price per ton but take the most work; round bales sell to cattle ranchers by the truckload for less. The plan turns on the equipment, which costs more than everything else put together, the land lease and water, and the weather between mowing and baling. In the example, a New Mexico hay farm starts with $93,000, ends its first year about $8,600 ahead before the owner's pay, and makes about $2,200 a month at full speed. Below is each part of the plan, the first year month by month, the startup budget, and a free template.
The short version
- Describe the farm in a paragraph: the fields, the hay, who buys, the goals.
- Cost each bale: fertilizer, fuel, twine or net wrap, the baling.
- Plan sales by product: small squares and round bales.
- Equipment is the biggest cost: buy used and keep it running.
- Test each cutting; horse owners ask.
- Sell from the barn all year, not only at cutting time.
- TaroStack keeps each cutting as a lot, counted in the barn, and each order's lots on record. More below.
Part 1: the business description
Pecos Valley Hay, a made-up hay farm in Roswell, New Mexico, writes:
Pecos Valley Hay leases 80 irrigated acres of alfalfa and grass near Roswell, cuts four times a year, sells small square bales to horse owners from the barn and round bales to cattle ranchers, and delivers within 50 miles. In its first year it aims to average about $13,500 a month.
Part 2: what a bale costs
| Product | Fertilizer and seed share | Fuel | Twine, wrap and baling | Cost | Price | Cost share |
|---|---|---|---|---|---|---|
| Small square bale, about 60 lb | $1.80 | $1.20 | $1.50 | $4.50 | $12.00 | 37.5% |
| Round bale, about 1,000 lb | $14.00 | $9.00 | $7.00 | $30.00 | $65.00 | 46.2% |
Most buyers pay cash or by check, so there's no card fee in the bale. The labor of baling small squares is in the twine and baling column; it's most of why they cost more per ton. Selling from the farm itself is in farm store business plan.
Part 3: the cuttings, the tests and the buyers
Cuttings come in May, June, August and September. Each cutting is tested for protein and feed value, and the result goes on the barn's board, because horse owners choose by it. Small squares go out of the barn by the pickup load all year; round bales go by the truckload in the fall and winter.
Part 4: what each product earns
| Product | Price | Variable cost | Contribution | Margin | Units a month at full speed |
|---|---|---|---|---|---|
| Small square bale | $12.00 | $4.50 | $7.50 | 62.5% | 800 |
| Round bale | $65.00 | $30.00 | $35.00 | 53.8% | 60 |
At full speed the business sells $13,500 a month and keeps $8,100, 60%; small squares bring $6,000 of it.
Part 5: the first year, month by month
Fixed costs are $5,900 every month: land lease ($1,500), irrigation water and power ($1,200), equipment upkeep and payments ($1,500), seasonal helper ($1,200), insurance ($200), and other costs ($300). Sales start at 10% of full speed:
| Month | Sales | Profit | Cash, year to date |
|---|---|---|---|
| 1 | $1,350 | −$5,090 | −$5,090 |
| 2 | $4,050 | −$3,470 | −$8,560 |
| 3 | $8,100 | −$1,040 | −$9,600 |
| 4 | $10,800 | $580 | −$9,020 |
| 5 | $13,500 | $2,200 | −$6,820 |
| 6 | $13,500 | $2,200 | −$4,620 |
| 7 | $13,500 | $2,200 | −$2,420 |
| 8 | $13,500 | $2,200 | −$220 |
| 9 | $13,500 | $2,200 | $1,980 |
| 10 | $13,500 | $2,200 | $4,180 |
| 11 | $13,500 | $2,200 | $6,380 |
| 12 | $13,500 | $2,200 | $8,580 |
The year's sales are $132,300, and the business ends it $8,580 ahead, before the owner's pay. It breaks even at about $9,830 of sales a month, in the fourth month. The lowest cash point, −$9,600 in month 3, is covered by the $10,000 of working cash with about $400 to spare. Hay is made in four cuttings and sold all year from the barn, so the plan spreads sales as monthly averages; the first months are low until the first cutting is baled.
Part 6: the startup budget
| Item | Example |
|---|---|
| Used tractor | $35,000 |
| Small square baler | $15,000 |
| Mower-conditioner | $12,000 |
| Hay barn repairs | $10,000 |
| Rake and tedder | $6,000 |
| Flatbed trailer | $5,000 |
| Working cash | $10,000 |
| Total to start | $93,000 |
The $83,000 before working cash is earned back in about three years at full speed. Other farm plans with heavy equipment are in pumpkin patch business plan and flower farm business plan.
Get the template
Download the hay business plan workbook. Four sheets: your products, each with its price, variable cost and units a month at full speed; the first year, month by month, with sales ramping up, profit, cash, the first profitable month, the lowest cash point and whether the working cash covers it; your fixed costs; and the startup budget. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The plan uses one yield a cutting. Rain on cut hay, a dry August and a baler that breaks in June change the year, and by February nobody knows how many bales of which cutting are left in the barn.
How TaroStack does it
TaroStack keeps each cutting as a lot, counted in the barn, and each order's lots on record.
Each cutting a lot. Each cutting goes in as a lot of bales with its date and its test result in the notes, so a buyer asking about a load gets its cutting.
Counts in the barn. The barn can be counted on a phone with no signal, and what's left of each cutting shows by lot.
Orders by customer. Pickup loads and deliveries are sales orders, with the lots each one took.
| The job | Notebook | In TaroStack |
|---|---|---|
| Bales left of each cutting | Counted in the barn | Stock by lot |
| Which cutting a buyer got | Remembered | Lots on each order |
| Who bought what this year | A notebook | Sales by customer |
Lots, counts and sales orders are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.