Build a Market for Your Hay

Three Producers Share Tips on Finding, Keeping Customers

John Atkinson switched to bromegrass hay, a prized feed for horses, to appeal to horse owners in his area. (Progressive Farmer photo by Jim Patrico)

When it comes to marketing their product, hay growers can't help but be a little envious of their grain-producing counterparts. In the hay business, you won't find trucks delivering product from the farm to an established market at the local elevator or an entity like the Chicago Board of Trade offering guidance on pricing.

Instead, hay growers have to go it on their own. It's up to individual growers to come up with strategies for seeking out new customers and retaining existing ones, and figure out how to competitively price their product within a given marketplace.

Here's a look at how three hay growers approach the task.

KEEP YOUR NAME IN FRONT OF CUSTOMERS

Successful hay marketing can involve plenty of hard work, but it's really not akin to rocket science, Nebraska hay grower Andy Stock said. His advice: Start by letting potential customers know about your product. Once you've identified the best customers, do what's necessary to keep them coming back.

"This is a very competitive business," Stock said. "There are always other hay growers out there looking to pick up a customer or two. You have to get your name in front of customers and keep it there."

Stock puts up alfalfa hay in large square bales on 400 acres near Murdock, Neb. His primary market is large dairies in an area running from Mississippi to Indiana. He also sells some of his annual production to local beef feedlots and horse owners.

These are some of the cornerstones of his marketing program:

TELL YOUR STORY. In conversations with existing and potential customers, Stock takes every opportunity to explain how they can benefit from the production and management practices he employs. His message varies by market. With large dairy customers, he emphasizes nutritional value and explains how his hay will help the customers' cows produce more milk. For horse owners, the biggest market for his medium-quality hay, he'll point out qualities like softness and nice, green color.

"It's an ongoing education process," he said. "We want them to know what makes our hay different from what they might be buying from the guy down the road or at the local auction. If you don't take the time to get your story out there, nobody else will."

PROJECT A PROFESSIONAL IMAGE. A few years back, Stock connected with an online design service to come up with a logo for his Stock Hay Company.

He uses the logo, which carries the slogan "We Put the Pro in Protein," on his invoices and other business correspondence. "It's one of those little things, but we think it makes a difference," he said. "It sends the message that we're businesslike and organized. It sets us apart from other hay sellers."

MAINTAIN CONTACT THROUGHOUT THE YEAR. Stock sends notes to buyers throughout the year to let them know about developments with the hay crop. During the holidays, he also sends a small gift to each customer. Last year, the gift was cheesecake. In other years, he has sent coffee cups with packages of gourmet coffee, gift cards for chain restaurants, calendars featuring pictures of his farm that he took himself, popcorn and sweatshirts with his company logo. "We try to do something a little different every year," he said. "It's just one more way to let customers know we appreciate their business and all the dollars they spend with us during the year. And it keeps our name in front of them."

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ADD A PERSONAL TOUCH. During phone conversations with customers, Stock will jot down notes on personal information that comes up -- a spouse's name, a new vehicle purchase or plans for a family vacation, etc. "Then, when I'm talking to them six months later, I can say 'How is Jane doing?' or 'Did the kids have a good time at Disney World last summer?' It makes an impression on people. They start to see you as a person, and that can make them more comfortable dealing with you. People want to buy from a person, not a business."

TEAM UP WITH OTHER GROWERS. Stock is a longtime member of the Nebraska Alfalfa Marketing Association (NAMA), a state promotion group based in Cozad, Neb. For dues of $250 per year, he gets a quarterly newsletter that keeps him updated on industry market trends and prices. The dues also cover listing his hay for sale on the NAMA website and having his hay represented at major trade shows like World Dairy Expo, in Madison, Wis. "It's a pretty good deal," Stock said. "Spending thousands of dollars to advertise isn't feasible for a smaller producer like me. With this, the cost of advertising gets split among all the people in the group. It's also a good way to network with other growers. If one of them gets a call about hay for sale, and they don't have what the caller is looking for, they'll give the person my contact information. It works the other way around, too. We're always looking for ways to help each other."

SELL THROUGH A LIMITED NUMBER OF DEALERS

A desire to manage time efficiently and effectively helps explain why the Elliotts -- Jason and his dad, Joe -- opt to market through hay dealers rather than selling directly to horse owners and livestock producers.

The Elliotts are busy folks. They grow alfalfa/orchardgrass hay on 130 acres near Stanford, Ky. Along with the hay, they background beef steers and cash-crop corn, wheat, soybeans and tobacco. They also do some custom farming for neighbors.

"There are only so many hours in a day," Jason said. "The less time we have to spend on marketing ourselves, the more time we have for focusing on putting up a high-quality product. That's the real key in this business. If you have a good product, it's always easy to move."

Working with dealers has also enabled the Elliotts to extend the marketing reach for the 15,000 to 16,000 small square bales they produce annually. When they first got into the hay-selling business about 10 years ago, they worked mostly with a handful of dealers in central Kentucky. As their operation grew, though, they made connections with outlets located as far away as Florida and Texas. "If we wanted to get into those markets on our own, we would need to invest in our own trucks or work with trucking companies to make the deliveries. That would have required more of an investment of capital and time."

