The U.S. will lose hay acres to high-priced corn this year, probably further straining the supply and driving prices up, say hay market observers.
“If we have any kind of drought situation this year, the country is looking at a shortage of forage that's going to become very severe,” says Dave Petritz, Purdue University ag economist. “We're in a market filled with anxiety and unknowns — all tied to the ethanol market.”
There's no doubt going to be a huge increase in corn acres, and the impact on alfalfa will be substantial, says Petritz.
“If you're an alfalfa grower with acreage suitable for growing corn, you're going to push that corn acreage as far as you can go,” he says.
The switchover looks to be more intense in some areas than others.
“We will definitely lose some acres to corn,” says Barb Kinnan, executive director of the Nebraska Alfalfa Marketing Association (NAMA). “But many of our commercial growers will stick with hay. They're in it for the long haul.”
That decision could prove to be profitable, too. Some NAMA members are predicting that first-cutting alfalfa hay could start at $100/ton or more.
“We're going to come out of the gate pretty high,” says Kinnan.
Hay production will be down in Kansas, too, says Steve Hessman, USDA Market News reporter in that state.
“High corn prices will prevent the establishment of some new alfalfa stands this year,” predicts Hessman, based in Dodge City. “I also think some growers will rotate some grassy fields into corn; this might be the year they try to clean those up. If the stands are thin, they can make more money on corn.”
A big worry on the minds of some Kansas hay growers is the impact a late-December ice storm will have on alfalfa stands. Up to 30,000 acres could be affected.
“The storm was over a month ago and many fields are still covered by a solid sheet of ice because the temperature hasn't warmed enough to allow any melting,” says Hessman. “We're not going to know until spring if those stands survived.”
Jack Getz, who heads USDA Market News for Washington, Idaho, Oregon and California from his post in Moses Lake, WA, sees Washington and California losing alfalfa acres. But he doesn't see it happening much in Oregon, which isn't a strong grain-growing state. Idaho could go either way.
“Depending upon where they are, some growers may take one cutting off in the spring and then come back in with corn,” says Getz. “That could ease supply concerns a little bit, but our supplies are going to be tight this year.”
Several other factors are likely to cut alfalfa production in California, he adds. Tomato contract prices are strong, home building continues to consume farmland, and farmers are planting more nut trees because they need less water than does alfalfa.
Because of reduced hay production last year, the 2007 growing season will begin with an already-tight supply situation. According to USDA's January Crop Production report, stocks of all hay stored on farms totaled 96.4 million tons on Dec. 1, 8% less than year-earlier levels and the lowest since 1988.
Nebraska's Kinnan points out that only 2,500 tons of hay are currently listed on the NAMA Web site.
“That's less inventory than when we launched the site 10 years ago,” she says.
The expected hay production shortfall may be partially offset by increased corn silage production in 2007. Mike Hutjens, University of Illinois extension dairy nutritionist, is already seeing a shift toward higher-corn silage rations.
“It's more economical for dairy producers to use that corn silage vs. buying grain,” says Hutjens. “My gut feeling is that, with $4 corn, we're going to see more corn silage raised on farms that milk cows because it goes a long way toward meeting a herd's starch requirements.”
Petritz advises hay growers to crunch some numbers and look at the long-term ramifications of replacing alfalfa with corn.
“Talk to the producers who rely on you for hay and say, ‘Let's work through these numbers together. I want to help keep you in business so you can keep buying my hay.’ A certain amount of cautious long-term management is prudent at this point.”
Conversely, he tells hay buyers to contact their regular suppliers to find out their intentions.
“If I was a dairy producer looking for a large hay supply, I would want some type of commitment from my grower,” says Petritz.