Exports boost western U.S. hay market
A taste for meat and dairy products in the developing world has increased demand for U.S. hay, and inexpensive containerized shipping technology has made it cost effective to ship hay produced in the western U.S. overseas.
"Exports are now a major player in the demand for hay," says Dan Putnam, University of California–Davis Extension agronomist. "The export market has made the hay crop more economically viable for farmers throughout the western U.S."
The cost of hay also appears to be less of an issue than it once was for overseas buyers.
"Historically, 10 to 15 years ago, importers would get out of the market when prices got too high," Putnam explains. "Now, even when hay prices are as much as $250 to $280 per ton, buyers have stayed in the market."
The value of the U.S. export market for hay in 2012 was $1.22 billion, more than four times 1998’s $286 million, according to a paper published by Putnam; Daniel Sumner, director of the Agricultural Issue Center (AIC) at the University of California–Davis; and Bill Matthews, project scientist at AIC.
Nearly all—99%—of U.S. hay exports originate in the West, although new hay export facilities are being built in North Carolina for East Coast export.
Big buyers. Hay exports to Japan, the top market for U.S. hay, have been steady in recent years, but two other buyers, China and the United Arab Emirates (UAE), have entered the market in a big way.
Putnam, Sumner and Mathews note that China imported an estimated 805,000 metric tons of hay from the U.S. in 2013, a 66% increase from 2012. In 2007, China bought a mere 2,400 metric tons of U.S. hay.
Similar to the situation in the eastern U.S., summer rains make quality hay production difficult in many parts of China. And the sheer size of the country, as well as its limited infrastructure, often make the cost of ocean shipping to Asia less expensive than overland transport within the country.
While China could possibly become self-sufficient in hay production, sources say the country will likely continue to import hay for the next five to 15 years as the country expands its livestock industries. If China’s milk prices remain high—equivalent to more than $30 per cwt. in the U.S.—large Chinese dairies will be able to afford imported U.S hay at higher prices than what U.S. dairies are able to pay.
Hay vacuum. Exports in 2013 to the UAE were 632,000 metric tons, 34.4% larger than in 2012 and 20 times the 2007 purchases. The hot, arid country banned hay production in 2008 due to hay’s use of nonrenewable water resources, and its herds of milk-producing camels, sheep and goats have relied on imported hay ever since.
"By banning domestic hay production, the UAE created a fairly large vacuum in the supply of hay, which has turned out to be a big boost for western U.S. producers and producers in Spain and Australia," Matthews says.
- March 2014