An Economic Study of the Relative Profitability of Alfalfa Production and Marketing Practices

• Main Author: Claycomb, David
• Format: Others
• Published: TopSCHOLAR® 1995
• Subjects: Agriculture; Agronomy and Crop Sciences; Economics; Marketing
• Online Access: http://digitalcommons.wku.edu/theses/903; http://digitalcommons.wku.edu/cgi/viewcontent.cgi?article=1906&context=theses

The seasonality of the price of alfalfa hay in Kentucky was studied as well as the potential cost or profitability of storage of this hay. Economic comparison of alfalfa hay production to other farm enterprises was carried out. In addition, an estimate of the value of two qualities of alfalfa hay was calculated based on 1991 prices. The analysis of 41 years of marketing data demonstrated significant differences (P<.01) in price with seasonal lows in June/July and a steady increase in price to a high in March. In general (based on $100 per ton hay and 12% interest) the alfalfa hay producer could lose from $5 to $10 storing hay and selling at a later date. There were some specific conditions where he might have realized a return to storage of $0.16 to $1.48 per ton. A further evaluation of average (KY Feeder) and good (KY Pride) quality hays indicated that current prices of $70-$75 and $100 per ton respectively were the prices where a dairyman would be able to include this hay in the cow's total diet. Even with problems of quality and quantity of alfalfa hay, the economic returns to the production of alfalfa hay were favorable when compared to other crops in Kentucky with the additional benefit of alfalfa being a crop that can result in reduced soil erosion from sloping land. Returns above variable costs can be from $120 to $400 per acre depending upon yield and sale price. However, an understanding of seasonality of price as well as storage costs need to be considered by alfalfa hay producers to assure realizing the above returns.