Building a Business for Hay

Near Crookston, Minnesota, in the midst of fields of corn, wheat, sugar beets, and beans, Jerry and Kim Michaelson and their son, Josh, grow alfalfa. They harvest about 3,000 acres to sell to dairies in North Dakota, South Dakota, Minnesota, and Wisconsin.

"The bigger dairies represent an established market that we can depend upon, and we know that we can produce the quality of alfalfa that these dairy producers are looking for," Jerry Michaelson says. "There seems to be a continuing demand for high-quality alfalfa hay."

They saw an opportunity to grow this high-value niche crop while witnessing dairy producers shift their forage management.

"Most of our dairy customers chop their forages for silage and haylage, and they buy all their dry hay," Michaelson says. "Because making silage or haylage is more forgiving of weather conditions, it's easier for the dairies to make haylage than it is to put up hay. They can then buy hay of the quality they need."

The Michaelsons already had gained some experience in marketing hay in small lots. The early hay sales came from the surplus harvested for their own cattle. The family formerly raised purebred Charolais cattle in addition to growing conventional cash crops.

Given the market potential, the Michaelsons found their interests shifting away from cattle and conventional crops to building a high-value hay business.

Another drawing card for expanding the hay business was their ownership of the equipment needed to harvest hay.

The Michaelsons took gradual steps in transitioning their operation into a hay enterprise. They converted fields to alfalfa as their hay market grew.

"We started out by selling hay to people who had bought hay from us in earlier years," Michaelson says. "We also sold hay to some dairy producers we knew. Their feed nutritionists liked our product, so our sales kept growing by word of mouth."

Consistently supplying the dairies with only high-quality hay has led to steady market expansion and loyal customers. Repeat clients account for 95% of the Michaelsons' sales.

"It's important to have a good relationship with our customers," Michaelson says. "We find out what kind of hay each of our customers wants, and this will depend on the ration that the dairy feeds. Because we test all of our hay for feed quality, we're able to deliver the kind of hay they want. We then make sure all the hay they buy from us is of the same quality so they don't have to change the ration every time they get a load of hay. I'll call back periodically to make sure the hay is working for them."

The relative feed value (RFV) in the hay ranges from 120 to 200. "The first-cutting alfalfa is usually lower in quality, while the later cuttings test higher in relative feed value," he says. "In the older stands of alfalfa, grass begins to grow. We sell that for dry-cow hay."

Cutting the alfalfa promptly at the early-bud stages typically gives the highest RFV in the forage.

"Getting hay harvested in a timely fashion is probably the most important factor in getting hay of high quality," Michaelson says. "There's a narrow window of opportunity. The relative feed value drops drastically when the alfalfa gets a little more mature."

Depending upon the field, they get three and four cuttings in a growing season. They take the first cut around the end of May and take the last cut no later than the end of August.

"If we cut later, we risk winter kill on the alfalfa stand, because we won't get enough regrowth for plants to survive winter and come back in the spring," he says.

They harvest the alfalfa in big, square bales. The yield averages about 4.5 tons per acre.

All Hands on Deck

Along with part-time employees, the whole family gets involved with the baling. Kim runs a baler, as does Josh's wife, Meagan. Jerry and Kim's daughter, Lindsey, runs a baler during the straw harvesting season.

The Michaelsons buy straw in the field from neighbors and bale it to supply dairy customers with wheat straw.

"When the alfalfa hay is ready to bale, we run with four big balers, and we can usually bale around 300 acres a day," Michaelson says. "We have to harvest the hay at that rate in order to keep up with the growth of the alfalfa and harvest it at its peak relative feed value."

Following the balers in the field are two stackers. The first-cut alfalfa bales, which usually have a lower RFV, are stacked in the field where they're covered with tarps. These stacks are set in paired rows with a line of plastic barrels marking the center of the row. The barrels create an elevated center line, providing a tarp covering with an air vent and a peak to shed water from rain or snowmelt.

The second, third, and fourth cuttings of alfalfa are hauled by semitrailer truck from the field to the yard, where the hay is stored in sheds.

The Michaelsons deliver bales of alfalfa and straw to their customers year-round. They're especially busy with this work in fall, winter, and spring, when harvesting hay is not under way.

The strength of their business hinges on continued production of quality hay.

"Customers know we care about how our hay is put up and the quality of the bales we deliver," Michaelson says.

Sustaining the Yield

The Michaelsons' alfalfa stands typically begin to thin out after four to five years.

"Every year, we break up 300 to 400 acres," Jerry Michaelson says. "We give fields a break before reseeding them, because old alfalfa puts out a toxin causing new alfalfa to perform poorly."

They terminate the alfalfa in the fall by spraying and chisel-plowing. Wheat grows in the field the next year.

The following spring, they reseed the alfalfa in mid-May, when the risk of frost has lessened. Before seeding, they lightly work the soil surface with a Danish tine on a harrow packer. They then blow on the alfalfa seed and harrow-pack the field. A barley cover crop protects the soil from erosion until the alfalfa is established.

The first year, the young alfalfa yields one to two cuttings, depending upon the growing conditions of spring and summer.