Low carry-over stocks, plantings of corn drive up price
By CRAIG REED
For the Capital Press
Feeding livestock on the West Coast has become more expensive this year, and hay prices aren't expected to drop going into the new year.
"The price is generally higher than any year I know of," said Sam Dinsdale, the owner of Dinsdale Farm of Silver Lake, Ore. He's been a hay producer for 35 years.
"The price is excellent, the quality overall is good, very little was rained on and production was pretty close to average," he said of the overall hay crop for 2011 in Central Oregon.
"It's a record price for hay," said Seth Hoyt of Ione, Calif. Hoyt also has 35 years of experience in the hay industry and for the past three years has produced The Hoyt Report, which provides details on the industry. "Just as the market was very depressed in 2009, the pendulum has swung so far the other way hay growers are making good money. The demand has been outpacing the supply and that's raised the price."
Scott Pierson, another Silver Lake hay grower and president of the Oregon Hay and Forage Association, said last year a ton of alfalfa was generally priced at $150 and this year it's at $250. He said he expects $250 a ton to be the low price for whatever hay is available between February and when the 2012 crop begins to come off fields in May.
David King, of Malin, Ore., a 29-year hay producer and president of the Klamath Basin Hay Growers Association, said he's heard of high quality alfalfa dairy hay going for $260 a ton. Hay that was rained on and then turned before baling is selling for $210. He added grain hay went for $80 a ton three years ago and is now priced at $160.
"In 2008 we had high prices, 2009 prices were down, 2010 was up and 2011 is double 2009," said King, who owns King Productions.
Don Santos, a Glide, Ore., rancher and a hay hauler and broker, said the price for Willamette Valley grass hay is up, selling for $115 to $150 a ton depending on quality.
The growers said there are several reasons for the higher prices. The carry-over of hay from 2010 was the lowest of the past 20 years, according to Pierson. The hay shortage is a result of some landowners in Western states planting corn, cotton or wheat in the last couple of years because of the demand for those crops and the subsequent increased price for them.
With the anticipated hay shortage, buyers jumped in early this year with higher offers to assure themselves a supply.
Hoyt said dairy cow numbers are up compared to 2010, leading to increased need. Hay exports to countries such as Japan, China, South Korea and the United Arab Emirates have increased.
"Dairy is a major player in the hay market," Hoyt said. "They probably buy 75 percent of the alfalfa in California and 60 to 65 percent in the West goes to dairies. The export market is next, and horses represent roughly 15 percent of the market."
"China in the last two years has more than doubled its demand, and it looks like it'll be increasing its future demand," Pierson said. "Australia has been a competing region for export hay, oat and alfalfa, but they've gone from a drought year and low tonnage to a flooded year. A man I spoke to there said it's a pretty bleak situation, so this year they won't be very competitive in the Asia and Middle East markets."
King said he has typically sold less than 50 percent of his hay to the export market, but he increased that percentage to about 75 last year and will export that much this year.
Dinsdale said the price has "been somewhat of a windfall" that was needed because production expenses, especially for fuel and fertilizer, have gone up. He added this hay market and its prices seem to be more accepted than they were in past years when prices were high.
Pierson said most of his customers are still buying good hay, but a few are having trouble paying the bill for it because of its expense.
"I want our customers to do well," he said. "If they can't sell their products (meat and milk) for a profit after using the hay, that's not good. We want everybody to do well.
"People like their protein and that comes from a forage-based diet," he added. "Meat and dairy will continue to drive the forage market. I don't believe hay growers are going to get filthy rich. Generally they should see a net profit, but probably not much more than last year."