Introduction

Sample costs and returns to establish and produce alfalfa hay under flood irrigation in Northwestern Nevada are presented in this publication. This publication is intended to be a guide used to make production decisions, determine potential returns and prepare business and marketing plans. Practices described are based on the production practices considered typical for this crop and region, but may not apply to every situation. The “Your Farm” column in Tables 1 & 2 is provided for your use.

Assumptions

The following assumptions refer to Tables 1 through 4 and reflect the typical costs and returns to establish and produce alfalfa hay stands under flood irrigation in Northwestern Nevada. The practices described are not the recommendations of the University of Nevada, Reno, but rather the production practices and materials considered typical of a well-managed farm in the region, as determined by producer survey results from 2007. Costs, materials, and practices are not applicable to all situations because establishment and cultural practices vary among growers within the region.

Farm

The representative farm consists of 402 acres of land on which 400 acres are cultivated for alfalfa production and 2 acres are used for owner housing, machine shop and roads. During the growing season the enterprise will produce four cuttings with total production at 6 tons per acre. The minimum land market value in 2008 was approximately $11,500.00 per acre for agricultural land in northwestern Nevada with water rights.

Stand Establishment

The establishment year follows one or two years of winter wheat production. The establishment year consists of 18 months. The alfalfa stand life in Northwestern Nevada is six years. Establishment year costs are provided in Table 1.

Land Preparation

In late July, the ground is ripped to break up the soil to improve water infiltration and fertilizer penetration. Roundup* is applied to remove any residual plant material from the previous planting. After application of fertilizers, the field is then disked and floated to remove small high and low spots followed by a custom laser which will level the land. The borders will then be run to differentiate the plots.

Planting

In August of the establishment year, alfalfa seed is drilled at 20 pounds per acre and is then firmed into the soil using a culti-packer.

Fertilization

Prior to planting, fertilizers are spread and incorporated by disking. Commercial fertilizer (11-52-0* at $42.00/acre) is normally applied and dairy manure ($10.00/acre includes cost of material and application) is additionally applied if soil nitrate levels are less than 15 parts per million or when organic matter content is less than 1.5 percent.

Irrigation

Irrigation begins immediately after planting to establish the alfalfa seedlings prior to winter. Four inches of water is applied to fields
via flood irrigation.

Pest Management

Insecticide and herbicide may be used during the establishment year, but is less likely due to the application of Roundup* prior to establishment. Herbicide use during the establishment year has an average cost of $55.00 per acre and may include a combination of Select* and Pursuit*.

Harvest

Harvest will begin in June of the establishment year and continue through September (14^th month).

Establishment Investment

The alfalfa establishment investment cost is placed into the investment summary (Table 3) and is depreciated across the 6-year stand life.

Irrigation

Irrigation begins in March and continues through the last cutting, usually in early September. Irrigation costs shown in Tables 1 and 2 cover the per acre cost of water at $25.00 per acre foot, plus an administration fee of $50.00 per land parcel, which is assumed to be one parcel per every 50 acres, or eight for the 400 acre farm. Also included are maintenance costs on ditches such as hauling dirt to fix wash-outs, broken head gates and machinery costs to weed the ditches are $10.00 per acre, or $4000.00 annually. Total irrigation costs are $111.00 per acre.

Fertilization

Commercial fertilizer (11-52-0* at $42.00/acre) is applied by broadcast spreader in March.

Pest Management

A variety of pest management methods are used depending on pest population cycles. Pest treatment will normally begin in April and continue for the six month production cycle.

Weeds

Herbicides commonly used are Select* and Pursuit*. A combination of two or more is common at an annual per-acre cost of $55.00.

Insects

Weevils and aphids are the primary insect threat to alfalfa hay. These insects are not an annual threat. Therefore insecticide is applied once every three years by crop duster. The total price for crop dusting is $90.00 per acre or $30.00 per acre annually.

Vertebrates

Gophers are the common vertebrate problem in alfalfa stands. Rodenticide and/or trapping are common treatments, at an annual per-acre rate of $1.50.

