Wrap up the deal: Guaranteeing a fair shake when dealing hay
Many agricultural dealings can cause some apprehension because producers are often selling tens of thousands of dollars worth of products on a handshake, whether it is forage, livestock or equipment.
Buying hay that is lower quality than what was agreed upon can be catastrophic and can lead to numerous financial and health issues in livestock long-term.
One Nebraska rancher who sells extra forage in good years generally doesn’t let a load of hay leave the yard unless he gets at least half the value in his bank account, either through a check, money order or cash.
One day last fall, he trusted a stranger and uncharacteristically sold a load of hay, accepting a check as payment.
While the buyer said he planned to return in several days for another load, he called earlier than expected – on Friday night – asking if he could pick up a second load on Saturday. Even though the seller had not been able to get to the bank to be sure the first check cleared, he sold a second load of hay.
By the time Tuesday came and the hay seller took the checks to the bank, the first one bounced and the buyer had stopped payment on the second check. The seller was out about $7,400.
The Natrona County (Wyoming) District Attorney does not plan to press charges against the buyer of the hay. Although in Wyoming, theft of $1,000 or more in property is considered a felony, the county victim witness coordinator explained to Tri-State Livestock News that the county would not prosecute.
Since the owner willingly allowed the hay to leave his property, the county considers it a business transaction gone wrong, rather than a theft. If someone had loaded the hay without the owner’s permission, and driven away, it would be a different story, said Rhonda Jones, the coordinator.
“We can’t prove that the buyer didn’t know that there weren’t insufficient funds. If we had more information about his intent, we might be able to prosecute. There has to be an intent to deprive,” she said.
But the “bad eggs” seem to be few and far between.
Someone who has been fortunate maintaining a tradition of trust is Tom Hamilton.
Hamilton bought and developed his own hay hauling and dealing business, TK Freight LLC, in the Lance Creek, Wyoming area. He has experience to back his expertise when it comes to making fair deals about hay. Although he’s had contracts in the past, most of business dealings were handshakes and verbal agreements. As he developed his business, he learned who to trust.
“I learned of people that were putting up good hay, and of course the people that weren’t putting up good hay usually don’t last very long. I developed a reputation, and it’s more about the people than the hay. You found out who you could trust and rely on to deliver a quality product, and on the other side, the people whose money was good and would pay on time,” Hamilton said.
Tom bought a stack mover after he graduated college in 1980 and purchased a hay hauling business from the person who had been hauling their hay, continuing to do that for five or six years. He took a break when he married and moved to Lance Creek, but business picked up again around 2000 when a neighbor asked him to help haul hay over the winter, so he bought a couple trailers and built a hay train. From there the business grew into what it is today, now managed by his son, Kyle Hamilton.
The business consists of brokering, which is finding hay for customers, and sometimes putting an entire deal together by connecting the buyers with the sellers. Occasionally, he would buy the hay and hold it until a customer came by that was looking for hay. He said that the hay sellers had asking prices that were based on whether it was a first, second, or sometimes third cutting, or whether it had been rained or even hailed on.
“If you were just taking one load of hay from the seller, you would probably have to take what they were asking. As the quantity you take goes up, you can usually negotiate pretty strongly from that asking price because the seller won’t have to talk to as many people to get their hay sold,” Tom said.
Even if it seems like general trustworthiness is declining, Tom’s son still runs the business on good faith, as his dad did. Most of his connections have been made through recommendations and word-of-mouth. “As far as a good deal goes, it’s pretty easy to find one right now. It hasn’t always been that way. If you trust in God and pray about it, it’ll all come out in the wash one way or another. You have to rely on Him or none of this would even work,” Kyle said. He still trusts handshake deals for most of his business.
“Ag is in a category by itself. Most of the time you can call someone up that has an ad and tell them you need hay, so they’ll write you down for some hay. I’d say 75-80 percent of the time, that’s good. That’s an honest deal that you wouldn’t have to worry about,” Kyle said. “It doesn’t matter if you’re selling cattle or selling hay or selling equipment, word gets around quick about who you don’t want to deal with,” Kyle said.
As a seller looking to ensure you’ll be paid, it’s common to be shy of checks. Ask for a down payment, and to be paid for each load of hay. You can also ask for a cashier’s check if the price has been agreed upon beforehand.
As a buyer wanting to confirm the hay is the quality agreed on, Kyle recommends networking and getting in touch with someone who knows the business. “If you want to know if you’re getting a fair deal, get ahold of a trucker. I’m not saying we’re know-it-alls, but we’re in the middle of the buyers and sellers. If a guy was just going to buy 1,000 ton of hay right now, he needs to find a contact and they need to be either a rancher or neighbor, or a trucker,” Kyle said.
Kyle said one of the best investments he’s ever made was a Buick that gets 30 miles to the gallon. He drives to meet the seller and check out the hay. He will even take plastic bags, label them with markers and take random samples to bring back to the customer.
A few additional factors to consider are whether the hay is round or square bales, the kind of packaging, and the type of hauling. When buying round bales, it’s nearly impossible to see what is inside. If you’re able to look at the hay, Tom recommends asking the seller to roll out one bale if you aren’t confident. Square bales tend to bring more money but are more likely to mold. Longer hauling and loading and unloading may require net wrap, while string is better suited for short trips. If the truckers aren’t hay haulers by profession, they may not get the hay moved on time because of other priorities. They also provide insight and advice to guaranteeing a fair deal.
“Hay truckers know who has good hay and who’s a good customer. Hay auctions have just come into play in the last 6 or 7 years, but I think they’re also good source. They’re very thorough on their testing for protein, color, quality, and whether it’s been rained on, and it’s often a fair price. It eliminates leg work on the person purchasing the hay, and they can be pretty confident they’re getting a quality product,” Tom said.
As a buyer or seller, checking a few things off your list before making a deal will increase confidence in a handshake. Analyze the hay before purchasing it and consider all the factors when negotiating the price. While TK Freight operates as both a dealer and hauler for their customers, other hay exchange or hauling businesses may only do one or the other. Lastly, verify the buyer, seller, and hauler’s reputation by networking with others in the area, former customers, or someone well-informed about the hay business.
Ask the seller if they’ve sold to anyone in the area you may know or asking for a reference. “Who have they sold to that you can visit with? Sale barns, coffee shops, and truck stops are a good place to have a conversation about hay,” Tom recommended. “You’re not very long in this business until you learn who you can and can’t trust.”
The Natrona County DA’s office strongly suggests requiring a certified check when making a private hay or livestock transaction.
“Protect yourself with a certified check, and make sure you know who you are selling to.”
A certified check is one in which the bank guarantees that the amount was available in your account at the time the check was written. A cashier’s check is similar, but is drawn against the bank’s account. When the bank issues the check, it transfers the money from your account into their account.
Both cashier’s checks and certified checks are official checks that are issued by a bank.
Cashier’s checks and certified checks are generally considered as more secure and less susceptible to fraud than a personal check.
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