A smorgasbord of woe has beset the California alfalfa industry this year, and the unpleasant menu of problems is hitting everyone, including custom harvesters.
The near-crisis is due to a variety of factors, not the least of which are double-digit increases in premiums for workers' compensation insurance. Another problem is low milk prices being paid to the state's dairy producers, the major buyers of California alfalfa hay. High diesel fuel prices are compounding the problem.
“There seems to be less optimism going into the current season compared to last year,” says Aaron Kiess, executive director of the California Alfalfa & Forage Association.
Kiess says a San Joaquin Valley grower and custom harvester recently voiced concern about cash flow this year. The grower said dairy hay buyers are being cautious and not buying large quantities.
“In the meantime, he's facing the same problem as everyone else in agriculture,” says Kiess. “His workers' compensation insurance costs went up 30% a year ago and then jumped another 30% in January. Combined with higher fuel prices, he's obviously taking a big hit.”
Another custom harvester feeling the impact is Bob Walton of Walton Hay Banking, Dunnigan, CA.
“Insurance rates are just skyrocketing,” says Walton. “An employee does a good job and gets a decent salary. That is as it should be, but all these other added costs create a hardship for the employer.”
Over a seven-month period starting in April, Walton's crews custom harvest about 4,000 acres of alfalfa and other crops.
He recalls that, back in the 1970s when water was more plentiful in the Sacramento Valley, alfalfa yielded about 12 tons/acre. Growers could apply two irrigations between cuttings then; now there's only enough water for one. As a result, the annual yield has dropped to 8-9 tons/acre.
“We are doing everything we can to control costs,” Walton says. “We have eliminated a lot of extra road time back and forth to fields. Instead of checking a field in the morning and again in the afternoon, we just check it once to eliminate one of those road trips. Instead of sending four pickups to bale a field, now maybe we send two pickups with two guys in each one.”
He also buys twine and other supplies in bulk at the best possible price. He can store 40,000 gallons of diesel, so he buys it when the price is low and stays out of the market when the price is high.
“A year ago, I paid 60¢ a gallon delivered for my diesel. Today the cost is $1.25 and I'm thankful I don't need to buy any.”
Walton also runs his equipment longer. “We used to turn our custom haying equipment every three or four years; now we're running it five to seven. We need to get more out of it.”
California's custom hay harvesting business has changed in the 35 years Walton has been in it.
“In the old days, some of the guys could be a little sloppy and get away with it,” he says. “If you baled some hay and it got moldy, you'd just figure that you would make up for it with the next cutting.
“But now it's so tight for the growers that, if you can't put up their hay at the best quality, they're going to be looking for someone else to do it instead.”
According to Seth Hoyt of the California Ag Statistics Service, the state's hay acres are expected to drop 11% this year. Apparently, many farmers are shifting from alfalfa to wheat and cotton, says Hoyt.