High feed costs may now be added to high energy and fuel costs on the list of items putting the financial pinch on Washington’s dairy farmers this summer. A 25-year low for snow packs and reservoir levels is leaving little water for irrigation of feed and other crops throughout the state.
Alfalfa is the most significant type of dairy hay and, according to the 1998 USDA Farm and Ranch Irrigation Survey, used 20.6 percent of the available irrigation water in Washington, second only to orchards. Less water affects both hay yield and quality.
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Area farmers and officials are reluctant to make predictions, but hay prices are already up 10-25 percent over last year and could easily go higher. Moses Lake-based USDA market reporter Vernon Larson said: “It’s a very unstable market. We’re dealing with many more variables this year than we’re accustomed to.” Drought is the biggest factor, because it’s affecting the entire West Coast’s feed supply and demand. Cool spring weather has also put the hay crop 2-3 weeks behind in production, meaning hay producers could lose a cutting. Dry pastures, high beef prices and uncertain export markets are also playing into the uncertainty. “I’d say there are `tight supplies,’ but there’s no way I’d call it beyond that. It is going to be tough on a lot of people,” Larson said.
Other factors that may reduce the region’s hay supply include a federal decision to shut off water to 170,000 acres in Oregon’s Klamath Basin, and Bonneville Power Administration’s payment to farmers in the Columbia and Snake River basins for $330 an acre to not irrigate, taking 90,000 acres out of production – though it’s unclear how much in either case is hay. The Washington State Dept. of Agriculture has reported that about half the farmers in the grain and hay growing Palouse have indicated that they will reduce production. Even Idaho, which usually ships hay to Washington farmers, may be looking to import some this year instead.
According to USDA’s Hay, Feed & Seed report, premium bales for export are currently selling for $135 per ton, while dairy hay is currently selling for $120-$130 per ton. Local buyers are resisting the higher prices, but buyers from Oregon, Idaho and Canada are showing interest.
Many dairy farmers have locked in hay prices through forward contracting, so their prices shouldn’t go up, as long as hay remains available. However, hay contracts can be broken due to an “act of God,” which would be the case if hay is unavailable due to drought conditions.
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By GlobalDataKeith Rupprecht, hay grower and president of the Washington State Hay Growers Association, said the yield was off early in the first cutting, but it’s coming up. “There’s not going to be the supply there has been in the past; there’s hardly any carryover from last year. We’ll know a lot more in terms of supply and demand by July 1. The first cutting will be sold and the second cutting will be coming off by then. www.cowtv.com
