Thanks to more rain this year, supplies of alfalfa hay and other forages in the state have rebounded, with prices falling after climbing to record-high levels last year.
Hay growers say dairy and livestock producers are in no rush to buy much hay right now, as pastures are still flushed with grass for grazing and the price of other feeds has also dropped. What’s more, some operations need less hay because they have fewer mouths to feed after the drought forced them to reduce their herds.
“There’s nothing to eat all this food that we’ve got, and we’ve just got a glut of it right now,” said Imperial County grower Ed Hale.
That’s a complete turnaround from the past two years, when lack of rain, poor crop yields and less hay being grown diminished availability of the forage. The hay shortage forced dairy farmers and livestock ranchers to look for supplies much farther away, driving up hauling costs.
With so much rain this year, there’s “massive amounts” of all forages—not just alfalfa hay but grass hays, grain hays and silages, Hale said. This is despite a decline in state acreage of all harvested hay, estimated at 790,000 this year, down from 830,000 acres in 2022 and 2021, according to the U.S. Department of Agriculture. Alfalfa hay acreage reached 450,000 last year. That’s compared to 500,000 acres in 2021 and 475,000 acres in 2020.
Growers in the Imperial Valley harvest alfalfa hay virtually year-round, and Hale said he’s in his sixth cutting of the year. Cooler temperatures have lengthened the season for growing higher-quality hay that dairies and export markets buy, he said. Normally by this time of year, the desert region would be cutting lower-cost hay more suited for dry cows and feedlots.
Being able to sell higher-end hay has helped Imperial Valley growers up until about a month ago, when prices began falling about $30 a ton every week, Hale said. Before that, a Saudi Arabia dairy company had been buying “the vast majority of our best hay and held up the market.”
Locally, California dairy farmers have mostly been buying “hand to mouth” lately due to plummeting milk prices, he noted. Other big export markets such as China and Japan also have backed off—China because it “overbought” last year and still has enough supply, and Japan because the stronger dollar makes American hay more expensive.
The region’s best hay is now going for about $220 a ton, which Hale said is about break-even for growers. That’s compared to an all-time high of nearly $400 a ton last year. With the price drop, he said, “you have to make a decision: Are you going to stack some hay up and just hold it until wintertime when there isn’t any around and sell it then?”
That cash flow is tight on dairies hurts the hay market, said Rick Staas, president and CEO of the San Joaquin Valley Hay Growers Association. Dairies account for about 80% of the cooperative’s sales, with the rest going to beef cattle ranchers and horse owners.
Most growers in the San Joaquin Valley are on their second cutting, but harvest is about six weeks later than last year, Staas said. Usually, the association’s larger dairy customers “load up heavily” at the beginning of the season, he said, as the first two cuttings are the highest dairy-quality hay, which has the nutrients milking cows need. There’s a limited supply of this hay, but dairies have been slow to buy it as they wait for prices to bottom out, he said.
“Even the top end is sluggish because the dairy industry is struggling with their prices,” Staas said.
Afraid that 2023 would be another dry year, he said a lot of his dairy customers bought more hay than normal last year and have “plenty of inventory.” Many of them also grow almonds, the market of which “is not fantastic right now either,” he said, so they’re hurting on both sides of their business. In addition, the price of almond hulls, which dairies use as part of their feed ration, has come down. The byproduct competes with lesser-quality hay fed to dry cows, and “at these very cheap prices,” it hurts the lower-end alfalfa market, Staas said.
In Siskiyou County, grower Brandon Fawaz said hay farmers continue to fight “little rainstorms” that have resulted in “an abundance of off-quality hay.” He’s on his first cutting, with more rain in the forecast, which he said will slow harvest.
“Good winter rain and snowpack is good for the aquifer, which we need to irrigate. But once it’s time to farm and make hay, it needs to be dry, and we’re not right now,” he said.
With softening of the hay market and rain impacting harvest, Fawaz described his outlook for the crop as pessimistic. Local demand for alfalfa hay is down, he said, because many cattle ranchers in the region downsized their herds.
There’s also a surplus of grain-type hay in the state because some growers were uncertain about what their water availability would be, so they planted crops such as wheat and oats. Cereal-grain hay, he noted, can be used to supplement higher-quality alfalfa hay in beef cattle and dairy rations.
Despite his outlook, Fawaz said he’s “not convinced our price is going to be low the whole year.” For beef producers at least, cattle prices remain strong, he pointed out.
But even as walnuts and almonds face price challenges, Fawaz and Staas said they don’t expect too many farmers will replace their orchards with alfalfa. With water so tight, Staas said he thinks alfalfa acreage will continue to decline, and that means “we’ll have to continue to bring hay in from other states.”
Yolo County grower Tim Heidrick, who sells hay to mostly customers with cattle and horses, acknowledged the current hay market has been “the worst one we’ve seen in a couple of years.” Even so, he said his farm is getting ready to plant new alfalfa fields this year and next year because “we’re seeing that we have the water this year, and hopefully it leads to the climate going back to a wet pattern.”
He noted alfalfa has been profitable, but lack of water to irrigate the crop forced the farm in recent years to stretch supplies by planting less lucrative grass hay in older alfalfa fields. The farm has tree crops also, and with the drop in walnut and almond prices, he said “I would bet more on planting alfalfa and making a go of it than the nuts.”
He added, “I think the alfalfa hay market for the most part will be all right down the road.”