neal.mcnamara@heraldbulletin.com
Even though he’s only 23, Matthew Chapman knows a lot about hay.
For example, he knows that hay prices have at least doubled this year, and that his hay stocks as so low, he’ll probably be sold out by Halloween.
“The price hasn’t quite tripled, but it’s getting closer all the time,” said Chapman, who operates Chapman Brothers Custom Baling in Springport in Henry County. “It’s just supply and demand. We have about one-third of the hay that we usually have.”
This has been a record year for hay prices, according to economists, with prices at least doubling because of reasons ranging from drought and ethanol production to, as Chapman said, supply and demand.
In Chapman’s case, he’s moved prices from last year’s $3 to $4 per bale, up to $6.50 to $8.50 per bale. And where last year at this time he’d have around 3,000 bales of hay going into the winter, he currently has only 750.
“I sold quite a bit throughout the summer, and that’s where a lot of it went,” he said.
According to Jim Robb, an economist with the Livestock Marketing Information Center, at the end of the 2006-’07 fiscal year, hay prices were up 11 percent, which is about $11 more per ton. This year’s prices are even 9 percent higher than the last record year for hay prices — caused by drought — in 1997-98.
And Robb doesn’t expect to see prices come down anytime soon.
“We set a record high in 2006-07, and we’re going to set another one this crop marketing year,” said Robb. “We expect hay prices will set a record of about $115 per ton. And horse and dairy-quality hay selling for well over $150 per ton.”
Robb pointed to several factors influencing the rise in prices. Increased production of ethanol has led to increased production of corn. The corn, which would’ve been used for feed, is now going toward fuel, thus an increased demand for hay.
“The U.S. is very soon going to be processing more corn in the next few years into ethanol than we feed in the livestock sector,” said Robb. “This has dramatically raised corn prices. And when you raise corn prices, you raise the price of feed.”
2007 began, in relevant history, with the lowest hay stocks on record, said Robb. Add to that a severe drought in the Southeast and parts of the Midwest, and demand goes even higher.
Sharon McNamee, who owns a horse and cattle barn on County Road 500 West in Anderson, has started having her hay shipped from Wisconsin.
“Usually we grow most of our hay, but we didn’t get enough rain this year,” said McNamee. “Our hay crop, we probably got one-third of what we usually get.”
McNamee said that Wisconsin hay is a little bit more expensive than that grown in Indiana, but the shipping costs are what’s really killing her. But the prices at auction are also high, she said. McNamee owns 30 horses, plus cattle. In the past, she said, she hasn’t had to worry about hay, since she grew it all herself.
“Hay prices right now, even at the weekly auctions, are way up,” she said.
Robb said that another factor driving up hay prices is drought. While Indiana saw little rain this past summer, areas east and south — especially in Kentucky and Tennessee — have seen even less. And horse people and cattle owners in those areas have been pulling hay from other states to satisfy their needs.
“(LMIC) expects in 2007-08 ... that national average hay prices will be at a record high,” said Robb.
Luckily, for Chapman, his hay business is just a summer side job. A full-time farmer, he does baling and hay-selling during the summer with the aid of his 17-year-old brother and his high school buddies. He won’t have any hay to sell this winter, but he’ll help out his best customers by finding hay for them elsewhere, using the Internet, he says.
“Hay is just for fun,” he said. “I don’t do that full-time. It’s just for extra summer money. And usually extra winter money too, when I have it to sell.”
Home News (ADS ONLY)
September 29, 2007
9:42 p.m.: The last straw: Drought, ethanol jack-up hay prices
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