Last year’s drought in the South Central U.S. wreaked havoc on dairy producers like Doug Idsinga, of Portales, N.M.
Among other things, it caused him and others to go all the way to Ontario, Canada, for alfalfa hay. They are paying $300 a ton for the hay, delivered, and that is contributing to a potentially disastrous economic situation. The high feed cost is forcing many New Mexico producers below their break-even cost, Idsinga says, “especially with the milk prices going down every day.”
Things have to improve or some dairymen will be going out of business, adds his wife, Beverly Idsinga, executive director of the Dairy Producers of New Mexico.
While alfalfa remains the “queen” of forages — and producers like Idsinga are willing to go 1,400 miles to get it — there is a point where people start saying “enough.”
Coping with scarcity
According to a recent report from the U.S. Department of Agriculture, hay stocks on U.S. farms on Dec. 1 were the lowest levels since 1988. Stocks were 11 percent lower than the same time a year earlier.
As a result of high prices and the smaller supplies of alfalfa hay, dairymen have started feeding less alfalfa hay in their dairy rations, hay market analyst Seth Hoyt told those attending a World Ag Expo seminar in Tulare, Calif., last month.
In 2010, producers in California fed their milk cows 11.15 pounds of alfalfa hay per cow per day, on average, and that dropped to 8.6 pounds in the third quarter of 2011, he said. One dairy in Idaho, he said, was feeding 14 pounds of hay in its ration last summer, but now is at 7 pounds. Meanwhile, the dairy increased corn silage from 45 pounds to 65 pounds per cow per day.
Given the price, alfalfa hay just hasn’t been feasible, adds Etchebarne, a dairy nutritionist from Modesto, Calif. Many of Etchebarne’s clients have significantly reduced alfalfa or eliminated it altogether from their rations, thus bucking conventional wisdom that cows can’t milk without alfalfa hay. Their cows have maintained high productivity on substitutes like corn silage.
Jim Ahlem, dairy producer from Hilmar, Calif., still uses alfalfa hay and has enough to take him to the end of May. Most of it comes from the central valley of California where he farms, but he still had to pay more than $300 per ton. California wasn’t hit by drought last year, which helped keep supplies on hand, but it was a different story in the south central U.S.
“I know some guys from Texas who were buying (alfalfa hay) from Nevada,” Ahlem says.
Improvement in sight
Hay prices should ease this year for producers in the Western states, according to Hoyt.
While lower hay prices might be viewed with optimism, there is also an element of pessimism in Hoyt’s prediction. One of the reasons why hay prices will decline is because dairy producers won’t be able to afford as much.
“I have lowered prices based on what’s going on in the dairy industry,” Hoyt said. “Right now, we are just producing too much milk,” he said, which is causing lower milk prices.
When dairy farmers experience economic difficulty, it becomes a problem for hay growers. Dairies are the main customer for hay in the West, and “a lot of dairies are going into a negative cash flow situation,” he said. Hoyt now estimates the price of first-cutting supreme alfalfa dairy hay, delivered, will be $260 to $270 per ton in central California this year and $210 to $220 per ton in Idaho. Again, that is a first-cutting hay price and not intended to cover the entire growing season.
Hoyt projects that hay acres in states such as California, Idaho, Nevada and Arizona will be up 3 to 5 percent this year compared to 2011. Yet, even with increased acres, there won’t be an abundance of hay, he adds.
A weakening La Nina weather pattern in the Pacific Ocean should help ease drought conditions and boost hay supplies.
Producers would welcome any improvement.
As we have seen, there are some producers who will ship alfalfa from 1,400 miles away, while others simply say, “enough is enough.”