Harvest

Harvest equipment owned by the farm and operated by the owner/operator or hired help consists of a mower/swather, a set of rakes, a baler pulled by a tractor, and a balewagon to haul the hay off the field and stack it.

Labor

The owner/operator wage is based on an allowance to the owner/operator of $75.00 per acre.

Utilities

Current utilities rates calculated using information from Base utility costs of $350 per month for the household were combined with costs of $7 per acre per year to allow for utilities for outbuildings and shops.

Yield

The 400 acre farm yields 6.5 tons of alfalfa hay per acre across four annual cuttings.

Returns

Returns for alfalfa hay sales are based on 2007 National Agricultural Statistics Service data for Nevada. An estimated price of $144.00 per ton of hay was used to calculate returns. Returns will vary during the growing season due to market conditions. Returns for aftermath grazing were estimated at 4 head per acre at a price of $0.50 per day per head for six weeks.

Cash Overhead

Cash overhead consists of various cash expenses paid out during the year. These costs include property taxes, interest, office expenses, liability and property insurance, as well as investment/machinery repairs. A complete listing of farm investments and associated costs can be found in Table 3.

Interest on Operating Capital

Total operating capital is calculated based on 80 percent of total operating (variable) costs. The interest on operating capital is calculated at a rate of 6.5 percent for the six month production cycle.

Property Taxes

Property taxes in Nevada differ across counties. For the purposes of this publication, investment property taxes are calculated at 1 percent of the average asset value of the property.

Insurance

Insurance on farm investments vary, depending on the assets included and the amount of coverage. Property insurance provides coverage for property loss at .666 percent of the average asset value. Liability insurance covers accidents on the farm at an annual cost of $1,749.00. Insurance information provided by Kevin Ogan of Beauchamp & McSpadden, Inc.

Fuel and Lube

The fuel and lube for each piece of equipment is calculated at 8 percent of the purchase price. Fuel and lube in the establishment year is 125 percent of that in a normal production year due to increased machinery use.

Investment Repairs

Annual repairs on all farm investments or capital recovery items that require maintenance are calculated at 2 percent of the purchase price for buildings, improvements, and equipment and 7 percent of the purchase price for machinery and vehicles.

Office & Travel

Office and travel costs are estimated at $3,000.00 for an average year. These expenses include office supplies, telephone service, Internet service, and travel expenses to educational seminars.

Capital Recovery

Capital recovery costs are the annual depreciation (opportunity cost) of all farm investments. Capital recovery costs are calculated using straight-line depreciation. Farm equipment for this budget is based on the prices of new equipment.

Salvage Value

Salvage value is 10 percent of the new purchase price, which is an estimate of the remaining value of an investment at the end of its useful life. The salvage value for land is the purchase price, as land does not normally depreciate.

Average Asset Value Computation

(Purchase Price + Salvage Value divided by 2)

Straight Line Depreciation Computation

(Purchase Price - Salvage Value divided by 2)

*The information given herein is supplied with the understanding that no discrimination is intended and no endorsement by Cooperative Extension is implied.

References

• Land and Farm (2008) Current pricing for agricultural properties with water rights in northwestern Nevada.
• National Agriculture Statistical Services data.
• Smathers, Robert (2007). The Costs of Owning and Operating Farm Machinery in the Pacific Northwest 2005. A Pacific Northwest Publication #346. University of Idaho, Washington State University, and Oregon State University.

Notes

Sample production costs and returns publications for significant agricultural products in various regions of Nevada are available online at the University of Nevada Cooperative Extension Web site at http://www.unce.unr.edu/pubs.html. For additional information, contact the Department of Resource Economics at the University of Nevada, Reno at (775) 784-6701 or your local University of Nevada Cooperative Extension office.

Published by: K. R. Curtis, M. Kobayashi, C. Bishop, 2008, Northwestern Nevada Alfalfa Hay Establishment, Production Costs and Returns, Extension | University of Nevada, Reno, SP-08-10

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