Shortage sparks new phenomenon: hay sales

• Mitchell hay auction

Auctioneer Lanning Edwards takes bids on a load of hay Tuesday at Mitchell Livestock Auction in Mitchell as checking clerk Trish Weber takes down bids. Chris Huber/Republic

Talk about it

MITCHELL, S.D. -- The auction drew more than 50 farmers, standing outside in the cold, hunkered down in their Carhartt jackets, their caps pulled low.

They weren’t there to offer a price for cattle, however. They came to Mitchell Livestock Auction on Tuesday to bid on hay.

That’s right, hay.

The dry summer and fall of 2012 left farmers and ranchers short of hay and other feed, so now they are buying it at a faster rate than many longtime farmers and ranchers can ever recall.

Mitchell Livestock Auction co-owner Don Stange said high-quality alfalfa that is fed to dairy cattle to spur milk production is bringing more than $300 per ton.

“There’s just a lot of shortage of feed,” Stange said.

Doug Van Gorp of Stickney paid $205 per ton for some grass hay at the Tuesday auction. Van Gorp said he bought it for a friend in Dell Rapids.

Van Gorp has farmed for 35 years, and said he has never seen such conditions. He said producers will have to continue to buy hay and other feed unless things change.

“It’ll keep up until we get some rain or more feed,” he said.

Larry Wagner, a South Dakota State University Extension agronomy crops field specialist, said feed supplies are down across the state, and online reports reveal hay and feed shortages across the nation. Predictably, prices are rising sharply.

A U.S. Department of Agriculture report issued Friday said prime alfalfa brings up to $280 per ton, while grass hay can sell for up to $200 per ton. That’s much higher than hay sold for in 2012, with some farmers reporting paying double what they did a year ago.

The USDA reported that production of all dry hay in 2012 was down 9 percent to 120 million tons, the lowest production level since 1964. South Dakota producers saw a 53 percent drop, as 4 million tons of hay was produced in 2012.

Wagner, who is based at the Sioux Falls Regional Extension Center, said farmers and ranchers are forced to be “creative as they can be” in the current situation.

He said the reduction in acres for hay created a thin supply of the feed. When rain didn’t fall in many areas last year, producers ran short.

“Last year we just didn’t get the production, plus, pastures are in tough shape,” Wagner said.

He said the auctions have popped up as a way for people with hay to sell -- often from people who received enough rain and grew plenty of hay -- to find buyers.

“That’s kind of the way it’s going right now,” Wagner said. “It’s really just a more organized way of doing what they used to be doing. People have always been buying and selling hay among themselves.

“I think there’s really concern about the supply,” he added. “You’ll see that happen a little bit more.”

First sales of their kind

Mitchell Livestock Auction had never held hay auctions before this year, but now it will continue to hold them at 1 p.m. Tuesdays all year long, said Trish Weber, the checking clerk.

Alfalfa, the most desired form of hay, with its delicate purple flowers amid the deep green plant, brings the highest price. It is the most nutritious hay and is also considered tasty by cattle and helps dairy cattle produce more milk.

Wagner said dairy farmers are more willing to spend money on higher-priced hay, since they see an immediate return on it by selling their milk.

Alfalfa can be harvested two or three times a year, but many producers only had two cuttings of it in 2012.

At Mitchell Livestock, one producer’s 3.12 tons of alfalfa sold Tuesday for $262.50 per ton, a return of $819 for the seller, Weber said.

Grass hay, which is less desirable, brings $170 to $210 per ton, she said.

As many as 100 tons of hay is sold each week. Most is in large round bales, which can weigh half a ton or more. Smaller square bales weighing around 100 pounds are also sold. Those bales sell for $5 to $7 apiece. In addition to hay, bales of cornstalks and straw are also auctioned off.

Stange laughed when he discussed cornstalks bringing $105 per ton at the auction.

Cornstalks were once considered trash, then labeled as residue, Wagner said. Now, it’s become feed.

“We did everything trying to get rid of it, and now we see the value of it,” he said.

The same goes for wheat straw, which for decades was used as bedding for cattle. Now it is fed to them, usually after it is ground up.

Wagner said salt and other supplements are added to the hay and other feed to improve it. Some mix molasses in it, and that is now sold at ag stores.

‘I used to sell hay’

Tuesday, auctioneer Lanning Edwards started things off with a rapid-fire recitation, urging higher and higher bids.

Edwards pointed to bidders as they caught his eye, and Preston Burma assisted him, moving slowly while keeping his eyes peeled for bids.

As Edwards asked for bids over $200 per ton for hay, the crowd responded, some signaling a bid, others shaking their heads at the price, and a few cracking jokes.

“Is that stacked in the barn?” one man shouted out, drawing laughter.

That was between the buyer and the seller, Edwards replied without missing a beat in his staccato call.

Mitchell Livestock Auction charges $4 per ton for the sale. The hay is delivered free within 20 miles, but buyers pay $4 per mile after that limit is reached.

Doug Werning of Milltown has attended several of the auctions.

“It was such a short hay crop. We didn’t get any rain,” Werning said as he awaited the start of the auction Tuesday. “I used to sell hay; now I’m buying it.”

He said while the lack of rain was a primary cause for the huge drop in hay production, another factor is high prices for grain, especially corn. Farmers are planting crops in land that was long set aside for hay, or used as pasture, Werning said.

He didn’t buy any of the hay at the auction, and noted that some of it was “slough hay,” which is not as nutritious as alfalfa hay, which brings far more.

Cattle price impact

With cattle prices also at or near record level, there’s a lot of incentive to fatten the animals up before sending them to market.

“Everybody wants to hold on to their cattle,” he said. “They know they’re valuable.”

The demand for hay has started a series of auctions across the state, and websites offering hay for sale, with names like southdakotahay.com or hayexchange.com, list tons and tons of hay that is on the market.

Ben Ymker, of Corsica, is an independent hay order buyer in addition to operating a farm. He has done business with Dakota Hay Auction, which is owned by Willie Groeneweg and has been in business since 2010. Its auctions are promoted on dakotahayauction.com.

“It’s short. People need feed,” Ymker said. “A lot of people are short.”

Ymker said unless farmers and ranchers devote more land to growing hay or for pasture, feed prices will continue to rise in the future.

Both Wagner and Stange said they doubt that will happen. With corn prices at all-time highs, farmers and ranchers will still plant that money-making crop, and then spend cash on hay, they said.

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