Shortages make forage a good cash crop

Monday, April 2, 2012

With fewer acres seeded to forage in the last couple of years, there is good money to be made here. But make sure you get paid in cash

by PAT LYNCH

In the last two years, a lot of forage acres were plowed down to grow corn and soys. This occurred both in Canada and the United States, where drought in some parts further reduced forage supply. As well, last year fewer acres were seeded to forage than was normal, with the result that we are heading for a forage shortage.

In February 2012, poor quality forage was selling for four cents a pound, about twice the usual price. Good forage is selling for eight or more cents per pound. If there is an increase in seeded acres this spring, the shortage could end by 2014, but I doubt it. It could be 2015 before forage prices drop. This shortage presents opportunities for those willing to change their cropping system. Forages are a good cash crop.

You can harvest two to three tonnes per acre in the establishing year. If you establish with a pea triticale mix, you could harvest closer to four tonnes per acre. Once forages are established, good producers can obtain four to five tonnes per acre for a return of $800 per acre. It costs about $80 a cut to harvest forages. Establishment costs spread over three years would be about $100 per acre. Growing forages will return more than you can get from soybeans. An added benefit is the increase in soil condition.

There is a marketing issue, however. The first market for your crop are the neighbours who feed forage. The second is one of the various markets outside your neighbourhood. But the hay market is different than selling grains. There is a history of people selling hay but not getting paid. If you are new to the business, the rules are very simple – cash or certified cheque before the forage is unloaded. There are no exceptions, not even for a very close relative.

If you do not have your own forage equipment, line up a custom operator now. Good quality forage sells for two to three times more than poor quality forage. This means hiring someone who can make forage in a day. This includes the ability to wrap.

If you grow your own forage acres, check them early this spring. Some may not be as good as you would have hoped. Especially, check stands older than two years plus the seeding year. This is a good year to seed extra acres.

As an aside, there are too many old forage stands across Ontario. Typically, stands start to lose yield after the second year. You would not think about taking a 20-30 per cent yield loss by growing corn or soys year after year. When growing forages, too many growers unknowingly lose 20-30 per cent yield because of old stands. If you need forage every year, you should strive to have stands that are never older than two years plus the seeding year.

Another good way to grow forages as a cash crop is by underseeding red clover. Every winter wheat acre in Ontario should be underseeded to red clover. Even if you do not get a 100 per cent stand, a poor stand is better than no stand. You can insure a red clover underseeding. The way the system is set up, it is hard to lose. You either get the benefit of the nitrogen and sell the forage or you get crop insurance. This is one of the no-brainers when it comes to cropping in Ontario.

World commodity and crop prices being what they are, I think you will see a rise in nitrogen costs for the 2013 crop. Underseeding in 2012 can help you reduce that cost. BF

Consulting agronomist Pat Lynch, CCA (ON), formerly worked with the Ontario agriculture ministry and with Cargill.