Nevada cattle ranchers and alfalfa growers are looking at the coming year as one with the potential to make some serious profit, while many northern Nevada dairymen still struggle under the yoke of low prices for their milk production.
Fallon alfalfa growers returned to profitability in 2011 as hay prices soared to $200 to $300 a ton. Ryan Sorensen, whose family has farmed in Churchill County for several generations, says he sold hay for $220 a ton in 2011, a price that's "very comfortable" for Fallon-area farmers.
A severe drought in Texas, which left that state without forage for its large livestock herds, pushed up prices throughout the West, Sorensen says.
"Hay is a supply-and-demand business, and $220 ton hay is the best I have ever seen in my life," Sorensen says. "The whole western United States skyrocketed because there wasn't anything down there (in Texas) to feed their animals.
"It is no longer a local business whatever happens across the country affects everything else."
Bulk hay prices dipped as low as $93 per ton in May of 2010. Fluctuations in price over the past few years caused financial angst for some northern Nevada farmers, as did a decline in fluid milk prices, which forced the closure of several Churchill County dairies and forced other dairymen to cull their herds. Fallon hay growers had large stockpiles under roof as demand from local dairies softened. The majority of Fallon hay growers sell their cuttings to nearby dairies, Sorensen says.
"We have our own little local market in Fallon. We are all in business together, so we give and take," he says.
Sorensen expects prices to hold through 2012, but hay prices typically don't hold steady until late in the second quarter of the year, he says.
Northern Nevada cattle ranchers also expect high prices for beef cattle to hold throughout the coming year. JJ Goicoechea, president of the Nevada Cattlemen's Association, says Nevada ranchers will benefit from declines in the overall size of the nation's cattle herd.
The low cattle numbers, combined with strong export expectations, should help Nevada ranchers sell their products at profitable prices for the next few years, Goicoechea says.
"Prices are good. Our national beef herd is near an all-time low we just don't have any cattle left in the inventory."
Droughts throughout the Southwest, particularly in Texas, forced ranchers in many states to cull their herds, Goicoechea says, and increased foreign demand from new importers such as Korea, Columbia and Panama increased demand for American beef.
"It looks onward and upward the next two or three years," Goicoechea says. "Margins are not that great right now, but we should be able to sell calves at a good cost. Once we expand cattle on a national level, it still will be a few years before we get into a productive beef cattle herd."
In late 20011 light calves were fetching between $800 and $850 a head, while cattle ready for feeder lots were selling for around $1,000 a head which translates into expensive beef.
"That correlates into $5 ground beef and $14 to $15 per pound for middle cuts," Goicoechea says. "In the economic downturn we are in, if we didn't have exports, we couldn't be selling this product because the American people couldn't afford to eat it."
Fallon dairymen also have seen severe price swings that impacted their operations. Many dairies lost years of hard-won equity in 2009 as the price per hundredweight (about 11.6 gallons) for milk fell to $11 well below their operating expenses. At the end of 2011 the price per hundredweight was in the $14 range.
Prices could stabilize in the future with the successful completion of a proposed dry milk processing plant in Fallon, which could lead to steady demand for local milk. However, powdered milk sells for less than fluid milk.