Haymakers raise the bar
GroundCover™ Issue: 119 | 02 Nov 2015 | Author: Tom Bicknell
At a glance
- The Australian fodder industry has an estimated value of more than $1.5 billion. It provides a large proportion of the diet of Australia’s dairy herd and beef feedlots, and its exports have grown from 100,000 tonnes to more than 811,000t in the past 15 years with indications this will continue to grow.
- In addition to its own income stream, adding hay to crop rotations delivers several agronomic benefits. These include risk management when grain crops are affected by drought or frost (see Hicks case study page 26), a disease break and in the case of crops such as pea hay, a nitrogen source, and as a weeds management tool by extending the life of crop sequences and herbicide options.
The outlook for the hay and fodder industry is looking bright as Australian producers meet increasingly sophisticated market requirements
While agriculture generally is facing challenging times with neither markets nor the climate offering too much in the way of stability, optimism is high among specialist hay producers.
This quiet broadacre achiever has become a sophisticated industry in its own right in recent years, bolstered by rising demand in Asia for high-quality Australian fodder and a domestic market facing an El Niño year.
The Australian Bureau of Statistics puts annual production at about eight million tonnes, although the executive officer of the Australian Fodder Industry Association, Darren Keating, says getting a solid picture of the volumes of hay and fodder produced each year is tricky as so much of it is used on-farm. About one-third of Australian growers produce some hay or fodder.
Of the known production, 10 to 15 per cent is exported, a proportion that added up to more than 800,000t in 2014-15. Much of this is from South Australia and Western Australia.
“It’s exciting times,” says Gavin Schuster, a hay grower from Freeling, north of Adelaide. “You don’t need to be down in the dumps about the hay market. There are lots of opportunities.”
The biggest growth in the industry at the moment can be found in the export market, led by booming demand out of mainland China.
“The key areas are Japan (which is about half of our exports) and it rolls on from there to South Korea and Taiwan, and then mainland China,” Mr Keating says. “In the past three years, China has gone from 17,000 to 18,000t to more than 120,000t, and it’s likely to keep growing.” (Figure 1)
That growth has come exclusively from oaten hay, which is the only fodder crop Australia is able to sell to China.
China’s dairy industry is booming, and with it demand for fodder. Rabobank estimated the country’s fodder imports grew 100 per cent each year between 2008 and 2012 before slowing to a more modest 50 per cent annual growth rate.
“A lot of large-scale dairy operations have been put in place in China, and medium-sized dairies are also picking up their nutrition game,” Mr Keating says. “Everyone is talking about the growth of China.”
Mr Keating expects that country’s growth to stabilise in the next few years, but not before it overtakes Taiwan to become Australia’s third-largest hay export market, a shift expected to take place by the end of this year.
However, China is just one part of the expanding exports story. Western Australian-based Gilmac is Australia’s largest hay exporter, and it is finding a home for as much hay as it can process in Japan, South Korea and Taiwan. The company’s general manager Munro Patchett says Gilmac plans to keep supplying its traditional markets, but adds that the company will look at entering China if additional hay is available.
Mr Patchett says the initial demand from China was for low-grade cheap hay, but today, as with other markets, the demand is for a much more sophisticated product that meets feed specifications: “They don’t want the best hay, but they still want good stuff.”
The supply challenge
Catering to those export growth opportunities while also supplying the hungry domestic market is likely to put pressure on supply availability this year, particularly in light of drier conditions and El Niño predictions.
Gilmac is stepping up with a new processing operation at Wagin in WA, the company’s fifth processing plant, combining with operations in Goornong in Victoria, Balaklava in SA, and York and New Norcia in WA. The plant has added 50,000t of processing capacity and 25,000t of on-site storage to be fully operational for the start of this year’s hay crop in September/October.
“There was a hole for Gilmac in the south-west area where lots of hay is grown, but we had to cart it to our other site in York, which was too far,” Mr Patchett explains. “We had a lot of interest and saw an opportunity to give people what they want, and we’ve had more growers come on board to deliver to us.”
The new Wagin plant is a key part of Gilmac’s strategy to have consistent supply for 12 months of the year. Sourcing, processing and storing hay from across the southern half of the country means the company can weather seasonal fluctuations in individual regions. Reliable supply is critical to establishing strong ongoing relationships in the export market, to the point where Gilmac carries-over three to four months’ worth of hay at the end of each season to ensure there are no gaps in availability.
“Over the southern half of Australia, we’re in the best hay-growing areas; we’ve located our sites in the middle of those regions,” Mr Patchett says. “It’s important to always have enough hay in the shed, and to do that we’ve built additional shedding. We can take the hay early on, and our customers know that we will still have hay at the end of the season.”
The Wagin plant is the latest version of Gilmac’s processing equipment, which the company designs and manufactures in-house at its engineering facility in the Perth suburb of Midvale. The majority of Gilmac’s processing is done on equipment that cannot be bought anywhere else, with the result that the company’s engineering team is continuously tweaking and improving the design.
“It’s about getting an extra few per cent out of it, to make the product look a bit better. That all counts in the market,” Mr Patchett says.
A key motivation has been to make the processing plants more automated and have a higher throughput. Gilmac’s original processing machines were capable of 40,000t throughput each year, but after years of improvement those operations are now processing 80,000t annually with the same number of staff. “And we’ll keep doing that – you have to, or you fall behind,” Mr Patchett says.
Hay buyers in both domestic and international markets are becoming increasingly sophisticated in their demands for quality, and objective feed tests are steadily replacing traditional practices in buyers’ decision-making. That sophistication in demand is in turn shifting how the industry is producing and processing hay.“A lot of farms have been in the habit of hay being a by-product of a failed crop,” says Stewart Hamilton, a hay grower near Inverleigh, Victoria.
“Now the domestic market is big enough with people pushing supplementary feeding more, so the market for a high-quality hay is getting bigger. All of a sudden you have to plan better and use better varieties, better inputs, better everything to meet that quality demand.
“People are generally now buying on feed tests. It’s not subjective … more technical. They’ll sit there on the calculator and figure out the protein and everything else they want.”
Hitting those high-quality nutritional test results requires good management and good planning. A traditional challenge for hay growers has been the time it takes to harvest a crop. Bringing in hay over the course of a few weeks can lead to variation in quality because of changes in weather and different growing times.
For the Schuster family, a new level of consistency has been achieved by harvesting over the space of a few days. To do this they bale directly into large square bales in the field, which has increased their harvesting rate and provided a host of storage and logistic advantages.
The family has invested in a custom-designed baling machine that slices large square bales into small bales, bound with twine. They process stored large bales into these smaller formats for the market over the year, turning out about 3000t annually.
“The advantage (at harvest) of the big bales over little ones is that you can do a lot of tonnage fast in big bales,” Mr Schuster says. “Our quality and consistency is now much better, because we can bale it all at once.”
Storing hay in the large bales – the Schusters supply hay 12 months of the year from 12,000 square metres of storage sheds – maintains quality and colour better, and as the large bales are so dense they do not experience the mice problems that often plague traditional small bales.
The custom baling machine turns out small bales that share that higher density. Weighing the same as traditional small bales but taking up less room. The machine loads them onto pallets, 18 bales per 1.2m pallet.
“Manual handling of small bales is a thing of the past, and now with bales on pallets, trucks can be loaded with 1200 bales in less than an hour with no sweat,” Mr Schuster says.
More information:Darren Keating, AFIA,
0437 103 848, 03 9530 2199,
0428 811 407,
0407 329 019,
Region National, Overseas, South, West
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