As most of the agricultural world has focused on flooded cornfields in Iowa, Ed Shaw has kept his eye on another crop that’s taking a beating.
“There’s been huge amounts of acreage taken out of forage, worldwide … and the reason for the reduction is the chasing of the biofuels in the cereals and oilseeds,” said Shaw, president of International Quality Forage in Carstairs, Alta.
“Unless the markets are willing to step up and pay competitive rates to what cereals and oilseeds are bringing, there’s going to be more and more acres taken out of forage.”
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In its June 30 acreage report, the U.S. Department of Agriculture estimates hay acres in the states at 60.4 million, down two percent from 2007. Alfalfa, the most desirable forage crop, is expected to be 20.8 million acres, down from 21.7 million in 2007.
Don Gephart, USDA hay, oats and sorghum analyst, said the 2008 hay acreage is down slightly from the five-year average.
“We were down in 2006, up a bit in 2007 and down in 2008,” said Gephart, who didn’t have the exact figure for the five-year average. Nonetheless, the 2008 forage numbers could drop further as the report did not account for the June flooding damage in the U.S. Midwest.
“Missouri, for example, is a big hay producer,” said Glenn
Friesen, business development specialist for forage with Manitoba Agriculture.
Canadian acreage is more of an unknown because Statistics Canada does not include alfalfa and other forage in its spring estimates. But Friesen expects Canadian acres have dipped, with producers growing canola or other lucrative crops on their alfalfa land.
North American producers are moving away from alfalfa, timothy and other forage crops, despite rising prices for hay.
While forage values are tough to nail down, varying widely depending on location and quality, Shaw said prices have nearly doubled over the last 12 months.
“Last year, we could buy quite a bit of alfalfa for $95, $110 per short ton ($86-$100 per tonne). Now it is $190 to $220 ($172-$200 per tonne),” said Shaw, referring to prices for alfalfa of export quality.
Prices have the potential to go higher, Shaw said, because demand for high quality alfalfa remains strong.
“The demand for high quality western Canadian product … going into the high-end horse markets, is increasing into the U.S. … and locally as well,” Shaw said. “The lower end horse markets are dropping off, because the sub-prime (mortgage meltdown) has affected a lot of people’s availability to buy.”
In international markets, Canadian producers are selling less compressed timothy hay to Japanese dairy farmers because of a higher Canadian dollar and much higher shipping costs.
“It’s a steady market, it’s not growing,” Friesen said, describing the Japanese situation. “The emerging market with potential for exponential growth is into the Middle East. And that’s primarily alfalfa.”
Producers in that oil-rich region are willing to pay a premium for high quality alfalfa for their horses, sheep and camels. But high ocean freight rates and a lack of containers mean that Canadian forage producers are losing out to alfalfa growers in Spain and other parts of Europe.
Friesen said Canadians hope to change that.
“There’s a trade mission planned, sometime in the next six months, to go over there and visit with potential buyers,” he said.
