Prices for high-quality organic hay are holding up in some parts of the country. But demand for lower-quality product is out-and-out sluggish.
Robin Brekken of Robin Brekken Farms, Inc., near Crookston, MN, is asking $1.10/point for organic alfalfa and alfalfa-grass mix hay with a relative forage quality (RFQ) of 140 or above packaged in 3 x 3 x 8’ square bales. He also sells baleage in 3 x 3 x 6’ bales. “The price has held there since July,” says Brekken, who notes dairies in northeastern Indiana are his primary market. “Sales have been steady.”
On the other hand, demand for lower-quality hay has all but disappeared, Brekken reports. He slashed his price for hay under 140 RFQ to 80 cents per point (from $1.10/point) in mid-February. “It’s been tough moving it,” he says. “It seems like there’s an ocean of that kind of stuff out there.”
Brule, NE, organic hay grower Steve Jehorek offers a similar assessment of the supply-demand picture. “We sold just about all of our hay before the first of November,” says Jehorek, who grows 600-plus acres of organic alfalfa under irrigation at Jehorek Organic Farms. He uses a conditioning product to soften the hay and make it more palatable. “But we’re still getting two or three calls a week from people looking for top-quality hay. Nobody is interested in the second-tier stuff.”
At the top of the market last fall, Jehorek says, hay in the 180-230 relative feed value (RFV) range was bringing $1.25/point. By way of comparison, conventional hay in his area was bringing $90/ton. “This year, we could see prices drop off to around $1/point,” says Jehorek, who works with several brokers to market his hay. Over 50% of the hay he made last year went to Pennsylvania. “Nobody really knows what will happen until we get into the season.”
Lou Anderson, an organic feeds broker in Fairfield, ID, says tanking milk prices have curtailed the movement of both organic and conventional hay in his part of the country. “A lot of dairy producers bought all the hay they needed by the end of September last year because they were afraid prices would go even higher,” says Anderson, president of S&L Commodities. “I’ve had a lot of calls over the last several months from people with hay to sell. But, with the exception of one call looking for organic export hay, I haven’t had any calls from anybody wanting to buy during that same time period.”
Anderson notes that organic hay production in his area far outstripped demand in 2008. “Somewhere around 50% of the organic hay sold in our area last year went to conventional dairies,” he says. “It ended up working out okay for many organic producers because the price of conventional hay was sky high.”
For the year ahead, Anderson looks for the organic hay supply to exceed demand again in the Pacific Northwest. Prices will likely track downward with conventional hay prices. “We went through a four- or five- year period where there was pretty good growth in the organic dairy industry, especially in Oregon and Washington,” he notes. “It took awhile for the organic hay supply to come on to meet that demand. The supply finally caught up at about the same time that milk prices started slumping. “
Long-term, Anderson believes the oversupply will likely force some organic producers out of business. “A lot of people could decide getting a 10-15% premium for organic hay just isn’t worth the effort and go back to conventional hay production,” he says. “These things are always cyclical.”
To contact Brekken, call 218-926-5655 or email rlbrekken@gvtel.com. Jehorek can be contacted at 308-280-2827 or kjehorek@atc.net. To reach Anderson, call 208-539-2245 or email loua@hughes.net.