BURLEY — Steve Hines has noticed there is a lot of hay stacked in sheds and on field corners as he drives around the Magic Valley.
“A lot of hay did get fed last winter but there is still a lot around,” the University of Idaho Extension educator for Jerome County said during an ag outlook conference in December. “And there’s a lot of hay around us.”
Nationwide, hay growers had 24.3 million tons of hay in stacks on May 1. Most western states had less hay on hand in 2017, but Nevada was up slightly — 220,000 tons vs. 215,000 tons in 2016. Idaho had 510,000 tons of that, about half of the previous year but still well above the 320,000 tons on hand in May 2014.
Idaho, Oregon and Washington all planted fewer new alfalfa seedings last year, but Nevada, California and Montana all seeded more acres.
“You would think the price would go because plantings are down but there’s just a lot of carryover,” Hines said.
Dairy hay prices averaged $180 a ton between the 2011 and 2016, but has been hovering around the $140 to $150 mark. At $145 per ton, hay growers are essentially breaking even when producing dairy quality hay.
Looking forward into 2018, Hines doesn’t see much reason for optimism. Despite drought conditions in the Northern Plains last summer, much of the nation’s range and pastures were in good shape going into winter. That lowers hay demand from beef producers. Drought in the Southern Plains between 2011 and 2015 helped prop up hay prices in Idaho.
Low milk prices aren’t helping the situation. Rick Naerebout, CEO of the Idaho Dairymen’s Association, said milk prices aren’t good in any major dairy producing region around the globe.
Processors are sitting on heavy inventories of many dairy products thanks to plentiful milk supplies.
“We have to chew through those (inventories) before we will see better prices,” Naerebout said.
According to the U.S. Department of Agriculture’s November cold storage report, total cheese stocks have built to 1.259 billion pounds. Of that, American cheese accounts for 733.2 million pounds. Other cheese stocks rose nearly 12 percent, likely a result of higher mozzarella production.
Milk production is still increasing in the U.S but at a slower pace. U.S. total milk production came in at 17.279 billion pounds in November, below trade expectations of 17.391 billion pounds but still 1.05 percent ahead of last year’s pace. Milk production appears to be on pace to grow at 1.5 percent.
Idaho produced 1.173 billion pounds of milk in November, down from 1.180 billion pounds in 2016. Average per cow production was 1,955 pounds, down from 1,970 pounds in November 2016. The number of dairy cows has remained essentially flat at around 599,000 head.
California, on the other hand, has seen cow numbers fall to 1.743 million head, the lowest level since February 2005 when the herd was just 1.742 million head.
U.S. Department of Agriculture forecasters have lowered estimates for both 2017 and 2018 production citing a slower pace in growth of milk per cow. Cow numbers are also expected to increase slowly.
Still milk prices are likely to be less than cost of production for the next few quarters. Magic Valley producers need, on average, $16 per hundredweight to break even on their milk. Futures contract prices are between $13.62 and $14.70 per hundredweight for the first half of 2018. Milk prices in 2017 were flat compared to 2016.
“Dairies are frustrated,” Naerebout said. “They have had 18 to 24 months of slow equity burn on their balance sheets. There is less interest in growing the milk supply.”
Despite the opening of the Chobani yogurt plant in Twin Falls, southern Idaho continues to produce more milk than can be processed within the region. Transporting that excess milk to other regions increases their costs and lower profits.
Until dairies can return to black ink, they will continue to look for cheaper feed alternatives to hay, Hines said. That’s a large reason why corn silage acres have increased 44 percent over the last 25 years in the Magic Valley.
Still, dairies need hay. A mature dairy cow consumes three-quarters of an acre of alfalfa each year. With roughly 75 percent of the state’s dairy herd located in the Magic Valley, the region needs to grow about 326,250 acres of hay or roughly a third of the total irrigated acres in the region.
“We can’t grow all the hay here we need,” Hines said adding that each year dairies import about 100,000 acres of hay from other regions. But it’s a hard sell to keep alfalfa in the rotation with hay prices low and no real hope in sight.
“Until the dairy market comes back,” he said, “hay prices won’t.”
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