High hay prices help farmers, hurt cattlemen

By Desirai Schild, Ag Weekly correspondent
Friday, August 1, 2008 4:22 PM CDT

BLACKFOOT, Idaho - The price of 2008’s first crop of hay is unsettling and may be life-altering.

“It’s right down scary,” said Don Hale, Blackfoot, president of the Idaho Hay and Forage Assn. “I’d say $200 a ton is not unreasonable for good hay. The dairies are willing for to pay up to $220, and the horse people will be paying that much for the small bales they feed.”

Hale said he didn’t have any exact figures but thought there would be a hay shortage nationwide this year. He said rising fuel and production costs have forced the price of hay up. So has the rule of supply and demand.

Many farmers have gone from producing hay to growing corn or grain.

“Hay needs a lot of water and has to be cut and baled three times over the summer — usually at night,” he said. “Grain takes less water, is harvested once and brings a good price right now. Which would you plant?”

Areas in California are being taken out of hay to provide more water for urban use, Hale said. Many dairies have moved from California to Idaho to have better access to quality hay. The dairies still in California are more than willing to buy Idaho hay and truck it in. This means local people are competing in the national and world market for an Idaho grown product.

Idaho’s hay farmers are getting more requests for all their hay crops then ever before, Hale said. This is putting hay producers in a pretty good financial position.

“Yes, I’m finally going to make a little money on my hay,” he said. “I’m not going to apologize for that. It’s the American way.”

The government is allowing farmers to cut and bale their CRP ground to add to the year’s hay supply.

“That’s going to be too little, too late,” said Doug Finicle, Blackfoot. “They can’t cut until Aug. 1 because of the nesting birds. In my experience, all those birds will be done nesting by the first of July. That extra month they have to wait to cut will take most of the feed value out of the crop.”

Finicle has been raising several hundred acres of hay for many decades. He said hay brokers have already been calling him to secure his crops this year. The brokers represent dairies that want the hay in the ton bales Finicle produces.

“As long as grain prices stay high, we’ll see even more hay fields going into grain production,” he said. “Farmers have to cover their own costs, and they’ll choose the crop that will do that for them.”

Cattle producers are the ones really being hurt by high hay prices, said Jennifer Ellis, Blackfoot, president of the Idaho Cattle Association. Her family operation grows some hay and runs a herd of 700 mother cows with calves.

“Looking into my crystal ball, I see a lot of people liquidating their herds,” she said. “With the cost of hay and corn going so high, the feedlots, where we sell our calves, will have to spend a lot of money just to finish the cattle for market. That means higher prices to the consumer but not the cattle producer.”

Ellis said this is because cattle producers are “price takers, not price makers.”

She said the cost of producing their own hay has increased 25 percent in the past year due to the cost of fertilizer, fuel and equipment.

“It just doesn’t pencil when you look at it on paper,” she said. “We’ll be lucky to see $1 a pound for our calves, and we can’t raise them for that. This is probably the toughest time I’ve ever seen in the cattle industry.”

Ellis said the problem is more than supply and demand.

“There has got to be a philosophical change in what our government sees as important,” she said. “Food costs have jumped 10 percent this year alone. How long can this go on? How bad will it have to get before our government takes a look at changing what’s not been working for years?”

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