Export Market Driving up Hay Demand, Price in West

Making quality hay is becoming an even bigger priority for Idaho farmer Kevin Johns.

“We’ve always grown a little bit of hay, but because of the wheat markets we’ve decided to go into hay a little more,” Johns says.

Over the last three years he’s diversified and ramped up production to cash in on a growing market.

“I think that’s how you’re going to survive,” Johns says.

The Driscoll Brothers are doing the same.

“This year we’re growing 3,500 acres from the previous 1,100 acres, so we put in a lot of hay this year,” says Logan Driscoll, hay manager for Driscoll Brothers near Aberdeen, Idaho.

The potential to make quality hay this year is promising.

“The hay crops been really good. Got a little bit of rain on the first crop, and that hurt us a little bit, but the hay crop is doing well,” says Brock Driscoll.

It’s Driscoll and other hay producers in the West cashing in on a demand boom for U.S. hay.

RaboBank says seven states produce 18 percent of the U.S. hay supply, all located in the West. Those seven states account for nearly 90 percent of U.S. hay exports.

But the largest hay produce, California, is seeing acreage disappear, declining 32 percent in less than 10 years.

“California, has suffered severally from drought over last few years and they’ve seen increased competition for water from permanent crops such as nuts or tree fruit or vines,” James Williamson, dairy analyst, RaboResearch Food and & Agribusiness group says.

While Williamson thinks it’s unlikely those acres will ever recover, its Idaho producer Brock Driscoll blazing the path in finding new demand for hay.

“We just started a new venture on that marketing into china, through a hay press that we’ve gone into partners with some people from china so we planted some extra hay this year,” Brock Driscoll says.

RaboBank says as China’s middle class grows a larger appetite for protein, the country can’t produce enough hay domestically.

“China is already a big buyer and I believe they will continue to be a large buyer going forward. Last year they imported about 1.2-1.3 million tons of hay,” Williamson says.

But as far as future growth and potential, that’s in the Middle East.

“Saudi Arabia has really got that one in the bag. They need hay to meet their demand to meet they’re production so they’re going to continue to import hay,” Williamson says.

He says the Saudi Arabia government is restricting domestic producers from growing hay due to water shortages.

“Two years ago, Saudi Arabia was importing close to zero hay from the U.S. and last year they imported nearly 300,000 tons. That could increase up to 800,000 tons by 2019,” Williamson says.

It’s that growing appetite bringing opportunities for more than just the Driscolls.

“It still follows the American market a little bit, but it puts more pressure on it so it should increase the hay producer what he gets out of that,” Williamson says.

Good news for hay producers, but bad news for feed buyers.

“These dairies in the west are having to pay more for feed to complete with foreign buyers. Foreign buyers want the same high quality hay that domestic dairies want and use to maintain milk production,” Williamson adds.

Williamson says with more demand coming online each year, the upside potential for hay prices and producers is clear.