Some growers fear 'demand destruction' if high prices persist
By TIM HEARDEN
COTTONWOOD, Calif. -- Hay producers in California's Central Valley are finishing their first cuttings this week and reporting ample tonnage.
Farmers have been getting about 1.1 tons per acre and the quality has been excellent, said Phil Bowles, president of the California Alfalfa and Forage Association.
The yield isn't quite as high as last year's first cutting, when late spring rains kept California growers out of their fields until "it was waste-high hay," said Bowles, a grower in Los Banos, Calif.
Still, the crop comes as an alfalfa shortage lingers in the West, pushing prices higher and causing concerns for dairy farmers as well as the producers who provide them with hay.
"To my mind, that's kind of a fool's paradise for a grower," Bowles said of hay prices, which hit $320 a ton in some areas in recent weeks.
"It creates demand destruction," he said. "There are substitute feeds they could use. They're not as good for the animal ... but either they use a substitute feed or they go out of business."
The loss of customers worries Ivar Amen, a Cottonwood, Calif., grower and president of the Shasta County Farm Bureau.
"Everything we do costs more," Amen said. "Everything's run by trucks for delivery, so our expenses are going to go up. It's just a matter of if our consumers and customers can survive."
Amen recalls what happened in 2008, when hay producers lost up to 40 percent of their buyers as hay prices reached $265 a ton.
"They got rid of their animals," he said. "They just got out of the business. The whole problem is it forced them out ... Either you've got to buy food for your house or hay for your horse that you don't ride. That's what it comes down to."
A vital feed crop for dairy and beef cows as well as horses and other livestock, alfalfa is grown on more than 1 million acres in California, in nearly every agricultural county.
The warmer valley counties are typically the first to harvest an initial cutting, with hay from upper elevations coming several weeks later.
The hay market in California has slipped slightly from six weeks ago, when "desperate" dairies were frighteningly low on the forage crop, said Seth Hoyt, author of the Hoyt Report, which provides hay market analysis.
Where the market will go this summer depends on many factors, including the quality of the first cuttings in neighboring states, he said.
In California, hay supplies should be ample this year as long as the weather cooperates, Amen said.
"I would say it'll be a decent season if it warms up, but it's got to warm up," he said. "The mountains are still pretty cool, and that's where most of our hay comes from."