Skip Menu

Return to Skip Menu

Main Navigation

Return to Skip Menu

Main Content

Bale Wrapper Economics

Authors as Published

Gordon Groover (xgrover@vt.edu), Extension Economist, Farm Management, Department of Agricultural and Applied Economics, Virginia Tech

Part 1:  Why wrap?  There are many articles in recent farm publications discussing the ins and outs of wrapping hay to maintain forage quality. Excellent quality forage is a goal of all forage producers and it makes sense and money.  The out-of-pocket cost difference between making excellent quality forage and poor quality is usually very small. Often it is based on harvest time relative to adverse weather events; thus, the clear advantage of wrapping baled hay soon after it is cut (that day or the next morning).  Wrapping single bales one at a time or wrapping a line across the field with an in-line wrapper will improve harvest efficiency and timing and reduce harvest and storages losses. Thus, wrapping bales offers real solutions to the problems of making excellent quality hay but at what costs?  Before digging into the details of estimating the costs and benefits of a bale wrapper, let’s spend a few minutes thinking about some key questions that need to be addressed before making an investment (these questions apply to most investments).

  1. What are the problem(s) you plan to fix with this new investment?
  2. Will this investment lead to other supporting investments?
  3. Will this investment increase or decrease the need for specialized labor and management?
  4. Will this investment increase or decrease production and/or financial risk?
  5. Will this investment create or reduce opportunities for the farm business?
  6. Will this investment reduce costs or increase income?
  7. Will this investment reduce income or increase costs?

While answers to these questions will vary from one farm business to another, a discussion with out numbers may help focus the decision making process.  Question 1:  What are the problems you are trying to fix?  Rained on hay, storage losses from hay stored outside, harvest and handling losses especially legumes, to name a few.  Also, consider the loss in income from sales of milk or live-weight gain from feeding poorer quality hay.  A loss of 5 pounds of milk per cow due to lower quality forages can quickly add up.  However, if the poorer quality hay can be fed to beef cows as their maintenance ration, is this a significant problem?  Defining the problem and the level of certainty that the investment will fix that problems is the key.

Question 2:  Will this investment lead to other supporting investments?  This can be a slippery slope for any new investment that requires another investment to finally solving the problem.  Consider the case of a farm trying to minimize machinery size and costs.  The investment in a single bale wrapper requires an 80 hp tractor to efficiently and safely move the wet bales.  Yet, if the largest tractor is a 55-HP, will the farm need to purchase a larger tractor to make the single bale wrapper work?  Will there be additional needs for gravel pads for storage in field or back at the farmstead? 

Question 3:  Will this investment increase or decrease the need for specialized labor and management?  The wrapper may require additional labor to manage the single and in-line system.  If the farm relies on unskilled labor or it is a one person farm, will the farm need to hire additional skilled labor?

Question 4:  Will this investment increase or decrease production and/or financial risk?  In most cases the bale wrapping system will reduce the risk of harvesting a poor quality hay crop and potentially reduce the total feed costs due to better quality forage and the need for less supplements.  Yet, the added capital investment to achieve these benefits can increase financial risk by adding debt to the farm’s balance sheet.  Please note the investment may reduce costs (increase profits) but the business must have the repayment capacity and cash flow to make this a feasible investment.

Question 5:  Will this capital investment create or reduce opportunities for the farm business? Consider how the wrapping system will impact other farm business enterprises.  For example, a cash hay business, the farm may be able to improve the quality of all hay, both used on the farm (warped hay) and dry for-sale hay. The wrapper provides an option for managing weather events and still harvesting second cut hay for sale as dry hay.  However, wrapped hay sales will be limited to cattle and hauling will be more expensive.  Also consider that additional income from custom wrapping can provide opportunities to help pay for the added investment costs and reduce the fixed costs to the home farm. 

Questions 6 and 7:  What will happen to costs and income from this investment?  We have discussed many of these considerations so far, so let’s summarize the discussion in a table format.  Table 1 breaks the discussion into positive items on the left and negative on the right.  For any farm business to determine if the purchase of a wrapper is financially prudent, they must know what problems need fixing and then provide dollar estimates for each of the items listed in Table 1.

