(Page 1 of 4)
Once considered a mostly local commodity because of bulky physical characteristics that make handling and transportation difficult, an increasing amount of U.S. hay has been moving to overseas markets during the past five years. High demand worldwide for quality forages, cheap ocean-shipping rates and innovations in hay-compression technology are pushing the increased exports.
Numbers from a University of California (UC) report released last year tell the growth story in a nutshell: From 2004 to 2008, the U.S. shipped an average of 2.8 million tons of hay overseas annually. Between 2008 and 2013, the average bumped up to 4 million tons annually, an increase of 46%. "Any way you look at it, it's been phenomenal growth," says Dan Putnam, a UC Extension forage specialist and one of the report co-authors.
Increased hay shipments to China have been a driving force for much of the overall growth. Chinese imports of U.S. hay in 2007 totaled a mere 2,400 metric tons, according to the USDA. In 2013, the U.S. shipped 779,000 metric tons of hay to China. (By comparison, Japan, historically the largest customer for U.S. hay, has bought an average of 1.8 million metric tons annually since 1998.)
The Chinese government is intent on making more meat and milk available to the country's growing population. As a result, China's dairy herd increased from 7.1 million head to nearly 9 million milk cows between 2000 and 2013.
Feeding all of those cows requires lots of high-quality hay, and that creates a challenge for the Chinese. The country's major alfalfa-producing regions are in the north and west. Its dairies are located mostly in the south and east, thousands of miles away. While China is investing heavily to improve its transportation infrastructure, it's still cheaper for dairies to bring alfalfa in from abroad than to move hay around within the country.
The imbalance of trade between the U.S. and China plays a role. Companies owning the ocean-going container ships bringing Chinese-made consumer goods -- everything from electronics to pajamas -- to the U.S. West Coast are willing to offer extremely low rates to fill their ships with goods for the return trip.
"It's now cheaper to ship a ton of hay from Long Beach to Shanghai than it is to truck that hay from southern California to dairies in other parts of the state," says Dan Undersander, a University of Wisconsin Extension forage specialist. Undersander has traveled to China several times to work with forage researchers and farmers.
Currently, most Chinese producers lack the expertise to grow the kind of high-quality alfalfa needed to fuel milk production in high-producing dairy cows. European and North American equipment manufacturers do a brisk business selling forage-making machinery in China, and the government is offering lucrative subsidies to farmers who grow alfalfa. "But in a lot of cases, people haven't had the training in how to adjust or use the equipment," Undersander said. "And there are a lot of people getting into [alfalfa production] right now who don't really have a good idea of what needs to be done."
Lack of a sophisticated pricing structure for quality forages in China is also an obstacle. "At this point, growers aren't getting a premium for producing quality hay, so it's difficult for them to justify growing it," Undersander said. "That's one of the reasons dairy producers there have been willing to pay such good prices for U.S. hay. When they buy from us, they know they're buying a high-quality product from a reliable source."