DROUGHT CREATING A STRAIN ON HAY MARKETS

by: Stephen B. Blezinger
PhD. PAS

Part 1

Everyone is certainly aware that much of Texas, Oklahoma, Louisiana and the mid-south is in the midst of one of the most significant droughts in some time. This has created a variety of significant challenges for the cattleman as well as the industry that supports him. In addition to the heat, the lack of rainfall has resulted in greatly diminished forage availability in many pastures as well as local hay availability. Many producers are feeding hay much earlier than they would have otherwise and this is already creating a strain on the hay markets. This is resulting in producers having to pay more for hay, go farther to find it and accept hay deliveries that are very questionable in quality. The entire dynamic raises a variety of issues that the producer otherwise may not be that concerned with but has to be aware of given the circumstances. The following outlines and discusses some of these issues.

Buying Hay and Other Forages

In drought stricken areas on of the first orders of business for the cattleman is procuring forages of some type to make up for that which would otherwise be produced on-farm/ranch or purchased through normal channels that may not currently exist. Hay is commonly traded in two ways. One is by the ton and the value of the hay is established largely based on the nutrient content (protein, Relative Feed Value – RFV which is calculated based on fiber components). This is the method commonly used by dairymen when purchasing alfalfa. Again, this is based on a value per ton of hay which is commonly “packaged” in large square bales (4' X 4' X 8' or 3' X 3' X 8'). These sizes work well for loading and securing onto tractor-trailers.

The second method is buying hay by the roll. This is much less preferable since the buyer really has NO idea what he is getting. Hay is variable in nutrient density, presence of contaminants (weeds, sticks, trash, etc.). Round bales are highly variable based on type of forage, type of baler, size of bale, ability of person doing the baling, density of rolls, binding (plastic/nylon twine, sisal, net wrap, etc.), and moisture content. Bale size, density and moisture content create huge variations in weight of bales. These can easily run from 650 lbs. to 1,200 lbs. or possibly more.

As drought periods become prolonged, availability of hay proximate to the affected areas become increasingly scarce. Producers have to go farther and farther away in an effort to purchase what is necessary. Given what transportation costs are $3 to $4 per loaded mile is not uncommon and then there may be a fuel surcharge added to this shipping cost. Consider what variation in bale what can do to the cost of a roll of hay when purchased in this manner. First let's set a standard. Remember in our first method, purchasing by the ton, everything is based on the weight of the hay itself. Feasibly you can get 24 tons (48,000 lbs.) of hay onto a truck in this case. Let's say the hay is located 150 miles away. At $3.50 per loaded mile, the total shipping cost is $525 (150 miles X $3.50/mile divided by 24 tons) or $21.88/ton or about $.011 per lb.

Instead of hay bought by weight let's change to buying hay by the roll. A typical tractor-trailer (53 feet) can hold around 34 bales, assuming they are 4 or 5 feet wide X 5 ½ feet in diameter. It is more difficult getting 5' X 5-6' bales hauled since a truck bed is 8' wide and two 5' wide bales are 10' wide stacked side to side. This creates a less stable load and in some states, this width requires and oversized permit which results in extra cost. So let's assume we are buying rolls of hay that are 4' wide by 5 ½ feet in diameter and we are getting 34 on a truck. Then let's assume these bales weight 1200 lbs. each. This gives us a load of 40,800 (20.4 tons) so immediately we see we are getting less on the truck as compared to purchasing large square bales by the ton. Based on our shipping cost from above ($525), this results in a transportation cost of $15.44 per roll, $25.74 per ton or $.013/lb.

Let's take this one step farther and assume that instead of hay bales weighing 1,200 lbs. what you buy actually weigh 800 lbs. Same bales size so you are still only getting 34 rolls on the truck but now your total weight is 27,200 or 13.6 tons. Based on the $525 shipping cost this results in a net per bale cost of $15.44 as above but your per ton cost is now $38.60 and cost per lb. is $.019 (46 percent higher than bales weighting 1,200 lbs. and 72 percent higher than buying hay by weight).

Let's do one more comparison. Let's assume you purchased this hay for $50 per roll in the field. Shipping it to your ranch you have a delivered cost of your hay of $65.44/bale. Depending on your storage and feeding methods you can easily lose from 10 to 30 percent of your hay that you just purchased. We'll assume that the hay will be stored in a dry area and fed in bale rings so the amount of loss is approximately 15 percent. This means that your cost per bale is now $76.99 ($65.44 / 85 percent). For the 1,200 lb. bales this is equal to $.064 per lb. For 800 lb. bales this is $.096 per lb.

So what would this difference REALLY cost you? With many producers having to buy and feed hay now (starting the first of September) this means they will probably be feeding hay from September 1 to Mid March (we will HOPE the drought will break and we will have a normal winter and spring but this is, of course an unknown.). Feeding September 1 to March 15 is 6 ½ months or 196 days. An average 1,100 lb. cow will eat about 25 lbs. of hay per day. This will total 4,900 lbs of hay for this period. If the round bales of hay you purchase average 1,200 lbs. and cost $.064/lb. as calculated above, your hay cost for this period is $313.60 per head. If the hay averages 800 lbs per bale with a cost of .096/lb., your cost is $470.40. $156.80 per head MORE!

This entire exercise was to point out the potential risk of purchasing hay buy the bale truly is. And this only accounts for bale weight differences. We've not calculated in cost differences that can accumulate when the buyer does not know what the nutrient content of the hay is and how much will have to be supplemented to make up the difference. All beef cattle producers should be encouraged to work toward changing this hay trading system to move from purchasing hay by unit (bale) to purchasing based on weight and nutrient content.

