The author is a senior associate editor for Hoard’s Dairyman.
“That price is almost $40 ahead of the same time last year,” noted Mike Rankin, managing editor of Hay & Forage Grower magazine. During the November Hoard’s Dairyman webinar, Rankin shared a few factors that have pushed alfalfa hay prices to record levels.
A major player has been the production obstacles of the 2021 growing season. Rankin explained that some parts of the country experienced drought, and in the Northwest, excessive heat stymied hay growth, even on irrigated acres. Water restrictions for irrigation has been an obstacle in certain areas, and wildfires created smoke that lengthened drying times for some alfalfa producers.
On the flip side, other regions faced too much moisture, particularly in the mid-South. This creates another set of hay making challenges.
There have also been logistical challenges, whether hauling hay on land or by water. Rankin referenced both trucker shortages and ships sitting offshore waiting to be unloaded as hurdles of moving hay where it is needed. Inflated fuel and container prices are also adding to transportation costs.
Despite the shipping challenges facing the country right now, hay exports continue to be robust, particularly to China. “We still have strong numbers on the export side of things for alfalfa,” Rankin reiterated. Hay exports for 2021 were trending slightly ahead of 2020 levels, and exports to China were up 35%.
Meanwhile, retail crop input prices have soared. “This has a huge impact, not only when buying hay but also for producing hay,” Rankin said. “This is going to have a big impact on prices in 2022.”
Commodity prices have been high as well, and throughout his career, Rankin has seen a trend between the value of commodities and hay. “Any time we have high commodity prices, high hay prices generally follow,” he shared.
Monitor production costs
Rankin advised hay growers to push the pencil and analyze production inputs. “If growing your own forages, legume and manure nutrients are going to be more valuable this year than ever,” he said. “Make sure to take advantage of those, because the less commercial fertilizer you have to buy, the better off you will be.”
If soil test nutrient levels are high to excessive, Rankin said to keep in mind that there is a low probability for a yield response from additional purchased fertilizer. “That means you need good soil tests to make those types of decisions,” he advised, noting this is an input farms can save on if they have been banking some nutrients. “Target those fields that are high to excessive, and think about putting no commercial fertilizer or a lower amount on those fields this upcoming year,” he noted.
Still, he pointed out, “Nitrogen is always going to be a good buy, so don’t short your grass or corn crops in terms of nitrogen.” Be sure to take advantage of legume and manure credits, though.
“Higher fuel costs will impact all forage production activities,” Rankin continued. If you hire a custom operator, expect rates to rise, and of course, this impacts the cost of production if harvesting your own crops, too.
Rankin noted that preordering and prepaying may be more than a tax strategy this year; it might be a necessity to ensure the arrival of a product when you need it since the pipeline is slow.
Greater variation exists
As always, inventories and quality vary by region and state, but Rankin said there may be more disparity in 2021 due to all the variation in weather and growing conditions within the season. For example, water continues to be a big concern out West.
“Non-irrigated acres really took a hit in 2021,” Rankin said. “That’s where a lot of lower production will be seen.”
Rankin shared that both the U.S. dairy and beef herds were culled heavily in 2021, which may reduce demand to some degree, but it might not be enough to really impact forage prices.
Forecasts in late 2021 predicted alfalfa and alfalfa grass production to be down about 9% due to both lower yields and fewer acres, further limiting the hay supply. Combining all these factors, Rankin predicts that forages will continue to be more expensive to both purchase and produce for the short to mid-term.