If you’ve purchased alfalfa hay in California lately, you’re probably suffering from sticker shock. Prices are running up to $350 per ton for high-quality alfalfa hay delivered in the Tulare County area. Fair-quality alfalfa has even skyrocketed to more than $200 per ton. These prices have some people questioning whether prices will keep climbing or if they’ve hit their peak.
Unfortunately, it’s not just one factor playing into the high prices. There are a lot of things at play, says Dan Putnam, Cooperative Extension Forage Specialist at the University of California-Davis.
Water issues and uncertainties on water availability in the past couple years have caused some California farmers to switch from growing alfalfa to crops that require less water. Other crops, such as wheat, cotton or corn, have risen in price, making them more attractive to plant than alfalfa in the short-term.
California dairy farms are carrying lower hay inventories this season than normal. “For financial reasons, dairies just couldn’t afford to fill their barns full of hay,” notes Seth Hoyt, hay market analyst and author of the Hoyt Report. Now, dairies are running out of hay and scrambling to get it, keeping prices high.
Cool, wet weather this year has delayed the first alfalfa cutting, which has kept the market strong. “In some areas, we are a month behind normal,” Putnam adds, citing freezes in the Imperial Valley and cold weather in the San Joaquin Valley.
Export markets have also taken a chunk out of the California hay supply. New markets in China and the United Arab Emirates have developed in the past few years and continue to increase hay consumption. The Imperial Valley now exports about one-third of the hay produced along with substantial amounts of hay from Nevada, Utah, Intermountain California, and the San Joaquin Valley. Hay exports have risen dramatically in the last year or two and will continue to remain attractive to alfalfa growers as the dairy industry’s ability to pay remains questionable, notes Putnam.
All of these factors have resulted in record high prices for alfalfa.
But, it’s still too early to panic over hay prices, agree Putnam and Hoyt. The first crop of alfalfa will soon come off the fields, after weather delays. “After the first harvest, we should see a little moderation of prices as hay supply increases,” notes Putnam.
A poor outlook on milk prices, should also factor into future hay prices. “The May over-base price is in the $16.50 to $17 range; when dairy farms need $18 plus to break even – it doesn’t work well,” notes Hoyt.
“Unless something changes in the coming months, I think we’ve seen our high for alfalfa prices,” says Hoyt. But, prices could go back up in late fall or winter if supplies are tight. Until prices drop, alfalfa hay will remain a painful purchase for dairy farms.