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July 27, 2007
Kynda Curtis, assistant professor and state specialist in the Department of Resource Economics recently finished a three-year risk management project to reduce the price variability of cool season grass, a type of horse feed.
This project, funded by the Hatch Grant to the Nevada Agriculture Experiment Station, aimed to help cool season grass producers to have more control over their product prices and their business.
Cool season grass, also known as Timothy hay, is grown in Nevada in Eureka, Elko and Humboldt for sale to horse owners, Curtis said.
Cool season grass isn't sold at a consistent rate, though. Since the growers and buyers bargain over the prices, the growers have trouble foreseeing what their hay sells for and so the prices in the cool season hay market vary greatly.
Curtis wanted to reduce the range of prices for which the hay is sold and give the producers better insight into what factors most affect the prices.
"It's difficult for producers to manage their costs and make appropriate investment decisions when they don't know what they're going the sell the hay for," Curtis said.
She interviewed horse owners and cool season grass buyers to uncover which characteristics of cool season grass prevented growers from coming away from their sales with a profit. For example, growers can receive up to $10 more per ton from greener grass.
"Hay producers can look at the characteristics and work on their production process to improve on those characteristics and earn more," Curtis said. "Some of the characteristics are color, nutritional content and foreign matter, like dirt in the hay, or whether the hay was exposed to rain."
Production and storing issues are not the only influences on the prices. Customer service and maintaining a good rapport with the buyers is possibly the most beneficial way to retain prices in the cool season grass market. According to Curtis, producers can earn up to $51 more per ton with repeat customers.
She also said that preproduction contracts between the buyer and the producers can also limit the price variability of the grass.
"Producers should also use contracts so the prices aren't so subjective," Curtis said. "This gives them some control over what they get paid."
Curtis hopes that the tools she provided for the producers will help reduce the price variability and give the producers peace of mind about their business, something most people in the agricultural business don't have much of.
"My main concern is for them to be profitable," Curtis said. "We lose agricultural producers all the time. It's a risky business."