Fuel for your car, and feed for your horse. Prices are up—way up—to satisfy appetites of both vehicles and equines. Whether it’s gallons or bales, you’re paying more this year.
California’s the number one state for hay production. Yet the prices continue to escalate, and maybe the supply is shrinking. Should you worry about a hay shortage? So far, according to California resources, the answer remains, “It depends.”
Hay is big business. It is the third most valuable crop grown in the U.S., with corn first and soybeans second. Hay accounted for $12.5 billion in 2005. Texas is the second largest hay-growing state, and Idaho third.
In California, farmers grow alfalfa hay over one million acres. Half the hay growing is in the Central Valley. On the average, an acre yields 3.35 tons of hay. As in any other industry, hay suppliers profit through the balance of supply (the sellers) and demand (the buyers). When one outweighs the other, one of the parties benefits. Right now, it’s a sellers’ market for horse hay.
Hay growers are in business to profit. Like all farmers, they worry about growing conditions—natural and manmade. Harsh weather damages forage. Plants are destroyed in heavy rainstorms, and this January’s freeze damaged plants in northern and southern counties.
Alfalfa fields need irrigation, and agricultural interests compete for the water supply. Drought conditions—both locally and out-of-state water sources—reduce the amount of water for farming.
Ashley Taylor of James Taylor Ranches, in Imperial, explains that water is diverted to urban areas, and hayfields are not seeded. A good part of the water going to cities is used for watering lawns. “I hate to see the ground fallow,” she says. “We are not watering land that should be farmed, and water is wasted in the city.”
Besides weather and water, forage is vulnerable to diseases and insect pests. Hay growers must defend fields against these threats.
Land used for hay farming is also vulnerable to economic demands. Urban encroachment means more acreage for real estate development. And with the high cost of petroleum, feedstocks for biofuel production lure landowners with greater profits.
Ethanol as a gasoline additive is a growing industry, with the market expected to double. It’s a byproduct of corn, sugarcane and sweet sorghum, with most current production in the Midwest.
Demand for corn is high in 2007. Corn production is expected to grow from 2.1 billion bushels in 2006 to 3.2 billion bushels in 2007. The USDA reports that 90.5 million acres planted in corn, a 15 percent increase.
Nationwide, the potential income makes farmers consider changes in their planting. Instead of growing cotton, soybeans, rice or hay, they can switch to producing for biofuel. Conservative farmers will likely stick with what they know, uneasy with the abrupt change to an unfamiliar crop.
More ethanol plants will be built in the West, with one being planned for the Imperial Valley in 2008. One of the valley’s farmers plans to phase in sugarcane, replacing alfalfa.
“I grow from 1500-2000 acres of alfalfa,” says Steve Reeves of Brawley. “I’ll be down to no more than half of that next year.”
Animals consume the hay supply, with different types of livestock eating legume hays and grass hays. Dairy farmers are the major customers for California’s alfalfa farmers.
The dairy market has been down, and that affects the demand for alfalfa hay. The number of acres in alfalfa production has dropped. Nationwide, alfalfa seed sales are 10 percent less. Yet in the U.S., hay planting overall is up four percent, with 63.1 million acres.

Hay Is For Horses
Hay for horses is baled in what’s called “small square bales,” 14” x 18” x 38”. The Agricultural Marketing Service of the USDA published market summaries, with guidelines for alfalfa and grass hay grouping hay by quality and size. The “Alfalfa Retail/light<110 lb bales” are what horse owners typically buy, in categories of Premium, Good/Premium, and Good.
Brawley farmer Mark Osterkamp says, “The horse market doesn’t need to be worried. Farmers are quick to destroy a very good market. When they get good prices, they are quick to overplant.” With increased supply, the price tends to drop.
“Agriculture is always cyclical,” says Nichole Rothfleisch, executive director of the Imperial County Farm Bureau. “The prices are good, but the potential crops coming to the Imperial Valley impact hay growing.”
Reeves suggests, “By growing less alfalfa, the price could get stronger. Others who grow sudan (a grass planted for hay, silage and grazing) now could start planting alfalfa.”
“They’re not making as much hay, or others are buying up hay,” says Taylor. “That drives the price up.” She noted that in March premium hay was selling $30 a ton higher than last year.
“Growing alfalfa has its ups and downs,” she adds. “Farmers become unhappy because the price drops in the summer. They may not get a good price to cover the costs of fertilizer and water.”
Demand increases with less supply. The export market buys hay to ship to Japan, Korea and Taiwan. “Exporters can come in and move hay faster,” says Taylor.
Bagged hay products, are another source of forage for horses. Besides the familiar pellets and cubes, haylage is a more “haylike” alternative. Alfalfa or grass hay is compressed into bales and then sealed and wrapped in plastic. The fermented forage preserves nutrients and maintains a consistent quality and a moisture level of 40 to 60 percent. When you cut open the plastic wrap, the hay springs out, ready to feed.
Haylage is a popular feed in Europe, and is now available in the U.S. A bale of haylage can weigh from 50 pounds (medium size bale) to 90 pounds (large bale). Chaffhaye and Fiber Fresh Feeds are two brands currently available to California horses.
For the time being it appears there is no ending point for rising hay prices.