Cooperative Extension
Colorado State University

FROM THE GROUND UP

MARCH 2003
VOLUME 23
ISSUE 1

Forages

Forages in Colorado

Forage crops have increased in their contribution to Colorado’s economy relative to other crops and the state’s market demand for forages still justify increasing acreage.

	Figure 1. Colorado crop sales value ($ millions)
		Figure 2. Annual Colorado crop sales value ($ millions)
		Figure 3. Colorado alfalfa annual acreage and yield
Figure 4. Average price/ton received by farmers

Forage crops are a significant part of the agricultural sector within Colorado’s economy. The cattle industry, which depends upon forages, dominates Colorado’s agriculture. Commercial turfgrass as well as the Green industry hold a strong second place. Alfalfa and other hay crops collectively contribute more to Colorado’s agricultural economy than other agronomic crops. The 2002 Colorado Agricultural Statistics report indicates that in 2001, alfalfa produced more farm sales revenues than either corn for grain or winter wheat (Figure 1). Their figures only consider the economic contribution of forages harvested with farm equipment and exclude the value of direct grazing on irrigated or dryland pastures and rangeland.

Colorado Agricultural Statistics records demonstrate that the sales value for both alfalfa hay and other hay crops have increased over the past 17 years (Figures 1 & 2). During this same time period sales of other crop sectors have remained relatively flat or declined in value (i.e.: dry edible beans). The total acreage of irrigated alfalfa hay harvested has been increasing since 1993. Yield per acre has also been gradually increasing (Figure 3). In addition, the market price received per ton of alfalfa or other hay has remained strong and in some years has improved over previous price levels (Figure 4). It is noteworthy that during the past decade the net increase in hay production has not dampened the market price received by farmers. There are two market trends and probably a third which have caused alfalfa and other hay producers to increase acreage and demand higher prices for their hay.

The first trend is people purchasing small rural acreages in an effort to improve their quality of life. Many of these new residents include horses, or livestock and exotic species in their homestead plans. Nearly all of these small acreage require owners to purchase forage and feed resources. In general, these small acreage buyers pay premium prices for small lots of hay, delivery to their homes, and for their self determined hay qualities.

The second significant trend is the dramatic increase of milk production by Colorado’s dairies. Total net production of milk in this state has increased by 84.6% from 1985 to 2001. This has been accomplished by a modest increase in number of milk cows, 16.7%, but more significantly by increased yearly production of milk per cow 52.8%, and improving overall dairy efficiencies. Improvements in dairy production efficiencies have enhanced the market for dairy quality alfalfa hay and beginning to add to the demand for corn silage and alfalfa haylage. Today’s dairy hay buyers along with their nutritional consultants require lab testing on all forage purchases. However, they are also willing to pay premium prices for quality hay.

The third trend may be the change in farmers perceptions on crops they raise and market. Essentially all crop producers recognize that their net return on many field crops has shrunk during the past decades. Increased equipment replacement costs, rising land prices and personal living costs, and a general inflation of input costs have outpaced crop income gains in yields and sales price. Unlike the commodity markets which don’t have differentiated markets, alfalfa and other hay crops have many different markets, each with their own different quality specifications. In addition, hay crops are not supported by Federal farm payment supports. Most farmers who have added or increased forage production in their crop rotations have been required to become better at marketing. In addition, they have had to rethink relationships to farm programs. In making these changes, farmers have increased their agricultural skills and modified their farm risk management.

Figure 5. 2001 Net return (gross minus production expenses)

Figure 6. Return to management and risk (minus land, labor, capitol payments)

Alfalfa and grass hay prices have generally maintained a net positive return for hay producers throughout the past ten years despite increasing yields and acreages. The 2001 Colorado Farm Enterprise Budgets developed by Colorado State University’s Agriculture and Business Management team demonstrates the better return from forages (Table 1). The average hay prices for 2001 were especially high and prices for some other crops, corn, and wheat, were low. However, during the 1990's and into the 2000 and 2001 crop years, alfalfa hay has nearly always provided more net income than other major agronomic crops. Agricultural specialists recommend that farm producers need to cover their production expenses in most years. Figure 5 presents a composite (non-weighted mean) of enterprise budget data from Table 1.

Crops that show positive net returns include corn silage, pinto beans, grass hay and alfalfa. Net returns are defined as production gross revenue minus direct production costs (Figure 5). In addition to covering direct costs of production, farm managers are said to have an economic profit, or a positive return to management and risk, if revenue is great enough to cover a return to land, labor, and capitol. Figure 6 shows the level of returns to a producers management and risk for the crops presented in Table 1.

It is important that farm businesses meet this second profitability objective in most years in order to remain sustainable and competitive. Agriculture will probably not reverse the trends of operator aging and land conversions to non-agricultural uses. However, enhancing farm profitability will serve to slow these trends.

D. Bruce Bosley,
Extension Agent/Cropping Systems
Lower South Platte;
Logan, Morgan & Sedgwick Counties

2001 Crop Enterprise Budget Summaries - From CSU Ag & Business Management Handbook

FROM THE GROUND UP agronomy news is a monthly publication of Cooperative Extension, Department of Soil & Crop Sciences, Colorado State University, Fort Collins, Colorado.

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