Supply and demand affects hay prices

Wayne Elston, owner of Elston Hay and Grain in Ramona stands by stacks of alfalfa bales at his store on Main Street. Sentinel photo/Karen Brainard
Wayne Elston, owner of Elston Hay and Grain in Ramona stands by stacks of alfalfa bales at his store on Main Street. Sentinel photo/Karen Brainard

This is the first in a series about challenges facing the agriculture and equine communities

By Karen Brainard

Increased hay prices are creating challenges for owners of horses, ranches, dairy farms and feed stores, say experts in the agriculture industry.

The prices are causing some horse owners to give up their animals, look for more reasonable feed alternatives, or make lifestyle adjustments to feed their horses.

Robin Joy Maxson in Ramona said for her five horses their feed bill for alfalfa and Bermuda grass hay has risen about $200 per month during the past year.

It basically boils down to supply and demand, said Wayne Elston, owner of Elston Hay & Grain in Ramona.

Aaron Phillips at Kahoots Feed & Pet Store in Ramona, said, “It’s just simply buy and demand” and businesses have to keep up with the costs.

While the type and weight of a bale will vary, Phillips said hay prices are about $5 higher per bale than a year ago.

Seth Hoyt, of The Hoyt Report Inc. which offers hay market analysis and insight, addressed the supply and demand issue, saying, “We came into 2011 with less hay supplies. 2009 was a bad year for hay growers and dairy producers.”

Instead of planting hay, farmers planted crops because they were a stronger commodity, said Hoyt.

The problem now is hay production versus demand is not in balance, he noted.

Elston said three main factors contribute to increased demands: exports, dairies and beef cattle.

When the price of milk decreased a few years ago, a lot of dairies went out of business, but now they are building back up and increasing demand for hay, said Elston.

A weak U.S. dollar and greater overseas demand has also impacted the market, according to Elston. Hoyt said China and Japan, especially, import a lot of hay.

If Japan had not been hit with a tsunami in which cows perished and dairies were lost, the demand for exports would be even greater, said Elston.

The drought in areas of Texas and Oklahoma has hurt farmers in those states and some ranchers have had to sell cattle or take them to the market because they can’t feed them, said Elston.

“The whole ag sector is kind of a perfect storm,” said Elston.

On some land where hay was once grown, corn, wheat or cotton are now taking up that space, said Elston. Even if farmers decide to grow hay again, production doesn’t happen all at once, he noted.

“It’s not going to be a quick fix,” said Hoyt.

Corn, cotton and other markets are still strong, so growers don’t necessarily have the incentive to switch to hay, he said.

Hoyt said he does not see a big hay surge in 2012 and prices will probably become stronger than they are now.

“Everybody anticipates it will go higher,” said Elston.

He said forecasts show alfalfa to rise to the higher 20s for darker bales and mid-20s for lighter bales. Businesses will face increasing price pressure, he added

Noting that grocery store prices are also on the rise, Elston predicted, “It’s going to be a long, tough winter of higher hay prices and high food prices.”

This series will look at how Ramona horse owners and ranchers are coping with the higher hay prices. If you have any comments to share on how this is affecting you or what adjustments you have made to keep and feed your horses or livestock, email them to karen@ramonasentinel.com.

   
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