Global Hay Demand, Competition Grow Strong

Global Hay Demand, Competition Grow Strong

How much hay will be exported to calcium- and protein-hungry regions like China and the Middle East may depend in part on competition from California dairies. So says Greg DeWitt, marketing manager for ACX Pacific Northwest, Inc., a California-based hay exporter.

ACX currently buys hay from seven key Western states – Washington, Oregon, California, Arizona, Nevada, Utah and Idaho. But demand for high-quality hay among domestic customers is on the rise, partly because of continued drought in the West that has cut into hay stocks and pushed prices upward.

“It’s all going to come down to the domestic markets and the availability of hay,” he says of his company’s ability to sell more hay overseas in 2014.

Even so, only 3-4% of all U.S. hay production is exported, he adds. “A significant portion of the alfalfa we supply overseas is summer hay that traditionally has not had the strongest demand domestically.

USDA’s May ag export projection, totaling $149.5 billion, is an increase of $6.9 billion from its February prediction. Hidden in the numbers is the rising demand for alfalfa hay, which alone accounted for about $586 million in exports last year.

“Export forage dynamics have changed a lot in a relatively short period of time,” says John Szczepanski, director of the U.S. Forage Export Council, a committee of the National Hay Association.

“Just a few years ago, Japan and Korea accounted for the lion’s share of U.S. forage exports. Since 2007, those traditional markets have remained pretty much the same, with all the new growth coming from China and the Middle East.” (See graphic.)

China, with an estimated 15 million dairy cows to feed, is now the No. 1 foreign buyer of U.S. alfalfa, due in part to its growing appetite for dairy products and animal protein. More than 800,000 tons of alfalfa hay were shipped from the U.S. to China in 2013, compared to none in 2006 and 460,244 tons in 2012, according to USDA’s Foreign Agricultural Service (FAS).

Just three years ago, Chinese hay purchases were about 2% of ACX’s total revenue, adds DeWitt. Last year, China accounted for 21% of the company’s hay sales.

Although 94% of the hay that China imports comes from the U.S., according to FAS, other countries are also starting to compete for the business. China recently signed significant agreements to import forage from Canada and Spain.

“The U.S. isn’t the only show in town,” Szczepanski warns. “Exporters need to continue to focus on safety and quality.”

But rising demand for hay is more than just a Chinese phenomenon. The United Arab Emirates, South Korea, Taiwan, Malaysia and Indonesia all have increased their hay imports over the past year as well.

ACX is based in Bakersfield, CA, with storage and hay-processing facilities in Stockton and WIlmington, CA; Ellensburg, WA; and Goldsboro, NC.

Contact DeWitt at gregdewitt and Szczepanski at john.