September 5, 2017 at 3:32 p.m.

Corn prices, drought blamed for low hay supply, high prices

By Jennifer [email protected] | Comments: 0 | Leave a comment

Jerry Haensel of Montrose, S.D., has been raising 300 acres of high quality alfalfa hay since 1976, putting up 1,200 to 1,400 tons per year. But in his 30-plus years in the hay business, Haensel has had a first this year - seeing people pay upwards of $300-400 per ton for hay.
"I've never seen it this high before ... people are having to pay an ungodly price for hay," Haensel said.
The spike in hay prices is being experienced throughout the United States, due in part to severe drought conditions seen throughout many of the southern states.
"A lot [of the high prices] has to do with the fact that many parts of the United States have seen a pretty significant drought this year. Producers have had to feed a lot more hay because there is not much pasture left," said Julie Schmidt, an ag statistician for NASS specializing in forages.
Several of the states currently experiencing drought conditions - such as Texas and Oklahoma - are typically big hay producing states. Last year alone, Texas produced 10.8 million tons of hay, coming in No. 1 in the nation, Schmidt said.
"Texas is big, followed by California, Nebraska, Oklahoma and Kansas," she said of the typically top producing states. "... Producers are intending to harvest less acres and produce around three million less tons of hay than last year."
Drought, however, is only part of the problem contributing to the shortage of hay this year. Blame can also be placed on the high corn and grain prices.
"Between 2010 and 2011 we have had a big change in hay acreage around the country because of the price of grains. More people are planting wheat, corn and soybeans because the prices have exploded," said Ken Barnett, an extension educator for the University of Wisconsin Extension Service.
Haensel echoed this fact, which, he said, has played a bigger role in the hay shortage than the drought.
"Guys who normally have 400 acres of hay plowed it up and put it in corn," Haensel said. "They weren't getting a good price for their hay, so they put up corn."
Barnett, who has worked with the UW Extension for around 20 years, has spent the last eight years carefully tracking the hay price and market in the upper Midwest, putting together a weekly report. Through his tracking, Barnett has seen a 9.6 percent decrease in alfalfa and mixed hay acreage in Wisconsin this year compared to last year. According to the National Agriculture Statistics Service (NASS) Quick Stats, 2,257 fewer acres of dry hay, all types, have been harvested this year compared to last.
"Most of the problem started this spring when we saw a shift from forage to grain, and as a result we have had a big drop in hay production," Barnett said.
Currently, Barnett said the average hay price in the upper Midwest is $131.73 per ton. The average 2010 price was $114.65, and in 2009 the average was $111.15.
"We are 13-16 percent higher than 2009 and 2010," he said.
However, the current price isn't the highest he's seen. In 2008, hay prices topped the charts at $139.36 per ton.
"Two thousand eight was the high mark," Barnett said. "Prices went completely crazy. We were paying $5 for a gallon of gas, then the economy bottomed out and we went into a recession."
Long-term, Barnett said this year's prices are following the typical pattern, with prices going up at the end of summer.
"Usually what we see is the price going up in August, increasing through the end of the year. In January, it typically comes down a little and remains fairly steady until May, when it reaches a high point. By then we've fairly depleted our stored hay," he said. "To this point, it has looked normal as far as a pattern."
Only time will tell, however, where the prices will go this winter and into next spring.
"Hopefully the August jump [in price] will not indicate the price taking off," Barnett said.
With the hay crop pretty much wrapped up for the year, Barnett said producers should know by now how much forage they have available to them. From there, they should calculate what it will take to feed their livestock through the year and determine whether or not they will need to purchase any hay.
"The bottom line is people who know they will need [to buy] hay should be shopping now," said Dan Martens, University of Minnesota Extension Educator with Benton, Morrison and Stearns counties. "Farmers ought to be having good discussions with their nutritionists, talking about options to deal with this."
Oklahoma dairy producer, Adam Nunn, is one producer who knows he will need to purchase more hay to feed his 120-cow herd near Fairview, Okla. He has been dairying in Oklahoma for 11 years now, after moving to the state from Georgia. Without the land base to produce his own feed, Nunn relies on purchased feed to support his herd, including hay that he typically purchases locally.
"There just hasn't been any [hay] this year," Nunn said.
Earlier this year, Nunn purchased 150 round bales of alfalfa from a producer 50 miles away, paying $150 per ton when he would normally pay $100 per ton.
"Now I'm about out and I'm looking at paying $260 per ton," he said.
Pickings are slim when it comes to hay in Nunn's area. Last winter produced little precipitation, and this summer's lack of rain has only worsened the conditions.
Nunn has been forced to expand his hay search to other states, including northern Missouri and South Dakota. He's looking for alfalfa, but he's not being too choosey at this point.
"I could use another 150 bales of alfalfa ... but I'm having a hard time paying $265 per ton, and for 165 RFV hay - not top of the line hay," he said.
If he's unable to locate any hay at an affordable price, Nunn said he may have to look at cutting back his herd.
"I might have to cull a few more cows. I don't want to, but I don't want to go into more debt either," he said.
It's the stark reality facing many producers, not just in the southern states but across the United States, who rely on purchased hay to feed their herd.[[In-content Ad]]


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