Farm Horizons, June 2014

Hay price and shortage is causing difficulty for farmers

By Tara Mathews

The local and national hay markets have felt the impact of recent weather conditions.

Many farmers have experienced a shortage of hay due to extreme cold winters, late springs, and droughts, according to Associate Director of the Center for Farm Financial Management Dale Nordquist.

The fluctuation in hay prices is caused by environmental factors and market conditions, Nordquist said.

Prices have varied from $89 to $186 over the last 10 years, with a significant hike between 2010 and 2011.

In 2010, hay was $110 per ton, and the price increased to $159 per ton in just one year.

The cost of hay can also be affected by other crop prices, according to Heidi Otto of Otto Farms Chopping.

“After the corn price increased, many farmers replaced their hay fields with corn,” Otto said.

The increase in corn price does not directly affect hay prices, but the indirect effect can be just as detrimental, Otto added.

Another affecting factor is the amount of “winter kill.” Winter kill is caused when the crowns of the hay plants freeze due to extremely cold ground temperatures, or lack of snow cover.

“There has been an incredible amount of winter kill this year,” Otto said.

A sign of winter kill is a soft or mushy taproot just below the crown, according to the National Agricultural Statistics Service.

In 2012-13, there was also a large amount of winter kill, Nordquist said.

“Southeast Minnesota saw the most impact,” Nordquist stated. “Farmers are having a hard time finding hay due to the winter kill of 2012-13 and this past winter.”

Winter kill is not terribly common, but the last two years have had extreme thaw and freeze cycles, which is when the winter kill happens most, he said.

“The temperature rising just enough to melt snow cover, and then dropping below freezing overnight or for days will cause more winter kill,” Nordquist said. “Winter kill is not as broad as it has been the last two years, usually.”

The weather plays a large role in the success of hay crops, as well.

For the past two farming seasons, there have been snow and cold later into spring, followed by rain, causing farmers to plant crops later than desired, Nordquist said.

“Last spring was terrible,” Nordquist commented. “Hay crops were not planted until late, and when everyone runs out at the same time, there’s a short period where it’s very hard to find.”

Although some areas have noticed a shortage, Derek Lundeen of Lundeen Hay Auctions had an odd recent auction, he said.

His auction May 3 drew higher prices than May auctions have in the past, but also had more hay offered for sale than May auctions in the past, Lundeen said.

“Normally, I would expect about 20 to 30 piles of hay at a May auction,” Lundeen stated. “This May, there were 60 to 70 piles of hay.”

“The amount of hay for sale is generally light, and prices are usually low in May,” Lundeen commented.

A small square bale was going for $7.75, and a round bale was $70 at his May auction, which is not normal, he added.

The average current price for a ton of hay is $158, which is actually lower than a year ago, when the price was $220 per ton, according to Nordquist.

Generally, Lundeen would not hold any auctions after May, but this year, he plans to continue auctions through the summer due to requests for hay sales from customers, he added.

“I think people are not storing their hay, and maybe even selling off older hay, which is the reason we had so much hay at the auction,” Lundeen stated. “With the price so high, they are better off to sell it than store it.”

Hay price does not change quickly, according to Nordquist.

“It can be more than a year turnaround sometimes,” he said.

“Farming is about the long haul,” Otto commented. “People need to expect that there will be good years and bad years, but over a few-year period, it usually balances out.”

The California drought is not helping the hay situation either, Nordquist said.

“California has a large dairy industry and has been experiencing a drought for some time now,” Nordquist commented. “They are being forced to ship hay in from our area.”

Shipping the hay can be very costly, and will, in turn, cause dairy products to raise in price also, he said.

“Although the market generally tends to be more localized, we are noticing a significant commonality among the entire nation,” Nordquist added.

Some farmers, including Jon Dammann of Lester Prairie, are getting down to the bare minimum amount of hay on hand.

“I have been low on hay for awhile now,” Dammann stated. “I have to let my cows into the pasture, even though the pasture hasn’t grown enough yet.”

The long winter has affected the growth of pastures too, causing more demand for hay.

“Grass hasn’t grown much yet, so I don’t know how anyone can have enough of the pasture ready,” Dammann added.

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