 

Table 1.  Positive and negative considerations for investing in a bale wrapper

Positive

Negative

Improved (maintain) forage quality1

Added operating costs for the wrapper (fuel and repairs) and plastic

Reduced harvest loss

Added fixed cost for the wrapper – cash flow and debt

Reduced storage and feeding loss

Added labor costs, requires 2 people – one moving bales and one operating the wrapper

More timely harvest

Increased number of trips to haul high-moisture vs dry hay (~20-40% more)

Greater live weight gains or milk production

Added storage space or loss of productive sections of hay fields

Less purchased feeds

Disposal of plastic – time and expense

Potential for custom income

Added time and maybe horse-power for feeding bales

In-Line wrapper - no additional tractors required

May require additional investment in bale handling equipment

Less worry about harvest problems

Single-wrapper – an addition tractor on site to power the wrapper and a tractor to bring bales

1Note: The mere act of wrapping hay will not lead to improved quality. Wrapping high quality hay will improve chances of maintaining that quality over time.

Part 2:  How much does it costs to wrap?  Listed below in Table 2 are the base assumptions required to determine the per bale costs of wrapping using the single bale wrapper (wraps one bale at a time) requiring a tractor (50-60 HP) as a power unit and one to move bales (60-100 HP); and the in-line wrapper powered by a gasoline engine (13 HP) requiring a 60-100 HP tractor to move bales.  The single bale system is less expensive ($15,000-$18,000) but requires more wrapping time and plastic film per bale.  The in-line system costs more ($24,000-$26,000), yet when setup provides a continuous string of bales linked via the plastic film, with less wrap-time and film per bale.  Other differences between the two systems are the single system takes about 3 minutes to wrap a bale with an estimated manufacturer’s throughput of 40 bales per hour; and the in-line system takes about 30 seconds to wrap a bale with an estimated manufacturer’s throughput of 120 bales per hour.  An additional 1.50 minutes was added to the wrapping time to both systems for moving bales to the wrappers.  The single systems can wrap of varying sized bales and the in-line system is sized for bales less than 5.5’ in diameter.  Plastic film varies between systems and between bales and film is sold in different weighs and lengths.  Based on information from the manufacturer, film usage is as follows:  the single system will wrap about 20 bales per roll of film and the in-line system will wrap 40 bales per roll and requires end caps or plastic hay bags for the 2 end bales to seal the line.

 

Table 2.  Base assumptions for each wrapper

Base Assumptions

Single bale

In-line

Estimated purchase costs per unit

$16,500

$25,000

HP for tractor to operate

50-60

N/A

HP of wrapping unit

N/A

13 hp gas

Manufactures capacity bales per hr

40

120

Bales per year

1,000 (about 100 ac)

Diameter of bales for in-line

5.5’ or less

Approximated weight of bales (depending on size)

1,500 lb to 2,500 lbs

Bale handling tractor size

60-100 HP or a large skid steer

Handling tractor costs per bale (80 HP) @ $27/hr plus 1.25% efficiency factor

1.5 min - $0.84/bale

Approximated plastic usage based on 5,000-6,000 feet per roll

20 bales per roll

40 bales per roll

Plastic costs per bale – based on current plastic prices based on ~$90-$100/roll

$3.75-$5.00

$1.75-$2.50

Approximate labor time per bale

3 min to wrap and 1.5 min move bales

30 sec per bale and 1.5 min to move bales

Equivalent number of wet bales based 2.5 dry bales per ton  (2.5 bales * 1.35)

3.4 bales per ton

Estimating the total costs of wrapping a bale of hay is based on a lot of assumptions about the typical systems on a typical farm and none of us live on a typical farm or have a typical hay system.  Please take the cost estimates listed in Table 3 as a starting point for your own analysis.  Listed in Table 3 are the costs estimates of the 2 different warping systems.  The first section of table 3 details the cost of plastic film at $4.40 to wrap a single bale and $2.10 for a typical bale in the in-line system. 

