Bottom-line boost: Oil boom, exports and drought helping Montana hay growers
By PAMELA J. PODGER of the Missoulian
Stopping his tractor to chat, Kale Gardner said his custom-haying operation around Arlee has fared well, given this year's unprecedented hay prices.
He'll start cutting his second harvest of alfalfa-grass hay this week and, even before it's baled, Gardner has it presold at $140 a ton.
Hay prices, which have risen gradually in the past, have soared recently and helped growers' bottom line after years of selling small bales for a few dollars each.
The high price hay is fetching is due to a combination of factors across the nation, including foreign exports, drought and farmers switching their acreage from hay to higher-value wheat, corn and other grains.
The chief culprit behind the increase is oil prices, which have risen 65 percent in just a year.
In June reports for this year, the national average price for baled alfalfa has climbed to $177 a ton, according to U.S. Department of Agriculture figures.
"Every record for hay prices has been broken over the last 1 1/2 years at both national and state levels," said Matthew Diersen, an agricultural economist at South Dakota State University.
He said he expected prices to remain high for a year, or possibly two, before there is a reprieve.
"What is influencing the high prices in Montana is it is closest to Washington, Oregon and California, where demand is great," he said.
Gardner said he received many inquiries on a newspaper ad to sell hay from his first cutting in early July.
"I had calls in from Spokane, Coeur d'Alene (Idaho) and other places. They said at all the spots they usually got hay, it was all getting shipped overseas to China," Gardner said.
While the cost of hay is determined locally and regionally, it's telling to look at the national picture. According to USDA statistics, hay prices have increased
TOM BAUER/Missoulian Shelly and Nick Belcourt weigh a bale of hay last week in one of their fields north of Arlee. Like most growers, the Belcourts are seeing record prices for their hay, but their production costs, including diesel fuel and fertilizer,
57 percent from a national average of about $85 a ton in 2000 to $133 a ton last year.
Diersen said the
2.65 million acres of hay planted in June in Montana is essentially the same as last year.
"Normally, that would mean prices would go down. But the impact from the neighboring states and national demand is driving the price premium," Diersen said.
Cattle ranchers, hay growers and livestock sales barns said they expect more people will sell their animals to cut their hay consumption.
Regional prices for hay are up, too.
"Last year this time, the big rounds were going for $80 a ton, and this year they are $100 to $120 ton," said Sean Mulla, an agricultural extension agent in Arlee.
Small rectangular bales of grass-alfalfa mix are currently about $10 each, while in previous years those bales cost about $6 to $7, he added.
For growers, that means the sweet smell of hay just got sweeter. Of course, they face rising production costs, including diesel fuel, fertilizer and other expenses.
Bob Peterson, who sells about half of the alfalfa hay he grows on about 400 acres in Frenchtown, said this year has been exceptional.
"The prices, they are pretty damn high. They are higher than I've ever seen them, and I've been doing this for 40 years," Peterson said. "There is more livestock and less acres of hay. Where there used to be hay, there is now houses."
Cattle rancher Ray Hitchcock has been growing hay for himself and others in the Arlee area for 18 years.
He said he purchased hay from eastern Montana last year and may do so again this year for his beef cattle.
"Starting last year, the prices shot way up. I think a lot of it was because of supply and demand, then the fuel prices," Hitchcock said. "I think a lot of the hay was shipped out of the area. I'll probably sell some of my older cows. I have to see if there will be any hay available and what my alternatives will be."
Shelly and Nick Belcourt have been growing hay for about 10 years on about 250 acres of land they own or lease.
Shelly Belcourt said she expects to sell their baled alfalfa-grass hay in the middle of the regional price range of $120 to $200 a ton.
"This is the highest I've ever seen the market," she said.
But their growing costs have risen. "You not only use diesel fuel for your equipment, but also for fertilizer. It's kind of a double whammy," she said.
Tonda Moon, a weed specialist at the Montana Department of Agriculture, said growers get a premium for growing noxious weed- and seed-free hay.
She said backcountry horsemen riding on public lands must use the certified weed-free hay as well as pellets and grain.
While she doesn't have official state numbers on the prices, Moon said her personal experience is the certified weed-free costs $10 to $25 a ton more.
"There has been a gradual increase in the number of producers," Moon said. "We're seen a more rapid increase in volunteer users like small landowners with a couple of horses."
Gardner, who has grown alfalfa-grass mix hay on about 200 acres of land, has done custom work for owners over the past three or four years.
He splits the hay with the land owner and typically sells his share.
With demand from overseas and neighboring states, he expects Montana hay prices will remain high.
"A lot of people are starting to sell their horses because of the high cost of hay and feed," he said. "People just can't afford it no more."
Reporter Pamela J. Podger can be reached at 523-5241 or at pamela.podger@missoulian.com.
