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Costs keep profit
margins slim
July 17, 2008
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| Jerry Sayles bales hay Wednesday. Rich Roseburg, Klamath Basin Research and Extension Center agronomist, estimates that hay prices are about 25 to 30 percent higher than they were two years ago. |
While the
Klamath Basin’s hay season is not as
stellar as some years, soaring
commodity prices keeping pace with
almost equally high input costs,
should offset some of the risk.
Rich Roseburg, Klamath Basin Research and Extension Center agronomist, estimated that hay prices are about 25 to 30 percent higher than they were two years ago.
The U.S. Department of Agriculture reported last week that the Klamath Basin’s premium alfalfa was selling for $200 to $210 per ton this year and was at $150 last year. The same report listed orchard-alfalfa mix hay was going for $195 to $200 a ton this year and was $165 last year.
But input costs and everything connected with oil are keeping the profit margins slim.
Farmer Steve Kandra said, in addition to the delayed and shortened season, fewer cuts means one cut less in energy, time, equipment wear and diesel costs.
“It takes the same amount of time to cut one ton as it does two,” he said.
But the longer grow time between cuts means a trade-off, too.
“That will affect the quality,” he said. “But in this kind of year when commodity prices are up that’s a compromise. Quality will be less. I’ll be paid a little less, but will have more material to sell at a lower production unit cost. So that’ll be my compromise.”
Higher prices haven’t hampered demand though, as both Roseburg and Kandra say there’s no shortage of buyers — just a meager supply.
Where buyers might have held back early in the season in prior years, Roseburg has heard that many are buying as much as they can this year to ensure they have what they need later in the season.
Kandra said he’s not having a problem finding buyers, and some of his customers have been with him for decades.
“The concern I have is that I will not be able to supply my customers like I normally would,” he said. “I’m going to be short. I’m not going to be able to supply all they need.”
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NOTE: In accordance with Title 17 U.S.C. section 107, any copyrighted
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NOTE: In accordance with Title 17 U.S.C. section 107, any copyrighted
material herein is distributed without profit or payment to those who have
expressed a prior interest in receiving this information for non-profit
research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml