SAUK CENTRE, Minn. -- Larry Oberhauser and Kim Robinson know a thing or three about the challenges of moving cellulose about the country.
Oberhauser, of Lake Andes, S.D., is a trader -- a "hay jockey." Robinson, of Wawanesa, Manitoba, is a hay trucker, driving for Heartland Hay Farms, near Brandon, Manitoba.
Both make a living hauling hay bales -- cellulose -- in all of their shapes and forms. It seems that every year there are parts of the Upper Great Plains where the quantity and quality are either plentiful, or pitifully short.
"You usually head for the drought, and you have your regular customers that buy alfalfa every years, but there aren't very many," Oberhauser says. "There's less and less dairymen."
The two were among the last of the dozens of truckers, to leave the town of Sauk Centre, Minn., recently, to deliver loads after abi-monthly Mid-America Hay Auction. This is the heart of Minnesota's famed dairy industry and the hay sales always are well attended.
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"There's quite a few there this year because of the drought," Oberhauser says.
There were more than 200 rigs at the sales in early January, and maybe a few less later in the month. February sales have been extra heavy, he says.
"Everybody dumped hay because they needed to to pay bills, and they wanted to sell before the load limits come on," he says.
After a recent hay sale, Oberhauser and Robinson ran into each other at a truck stop café at Truckers Inn at the intersection of Interstate 94 and U.S. Highway 71. After a hearty breakfast and a chat with a visitor, they'll head out into subzero temperatures, where they'll complete deliveries -- at an extra $3.25 per mile -- into Wisconsin and upper Minnesota.
The two say their business already has changed dramatically because of ethanol and wonder how it might change even more.
Brisk bale sales
Like everything else in agriculture these days the hay business has been .¤.¤. well, brisk.
In recent auctions, hay in the Sauk Centre auction has been running $150 to $220 per ton, a little less lately.
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"Yeah, because everybody's coming in with it," Oberhauser says.
Price varies based in part on the relative feed value that is tested for each load by the Stearns County DHIA, which is a large laboratory complex across on the north side of Interstate 94. The lab also test for moisture content and protein.
Bales come in numerous forms and qualities. Medium-sized bales, called "three-by-threes" range from 900 to 1,400 pounds, and you get about 60 to a load. The "four-by-four" bales, or the large, are about 2,000 pounds and you get 30 on a load. Big round bales range from 1,200 to 2,000 pounds each, and you get 30 to 34 on a load.
"If they're heavy, you back it down to 23 -- the finer the hay, the heavier," he says. "Usually first- and second-cutting is the lightest because it's stemmier."
Oberhauser buys hay from producers, mostly in his home area. Once every seven or eight years it gets dry there and he moves out of the region.
A week before the sale he hauls it up to the Sauk Centre area and unloads it on the ground. The past four sales, he'd had eight loads on the ground, about four high in a row at the auction. The auction takes it off the truck and puts it back on for about $50 a load.
Oberhauser brought up about 20 tons of medium-quality hay for a late January sale, he says. For this load, he mentions a subtle difference that interests the dairyman.
"This here is fourth cutting," Oberhauser says.
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He buys hay from numerous farmers and ranchers. He tries to cajole them into harvesting the hay to make the best buck for everybody, but they don't always listen. They have other priorities and their own theories.
"Some of the ranchers back home this year didn't cut their third cutting because it was too dry," he says. "They thought, 'Let it go,' because it was too short. So here comes the rain in August, and a fourth cutting that's 2-foot tall. It outgrew the third (cutting), which makes a sort of deadness to the color -- green hay with dead hay in it. The bale doesn't look pretty, and it doesn't test as well. I brought in 25 semi-loads of it, and got about $160 to $180."
Oberhauser says he has another 50 loads of some of the better.
"Now there's no third cutting in that," the hay jockey says. "We cut our third cutting at Lake Andes. I gave them $30 more a ton for it -- $130 off the field. And they got better money for that -- $200 up here," he says.
The tactic paid off. This time.
"Of course, sometimes it doesn't rain and we've wasted our time," he says.
That's the hay business.
Farming vagaries
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Oberhauser knows personally about the vagaries of farming.
He grew up near Lindsay, Neb., a little more than an hour southwest of Sioux City, Iowa. It was the home to the famed "Lindsay Zimmatic," an area of center pivots. He graduated from high school and started farming near home, but moved to the Vermillion, S.D., area in 1979 because land was cheaper than in Nebraska.
He bought 160 acres and rented another 1,300 acres. Corn and soybeans didn't have a good federal safety net program at the time.
"When it got real wet down by Vermillion for three years in a row, things went bad. Then the 1980s hit," he says, referring to land deflation. "It sucked. My bank closed its doors. Others wouldn't take me."
He got out of farming in 1986 and went into this hay business.
