EXPORT OATEN HAYOpportunities for grain growers

Overview• The product• Why grow export hay• Markets

• Key export markets• New markets

• Key messages

The product• Farm bales compressed prior to export• Largely driven by the Japanese market• Majority high quality oaten hay• Smaller volumes of straw and lucerne hay • Mainly used for dairy and beef, smaller horses market• Customer requirements;

• chemical residues, ARGT, traceability, purity

The product – quality oaten hay • Subjective desirable attributes

• Good colour & aroma, sweet taste, fine texture

• Measured attributes for premium grade (Japan)• ADF % in DM more than 30-34• WSC % in DM more than 12-25• DDM % greater than58-60 • Moisture % less than 12-14• Stem thickness less than 6-12mm

• Minimal weather damage• Variety is important

Why grow export hay? • Risk management

• Frost• Enterprise mix• Different set of market/price drivers to grain

• Weed management • Crop rotation• Good returns if done well• Cash flow management

Typical Hay, Silage and Straw Demand by SectorExpressed as Dry Matter

Dairy62%

Horse6%

Beef Feedlots7%

Other - on farm13%

Export hay/straw10%

Export pellets1%

Composters1%

Export stats• Australia typically exports over 700,000 Mt annually• WA biggest export state - typically over $40%• SA and Vic other key export states

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1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Australian hay export tonnage 1988-2013

Australia Total Export TonnesWA Export Tonnes

Who is the Customer

• Australia has a strong role in feeding Asia; • Key products meat and milk• Animal feed to support meat and milk production

• Australia has exported to +50 countries• Australia's key export markets

• Now;• Japan (biggest and most mature)• Korea (growing in value and size)• Taiwan (good steady market)

• Future;• China (or is it now?)• Middle East • India

Japan“biggest and most mature”

• Australia's oldest and most important export hay market• Typically takes better quality oaten hay for the dairy and

beef market;• High yielding dairy cows• Wagyu beef production

• In 2014 imported over 443619 Australian hay and straw

Korea“growing in value and size”

• Has been a good market for Australia in the past 12 months

• Focused on the dairy industry• Korea has a demand for low price, mid quality hay• In 2014 imported over 160134 mt of Australian hay and

straw

Taiwan“mature well educated market”

• The market prefers high quality hay (oaten and wheaten) with high analysis results

• Focused on the dairy industry• In 2014 Taiwan has imported approximately 46601 mt of

Australian hay and straw

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2011 2012 2013 2014

Australian export hay tonnage 2011-2014

Japan

South Korea

Taiwan

China

China

• Market Drivers• Growing population• Increased standard of living

• growing middle class consuming more meat and milk

• Large dairy growth –• farms with 5,000-10,000+ cows

• Focused on production & efficiency of scale• Large number of buyers

China• What do they want?

• More stock feed!• Good information on the product• Fodder to drive productivity in dairy systems• More dairy cows

Who has market access?• China is unique that it requires individual market access

arrangements for each country and product• Current fodder access includes;

• US – Lucerne• Canada – Lucerne• Spain – Lucerne (recent market entrant)• Australia – Oaten Hay

• Great synergies for using both alfalfa and oaten• Works well in Australian dairy systems

Take home messages…..• Australia has a well established export hay industry• Grain growers should look at their farming system and

consider growing hay for the export market• If targeting export do it properly!• Growth in demand from China has created new

opportunities for growers