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Quality, disease-free product crucial to maintaining strong demand

GOOD PROSPECTS: Balco chief executive officer Rob Lawson said the Chinese market was looking good.
Nanjing Night Net

BALCO chiefexecutive officer Rob Lawson has just returned to SA from China, where he says there is an increasing focus on hay quality ahead of quantity.

“Their domesticplantings of oaten hay have increased, but the need for quality, clean and disease-free fodder–which Australia is known to produce–is stillhigh among the high-end dairies,” he said.

“But there are milk pricepressures in China,like there is globally, so Chinese dairies are looking closer at how to more effectively produce their own quality product domestically.”

Mr Lawson said other developing marketswere Indonesia and Vietnam, while water restrictions in the Middle East would create opportunity for Australian growers.

“Freight rates are also becoming more competitive for us,” he said.

“Australian hay growers should be optimistic, but they need to make sure they have a relationship with a quality exporter.”

Mr Lawson said the hay season was off to a great start in SA, with the area sown up about 10 per centon 2015.He believed most Australian exporters would have minimal carry-over.

“The extra plantings should comfortably meet the demand,” he said.

Last year SA exported about 250,000 tonnes, at prices up to $250/t for oaten hay.

Mr Lawson said they weren’t expecting prices to be that high because of the likely extra volume.

“It’s important that the Australian industry manages thegrowth curve in a controlled manner, because as soon as there is oversupply, the price will drop,” he said.

Australian growers diversifying into fodder production could capitalise on rising demand from China.

About 850,000 tonnes of Australian fodder was exported overseas in the past year, mainly to Japan, Taiwan and Korea.

While Japan remains Australia’s largest fodder export market, increasing Chinese demand for Australian-grown fodder is expected to underpin growth for the foreseeable future.

Australian Fodder Industry Association executive officer Darren Keating saidChina wasan exciting prospect for fodder exporters.

“Three years ago we exported about 18,000t to China,” he said.“While last year we saw more than 160,000t exported.”

This growth demand reflects the continued expansion of the Chinese dairy industry, which official figures suggest has maintained a 12.8 per cent average annual growth rate since 2000.

Producing hay for export is more specialised than producing for the domestic market, with farmersproducing grain in regions with existing export facilities best placed to diversify their operations.

“If you are going to produce hay for export successfully, you have to know your customers and you have to know what they want,” MrKeating said.

“In terms of China, the only product we have market access for is oaten hay, which is mostly used in dairy production and beef feedlots.”

Mr Keating said diversifying into fodder could also help growers to spread risk.

“Obviously if you know how to produce hay or silage, especially for people with a focus on grain production, it gives you more options in the event of challenging environmental or economic conditions,” he said.

Australian hay production is estimated to be worth more than $1.5 billion, with oaten hay accounting for almost 75pc of hay exported from Australia annually, according to the Rural Industries Research and Development Corporation.

Even if producers are not planning to export hay, its production can still help to spread risk and build resilience, according toRIRDCsenior program managerJohn de Majnik.

“We strongly encourage farmers to consider diversification strategies where appropriate,” Dr de Majnik said.“Export fodder provides one such opportunity.”

This story Administrator ready to work first appeared on Nanjing Night Net.

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