Dairy farmers explore options in feed supplies


Issue Date: August 12, 2015
By Ching Lee
The California drought, reduced corn prices, lower fuel costs and other factors affect the choices dairy farmers make when securing feed for their herds.

Limited water supplies have reduced production and acreage of California-grown feed crops, but experts say lower corn prices and greater abundance of other feed ingredients have allowed dairy farmers options for feeding their animals.

While dairy farmers were grappling with high forage prices last year, Brad Kloss, a dairy nutritionist and management consultant in Visalia, said alfalfa hay is "more reasonably priced" this year. Prime-quality hay remains very expensive and limited in supply, he noted, but what's available on the market today will work for lactating cows.

Because of lower fuel prices this year, Kloss said some of his clients are buying alfalfa from states such as Utah and Idaho without incurring high freight charges. The stronger dollar has also dampened hay export prospects, with more Southern California hay looking for local outlets, he added.

Dairy farmers who grow some of their own feed but are short on water are planting more milo, or grain sorghum, instead of corn silage because milo uses less water, he said. Although milo is a lesser-quality feed for milking cows, Kloss said dairy farmers have been able to feed more alfalfa hay and grain-corn to offset some of the nutritional deficits of milo, which lacks protein and starch.

Corn prices continue to drop, though not too many dairy farmers are locking in their contract prices yet, as they may sense prices could dip further, said Joel Karlin, commodity manager and market analyst for Western Milling in Goshen.

"They realize corn prices are usually lowest at the beginning of October, which coincides with harvest," he said.

But Karlin said it's still early to tell what size the U.S. corn crop will be. At an estimated 88.9 million acres, U.S. corn plantings are at their lowest since 2010, according to the U.S. Department of Agriculture.

Torrential rainfall this season in eastern Corn Belt states could result in major crop losses, though Karlin noted there is still potential for record yields in almost all states west of the Mississippi that did not experience the deluge.

"The question is if the really good crop prospects from the West are going to be able to offset what should be reduced bushels in the eastern area," he said, adding that while U.S. farmers likely will not produce record yields as they did last year, "we'll still have a very good corn crop."

Lower demand for corn and soybeans, particularly in foreign markets, is helping to keep prices down, with the strength of the dollar crimping U.S. export capabilities, Karlin said. Falling gasoline prices, which put pressure on ethanol values, mean less demand for corn to produce the renewable fuel. Low milk prices and a drop in cattle and hog prices also could reduce demand for feed. In addition, rain downgraded a large portion of the U.S. wheat crop to feed category, and that will compete with corn for space in the feed ration.

Even though the market for high-quality hay continues to be tight, Karlin said dairies bought ample amounts of lower-grade hay last year and are still using those supplies. California farmers are expected to harvest another decent almond crop this year, he noted, which means there will be plentiful almond hulls for feed. While state cotton acreage continues to decline, which means there will be less local supply of cottonseed—another important dairy feed ingredient—Karlin said dairy farmers increasingly buy their cottonseed from big cotton-producing regions such as Texas and the Mississippi Delta.

With lower milk prices this year, Kloss said dairy farmers may scale back somewhat on high-quality, expensive feeds, but they remain cautious about trying to maintain milk production.

"I always tell clients, 'You can't expense your way out of low milk prices,'" he said. "If they cut (feed) costs so significantly that they reduce their milk production, once milk prices turn around, they won't be able to recover the milk as quickly."

Because the price of alfalfa hay and almond hulls has dropped, Kloss said there is less interest in alternative feeds such as pomace and other vegetable byproducts that don't have as much nutrient value. Carrots, for example, are "not a very good buy right now" when almond hulls are priced much lower on a dry-matter basis, he noted.

The biggest challenge for dairy farmers, Kloss said, is to grow a good-enough crop that still allows them to produce abundant milk with the limited water they have. He noted most producers he works with have opted to grow lower-quality forage in favor of maximizing their ground to gain tonnage, simply because they need enough crop to feed their animals. While that means having to turn to outside feed sources to fill any nutrient gaps left by those forages, he said other feeds "are a lot less expensive than they were in years past."

Some farmers are taking a different approach, according to Wiebren Jonkman, who runs a custom farming and harvesting operation in Merced County. He said those who are short on water are definitely seeing lower corn yields, with some fields down by as much as 10 tons per acre. But he said his clients are planting less in order to make quality.

"What you see a lot are vacant fields, because if you don't have enough water, you're better off leaving one field out and making sure you have a good crop on all the others," he said.

California corn acreage fell from 520,000 in 2014 to 430,000 this year, according to USDA. Total state hay acreage also dropped, from 1.38 million in 2014 to 1.28 million in 2015.

Dairy farmers who don't produce enough to meet their feeding needs are also having to go farther to find additional feed, Jonkman said, noting that with limited water, more row-crop ground in the Central Valley is devoted to higher-value tomatoes rather than corn silage.

With more land sitting idle, Jonkman said he and other silage contractors are feeling the impacts, noting that his business has seen a 10 percent decline in the acreage it farms and harvests.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.