An extended drought has sent feeder and other hay prices soaring in parts of California. The long dry spell is also causing some alfalfa growers to rethink how much of the crop they’ll grow next year.
“It’s the third year in a row where we’ve had below-normal precipitation and this year looks to be the worst of it,” says Norman Beach, vice president of the San Joaquin Valley Hay Growers Association (SJVHGA) in Los Banos, CA.
The situation is most dire for beef cattle producers in the Coastal and Sierra foothill regions of the state. “Because of the drought, there isn’t any grass for winter grazing,” says Beach. “In turn, that’s caused hay prices to go way up.”
Currently, feeder-type alfalfa hay is selling for around $265-270/ton delivered, he reports. Last year at this time, the price for the same kind of “green and clean” alfalfa was in the $215-225/ton range. “And as supplies get shorter and shorter, prices are likely to go up more.”
Suppliers have farther to travel to find hay, Beach says. Early last week, he took a buying road trip to Oregon and Nevada while another SJVHGA rep headed on a similar mission to southern California and Arizona. “Usually, we can find all the hay we want within a 500-mile radius of home. Now we’re going 700 miles away.”
Many beef producers have been forced to buy select dairy- and stable-quality hay for their herds, reports Troy Ingram, hay grower and owner of Troy Hay Sales & Hauling in Oroville, CA. In the last four or five weeks, prices for that kind of hay in some areas have increased by $50/ton, he says. “It’s a tough deal. A lot of people are really, really hurting.”
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The market may be nearing a top though. “It still comes down to supply and demand,” Ingram says. “With prices where they’re at, some cattlemen aren’t going to be able to pay any more for hay. They’ll have to make a choice. A lot of them will end up selling their cattle.”
The culling has already started. “A lot of people in our area are thinning their herds, getting rid of their non-productive, less-productive and older animals,” says hay grower Norm Yenni, of Sears Point Farming near Sonoma, CA. “They’re trying to stretch whatever feed they have. But if we don’t get some rain, we’ll see a lot more selling.”
Yenni puts up several types of grain hay (oats, wheat, rye-grass and barley) in small-square, three-tie bales on 2,300 acres. His major markets include feed stores, horse owners and beef producers.
“The hay supply is as tight as I’ve ever seen it and probably as tight as it’s ever been,” he says. “I don’t have any decent cow hay at all right now. It’s been that way for three weeks or so.”
At mid-week last week, Yenni had only four loads of oat hay – 25 tons – in his barns. All of it was committed to feed stores. “Normally at this time of year, I’d have 15-20 loads on hand,” he says. He discontinued selling at the retail level in mid-December, compared to most years when he’s sold retail hay into February or March.
The committed hay sold for $200/ton. A year ago, it would have gone for closer to $170/ton. “It’s a sellers’ market right now, and I probably could have charged more for it. But I don’t want to drive my customers out of business. I’m looking for them to be here for me in the future when I have a surplus of hay to sell.”
Yenni is planting the coming season’s hay crop now rather than waiting until spring. “Usually we don’t get going on planting until late February or early March. But this year, we should be all finished up by the end of this month. My thinking is that we’ll be able to maximize the benefits of any rain we get by having that seed in the ground and ready to grow.”
He knows it’s a risky strategy. “We have the seed in the ground, we’re burning up a lot of fuel, and we’re paying for a lot of labor. And it’s all on faith. If the rains don’t come, it will all be for nothing.”
Irrigated alfalfa growers in other parts of the state are also apprehensive. Some reservoirs, says SJVHGA’s Beach, currently are at only 20% of capacity. “If we don’t get some rain, we‘ll break records for low water levels. There will be some huge cutbacks in the amount of water available for irrigation.”
Coming out of fall, many industry watchers had been hopeful that alfalfa acreage in the state would increase in 2014, he says. “But if it continues dry, a lot of the intended plantings we were hearing about won’t happen. Instead, growers will save their water for permanent, higher-value crops in the vineyards and orchards.”
There’s still time for a weather turnaround. “We still have a few more months where we could get substantial precipitation,” says Beach. “But if that’s going to make a difference, it needs to come soon.”
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