California alfalfa hay growers riding 2007 price, yield crests

It will be a record year for California alfalfa hay prices and likely yields when this season is put in the record books, predicts Philip Bowles, chairman of the California Alfalfa and Forage Association (CAFA).

The Los Banos, Calif., producer and president of Bowles Farming Co., calls current hay prices “pretty staggering.” Adding icing to the alfalfa cake is the fact pests have been nonexistent and mild weather has produced outstanding yields.

Recent USDA Market News data are still showing supreme and premium hay prices hovering in the $200 range in many markets. In the heart of the California dairy country in the central and southern San Joaquin Valley, fair quality alfalfa is averaging about $180 per ton, $50 per ton above last year's price at the same time.

Rising milk prices are one reason for good hay prices and secondly, all dairy rations are priced higher than a year ago, fueled partly by the ethanol-driven corn prices.

The fifth generation family member to farm at Bowles says it is no accident alfalfa is prospering.

Alfalfa for many growers has emerged from a perceived low value rotation crop maybe undeserving of close management. No more, says Bowles. “Alfalfa can be farmed as intensively as vegetables, wine grapes or any other high value California crop to produce a high quality, uniform product that is in demand.”

“People are starting to realize it is not a crop you grow for fun or something you do for your brother-in-law. What you do in the field can make a real difference between a good and bad year economically.”

Alfalfa is the cornerstone of a growing dairy forage production acreage ranging from silage corn to green chopped wheat to crops like sudangrass. Almonds, pistachios, and wine grapes are often touted as alternatives to row crops like cotton. Now alfalfa and forages are on the same alternative list due to the income potential they offer.

“There is a reason they call alfalfa the queen of forages. God never made a better feed for lactating dairy animals. Alfalfa provides all the things necessary to keep a dairy animal healthy and making milk for a long time,” said the man who farms 6,000 acres of alfalfa as part of the Bowles 12,000-acre operation.

He admits alfalfa has been the benefactor of a growing California dairy industry. “What drives hay prices are milk prices.”

“There are one-third more dairy cows in the state than 12 years ago. While I think the growth has stopped in the dairy industry, it has stopped at a very nice level.”

According to USDA/NASS, there are about 1.8 million dairy cows in the state in about 2,000 dairies averaging almost 900 cows per dairy.

“Alfalfa hay buyers and dairymen are very sophisticated today. Dairymen are highly educated, talking to animal nutritionists all the time. Dairying is a business on a tight margin, and dairymen know what kind of alfalfa and other rations they want to economically produce milk to stay in business.”

However, particular alfalfa hay buyers and dairymen are good for alfalfa producers. “Dairies are demanding good quality and that is driving alfalfa growers to create higher quality for a demanding market.”

He compared this to the California cotton industry, which produces niche (Acala, Pima) cottons for textile mills and receives premium prices for it. “California cotton growers do not grow cotton to put in a government loan program. It is grown for specific markets developed by the California cotton industry to meet the needs of their customers, the textile industry.”

“This is the story of all California agriculture; constantly striving for improvement. It is no different with alfalfa.”

The Los Banos area is considered one of the best places in California, if not the world, to grow alfalfa, and Bowles has maximized that for decades. However, 15 years ago there was too much hay around for the local market.

“We started exporting hay to get the prices we needed. But that has all changed. I can now make more money on hay shipped across the street than shipping it halfway around the world.”

There are more acres of alfalfa in California, 1.1 million, than any other crop in the state. It displaced cotton, which has fallen on hard times due to low prices compared to more profitable alternative crops, including alfalfa.

However, unlike many other commodity crops, alfalfa is a marketing enigma. There are no futures or options markets from which to discover price. It cannot be forward contracted, although it is not uncommon for dairies or hay brokers to make long-term agreements to buy hay from specific producers.

“Alfalfa prices are reported as a result of thousands of transactions between two people, a buyer and a seller, who may not necessarily tell the truth, especially at the coffee shop,” said Bowles. “It is also often difficult to get good marketing information because markets tend to be very localized.”

Seth Hoyt, senior economist, USDA/NASS California field office, does a “wonderful job” reporting on the hay markets and trends in California, said Bowles, “but in reality we do not always know what is going on in the marketplace.”

Part of that is the localization of alfalfa markets created by the dairy animals. “Animals get used to hay from different areas. Alfalfa hay graded by objective standards should feed the same, regardless of where it is from. However, it doesn't always.

“That is one of the mysteries of this business - why one grower's hay feeds and milks and another load of hay does not, even though they test the same. Cows, get used to certain hay from certain areas and will not eat other hay as well.”

Hay testing for quality has been one of the long-running mysteries of the alfalfa business. “Testing standards are much better than they were 25 years ago because we have a better understanding of the biology of the cow and are able to do bioassays to more accurately predict how a cow will respond to feed and correlate that to hay testing.”

