THE SHRINKAGE OF MARKET HAY. 25 



protect himself against loss of water by shrinkage. He assumed that 

 if hay was worth, say, $10 per ton when cured in the field, the pro- 

 ducer should not receive less than this price during the remainder of 

 the year. According to his theory the farmer should advance the 

 price of hay sufficiently from time to time to cover the loss of water. 

 In other words, he advocated that if hay is worth $10 per ton when 

 made, and loses 24 per cent by winter, the producer should sell it 

 for about $12.50 per ton. 



There are serious practical objections to this theory. In the first 

 place, it is assumed that the price of hay remains stationary during 

 the entire year, which does not happen in practice, since the price 

 varies according to demand, size of current crop, local conditions, 

 etc. Again, the producer does not ordinarily determine the price of 

 hay. This is done in the city markets, and the price of hay sold 

 locally is based, in general, on the quotations of the nearest city 

 market. 



As a matter of fact, only a very small percentage of the annual 

 hay crop is sold on the market while it contains an abnormally large 

 amount of water, for during the time it is going through the ' 'sweat," 

 in the barn or stack, which usually continues from 3 to 6 weeks, hay 

 is not marketable and is not in condition even to be baled. Hence 

 there is no logical reason for assuming that the water lost during this 

 period of the curing process causes a loss to the producer, since the 

 hay is not a marketable product until shrinkage is over. 



Neither is there any valid reason for assuming that the price of 

 hay at haymaking time, when both old and new hay are scarce, should 

 set the price of hay for the remainder of the year. The price of new 

 hay during July and August is much higher in several of the leading 

 markets than during the winter months when shrinkage has ceased. 

 The high price of new hay is due, in part, to the comparatively small 

 amount baled, and to the fact that during July and August farmers 

 are too busy with such crops as hay, corn, and small grain to haul 

 hay to market. In other words, new hay often sells for more than it 

 is really worth, if we consider the high percentage of water it some- 

 times contains and the price of thoroughly cured hay during the 

 winter months. The 20-year average monthly price ("high") of 

 timothy in four leading markets is shown graphically in figure 1. 



The amount of newly made hay sold loose from the field during the 

 hay-making period is comparatively small, and the local price has no 

 effect on the price of thoroughly cured market hay later on. If the 

 price of new hay happens to be lower when hauled from the field than 

 the price of thoroughly cured hay later, it is not necessarily because 

 its large water content is taken into consideration, but more likely 

 because the cost of baling is eliminated, as is also the cost of hauling 

 and storing away or stacking, if the buyer does the hauling. 



