Key Takeaways
In recent years, alfalfa producers have faced a sustained deterioration in margins, driven by a combination of weather-related production volatility, persistently high input costs, shifting international livestock feed demand and heightened export uncertainty. Unlike many other major crops, alfalfa has limited options to offset losses when prices fall, as available risk management tools are narrowly focused and do not address broader margin pressures.
Those pressures are now reflected clearly in returns. Prices spiked during the drought-driven supply tightening of 2021–2022, but that rally reversed as weather conditions improved and export demand weakened. With prices now below full economic cost in many regions, losses have widened — and alfalfa is not eligible to receive to payments from the recently announced $11 billion Farmer Bridge Assistance Program, leaving the sector’s current shortfall unaddressed.
Production Dynamics Shape Risk
Unlike annual crops that are terminated every year, alfalfa is a perennial legume grown in multi-year “stands,” where a single planting supports repeated harvests over multiple seasons. Fields are typically harvested repeatedly for five to seven years or longer, depending on management, weather and water availability. In rain-fed regions such as the Midwest and upper Plains, growers commonly take three to four cuttings per year, while irrigated systems in portions of the West and Southwest can support seven or more cuttings annually.
This long stand life limits how quickly production can respond to market signals. When prices rise, new seedings represent only a small share of total acreage, and newly planted stands often take one to two years to reach full productivity. Conversely, when prices fall, growers may remain locked into production even as margins deteriorate. The result is a supply base that adjusts far more slowly than most annual crops.
Geographically, alfalfa production is widespread but concentrated in regions with strong dairy and cattle sectors and more favorable growing conditions. California, Idaho, Montana, the Dakotas and Arizona consistently rank among the top producing states, achieving high yields due to longer growing seasons and irrigation.
Other markets have provided only partial and uneven offsets. Saudi Arabia’s imports surged in 2023, rising roughly 42% to about 431,000 metric tons, as domestic water-conservation policies sharply curtailed local forage production. However, shipments to Saudi Arabia and other Middle Eastern buyers softened through 2024 and into 2025, as procurement strategies shifted and buyers adjusted inventories following the 2023 surge. The UAE followed a similar pattern, with imports jumping more than 250% in 2023 from a low base but failing to sustain that pace in subsequent years. Japan’s imports of U.S. alfalfa declined sharply in 2023 and remained subdued in 2024–2025, as a strong U.S. dollar reduced price competitiveness and buyers increasingly sourced from alternative suppliers or relied more heavily on domestic forage. Together, these trends underscore that gains in select markets have not been sufficient or durable enough to offset the contraction in Chinese demand.
Prices Fall as Costs Stay Elevated
The financial impact of these combined pressures is now evident in returns. Alfalfa prices peaked during 2021–2022 amid drought-driven shortages, but the rally proved short-lived. From April 2023 to November 2024, national average prices fell from about $288 per ton to $164 per ton, a 43% decline. By 2025, prices averaged roughly $171 per ton, well below recent break-even levels.
At the same time, production costs have remained stubbornly high. University cost-of-production studies across the Plains and Western states show full economic costs ranging from $165 to more than $300 per ton, depending on irrigation intensity, yield and region. Input expenses, particularly water, fertilizer, labor, fuel and machinery, have climbed 20% to 35% since 2020, while yields have stagnated near 3.5 tons per acre.
Estimated 2025 Economic Losses
Cost-of-production studies from the University of California (2020),University of Arizona (2023), Iowa State University (2025), Oklahoma State University (2024), University of Nevada (2008-indexed) and the University of Idaho (2020) show that alfalfa production carries an average full economic cost of about $229 per ton, a figure that reflects operating expenses, cash overhead, and the annualized non-cash costs of land, equipment and field establishment. Together, the states represented by these university budgets account for about one-third of U.S. alfalfa production. While some higher-yield operations may cover a portion of variable operating costs, recent prices frequently fail to recover full economic costs, leaving producers unable to fully cover capital recovery and land charges. Using USDA’s estimate of 14.12 million harvested alfalfa acres in 2025 and an average yield of 3.51 tons per acre, total production reached roughly 49.8 million tons, placing the sector’s annual economic production costs near $11.4 billion.
USDA-National Agricultural Statistics Service price data show 2025 year-to-date average prices near $171 per ton, generating approximately $8.5 billion in farm-level revenue. The result is an estimated $2.9 billion economic shortfall in 2025, or a loss of about $203 per acre.
- A major U.S. field crop without a safety net: Alfalfa is the fourth most valuable field crop in the U.S., generating roughly $8.1 billion in farm-gate value in 2024, yet it remains largely outside core farm safety-net programs.
- Prices collapsed while costs stayed high: After record prices in 2021–2022, alfalfa prices fell more than 40%, while production costs remained elevated, pushing average returns into negative territory since late 2023.
