Midwest livestock farmers grapple with hay shortage as prices surge to record levels

Cattle farmers across the Midwest are desperate for hay to feed their animals, as they witness their stockpiles are running out with winter continuing unabated. Every year, cattle farmers open the gates to let their cattle graze the pastures by early May, but it might not be the case this year as an extended winter has resulted in inhibiting the growth of grass.

The prolonged winter is mounting on to the troubles with hay availability in the Midwest, as hay supply has been scarce right from last fall. The region faced drought at the end of summer in 2017, which led to a decrease in hay harvest. Ranchers from the Dakota states and Montana who usually send hay down to states like Iowa and Minnesota clutched onto their reserves this year as they realized finding hay might be a problem along the way.

This has sent hay prices rocketing over the last month, as livestock farmers are left scrambling over the remaining fodder in the market. According to the UW-Extension report, Grade 1 large round hay is selling at $123 per ton this year compared to being pegged at $80 per ton a year back. Grade 2 and Grade 3 large round hay are selling at $108 and $109 per ton this year compared to being sold at $62 and $46 per ton last year. The difference is revealing – Grade 2, and Grade 3 large round hay have gone up by 74% and 135% in price year-on-year.

The rise in prices has dealt a heavy blow on the cattle farmers who are selling off livestock, unable to break-even with their cattle farms. Missouri is seeing a lot of cattle operators taking their livestock to the market due to the critical shortage of hay. “The hay feeding season has lasted so long that those with hay are holding onto it, leaving the ‘have-not’ guys short,” said a Missouri Department of Agriculture spokesperson. “This situation could be over in a week, if we return to normal April weather.”

Every year, the prices of hay rise during the waning months of winter as hay stockpiles deplete, but then, the rates are reined in from surging continuously as farmers understand that summer would only be a few weeks away. This time around, a drought at the end of summer in 2017 combined with an apprehension of a never-ending winter is spiking prices to never-seen-before levels.

The increase in hay exports could also be a reason for the current hay deficit. The excess hay is generally exported instead of being larded, a lot of which heads down to Mexico, where premium quality alfalfa is in demand for their racehorses and dairy farms. An increasing number of Midwest farmers grow crops only for exports, as good quality hay is in demand across China, Saudi Arabia, and Japan.

The U.S. exported hay worth $356 million last year, of which 44% of the shipment went to China. If hay is not hit with the U.S.-China trade war, the export market for hay – especially alfalfa hay – is expected to climb in the next few years as Saudi Arabia is shutting down its alfalfa hay growing fields to conserve its receding water supply. Saudi Arabia runs massive dairy farms and heavily exports premium quality alfalfa hay, with its local stock notwithstanding the demand. The closure of the Saudi Arabian farms would provide an opportunity for the U.S. hay farmers to increase their market share in the Middle East.

Bottomline, as a lot of U.S. hay farmers look to export their produce, the Midwest livestock operators might have to look at different options for their hay. Canada could be a good alternative going forward, as it grows Timothy Hay, and already exports about 20% of its total produce down south into the U.S. Canada’s baled forage export industry is expanding rapidly, and its location with respect to the Midwest could provide the region easy access to affordable hay, in case similar supply shortages raise up in the future.

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