"I didn't have Dad or Mom to help me," Oberhauser says.
With a bit of pride, he says he emerged from farming without a foreclosure.
"I paid $1,700 an acre for the land, and if I sold it for $1,300, I could walk away."
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So he did. The final land sale was in 1994. By then, he was a bona fide hay jockey. There are several of them in the Yankton, S.D., area, he says.
Hey -- not just hay
Back home, cattle feeders typically don't like third- and fourth-cutting hay, he says.
"It's too rich for their stock cows," he says.
So it's dairy hay -- if you get it up right and if you don't let it bloom too long.
The beef guys tend to cut once a year and have plenty. When they have more than one or two cuttings, they want to sell.
"I'm buying alfalfa in the windrow," Oberhauser says. "They cut the alfalfa and I give them a bid."
Most farmer-ranchers put their hay into round bales, "but if there's plenty in the area, and you want to make money selling hay, you'd better be in big squares," Oberhauser says.
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In the past two years, Lake Andes was dry. There was no third or fourth cutting.
"They cut it twice and let it go," he says. "This year we got 9 inches of rain at the end of August. The third cutting grew to 6 inches tall and it was dead."
But the fourth cutting went to 1½ to 2 feet tall, "so in September and October, we put up about 3,000 acres," he says.
Olberhauser's 2007 as a very good year. Elsewhere, there were shortages short of hay.
"Everybody put corn and beans in -- even out in South Dakota. There's a lot of hay and grassland that got destroyed," he says.
Six or eight years ago, when South Dakota was dry, ranchers traveled to Minnesota to buy hay.
"I think we'll have another good year of selling alfalfa, but if we ever got super-dry, like we did a few years back .¤.¤. we won't be going east to get alfalfa because that's gone. If South Dakota gets real dry again, where are you going to get it?"
Maybe Kansas and Nebraska, but usually if South Dakota is dry, those states are dry, too.
Maybe.
Moving with the market
Typically, Oberhauser specializes in meeting the needs of dairy producers.
"You've got to please them. When there's a lot of hay around, they get pickier," he says.
He also deals with beef and other livestock producers across a wide geographical range. Deliveries take him across the country -- southern Illinois, Kentucky, Tennessee -- some years even Virginia and Georgia.
Moisture dictates where the hay will move.
"For now, we're going down into Iowa and the border of South Dakota and haul round bales of first-cut hay," he says. "I sold 25 loads to Nebraska, too."
People put up extra hay in South Dakota because they didn't know they'd have so much.
"We deliver to the cattle people in Iowa -- a lot of small farmers who have 4,000 to 5,000 head of fat cattle that they're feeding."
Things can change fast in the hay business.
Four or five years ago, Oberhauser was heading into Minnesota to sell hay and not getting $100 a ton.
"Then I took hay to Texas for three yeas because I knew the prices were high down there. About every eighth year, it dries up in Texas," he says.
About three or four years ago in Wisconsin, he was getting $140 a ton before Christmas. Then Canadians like Robinson came in and the market dropped to $110.
Last year, he delivered nearly 180 tons of hay to Kansas dairies.
Now, dairy producers in Minnesota are the ones needing hay. Many suffered the effects of last summer's drought.
"In Minnesota this spring, they had a late frost and froze it off -- froze off the first cutting. Then they had dry in June and July and it rained at the end of August."
All the way into southern Illinois it was dry.
Oberhauser says the math changes quickly.
"This year, I'm paying $120 (per ton) off the field, or better, now for good dairy hay," he says. "I'm coming up here and got $220 yesterday for my best hay. But I had five loads that were down to $140."
In early February, he got only about $140.
"But I think by the end of March and April, it'll come back because the hay is sorted over, or picked over. The square bales are mostly gone, and a lot of dairy people are set up for square bales -- not round bales."
A month and a half ago, Oberhauser had paid $70 per load for first-cutting grass and alfalfa and traveled to Sauk Centre, where he got $110 for it. He needed $40 a ton just to break even.
But in the third and fourth cuttings -- better dairy hay -- Oberhauser paid another $10 to $20 per ton for the hay.
"So I paid $130 per ton for the best square bales, and it still takes $40 to get up here. On my best load, I can make $70 per ton up here," he says.
Since then, the market has gone down.
Into the rest of the winter, Oberhauser plans to work in Iowa and eastern South Dakota.
"They're short," he says. "It's cold. The cattle are eating more, and there's a big demand. The price jumped $30 a ton. That makes a heckuva difference."
Oberhauser looks ahead to the summer, but he can't look too far. Last year, he didn't forward-contract any hay because he figured the price was going up.
"I wasn't going to cut my throat by contracting early," he says.
"I watch the weather -- which areas are drought. Where will they be dry all spring?" he says. "Then you know where to go with your first cutting."