SET A FAIR PRICE. Negotiating a price with dealers can be the trickiest part of marketing, Jason said. In his area, up-to-date information about hay prices is often hard to come by. Local news outlets don't regularly report prices, and hay auctions (another often-used price-discovery source in some parts of the country) are few and far between.

As a result, the Elliotts use current soybean meal prices as a baseline for establishing price. "I figure most of the hay we put up is 18 to 22% protein content," Jason said. "That's about half of what the protein of soybean meal is. So if a ton of soybean meal is selling for $630 to $640 per ton, we figure our hay should be worth about $315 to $320 per ton at the farm."

Working from that starting point, the Elliotts adjust the price up or down depending on the quality of the cutting. "If it's a little more mature or sun-bleached, we'll discount the price a little," Jason said. "One thing we don't do is try to sell hay that gets wet after it's been cut. We'll feed that hay to our own cattle."

STAY IN TOUCH. During the winter months, Jason also makes it a point to stay in touch with other local hay growers and feed stores about hay price trends in his area. "We want to be competitive -- not too much over or too much under the going price," he said.

Working with dealers can carry pitfalls, Jason said. "We've been burned a couple of times on getting paid for our hay. Now, we've been at it long enough that we think we have a better idea who we want to deal with and who we don't. It's all about trust. If I'm working with someone new, I want the cash in my hand before the hay leaves my barn."

TARGET REPEAT BUSINESS

Holding on to longtime customers is a major component of Missouri hay grower John Atkinson's marketing strategy. "Finding new customers takes time," Atkinson said. "You have to place ads and answer and make a lot of phone calls. If I can keep the same customers coming back year after year, that's work I don't have to do. I can concentrate on growing the best hay possible."

Along with his wife, Mary Lou, Atkinson grows bromegrass hay on the couple's 100-acre Trail's End Farm, near Kingdom City, Mo. He puts up most of his hay in small square bales weighing around 55 pounds each. He also makes some large 4- x 5-foot round bales if weather interferes with quality. Pleasure horse owners within a 50-mile radius of the farm are Atkinson's target market.

Atkinson purchased his farm in 1986. At the time, most of the acreage was in fescue pasture. When he retired from the Army Corps of Engineers a few years later, he decided to seed down the pastures and get into the hay business. "A lot of horse owners like Timothy. We considered it, but with the soils and climate we have here, it can be tough to grow. Smooth bromegrass was a better fit for us."

RETAIN THE BUSINESS. Pricing hay fairly, year after year, is the surest way to keep customers coming back, Atkinson said. Toward that end, he keeps detailed records on input costs -- fertilizer, seed, fuel, hired labor, equipment and depreciation. Using that information as a starting point for setting a price, he adds a percentage to each bale to cover his own labor.

The price is based on customers picking up bales in the field during a six-week growing season that typically begins in early June. "They'll either come with their own trailer and pick up the hay as I'm baling, or they'll drop off their trailer and come back to pick it up at some other time when it's more convenient for them."

If he stores hay in his barn for a customer for several months, he'll add a storage and handling charge, usually around 20 cents per bale.

COMMUNICATIONS. Keeping in touch with customers throughout the year is another important part of Atkinson's marketing plan. A few months ahead of harvest, he writes and mails a personal letter to his regular customers. In the letter, he describes the previous year's hay crop and talks about new equipment purchases he's made or trends in diesel and fertilizer prices, and how those trends might be affecting his business. "People like to feel a connection to the farm they're buying their hay from," he said. "This is one way to accomplish that."

At the end of the letter, he announces what his price will be for the upcoming growing season and sets a deadline for customers to place orders (usually the end of April). "I let them know that if I don't hear from them by that date, I'll offer the hay to someone else," Atkinson said.

Setting the price ahead of the season benefits both seller and buyer.

"Some hay growers like to price their hay as the season goes along," he points out. "They want to hold onto it in case the price goes higher. But I'd rather know that I have all my hay sold before the season starts. Buyers like going this way because they can plan on what their price is going to be."

Atkinson also offers a 100% satisfied guarantee to his customers. "It doesn't happen very often, but occasionally there will be a bad (dusty or moldy) bale or two in a load," he said. "In those cases, I replace the bad bales no questions asked. They might have to wait until the next year if I'm already sold out. But they know that I stand behind my product."

GIVE A LITTLE. As another way of staying in touch, he mails a farm calendar to each of his two dozen or so regular customers each October. He orders the calendars, which feature photography of agricultural scenes along with contact information for his farm, from a publishing company in Florida. "It's a way to say thank you to each customer, and it reminds them that we're still out here and want their business."

The publishing company Atkinson works with has a minimum order of 100 calendars. He takes the extra calendars to feed stores and other local businesses, and asks them to hand them out at their checkout counters. "It's a way to pick up a new customer or two," he said.

Cost of the calendars, including mailing, is about $3.50 each. "That's less than I charge for one bale of hay," Atkinson said. "If it helps me keep one customer or gets me a new customer, I'd say that's a pretty good investment."

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