Types of Hay for Crop Sharing

There are many different types of hay. Common hay crops include alfalfa, fescue, orchard grass, timothy, ryegrass, and more. Some might even mix hay crops, such as timothy and orchard grass.

“There are a lot of hay farmers,” said Brock Utecht, a Whitetail Properties Land Specialist in Missouri. “I'm in southern Missouri. Just about every neighbor and farmer has cattle. So, there's a bit less supply of the hay directly. Still, there's plenty of them around. You're going to find those contacts quickly.”

Although there are many different hay species, alfalfa is perhaps the most common. Timothy and orchard grass are highly desirable, too.

“There's crop shares for a lot of alfalfa farming,” Utecht said. “We do different agreements if it’s square or round [bails]. Know what that market supports. Calculate what you expect to be paid from that farmer to do that crop share.

Oftentimes, alfalfa is heavily involved with the equestrian market. Cattlemen who want more protein-rich hay for finishing cattle want it, too.

Crop Share vs. Cash Rent Hay Lease

Understand leasing land for hay production, but haven’t share cropped? Hay crop sharing differs greatly from a straightforward lease agreement. First, with hay crop sharing, the landowner (lessor) has a bit more control over it. With leasing, although you still own the land, the farmer (lessee) has more control.

Another difference is found in the terms and duration of the lease. Oftentimes, leasing agreements are multiple years. Generally, crop shares are only for one year.

“The lease agreements I've seen usually go for multiple years,” said Zeb White, a Whitetail Properties Land Specialist in Utah. “Typically, share cropping, at least in my area, goes for just one season. It gives the owner a little bit more chance to negotiate year-to-year. They can plan things out.

Regardless of the route chosen, the landowner still has the final say in operations.

“Either way, they own the ground,” White continued. “They still control the ground to a large extent.”

Structuring Hay Crop Share Agreements

According to Utecht, hay crop sharing usually works in a couple different ways. First, you can pay a hay farmer a rate per bale. Then, you get to keep the hay.

“For example, I pay a guy $25 per bale that he produces on my farm,” Utecht said. “Retail on those bales is probably anywhere from 50 to 65 depending on the year and the rates.

“Maybe you don't need as much hay,” Utecht said. “If you have less livestock, you can do a crop share where they take 50% of the hay and you keep 50%. There are no payments involved. You just split it right down the middle.”

Of course, crop shares are very nuanced. There’s fertilizer, lime, herbicide, insecticide, and other costs.

“If they take care of the farm’s lime and fertilizer, they’ll take 70% and you’ll keep 30%,” Utecht said. “If you just have some horses, possibly they're paying you $25 a bail to come and bail it (and they keep the hay).

“So, there are multiple different ways to structure what works best for the individual owner of the hay land,” Utecht said.

Of course, agreements should be fair. Each important aspect of the crop share must be addressed.

“Be very clear on the agreement,” White said. “Know who's responsible for what.”

“Get a payment ahead of time before it's even harvested,” White said. “I typically see a 50-50 or 30-70 split. As soon as the agreement is entered into, the owner gets a lump sum payment. Then, when the person doing the crop share comes to harvest, they’ll pay the remainder.

All said, he encourages people to be very definite on timelines. Also, be very definite on who's responsible for what. Then, get some money up front.

“That way, the person who's working the ground, or who is coming to harvest the ground, is much more committed,” White said. “Once they have money on the table, they're much more likely to follow through on what they say they're going to do.”

Making Hay Crop Shares Fair

Before entering into a hay crop sharing agreement, it’s important to get to know the farmer you’re working with.

“A lot of landowners are aging out,” White said. “You'll have younger guys or neighbors who want to do a crop sharing agreement. Get to know the person you're going to be share cropping with. You're all in it together. Make sure that you understand how they want to go about it. Have them walk the fields with you. Have them walk the farm with you.

“There's nothing that really replaces spending time with them,” White continued. “I hate to do those kinds of deals over the phone, because you never know what this other person's plan is, or what their vision is. So, get boots on the ground. Spend a day together walking it before you enter into an agreement. Know that you're both on the same page.”

Sometimes, hay crop shares are managed by handshake agreements. That said, it’s always best to have things in writing. Utecht says the agreement method ultimately depends on the relationship with the farmer. He always recommends having something in writing. That way, it's black and white, and there's a signed contract with all the details.

“The farmers are going to have a bail count on their tractors from their bailor,” Utecht said. “So, it's all written.”

Of course, you can do it multiple different ways. It’s best for the two parties to discuss it, determine what they are most comfortable with, and operate accordingly.

“I just do it on a handshake agreement,” Utecht said. “He sends me a picture of his screen on his tractor that's connected to his bailor. It shows how many bails he had. I know the going rate. Then, he charges me, and I write him a check.”

According to White, a common option is called, “buying out of windrow.” The owner plants. Then, the person buying it harvests, bails, and sells the crop.

“They do everything, so the owner is only responsible for the planting, watering, and sometimes fertilizing,” White said. “But the owner gets it started, and the buyer takes it from there.”

Setting a Hay Crop Share Price

Generally, crop share prices vary from state to state, county to county, and crop to crop. Sometimes, determining a good and fair price can be challenging, especially in fluctuating markets.

“Hay can be tough, because it's a commodity, and it varies pretty wildly,” White said. “Obviously, you don't want to go in the hole. So, you're going to negotiate something that makes you some money and gives you some comfort.

White notes that, for some, it's hard to buy ground. Land is very expensive, and there are a lot more people who are apt to do this kind of agreement — even more than what most sellers realize.

“If landowners reach out and network a little bit more, they'll realize a lot of people want to do this type of agreement,” White said. “The negotiation is usually better for them, because there's little ground that's for sale, and the ground that is for sale, is commanding a high price right now. So, crop sharing is becoming more common. It's an advantageous negotiation point from the owner, because there just aren’t a lot of owners doing it right now.”

Who Should Consider Hay Crop Sharing?

Some might wonder, when is a hay crop share a good option for the landowner? When should they consider using this method?

“For landowners, the advantage is less equipment,” White said. “It's less effort. They have a guaranteed payout.”

In contrast to someone selling hay to the public, they know exactly what their crop is going to sell for. They know exactly when they're going to get paid. There is no marketing involved. And there's no pursuing buyers for the final product.

“So, it's more of a certainty kind of thing, a lot less work, and a lot less equipment,” White said.

Ultimately, if you have the hay land, but don’t have equipment, don’t want to do the work, or don’t want to deal with other hassles stated above, hay crop sharing might be for you.

Regardless of who handles what, be sure the land is being properly cared for. Protect your hay crop, and it will produce for years to come.

“The more that you fertilize and lime your farm, and take care of that hay ground, the better it’s going to produce,” Utecht said. “This offers more flexibility with doing crop shares.”