The in-line system requires the line of bales to be capped using end caps or by placing the starting and ending bales in a hay bag prior to wrapping. Capping the ends is estimated to be $0.30 per bale (the prorated costs of capping the ends will vary based on the length of the bale-line).  Labor for both systems is priced at $15.00 per hour and an additional 25% machinery efficiency factor is added to cover labor associated with changing film rolls, refueling, and setup and takedown time.  Labor time for the single system is 3 minutes to wrap and 1.5 minutes to handle bales for a total of 4.5 minutes per bale for a total labor cost of $1.40.  Labor for the in-line system is 0.5 minute to wrap and 1.5 minutes to handle bales for a total of 2.0 minutes per bale for a total labor cost of $0.65.  The single system requires more time and film and costs about $5.80 per bale, which is $2.75 more than the in-line system. The cost to operate the machinery and equipment is based on engineering factors for fuel and repair rates (American Society of Agricultural and Biological Engineers, Technical Library).  The single systems requires a 55 HP tractor to run the wrapper and the costs per hour are $11.97/hr to cover fuel and repairs for both the tractor and wrapper.  The in-line system is power by a 13 HP gasoline engine so the costs per hour of $5.15 covers gas and repairs for the engine and wrapper.  The fixed machinery costs (ownership) at first glance looks very large; however, if the fixed and variable machinery costs are prorate on a per bale cost (40 bales and hour for the single and 120 for the in-line) the costs per bale for the single system is $3.39 and for the in-line system $2.66 per bale.  Summing all the costs on a per bale basis shows that a bale wrapping system will add about $5.00 to $10.00 per bale to the cost of producing the hay in that wrapped bale.  Another way to look at the cost is to compare it on a dry-ton basis.  Based on the assumption that the difference in moisture between dry and wrapped hay is around 35% (50% less15%) and the average number of dry round bales per ton, 2.5 bales, is inflated by 35% to arrive at 3.4 warped bales per ton.  The costs per ton to wrap a dry-ton-equivalent ton of wet hay is $31.24 for the single and $19.42 for the in-line system.  Therefore, if the total cost of producing a ton of hay on your farm is $100/ton, using a bale wrapper will increase your total costs to $120 to $131 per ton.

 

Table 3.  How much does it cost to Wrap?
Variable costs (labor and plastic)

Single bale

In-line

Plastic costs per bale - based on current plastic prices based on ~$90-$100/roll

$4.40

$2.10

2 end caps or hay bags at $5 per end or $10 for a line of bales

N/A

$0.30

Labor costs at $15.00 per hour plus an additional 25% for setup, changing wrap, fueling…

$1.40

$0.65

1

Total variable costs labor and plastic per bale

$5.80

$3.05

 

Machinery costs 

Power units and wrapper variable (fuel and repairs) costs/hour

$11.97

$5.15

Fixed costs/hr

$89.76

$213.00

2

Total machinery costs/hr

$101.73

$218.15

Machinery costs/bale (Line 2 ÷ capacity bales/hr) see Table 2

$2.54

$1.82

Bale handling tractor (80 HP) total costs/bale @ $27/hr, plus 1.25% efficiency factor = 1.5 min/bale

$0.84

$0.84

3

Total Machinery costs per bale

$3.39

$2.66

4

Total costs per bale (line 1 + line 3)

$9.19

$5.71

Per dry ton equivalent (Line 4 *3.4 bales per ton)

$31.24

$19.42

Part 3:  Summary:  The bottom-line will depend on how you assign values to the following benefits of owning a hay wrapping system:

  • Improved forage quality
  • Reduced harvest loss
  • Reduced storage and feeding loss
  • More timely harvest
  • Greater live weight gains or milk production
  • Less purchased feeds
  • Potential for custom income
  • Less worry about harvest

These benefits will need to be greater than or equal to the $20-$30 added costs per ton to wrap hay for this investment to make sense/cents and fix that original problem.

[1] Thanks to Mr. Billy Good of Anderson Bale Wrappers, Inc. for his information and coefficients used in the economic analysis.

[1] This paper was prepared for the VCE and VFGC Alfalfa Haylage and Baleage Conferences held December 7-9, 22020.

Rights


Virginia Cooperative Extension materials are available for public use, re-print, or citation without further permission, provided the use includes credit to the author and to Virginia Cooperative Extension, Virginia Tech, and Virginia State University.

Publisher

Issued in furtherance of Cooperative Extension work, Virginia Polytechnic Institute and State University, Virginia State University, and the U.S. Department of Agriculture cooperating. Alan L. Grant, Dean, College of Agriculture and Life Sciences; Edwin J. Jones, Director, Virginia Cooperative Extension, Virginia Tech, Blacksburg; Jewel E. Hairston, Administrator, 1890 Extension Program, Virginia State, Petersburg.

Date

December 13, 2010