Hay farmers beware: Rising prices may mean more scams

By SHANNON DININNY
Associated Press Writer

November 29, 2007  

YAKIMA , Wash. (AP) -- It's hard for Les Wentworth to forget more than $50,000.

That's what a dairy farmer paid in cash for a load of Wentworth's premium Eastern Washington alfalfa hay. A truck driver they both knew offered to haul the hay to the dairy farm west of Washington 's Cascade Range - then sold it to someone else and pocketed the money he collected.

It was the late 1980s, and hay prices were booming. But Wentworth, after returning the dairy farmer's payment, got only 21 cents on the dollar to recoup his loss from the state program that bonds hay dealers. And while the trucker agreed to pay $1,000 a month in a settlement, he never paid it all.

Wentworth figures he's still out $15,000 today, plus interest. His lesson for other hay growers: When prices are good, beware unscrupulous dealers.

"I do not know a farmer that hasn't been burned," Wentworth said.

Agriculture experts across the country are warning hay farmers and buyers alike to watch for scams amid a shortage of hay and feed and resulting high prices. In Washington state, hay prices have passed $200 per ton in some areas, and winter hasn't even officially arrived.

Investigators with the state Department of Agriculture already have fielded 42 complaints about hay quality or nonpayment. The value of disputed hay sales has topped more than $190,000 this year.

"Any time we see something like this we get concerned. It fluctuates from year to year, but we're just seeing more this year," said Kirk Robinson, manager of the state Agriculture Department's Commission Merchants Program. "Hay is a little bit more valuable commodity than it was in the past, so we're seeing people trying to make more money off of it."

Farmers who have contracts or agreements with large buyers, such as dairy farmers, often deal with them directly. Otherwise, they tend to sell their hay to dealers, who in turn sell the feed to smaller buyers who might have a smaller herd, or a horse or two in the backyard.

But current U.S. hay prices are the highest since record keeping began in 1949, according to the National Agricultural Statistics Service, opening the door for scammers to try to make a quick buck.

Average monthly prices in the United States topped $130 per ton for the past six consecutive months, with a high of $138 per ton in May. The previous high: $117 per ton in April and May of 1997.

Commodities experts say more farmers are planting corn and wheat to capitalize on high prices, leading to a shortage of other feed crops, including hay. That in turn is leading to more scams.

Aden Brook Farms, a distributor of hay, straw and wood shavings in Pine Bush, N.Y., has received three bogus certified checks in recent months. The first, for $38,000, bounced 40 days after it arrived, CEO Nick Fitzpatrick said.

"Luckily, we had not shipped anything yet. We immediately flagged it as a suspicious transaction," he said, adding, "I was surprised because they didn't even try to negotiate the price."

Becoming even more widespread, Fitzpatrick said, are people selling loads of hay that don't exist.

"Especially in the Southeast, because there's a lot of drought areas in desperate need of hay, there's been people targeted. They just pay for hay that never shows," he said.

Several years ago, "hay rustlers" turned to Colorado and Wyoming when Texas was enduring a four-year drought, said Donald Kieffer, executive director of the National Hay Association, based in St. Petersburg , Fla.

"And they were buying it from a lot of people who really were too trustworthy," Kieffer said. "Probably a lot of these people that are getting burned now are not in the commercial market, but because the price looks good, they're trying to sell some hay in the open market and they're getting hooked."

Most states, including Washington , require hay and feed dealers to be bonded and licensed.

In Washington, the hay industry also has tossed around the idea of taxing growers - say a penny or two per ton - to create an indemnity fund solely to protect farmers who get scammed, said Wentworth, a third-generator farmer who, with his brother, grows hay, wheat, beans and corn on 500 acres near Ephrata, about 100 miles west of Spokane in central Washington.

He's been bitten twice by hay scammers, despite requiring cash up front. He vows never to be a victim again by dealing only with people he knows and trusts.

"It's just something that goes with being a hay grower, I guess," he said. "It shouldn't - theft is theft."