Apr 27 2011
Factors such as foreign markets, ethanol production drive up prices.
Another hit in the pocketbook is the last thing struggling dairy farmers need.
Unfortunately, that's the current reality of feeding any animal that eats hay and grain. Hay prices are reaching unprecedented heights, and other feeds aren't far behind.
According to the U.S. Department of Agriculture, supreme quality alfalfa hay, the hay that's fed to dairy cows which are being milked, is about $345 a ton in the Merced area. Last year, it was about $190 a ton.
"Corn is more than $300 a ton, soybeans almost $400 a ton and cottonseed is out of sight," said Michael Marsh, chief executive officer of Western United Dairymen, an organization that works to promote legislation and programs for the industry.
Because cottonseed is priced so high, Marsh said some growers who had planted alfalfa in the past are turning to cotton, which gives them two crops -- cotton for lint and the seed for feed.
One of the driving forces of the cost of feed is the use of corn for ethanol, Marsh said. But it's not the only factor in feed prices. "Appetite from foreign competition for our feed is driving the price up, too," he said.
China is importing corn at a record pace, along with Saudi Arabia, where dairies are springing up everywhere.
Although feed prices continue to rise, the price paid to dairy farmers has also gone up. It's above $17 a hundredweight, compared to less than $10 a year ago.
"There's a good improvement compared to what we were at in 2010," Marsh said. "But the farmer has no ability to increase his price -- it's not set by the farmers."
Marsh said about three weeks ago Sen. Dianne Feinstein, D-Calif., introduced a bill in the Senate that would eliminate ethanol subsidies, and also reduce the tariff on imported ethanol from 54 cents a gallon to 45 cents.
"We have such a huge budget deficit, and it's hard to justify giving $6 to $8 billion to the oil companies," Marsh said. "Especially when they're experiencing record profits."
Although dairy farmers are scrambling to substitute cheaper feeds for the more expensive ones, cutting back too steeply on rations causes milk production to go down.
"Dairy farmers are in a hole, and the feed prices keep that hole going," Marsh said.