Input costs send hay and forage into ‘uncharted territory’

A recently released report on alfalfa market trends says the market is seeing “strong growth” driven by more consumer awareness of food production techniques, including animal feeds. But growers are trying to stay ahead of rising input costs.

According to the IMARC Group latest report titled “Alfalfa Hay Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026,” the global alfalfa hay market will exhibit “moderate” growth during the next five years.

The market for hay and forage is generally good, according to Alejandro Plastina, associate professor in the Department of Economics at Iowa State University. Fertilizer costs are soaring, especially nitrogen but also potash and potassium. Retail potash has risen from $327 per ton in October 2020 to its current value of $776 per ton.

Hay and forage aren’t as fertilizer-intensive as row crops, so the rise in fertilizer prices won’t affect forage and alfalfa as much as corn and soybeans, said Plastina. Equipment costs are also rising, as is the cost of the plastic used to wrap bales.

The U.S. Department of Agriculture is predicting that almost every Northwest state will have lower hay and forage production this year than last. Hay stocks in Montana dropped severely after the 2020 drought, after which the state saw an even more severe drought. Dryland production was especially affected. The result of all these climate issues has been a low carryover this year. With increased need for additional forage production, seed supply for new plantings is an important consideration.

Supply more than price

On the other hand, “Forage seed production in 2021 has experienced unprecedented challenges with virtually no popular species spared,” Dan Foor, CEO of LaCrosse Seed company of LaCrosse, Wisconsin, writes in Hay and Forage Grower magazine.

More important than price increases, though, is supply. Foor predicts that many forage species have “best case scenarios of a 15% to 20% reduction in expected supply, while some may have only 25% to 30% of total supply expectations. In short, the forage seed industry will be in uncharted territory for the foreseeable future.” Foor’s message to hay and forage growers: Get contracts locked in and get your supplies assured if you can.

Besides availability, inputs are suffering from the same logistics issues plaguing other supplies and farm inputs: container shortages, truck driver shortages and fuel price increases. These affect especially imported seeds from Europe, including Denmark and the Netherlands. Imported orchardgrass, perennial rye and fescue are an important part of the supply picture, said Foor.

Seed production in the Willamette Valley, which is the most important grass and clover production area in North America, has suffered over the past two years due to drought and other climate issues. On a brighter note, the primary alfalfa production areas in North America were not as negatively affected as the grass and clover areas, and as such the outlook for alfalfa seed supply does appear to be in fairly good shape.

Another issue, said Foor, is oat prices. Oats are often planted with alfalfa to reduce the need for weed control herbicides. But oat prices have doubled in the past year. Foor attributes part of that to a demand spike for newly popular products like oat milk in supermarkets, combined with a challenged seed production year. “This was quite unexpected,” said Foor. “Oats aren’t usually in short supply.”

On the upside, prices for alfalfa and hay remain high, as do dairy prices. On Nov. 2, the USDA reported that the average alfalfa hay price during September rose to $209 per ton, the highest monthly average since July 2014.

The high prices could lead to acreage increases in the upper Midwest, Foor told High Plains Journal. “I do see some opportunity for acreage growth there.”

The National Alfalfa & Forage Alliance recently updated and released “Alfalfa for Beef Cows,” a guide to everything livestock farmers should know about feeding alfalfa to beef cows.

“Alfalfa is most often thought of as the premier forage for dairy cattle,” said Beth Nelson, NAFA president. “But alfalfa’s contribution as a high energy, high protein feed source in a well-managed, nutrient-dense beef cattle diet is critically important as well.” Alfalfa has a high nutrient content than grass and is available in bales, cubes or pellets; a good quality alfalfa can have up to 20% protein content.

Foor has been in the business for nearly 30 years, and he recently returned from an industry conference where he spoke with veterans who have been involved with hay and forage for 50 plus years. “The common refrain from such veterans was that they’ve never, ever, seen conditions like this,” he said.

David Murray can be reached at [email protected].