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January, 2004
Reference: Manitoba Agriculture, Food and Rural Initiatives – Farm Management

This guide is designed to provide you with planning information and a format for calculating the costs of production for timothy hay for export. Also available, is an Excel spreadsheet that can be downloaded from the Manitoba Agriculture Food and Rural Initiatives website.

The cash input costs associated with growing a crop in Manitoba are substantial. It is extremely important for farm managers to do detailed calculations to select the optimum combination of crop inputs to maximize profits. Detailed planning is also necessary when estimating the amount of capital required to finance inputs,
equipment and storage facilities. Therefore, producers are encouraged to substitute their own figures in the attached budget to develop their own cost of production for
export timothy hay.

Disclaimer: This budget is only a guide and is not intended as an in depth study of the cost of production of the Manitoba Timothy industry. Interpretation and utilization of this information is the responsibility of the user. If you require assistance with developing your individual budget, please contact your local MAF Farm Management Specialist or Regional Forage Specialist.

The last few years in Manitoba, has seen the demand for timothy hay for export increase dramatically. Last year nearly 30,000 tonnes of hay was exported out of the province, mainly to Japan. Processors pay premium prices for quality which is a province, mainly to Japan. Processors pay premium prices for quality, which is a product, that is celery green in colour and free of brown leaves.

Experienced producers have had success in producing a quality product. They have made all necessary commitments to satisfy the customer to produce a quality product. Innovative management has resulted in a higher percentage of good quality exportable hay being produced regardless of the weather. Manitoba has the potential to be a major player in this market.

Export Timothy Hay – Cost of Production Summary January, 2004

	Establishment Cost $/acre	Annual Cost $/acre	$/tonne	Your Cost
A. Operating Costs
1.00 Establishment Cost	n/a	$20.12	$8.90	____________
1.01 Seed (establishment)1	$11.00	n/a	n/a	____________
1.02 Fertilizer	$13.20	$26.40	$11.68	____________
1.03 Chemicals	$18.00	$12.00	$5.31	____________
1.04 Field Fuel Costs	$8.90	$5.83	$2.58	____________
1.05 Moving Costs	$0.00	$19.92	$8.81	____________
1.06 Custom Costs	$0.00	$0.00	$0.00	____________
1.07 Repair & Maintenance	$4.59	$17.53	$7.76	____________
1.08 Insurance	$1.36	$0.25	$0.11	____________
1.09 Miscellaneous	$2.00	$2.00	$0.88	____________
1.10 Land Taxes	$6.50	$6.50	$2.88	____________
Subtotal Operating	$65.55	$110.56	$48.92	____________
1.11 Interest on Operating	$1.80	$3.04	$1.35	____________
Total Operating Costs	$67.35	$113.60	$50.27	____________
B. Fixed Costs
2. Depreciation
2.01 Machinery	$26.09	$26.09	$11.54	____________
2.02 Storage	$6.75	$6.75	$2.99	____________
3. Investment
3.01 Land	$16.00	$16.00	$7.08	____________
3.02 Machinery	$6.38	$6.38	$2.82	____________
3.03 Storage	$3.30	$3.30	$1.46	____________
Total Fixed Costs	$58.52	$58.52	$25.89	____________
C. Labour	$15.00	$12.00	$5.31	____________
Total Cost of Production	$140.87	$184.12	$81.47	____________

1. The cost of establishing the crop, $140.87, was spread over 7 years at $20.12 per year.

Disclaimer: This budget is only a guide and is not intended as an in-depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility of the user.

For further Information contact your local Manitoba Agriculture, Food and Rural Initiatives Office.

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