- Export demand has weakened sharply: Shipments to key markets, especially China, have fallen amid global dairy market shifts and ongoing trade conflicts, reducing a critical outlet for Western hay producers.
- Losses are large with limited relief: Estimated 2025 economic losses total roughly $2.9 billion, or about $203 per acre, with no access to commodity support or the Farmer Bridge Assistance Program.
In recent years, alfalfa producers have faced a sustained deterioration in margins, driven by a combination of weather-related production volatility, persistently high input costs, shifting international livestock feed demand and heightened export uncertainty. Unlike many other major crops, alfalfa has limited options to offset losses when prices fall, as available risk management tools are narrowly focused and do not address broader margin pressures.
Those pressures are now reflected clearly in returns. Prices spiked during the drought-driven supply tightening of 2021–2022, but that rally reversed as weather conditions improved and export demand weakened. With prices now below full economic cost in many regions, losses have widened — and alfalfa is not eligible to receive to payments from the recently announced $11 billion Farmer Bridge Assistance Program, leaving the sector’s current shortfall unaddressed.
Production Dynamics Shape Risk
Unlike annual crops that are terminated every year, alfalfa is a perennial legume grown in multi-year “stands,” where a single planting supports repeated harvests over multiple seasons. Fields are typically harvested repeatedly for five to seven years or longer, depending on management, weather and water availability. In rain-fed regions such as the Midwest and upper Plains, growers commonly take three to four cuttings per year, while irrigated systems in portions of the West and Southwest can support seven or more cuttings annually.
This long stand life limits how quickly production can respond to market signals. When prices rise, new seedings represent only a small share of total acreage, and newly planted stands often take one to two years to reach full productivity. Conversely, when prices fall, growers may remain locked into production even as margins deteriorate. The result is a supply base that adjusts far more slowly than most annual crops.
Geographically, alfalfa production is widespread but concentrated in regions with strong dairy and cattle sectors and more favorable growing conditions. California, Idaho, Montana, the Dakotas and Arizona consistently rank among the top producing states, achieving high yields due to longer growing seasons and irrigation.
Other markets have provided only partial and uneven offsets. Saudi Arabia’s imports surged in 2023, rising roughly 42% to about 431,000 metric tons, as domestic water-conservation policies sharply curtailed local forage production. However, shipments to Saudi Arabia and other Middle Eastern buyers softened through 2024 and into 2025, as procurement strategies shifted and buyers adjusted inventories following the 2023 surge. The UAE followed a similar pattern, with imports jumping more than 250% in 2023 from a low base but failing to sustain that pace in subsequent years. Japan’s imports of U.S. alfalfa declined sharply in 2023 and remained subdued in 2024–2025, as a strong U.S. dollar reduced price competitiveness and buyers increasingly sourced from alternative suppliers or relied more heavily on domestic forage. Together, these trends underscore that gains in select markets have not been sufficient or durable enough to offset the contraction in Chinese demand.
Prices Fall as Costs Stay Elevated
The financial impact of these combined pressures is now evident in returns. Alfalfa prices peaked during 2021–2022 amid drought-driven shortages, but the rally proved short-lived. From April 2023 to November 2024, national average prices fell from about $288 per ton to $164 per ton, a 43% decline. By 2025, prices averaged roughly $171 per ton, well below recent break-even levels.
At the same time, production costs have remained stubbornly high. University cost-of-production studies across the Plains and Western states show full economic costs ranging from $165 to more than $300 per ton, depending on irrigation intensity, yield and region. Input expenses, particularly water, fertilizer, labor, fuel and machinery, have climbed 20% to 35% since 2020, while yields have stagnated near 3.5 tons per acre.
Estimated 2025 Economic Losses
Cost-of-production studies from the University of California (2020),University of Arizona (2023), Iowa State University (2025), Oklahoma State University (2024), University of Nevada (2008-indexed) and the University of Idaho (2020) show that alfalfa production carries an average full economic cost of about $229 per ton, a figure that reflects operating expenses, cash overhead, and the annualized non-cash costs of land, equipment and field establishment. Together, the states represented by these university budgets account for about one-third of U.S. alfalfa production. While some higher-yield operations may cover a portion of variable operating costs, recent prices frequently fail to recover full economic costs, leaving producers unable to fully cover capital recovery and land charges. Using USDA’s estimate of 14.12 million harvested alfalfa acres in 2025 and an average yield of 3.51 tons per acre, total production reached roughly 49.8 million tons, placing the sector’s annual economic production costs near $11.4 billion.
USDA-National Agricultural Statistics Service price data show 2025 year-to-date average prices near $171 per ton, generating approximately $8.5 billion in farm-level revenue. The result is an estimated $2.9 billion economic shortfall in 2025, or a loss of about $203 per acre.
