He first bales his acreage into large bales and moves them to his storage facility. There Murray uses a recently purchased hay press to re-bale the straw into smaller bales before shipping them out to his customers.
At first glance the process would seem to add expense to the operation, but Murray explains that this added step actually cuts down his costs in the long run.
By using larger machines in the field, Murray has cut costs in several areas. The large baling machines cut down harvest time from three and a half weeks to two weeks, and Murray needs fewer of them as well.
“What I did with eight pieces of equipment in the field at harvest time, I’m doing with three now,” says Murray.
Fewer machines also means that there is less maintenance and man-hours needed, so Murray is able to save in labor costs.
Murray estimated that his processing cost per ton was roughly $140 using conventional baling methods. Since the shift to the new equipment, Murray calculates that it costs $80 a ton to produce the straw, including the added $12 per ton to process the straw in the hay press.
The new process also reduces overall transportation costs. Since Murray brokers his own straw, his company, Paul Murray Covenant Hay Company, delivers what he grows.
Murray explains that the benefits come because the smaller bales are 38 percent heavier for the volume. A truck that would fit 15 tons in the larger bales is able to carry closer to 23 tons of the smaller bales.
Since it costs Murray about 30 cents per mile to maintain and insure a tractor-trailer, not to mention the price of gas, more weight in a trip makes a significant collective savings.
Murray says, “The shipping is the greatest expense to the whole operation. Last year we spent over $200,000 just on diesel fuel for road tractors. You cut that by 40 percent – that puts $80,000 back in your pocket.”
That savings also allows the company to be competitive at a greater distance. The changes have allowed him to expand his company’s competitive footprint, the area he can afford to sell his straw without shipping costs making it too expensive to sell, by a 300-mile radius. That opens up a lot of market opportunities to the company.
All these savings will balance Murray’s initial $1.3 million investment. That investment went toward purchasing the hay press, constructing a 55,000-square-foot barn to hold and process the straw as well as to update equipment.
Murray estimates that the project will be paid off in seven to nine years.
It may raise a few eyebrows when a producer experiments with the way things have traditionally been done. Not every experiment will be successful, but when the unexpected is researched and quantified, a new way of doing things can sometimes help a producer find profit in unexpected places. FG
Melissa Miller
Editorial Intern
