THE export oat market will continue to grow as demand for Australian hay from China increases and new markets develop in the Middle East and south-east Asia.
Speaking at the Australian Fodder Industry Association in Perth last week Balco Hay director Murray Smith said while Japan was still an important market for Australia hay, there were new opportunities opening up.
"While the dairy industry in Japan has had its moments with a steady increase in cows by 1-2 per cent, a decrease in dairy farms by 3-4pc and a decrease in profitability per cow has led to the need for an efficient and larger scale businesses, the Japanese market remains a very important one for Australia," Mr Smith said.
Demand for Australian hay and straw demand has remained constant over the past five years, with a slight increase from 24pc in 2011 to 27pc in 2015.
"The other factor with dairy and hay imports is that the newly-elected Japanese Prime Minister Shinzo Abe is devaluing the yen which made it much more expensive for dairy farmers to buy product so they have been chasing a lower quality and lower price product."
The beef industry is experiencing similar decreases in farm and cow numbers while the size of operations are growing.
"Another concern facing beef producers is the continual impact of the Fukushima nuclear accident in 2011 and residue in beef and with an increase in beef imports, there is a flow-on effect to the amount of hay imported."
Mr Smith said other traditional markets for Australian hay, Taiwan and Korea also remained stable.
Taiwan import between 45,000-50,000 tonnes of hay for its 150,000 head cow population.
"Taiwan also import a fair amount of wheat hay and like the really fine high quality stem and are prepared to pay for it.
"Korea import 135,000 to 1480,00t per year and while it is a very mature market, demand changes as the Korean government introduce quotas and then reduces them as a way of encouraging its rice farmers to grow barley for silage.
"However, they have had little success in making silage due to the wet conditions so Korean dairy farmers continue to take Australia hay and will take a wide range of quality, so if we have weather-damaged hay Korea is a market that can handle that product quite well.
China is emerging as Australia's largest fodder market, growing significantly since Australia's entry into the market in 2007 where it has experienced year on year growth.
The number of dairy cows in China grew from 55 million in 2001 to 12.3m in 2008 and 15 million in 2014.
Australian hay demand matched the growth with 14,048 tonnes was exported into China in 2011, growing to 163,721 in 2015, taking Australia's market share to 12pc in 2015.
"There is a fairly heavy corporate dairy focus in China, with one of our clients having 150,000 cows and 10,000 cow units around the provinces," Mr Smith said.
"They are really focused on their feed and quality and take a scientific approach to their feed requirements and they are working overtime to get high production out of their cows.
"There is also a reluctance to use the domestic grown irrigated oats as they can't get the sugar contents right and professional dairies are not really keen on it due to biosecurity issues such as foot and mouth disease."
Mr Smith said new market opportunities were opening up in the Middle East, Vietnam, Malaysia and Indonesia.
"Most exporters have done small volumes into the United Arab Emirates (UAE) but we can't seem to crack the market.
"There's no balance of trade - we can export up there but we have nothing to bring back. The US and Canada can do it a lot cheaper even though they are further away.
"However, by the end of next year there will be a change in irrigation policies and they have been investing in land in the US to grow lucerne and shipping back to the UAE."
He said while Vietnam, Malaysia and Indonesia are "tender type" systems of small volumes, they are understanding how to use hay in the ration and there was growth in these markets.
Hay exports would continue to grow over the next 12 months and beyond with plenty of hay at various qualities available.
In America 60pc of Timothy oats and alfalfa hay was damaged by rain which will lead to a shortage and increased competition.
"Total export tonnages from Australia reached around 910,000t in 2015 and I believe by the end of 2016 we will get to 950,000 and could reach 1,000,000t by 2017/18 on the back of the growth in the Chinese market," he said.
"There is a lot of good hay supply across all States and a lot of different grades because of the seasonal condition but this is a good thing as we will be able to supply all markets.
"The low cereal prices are also renewing the interest in hay so if you concentrate on oat quality the exporters will pay a reasonable amount."
