Ground Cover North : Ground Cover 065 November-December 2006 - North
HAY QUALITY STRENGTHENS MARKET GROWTH In recent years the market for Australian-grown hay has strengthened as its quality has been increasingly recognised by overseas buyers. Rebecca Thyer examines why hay demand is rising and also what new Japanese residue limits will mean n Australia’s ‘clean-and-green’ image is an important selling point for hay exporters, one that is becoming even more important to Australia’s major customer, Japan. Although domestic and export demand for Australian hay currently outstrips supply, the industry must stay on top of new export requirements – particularly stricter maximum residue limits (MRLs) that relate to herbicides and pesticides. Japan introduced more stringent MRLs on food and feed imports in May this year. Colin Peace, executive officer of the Australian Fodder Industry Association, says the industry has been proactive in addressing these new requirements. It is working with the Australian Government to improve market access and better align the Australian and Japanese MRLs. MRLs regulate the chemical residues allowed for food and feed imports. These limits vary for each chemical according to usage patterns, application method and rates and timing. Japan’s new MRL list includes 60 chemicals, of which 19 apply to Australian hay and straw producers. Australian producers also use another 40 chemicals that the Japanese are not monitoring yet. Mr Peace says it is likely Japan will extend its list to include additional chemicals. “So we are working together across industry to get technical information on these as well. That way we can also meet these requirements, if and when they are introduced. “We’re trying to be on the front foot, ahead of our competitors and we think we are achieving that, although the process will take a few years.” To meet new requirements, growers must follow existing practices – that is, apply chemicals in line with recommendations and keep spray diaries. Mr Peace says getting it right is crucial to the industry’s future. “Japan will impose a stricter testing regime if we make a mistake, and the cost of that regime will be borne by the Australian industry. Everyone is dependent on each other to make sure we get this right.” Michael Mackie, director of hay exporter Gilmac, agrees. “It’s not a big deal unless we get it wrong. We don’t want to have to test all hay for chemical residues on a routine basis because the costs will be huge. “We’ve got to make sure we are faultless. We have to look at what our customers want and perform better.” Growers who can produce hay of the right quality will have a ready market for their product, Mr Mackie says, as demand will only rise over the coming years. With beef and dairy production increasing in Asia, demand for quality feed also rises. The industry predicts that Australia will be exporting one million tonnes of hay a year by 2010, almost double the current 600,000 tonnes. In addition, demand for straw is also increasing. Murray Smith, marketing director for SA-based Balco Australia, is confident exports will increase, based on growth over the past few years. “It’s already above a threshold that we thought it would reach.” A merger with Elders Hycube has seen Balco expand from its SA base to operate Elders Hycube’s two hay-processing plants at Brookton in Western Australia and Boort, Victoria. It also operates in NSW. The company exports 150,000 tonnes of hay a year to Japan, Korea and Taiwan, but Mr Smith believes this figure – which includes oaten hay, cereal hay and triticale – will increase as demand increases. He says China also offers new opportunities as its dairy industry expands. Gilmac’s Michael Mackie concurs. He says that increasing affluence is driving dairy and meat industries worldwide, in particular in the emerging economies, and this is lifting demand for quality stockfeed: “It is a growing market for specialist hay exporters, and we are displacing US exporters because of the quality and consistency of our product.” Quality cereal hay provides one of the highest cash returns per hectare, he says. “It’s not just a break crop any more.” Gilmac’s main markets are Japan, Korea and Taiwan, although it too views China as a potentially significant customer. “There are five million dairy cows in production in China now,” says Mr Mackie. “By 2010 there will probably be 10 million and 20 million by the time they get to the level they are aiming at. The Chinese Government has made dairying a priority.” Chris Johnson, from SA-based J T Johnson and Sons, agrees with the positive outlook. “The Chinese market is looking promising, and while the Japanese market will not grow so much from now on, Korea and Taiwan are emerging as contenders, with livestock practices creating opportunities for Australian hay products. “The market for Australian hay is so strong there is not enough hay to meet market requirements, so prices will stay high.” He says oaten hay is growing strongly for a few reasons – product consistency, performance results from animals and competitive pricing. Johnson’s main market is Japan, with other markets in Korea, Taiwan, Singapore and the Middle East. It sells oaten hay, wheat and barley straw, lucerne hay, oats, cotton seed, cattle, sheep and dairy pellets. All three exporters agree that for Australia to continue on this winning streak it needs to hold on to its clean-and-green image by remaining residue-free; a move which will require research and development and a sustained commitment to quality assurance. Balco’s Murray Smith says the company has created its own traceability and quality assurance package, ‘Haycare’, which it introduced late last year. Stringent checks are made of growers’ paddocks before, during and after growing. When baled, hay is tested for quality, colour and contaminants. Balco’s managing director Malcolm May says Japanese dairy and beef producers are legally required to have three years of past history, including where feed originated. “With Haycare we can take them to the paddocks where the product is grown. They like this.” Gilmac’s Michael Mackie says the Japanese dairy industry is responsible for professionalising the Australian hay industry. “Hay produced in Australia used to be pretty marginal, but now it is a specialist crop. We have an objective basis for grading hay and place a huge emphasis on quality.” Australian hay exporters have faced quality and disease issues before and know the importance of having systems in place to prevent disease and its spread. Following an outbreak of annual ryegrass toxicity (ARGT) in the late 1990s, the hay export industry was stopped for several months. Realising potential export problems, the industry acted to make sure that only licensed exporters could export and that hay was tested for ARGT. All specialist exporters say contamination and quality remain the two determinants of the industry’s future, and are the areas where R&D needs to be concentrated. “We’re trying to get a fodder levy in place so that everyone can contribute to an R&D fund,” Mr Smith says. “There is a voluntary levy among some exporters, but a wider levy would allow more R&D, which is critical.” More information: Colin Peace, 03 9530 2199, email@example.com; Michael Mackie, 03 9576 1577, firstname.lastname@example.org; Murray Smith, email@example.com NOVEMBER -- DECEMBER 2006 GROUND COVER 21 Hay exports Balco's Murray Smith and Malcolm May: the company has created its own traceability and quality assurance package.
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