AS MILK processors clamber to keep up with demand from China’s booming dairy products market, Chinese hunger for dairy ingredients at the farm level is also going through the roof.
US exporters have hit a jackpot with their fast expanding domination of the export lucerne hay market to China’s increasingly modern network of super-sized dairy farms – some housing up to 40,000 cows.
But while the US has at least 95 per cent of the lucerne (alfalfa) hay trade, Australia has eyes on the market, too, and is keen to broaden a handy foothold in oaten hay exports to China.
Australia exported a relatively modest 46,000 tonnes of oaten hay to Chinese dairy farms last year – a big jump on the 18,000t sent 12 months earlier, but well behind total US hay sales to China which now nudge almost 700,000t a year.
With China relying on just eight per cent of the world’s arable land to feed 20pc of the world’s population, imported food and livestock feed products have become increasingly important, particularly as dietary preferences expand on the back of rising household incomes.
Rabobank’s Shanghai-based senior dairy analyst Sandy Chen, said demand for feed products had sent China’s emerging hay import market (based on alfalfa from the US and Canada) leaping about 100pc annually between 2008 and 2012.
It continued powering ahead at 50pc growth last year.
Chinese livestock producers had also forced the nation to become a net importer of corn since 2010 – prior to that it was a significant corn exporter.
China is also the largest buyer of soybeans and soybean meal on global markets.
«From a feed grain and hay perspective China doesn’t have the space to consistently grow all that is required to support the big dairy farm enterprises we now have,» said Mr Chen.
Corporate-based giant barn-style dairies typically housed from 5000 to 13,000 cows with the largest of China’s dairy farming businesses, the Hong Kong-listed Modern Dairy Holdings, running up to 178,000 cows on multiple farms, the biggest of which held about 40,000 head.
These huge farms, and a growing group of second tier operations with about 1000 cows each, were supplying an increasing portion of China’s the domestic milk production – up from 30pc to more than 40pc in the past six years.
Noting the potential for Australia to build its feed export supply chain to China’s modernising dairy sector, Mr Chen said early import accreditation for North American exporters had helped them secure a good reputation as consistent quality suppliers.
However, the Australian Fodder Industry Association (AFIA) is hoping applications submitted to Chinese authorities in the past 12 months will eventually lead to Australian lucerne exports getting into China, as well as other cereal hay sales.
AFIA executive officer Darren Keating said Australia already exported lucerne to other Asian markets, particularly Japan, and was recognised as a unique worldwide supplier of oaten hay, a valuable complementary product alongside lucerne in dairy rations.
«Given that China’s been pretty much flooded with US product, the message we’re getting is that they’d like to have another option to buy from,» Mr Keating said.
«There’s quite a bit of interest in what we might be able to do.»
Australia exported about 800,000t of lucerne and oaten hay last year, plus some barley, wheaten and long-straw cereal products.
Japan took about 60pc, followed by Korea, Taiwan and fast rising China.
Mr Keating said Australia enjoyed a good reputation for its oaten hay which added fibre to lucerne-based diets to reduce milk fever risks after calving and improve calcium management in herds.
The challenge was to educate more Chinese dairy operators, some of whom are Australians or trained by Australians about the value in our hay offering, and hope the Australian dollar’s value dropped further against the US currency to make our exports more attractive against North American fodder prices.
While much of the expanding export crop was sourced from Western Australia (relatively near to Perth), South Australia and Central Victoria, Mr Keating said the industry was trying to boost cereal and lucerne exports from Central NSW and southern Queensland.
«The hay market is also recognised as a really good cropping rotation tool to keep weeds under control – farmers who make hay spend less on herbicides,» he said.
However, export hay production was not an enterprise to be treated casually – it require close liaison with hay merchants, specific seeding rates and varieties and a strict adherence to quality parameters.
Export hay issues, including what the market needs, will be among the topics discussed at this year’s three-day AFIA national conference in Adelaide from August 4.
Source: The Land
