Alfalfa growers aren't 'making hay' this year

Erratic weather conditions—wet, cold and searing heat—have had a huge impact on the state's alfalfa crop. Experts predict yields at 6.7 tons per acre, the lowest level since the El Niño year of 1998.

California hay growers are fretting about the lack of high-test hay for milk cows while stacks of medium- to low-test hay have piled up. The price spread in the San Joaquin Valley between the top and bottom dairy qualities is wide.

Supreme was selling on Oct. 6 for $178 to $198 per ton delivered and fair quality hay for dry cows was selling for between $115 to $125, according to the U.S. Department of Agriculture's Market News.

"It has been a stare down with the dairies," said Orland hay grower Lee McDaniel. "Dairies don't want to or can't pay last year's prices for high-test hay. There's too much hay in the mid- to lower-quality range and growers don't want to sell for lower prices."

McDaniel, who helps operate the family-owned Marybelle Farms, said, "It's a wait-and-see situation. A lot of hay is sitting or going into barns to wait for better prices. I think the market will shake loose, but it's hard to know what's going to happen."

It appears the stalemate on hay purchases may be easing. USDA reports that 44,536 tons were sold in California the week of Oct. 6 and 57,135 tons were sold the previous week. That compares to 28,354 tons sold the previous year during the same period. Year-to-date sales totaled 1.7 million tons by Oct. 6, compared to 1.6 million tons in 2005.

Triple-digit temperatures fanned growth of low-test hay, and farmers have seen abundant supplies of lesser-quality hay lead to a price drop of more than $20 per ton. Hay is currently being cut throughout the Central Valley.

Alfalfa hay acres in California on Aug. 1 were estimated at slightly more than 1 million, up 3 percent from 2005, but that prediction may not hold, said Seth Hoyt, senior economist with the National Agricultural Statistics Service. The Central Valley experienced the largest increase in alfalfa planting in the state.

While Imperial Valley alfalfa acres were up 9,500 from last year, this was offset by a planting decline in the Blythe area. Seed companies had expected California's planted alfalfa acres in 2006 to be up more than 10 percent overall, which didn't materialize, Hoyt said.

"A Sacramento Valley grower told me he planted more than 500 acres of alfalfa last fall that was drowned out by December rains," Hoyt said. "He replanted in February, but March and April rains drowned out all but 70 acres of what he replanted.

"March and April rains caused more damage to alfalfa fields in the northern San Joaquin and Sacramento Valley than first thought. Rain the third week of May in Central and Northern California caught some alfalfa hay on the ground and prevented it from going to high-quality hay. This added to an already plentiful supply of low- to mid-quality hay."

Adding to the dairy/hay equation is the fact that lower milk prices have slowed dairy purchases. Also, dairy operators are not building on-farm hay inventories, and hot weather led to a decline in hay consumption because cows eat less and produce less milk.

Market observers say dairy operators are waiting for hay prices to settle before making significant purchases. The hope for improved milk, cheese and butter markets may not materialize, Hoyt said.

"As California alfalfa hay growers discovered in 2003, despite tight supplies of high-quality alfalfa hay, when your main customers are financially strapped, they resist higher asking prices," Hoyt said.

San Joaquin County hay grower Mike Robinson said the hay market is off because there's no test hay right now and because the local crop was damaged by spring and summer weather conditions.

"Since the dairy market dictates the price, essentially there is no market for hay right now," he said. "Right now we're finishing up our fifth cutting and looking toward the sixth when we should begin getting higher test hay."

Robinson said fortunately hay is a commodity that can be stored and brought out later when conditions are right for better prices.

"Winter hay coming out of the barn usually goes up a minimum of $20 to $25 a ton, depending on the availability and quantity on the market," Robinson said. "Last year hay was in such high demand there was very little hay put into the barn. Hay tested pretty much all year last year and was taken away by the dairymen. That's not the case this year."

Still, hay remains a steadfast crop, according to Dan Putnam, University of California Cooperative Extension alfalfa and forage crop specialist. He said California's 2005 hay crop was worth $1.15 billion, the highest value in the nation and highest ever for the state, up 35 percent from $852 million in 2003.

For comparison, he noted that Texas, the nation's No. 2 hay producer, had a 2005 crop worth $730 million, and Idaho at No. 3 had a crop valued at $586 million. The total value of U.S. hay production was $12.5 billion in 2005, the nation's third most valuable crop behind corn and soybeans."

Although there's no doubt California will continue to be the nation's top hay producer, Putnam said winter forage yields were off significantly in 2006 in the Central Valley. A combination of extremely rainy conditions, waterlogged fields, nitrogen deficiencies in January and February, and sudden heat in May and July added up to a difficult year.

"Most varieties were viciously attacked by striped rust in winter, lowering yields and quality," Putnam said. "Many fields were harvested in the flowering to milk stage in the first week in May. Then crop development was delayed due to cold weather and flooding, which set back the silage harvests."

Nearly 50 percent of California's alfalfa crop is produced in the San Joaquin Valley. UCCE farm advisor Mick Canevari said young alfalfa fields rebounded quite nicely from the wet spring winter.

"Older fields that had phytophthora (root rot) problems last year, however, are still struggling, showing less vigor and little growth before bloom occurs," Canevari said. "That's especially true in the northern part of the valley where most flooding occurred."

The weed complex of watergrass, yellow foxtail and nutsedge showed up in full force during the summer in fields where plant spacing had thinned. He warned growers that soil residual herbicide treatments may only be worth the investment if density and plant conditions make it possible to save the stand.

As growers move toward completing the crop year, some have decided to let plants mature and shift to seed production. USDA crop analysts report that California alfalfa seed production is beginning to recover from many years of decline.

Seed acreage in 2005 was recorded at 29,100 acres, located primarily in the Imperial and central San Joaquin valleys. The average yield per acre for alfalfa seed in California was between 400 pounds and 500 pounds per acre over the past five years, with total production ranging from 10 million pounds to 20 million pounds.

In 2006, the industry expects acreage to be up about 15 percent along with higher yields than reported in 2005, when weather conditions contributed to the lowest yields in the Imperial Valley in 60 years.

"The heat pretty much put an end to harvesting hay," said Imperial alfalfa farmer Vince Brooke. "The alfalfa seed crop looks great. We're seeing a bigger shift to seed by those farmers who can afford to do it because hay prices are too low."

Brooke, who is president of the Imperial County Farm Bureau, added, "I've gotten really irritated with brokers offering me $90 a ton for hay when the market is $115. Buyers have stopped calling because they know we won't sell below the cost of production."

The hay price in Imperial hasn't really changed much in the last 20 or 30 years, Brooke said, but costs continue to increase.

This year, once again, there's a lack of quality oat hay, said Sonoma hay grower Norm Yenni, who is chairman of California Farm Bureau Federation's hay commodity advisory committee. "Much like last year, my hay got rain damaged. My tonnage is drastically reduced, but what came up is of good quality."

Yenni expects oat hay production and prices to remain stable through the rest of the year.

"Our hay prices in our niche market have been pretty good because we go primarily to the retail market for horses," Yenni said. "We're about equal to last year's prices, which were at record levels. But remember that the cost of all inputs has gone up, especially fuel costs. I don't think that in terms of profit we'll be ahead of last year at all."

For more information about the outlook for the 2006 California hay market, visit usda.mannlib.cornell.edu. Annual, weekly and monthly reports of the state's and other hay markets can be found at www.ams.usda.gov.

(Kate Campbell is a reporter for Ag Alert. She may be contacted at kcampbell@cfbf.com.)