U.S. hay, the country’s third-largest crop by value, is now cheaper to ship to China than to farmers in central California, compounding shortages that mean record prices for the dairy industry.
Ocean freight costs about $30 a short ton (0.91 metric tons) to send hay to Asia from Los Angeles, compared with $53 to truck the crop from southern California to the center of the state, according to Greg Braun, the president of Border Valley Trading LLC, a Brawley, California-based exporter. Prices for alfalfa, the most common variety, surged 62 percent in a year and reached a record $186 a ton in July, government data show.
Shipping lines hauling Asian goods to the U.S. are failing to fill boxes on the return journey, driving down costs for the containers used to carry bales of hay. That imbalance is contributing to the biggest U.S. trade deficit in almost three years and threatening earnings for dairies and cattle feedlots that the government had expected would help the U.S. agriculture industry generate record farm income of $94.7 billion this year.
“The hay and alfalfa shortage will get worse before it improves,” said Tom Barcellos, 56, who owns the 800-cow T-Bar Dairy in Porterville, California and farms 800 acres of hay. “So much of the hay is going into the export market that it takes hay away from California dairies.”