© Gary Hubbell, Ranch Real Estate Broker, 2009 ALL RIGHTS RESERVED
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ORGANIC ALFALFA AND HAY FARMS
ORGANIC ALFALFA This category of organic farming goes hand in hand with organic dairy operations. The best feed for dairy cattle is high-quality alfalfa, and as far as yields go, organic hay farming can be one of the best bets for high production and good payments. The “gold standard” for Colorado hay is San Luis Valley alfalfa. The good soils, high elevation, clean water, and cool nights can result in outstanding hay production. Hay is rated by “relative food value”, or RFV. Growers can send samples of hay to testing labratories that determine the quality of the feed in a certain cutting of hay. Average hay that rates in the 180’s is considered good quality. I’ve seen growers in the San Luis Valley produce cuttings that rated as high as 250. That’s almost unheard-of quality.
Of course, alfalfa grows well when it’s fertilized, and commercial applications of nitrates and phosphates really stimulate production. However, when a farmer is irrigating with a center pivot sprinkler, it’s relatively easy to substitute a commercially spread fertilizer such as nitrate pellets with an organic liquid fertilizer such as chicken manure or fish emulsion that is distributed by the center pivot sprinkler. Some of the farmers in the San Luis Valley are getting yields of 5 to 6 tons per acre even with organic farming practices. Hay commodity prices tend to follow large and small grains to some extent. When corn and wheat go up, so does alfalfa. However, alfalfa tends to have a built-in hedge against rising and falling grain prices, because the demand for dairy hay is so strong. In the winter of 2008, high-quality organic dairy hay was selling for about $275 a ton.
Many dairies are concentrated in the arid Southwest—in the Texas Panhandle around Dalhart and over into New Mexico, near Clovis and Portales. The milder winters make it easier to milk cows, and there is a good supply of agricultural products such as corn and alfalfa to feed their needs. However, that supply of alfalfa is shrinking as corn prices go up, and the demand is getting ever stronger.
As organic dairies become more popular, the market for organic alfalfa will become ever stronger. Farmers investigating this market must keep a couple of factors in mind. First, organic alfalfa is handled in large “butter stick” bales—3x4 feet on the ends, and 8 feet long. The bales are easily stacked on a semi trailer. I’ve seen skilled operators load a semi in seven minutes flat. The massive tractors required to bale this hay are very expensive and so are the balers. Round bales, on the other hand, are tricky to load, unstable to ship, and inefficient, because you can’t get the same tonnage of hay on a trailer. If you intend to start growing organic hay, you’d better be sure you have enough acreage to justify a massive, expensive tractor and 3x4x8 square baler.
Investors looking to invest in agriculture should take a hard look at organic hay production. It truly seems to be one of the best-paying propositions in farming today. I know of several farms that would work for this use, and the sellers are willing to assist in converting the farms to organic production.
Click here to keep reading—Organic Grass Hay