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Published September 06, 2011, 03:15 AM

Small Colorado hay crop good news for producers

GRAND JUNCTION, Colo. — While western Colorado has enjoyed a wetter-than-normal year thus far, local farmers and ranchers are feeling the effects of a prolonged drought that continues to plague southeastern Colorado, the Midwest and the southern Plains.

By: Mike Wiggins, Associated Press

GRAND JUNCTION, Colo. — While western Colorado has enjoyed a wetter-than-normal year thus far, local farmers and ranchers are feeling the effects of a prolonged drought that continues to plague southeastern Colorado, the Midwest and the southern Plains.

What's expected to be the smallest hay crop in more than a century has boosted the demand for — and therefore the price of — hay, creating a good-news-bad-news situation that touches everyone from hay producers and cattle growers to grocery shoppers when they pick up a gallon of milk or pint of ice cream.

"The winners are the people providing feed. It's a very strong demand, and those crop farmers are going to make very good money. They're going to have a very good year on the balance sheet. And the livestock folks are just going to hold their breath and wait it out," said Stephen Koontz, an associate professor and agriculture economist at Colorado State University in Fort Collins.

In addition to the drought, Koontz said, high corn prices also are driving the hay market, creating a double whammy for ranchers who need something to feed their cattle.

The price of alfalfa hay in Colorado jumped from $130 a ton in January to $180 in July, the latest month for which data were available, according to the U.S. Department of Agriculture. Alfalfa hay was selling for $125 a ton at this time last year.

Those prices have worked to the benefit of Fruita farmer Dean Byers, who owns four acres on 20 Road and leases or sharecrops another 600 acres. Two-thirds of that land is in hay.

Byers estimated he is being paid $50 a ton more than in previous years, an increase in profit that will allow him to purchase better farming equipment. He said about 75 percent of the hay he bales is shipped to Texas.

At Gary and Christi Flynn's 800-acre farm on 18 Road, the phone rings constantly with calls from livestock owners in search of feed.

"We're seeing a huge demand for hay right now," said Christi Flynn, who said she and her husband sell about half of the 200 acres of hay they grow and keep the other half to feed their cattle. "All the out-of-staters are calling right now."

The profit going to hay growers could be enough that farmers who otherwise hang onto some hay as an insurance policy against a tough winter may instead sell it, said Rod Sharp, an agriculture economist with the CSU Extension Office in Grand Junction.

But, as Byers noted, "When somebody is prospering, somebody is losing."

And dairy farmers and beef producers fall into that latter category.

Experts say hay prices are cutting into revenue generated by an otherwise solid cattle market. Some ranchers are burning $4 a gallon diesel to haul their cattle elsewhere in search of hay.

Graff Dairy co-owner Dave Nichols said he has had to bump up the price of his milk, ice cream and other products by 15 cents the last few months to compensate for an increase in the cost of milk, which was triggered by higher hay pries.

Graff Dairy, 581 29 Road, buys its milk, generated from a herd of 120 cows, from Loma dairy farmer Robert Raymond.

"As long as that continues (high hay prices), you're going to see rises in the finished product," Nichols said.

Koontz said the price hike will force hay consumers to shop harder for a deal.

"Not buying where it was the easiest to buy in the past is going to become a way of life," he said.

Koontz said he doesn't foresee a break from high prices anytime soon — at least, not until long, persistent rains fall over Texas.

"They need more than one hurricane to seriously wet down the place," he said. "They are in very bad shape. It's a matter of what kind of forage do they have come back next year."

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