Other Roughage Sources – When Hay Simply Isn't Available

In situations when hay or pastures are short a number of alternatives exist to provide the necessary nutrients. Something that the producer must consider is that it is not mandatory that you feed hay to cows. Granted, hay and grass are the normal base sources of nutrients in the cow's diet primarily because her digestive system is designed to handle large amounts of fiber based material from which required nutrients are extracted. In most cases, pasture and possibly hay sources are the least expensive sources of these nutrients. Another role of roughages in the cow's diet, especially in colder weather situations is to provide warmth. When a cow consumes roughage, the bacterial action in the rumen which breaks down the fiber produces heat and a lot of it. Although not a problem at the moment, this fiber digestion helps the cow stay warm. In many cases I'll recommend for a producer to feed slightly lower quality roughages during cold periods to increase the amount of activity which must be input to breakdown the plant material, thereby increasing heat generation.

So what can we use as a roughage source when hay or conventional roughages are short. Table 1 provides some examples.

Roughage sources such as corn and milo stalks, peanut hay and soybean stubble can be purchased in a baled form. The other products such as gin trash, cottonseed and peanut hulls are often delivered in loose, bulk form but in some situations can be found in a pelleted form which makes handling quite a bit easier.

You will notice with these roughages that in general they are low in protein and energy so it is a basic assumption that some for of supplementation will be necessary. Typically 3 to 5 lbs. per head per day of processed corn or milo or another grain source may be used to meet energy needs. Additionally it is necessary to provide protein as well. Other feed ingredients such as corn gluten feed or whole cottonseed can be used to satisfy both protein and energy needs to a certain degree.

Regardless of what roughage source you decide to use loads need to be tested regularly to ascertain nutrient content. Products must be compared based on economics. In many cases a really “cheap” feed can cost you much more in the long run.

Supplementation – Urea Containing Supplements

Feeding, supplementation and basic management issues are also amplified during periods such as this characterized by forage shortages. One other challenge that also contributes to the situation that producers are currently in is high feed and commodity prices. With proteins over $400 per ton, corn over $300 and most commodities over $250, livestock feeding and supplementation is an extremely expensive proposition. Producers are looking for any way possible to reduce costs and one way is through the inclusion of non-protein nitrogen (NPN) sources such as urea to replace a portion of the crude protein that would normally come from ingredients such as cottonseed, soybean, canola and sunflower meals. This NPN is broken down in the rumen and utilized by the microbial population to make bacterial protein which is digested and absorbed by the cow. A rule of thumb, especially for more complete types of feed is that no more than 1/3 of the total protein should come from an NPN source. In true supplements where the feeding rate is much lower, the NPN content can be higher but intake must be closely regulated. Many dry feeds and supplements and liquid feeds in general contain some level of urea as a source of non-protein nitrogen (NPN). Feeding of NPN is safe as long as certain precautions are in place. Keeping these precautions in place is critical during drought periods.

a) Liquid feed is an excellent supplement for cattle on pasture or hay. However, in periods when forage availability is low care must be taken that cattle do not over-consume urea containing feeds and liquids because they are hungry. Overconsumption of liquids can lead to excessive urea intake which ultimately can create an ammonia toxicity situation.

b) If NPN containing supplements are being newly introduced to a group of cattle or if they have been off the supplement for some time, be sure cattle have been allowed to fill up on pasture, hay or other forages or feeds. Do not feed dry or liquid feeds or supplements to hungry cattle under any circumstances.

c) Locate liquid feeders away from shade, feed sources (hay rings, etc.) or water sources to prevent easy access and possible over consumption opportunities. The same should be considered with dry supplements as well.

Beware of Cheap Feeds

Given the circumstances the industry is in, as mentioned above, all producers are looking for a way to reduce costs. However, in many situations, especially with livestock feeds, cheaper is not always better. Any given feed tag can be replicated in countless ways so that the tag information is the same but the nutrient values which are not shown, such as energy, some fiber components, digestible protein, etc. Just because a given feed looks relatively inexpensive does not make it better. In some cases, a producer may be comparing two products, both with very similar tags but one product may be $20 per ton cheaper than the other. The first question a producer HAS to ask himself is “why?” In some cases the difference may be very legitimate; the maker of the less expensive product may have done a much better job of buying his ingredients that the mill making the other product. There is a possibility that the cheaper product does not have as much profit margin on it, is manufactured closer and the transportation costs are not as high. It is critical though that when comparing two products that the producer compares “apples and apples.” If one product is significantly cheaper than the other it is critical to know if the cheaper product is using a lower quality formulation, less digestible or available sources, etc. etc. The mill manufacturing the feed may constantly reformulate the feed using least cost formulation objectives. This can result in a product that is highly variable and this inconsistency may negatively affect consumption. The results of using a cheaper product, made with a lower energy level, could result in reduced gain in calves, reduced reproductive performance, health and so on.

Conclusions

It becomes obvious that under conditions experienced in many areas of the country that the feeding and management conditions become considerable. In the next issue we will examine more of these considerations in an effort to help the producer consider some of the less-than-obvious pitfalls during these challenging times.

Dr. Steve Blezinger is a nutritional and management consultant with an office in Sulphur Springs, TX. He can be reached at 667 CR 4711 Sulphur Springs, TX 75482, by phone at (903) 885-7992 or by e-mail at sblez@verizon.net. You can also follow us on Facebook at Reveille Livestock Concepts.







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