Nevertheless, there is more to be done in that area. CAFA and Dan Putnam, University of California, Davis, forage specialist, are involved in a new national organization attempting to standardize hay testing nationally.

Bowles believes alfalfa has a long and solid future ahead in California agriculture.

“I do not think you will see a big increase in alfalfa acreage because there are only certain areas where soil types and other factors are suitable for quality alfalfa,” he said.

“Alfalfa is not the type of crop you can jump into and jump out. Unlike other areas of the country where alfalfa or hay are often tied to on-farm livestock, it is a commercial crop in California. It takes a commitment over a period of years, and it takes specialized equipment to farm it.”

It also requires a reliable water supply, which is becoming more expensive and often elusive for farmers with constant environmental challenges.

However, in this era of water uncertainty, alfalfa is the only crop that offers a unique drought/no-drought, off/on switch. Everyone knows you can stop irrigating alfalfa in the summer, and it will not die off. As California producers continue to face water uncertainty, that may make alfalfa a more attractive cropping alternative when water is in constant doubt.

It is not uncommon for growers, especially in the desert, to harvest for dairy quality hay in the spring and cut the water in the summer to save water or because prices are too low to justify harvest. This has been done for years.

A grower cannot cut the water on an orchard or a tomato crop like alfalfa, said Bowles, and that may make the forage crop a more economically attractive alternative.

This summer there have been reports of growers not irrigating to save water for other crops, or selling the water earmarked for summer hay production. Water auctions for a limited supply of surplus water have brought unbelievable prices this year.

“If you are looking at selling water for $250 or cutting summer hay for $150, water may bring more money,” said Bowles.

He said alfalfa is a good crop in this era of reduced pesticide use on crops like cotton or tomatoes. “Alfalfa is a good insectary for lace wing and other beneficials.”

Entomologists like University of California IPM Specialist Pete Goodell and others have long advocated leaving uncut strips of alfalfa to keep lygus in the alfalfa and out of the cotton, where it can cause major damage.

“That concept has been around for years. It is amazing to see how many growers are now adopting it.”

Alfalfa's rise to great economic prominence is attracting new technology, specifically herbicide-resistant alfalfa.

However, this technology is now on hold because a Northern California judge earlier this year ruled the federal government did not do an environmental impact statement before releasing the technology. A radical organic food group filed the lawsuit because transgenic pollen would contaminate organic alfalfa. The judge stopped all herbicide-resistant alfalfa seed sales, but allowed herbicide-resistant alfalfa already planted to be grown and harvested.

“It would be a terrible shame if Roundup Ready alfalfa is not put back on the market. If the government needs to do an environmental impact statement, let's get on with it and get the technology back on the market.”

Bowles is optimistic it will return since there is a huge market for the technology nationwide. Before sales were started, Monsanto and others were predicting Roundup Ready alfalfa would eventually account for 90 percent of California alfalfa.

Bowles planted several fields and he said stands are “beautiful with terrific yields.”

“There is no weed competition with the transgenic alfalfa, and we did not have to use some of the standard herbicides, which can stunt the early growth of a new stand. “We got none of that with Roundup-resistant alfalfa.”

He also believes drip irrigation has a place in alfalfa production. Growers in other parts of the country are trying it. He has other crops that are drip irrigated on Bowles Farming, but he has not tried alfalfa.

“In theory, alfalfa should respond well constantly irrigated with drip,” he said. However, since it is new territory it would take a large financial commitment to try it. “You are looking at $1,500 per acre for the drip system, and $700 to establish a stand of alfalfa.” Bowles is not ready to take that gamble first.

Hybrid alfalfa is another innovation. “We have seen hybrid vigor in the Hazera cotton, and we are hoping to see that in alfalfa. Of course the cost of hybrid crops is a concern.” Bowles has one field of hybrid alfalfa.

Alfalfa breeders have done a good job of breeding varieties for pest resistance, but Bowles is disappointed that there have not been yield increases like farmers have seen in new cotton and processing tomato varieties.

“We are on a yield plateau on alfalfa and that concerns me.”

Bowles is the newly-elected chairman of CAFA. He is pleased with the growth of the 400-member volunteer organization formed to raise the awareness and political presence of alfalfa in California. CAFA works on many issues, from assisting in getting products registered for use on alfalfa to dealing with hay transportation issues like the new rules the Department of Transportation wants to impose on hay haulers.

“They want strapping lengthwise on hay loads in addition to the over the trailer strapping now used. We have shipped more than a million tons of hay from here and have never lost a bale on the highway,” said Bowles. The feds want to revise strapping laws to deal with bales tumbling on the roadways in the Midwest. “One rule does not fit all, we remind them.

“Our commercial hay haulers do a good job of securing loads in California. What the feds are proposing is unnecessary in California, and CAFA is working to gain an exemption for California.”

CAFA is also working on establishing a federal alfalfa research presence in the West.

CAFA has taken a pivotal role in representing California alfalfa, a role Bowles expects to grow not only in his home state, but on a national level as well.

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