September 30, 2007

High Hay Prices

Hay prices are at record levels this year. Why? Well, government subsidies result in an artificially high price of corn for use in ethanol production. Lack of low-cost corn results in farmers feeding hay to their cows which results in a hay shortage which drives up prices.

"We set a record high in 2006-07, and we're going to set another one this crop marketing year," said Robb. "We expect hay prices will set a record of about $115 per ton. And horse and dairy-quality hay selling for well over $150 per ton."

Ethanol production has also changed the market, Robb said. Corn which would normally have been used for livestock feed is now going toward fuel.

"The U.S. is very soon going to be processing more corn in the next few years into ethanol than we feed in the livestock sector," Robb said.

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