Soaring Hay Prices Hit Cattle, Horse Farmers

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Cattle and horse farmers are being squeezed as alfalfa suffers its worst season in years, driving down hay stocks and pushing prices to a five-year high. Although alfalfa crop conditions have improved a bit recently, high quality hay for forage may be hard to come by for some time.

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On the left, hay crop conditions in Wisconsin this year (dark blue line with markers) are drastically worse than the previous five years, although they have improved notably in recent weeks. On the right is the monthly average alfalfa hay price recorded by the USDA for Wisconsin (green line) and the US (blue line). 

Alfalfa is the the most cultivated forage legume in the world and the United States is the largest producer. Virtually every state grows alfalfa except the southeastern part of the country. Acreage is in a long-term decline as feed rations shift to other crops or byproducts, but 17 million acres are still in production. Dairy cows and horses are the primary consumers of high quality alfalfa hay. Dairy producers are cutting back on hay and shifting to cheaper alternatives as low, on-farm milk prices squeeze budgets.

This year started off poorly as farmers in the upper Midwest saw many acres of alfalfa damaged from winterkill. Alfalfa is a perennial crop and goes into dormancy over the winter. Each spring farmers eagerly anticipate warmer temperatures that break the dormancy. How the crop greens up is a key indicator of winter damage and determines if the stand needs to be replaced.

The polar vortex was particularly damaging in areas like Wisconsin this winter. Low levels of snow, which insulate the dormant crop, increased exposure, and then repeated cycles of thawing and freezing did further damage. Ice sheeting—where late winter rains form ponds in a field, freeze over, and then suffocate the crop—was also a problem in many areas. Wisconsin data shows that 43% of the alfalfa crop in the state suffered either moderate or severe winterkill, with northern Wisconsin experiencing as much as 75% severe conditions.

Heavy spring rains in the Midwest presented further problems. The first cutting of the season, typically around the third week of May in the Iowa area, was delayed into June. Delayed harvesting means the plants get more mature, which has a negative effect on quality. Anxious farmers had to be patient, waiting for periods of open weather to harvest, or risk damaging the wet fields with heavy equipment. Further, if hay is cut and then rained on there is potential for leaf loss or mold growth.

All these crop issues come at a time when on-farm hay stocks are the lowest since 2013 and one of the lowest levels on record as of May 1, according to the USDA. As a result, prices have risen sharply, reaching a five-year high at over $200 per short ton on average for the month of May. Prices are likely to stay elevated for some time until the supply of quality hay is rebuilt.

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