- Author: Daniel H Putnam
- Author: William Matthews
- Author: Daniel A Sumner
The western hay industry is in the midst of another dramatic increase in hay exports in 2017, following similar increases in 2016 and 2015. Hay volumes have grown 56% and value increased 47% in the past 3 years (Figure 1).
The dramatic rise of hay exports is one of the most interesting trends for western alfalfa and grass hay production over the past two decades. Japan has been importing hay products for more than 20 years (Figure 2), but recent expansion of the demand has come from China, UAE, Korea, and, just recently, Saudi Arabia (Figure 2, Table 1). {See related article about emerging Saudi demand from March, 2017 "Growth in Saudi Demand Likely to have World-Wide Impacts"}
Exports have grown from a minor footnote in the hay market to a major chapter for the western US states that are the primary participants in that market. Exports totaled 4.8 million Metric tonnes (MT) from western ports in 2016 (Table 1), and if current trends hold, exports are likely to exceed 5 million MT in 2017. Hay exports were valued at $1.4 billion from the western US in 2016 and, although there has been a slowdown of exports in the late summer, are on track to exceed that value in 2017 (Table 1).
Table 1. Comparison of 2015 and 2016 US Alfalfa and All Hay Exports to Top Destination Countries from Western Ports
Destinations: Primarily Asia and the Middle East. Including grass hay, Japan was the largest destination for US hay exports. About 60 percent of the 1.6 million MT of hay products exported to Japan were non-alfalfa grass hays. China purchased the most U.S. alfalfa hay in 2016 accounting for about 42 percent of total alfalfa exports. U.S. hay exporters experienced dramatic increases in the volume of product shipped to Saudi Arabia in 2016. Increases of close to 260 percent in alfalfa hay exports to the Saudi Kingdom may end up surpassing the UAE as largest destination country in the Middle East in 2017 (Table 1).
Figure 2. Volume of US Hay Exports from Western Ports by Top 6 Destination Countries, 1996-2016. Over 98% of all hay exports are from western ports. Western ports include all ports in California, Oregon and Washington. Source: US Dept. of Commerce.
Hay is growing into an International Commodity. Hay is a bulky commodity, and historically used mostly on-farm in most of the United States, and still is for most regions. However, in the western regions, hay has had a long history of movement via animal power, trucks, rail, or even river-navigating barges (see Figure 3).
Even today, it's likely that >85-95% of western-grown alfalfa and grass hays move off fields to a point of consumption some distance away from where it is grown. Hay trucks are a common site on western highways. This is contrasted with many eastern US regions, where only 5-20% of hay may move off-farm. Western farms typically utilize larger bale packages (e.g. 700 kg), mechanical pickup, the use of ‘squeezes' (modified fork lifts), and flatbed or van-type trucks.
From domestic hay shipping technology, it's just an additional step to ship overseas. The key factors which have enabled overseas shipment of hay have been 1) Availability of high-quality western-grown alfalfa and grass hay products, 2) Domestic trucking infrastructure, 3) Inexpensive container costs due to returned empty containers to Asia, and 4) improved technology and expertise for double compression and handling, further reducing overseas costs. The imbalance of trade with Asia has been a major factor in reducing costs of cross-ocean back-hauls.
The imbalance of trade has even made inland trucking more favorable within the US. Back-hauls with containers or vans to the ports has made domestic inland shipping more affordable for exporters, since cheaper rates can be negotiated.
What is Exported? Hay exports were approximately 56% alfalfa (Medicago sativa) hay and 44% grass hay in 2016. For comparison, hay production in western states was about 82 percent alfalfa and 18 percent grass hay, so a disproportionate volume of grass hay production is exported. The primary grass species for export are timothy (Phleum pratense), mostly from the Pacific Northwest, and sudangrass (Sorghum bicolor), kleingrass (Panicum coloratum) and bermudagrass (Cynodon dactylon). The latter warm-season grasses are primarily grown in Southern California and Arizona. Although historically, a wide range of hay qualities have been exported, increasingly countries are demanding higher quality ‘dairy quality' hays (e.g. Supreme and Premium alfalfa), especially for China and Saudi Arabia, countries which have large dairy farms and a shortage of domestic high quality alfalfa hays. Emphasis is often on good color, adequate protein, and free of weeds, molds or other faults, but more recently low fiber, high digestibility hays are demanded by modern overseas dairies.
The primary packages used is double compressed hay, wherein normal large or small bales are re-cut to a customer's specifications, and re-packaged with compression wrapping to improve shipping efficiency. Cubes and pellets are also exported.
How big a footprint? Exports still make up a minor component of US hay production (<4% for all hay and <5% for alfalfa, Figure 4). However, exports now make up the equivalent of nearly 15% of the alfalfa production and 51% of the grass hay production volume in the seven western states (Figure 5) that are the major export producers (AZ, CA, ID, NV, OR, WA, UT). While some exported hay may come from further east, the majority of hay exported comes from these seven states.
Figure 4. Share of US hay production exported, 1998-2016. Source: US Dept. of Commerce and USDA-NASS.
Figure 5. Western Exports expressed as a percentage of Western states' production (including Arizona, California, Idaho, Nevada, Oregon, Utah and Washington). Western ports include all ports in California, Oregon and Washington. Source: US Dept. of Commerce and USDA-NASS. Note: although some exported hay comes from other states, it is thought that a vast majority originates in these states.
Figure 6. Monthly trends of the value of alfalfa exports from western US states, 2014-2017 (Dept. of Commerce data).
Recent Trends: Late in 2017, the increases in exports may be moderating, although it's too early to tell (Figure 6). This may be due to the inching up of hay prices in the western US over the summer period, or the softening of demand in some countries. Exports have bounced back a little in August after falling in July, but still down from a year earlier. There have been increases in exports from Seattle/Tacoma compared with a year ago. It will be interesting to see whether the increases observed from January - July hold for August-December of 2017. Higher prices observed for high quality alfalfa hays in late summer/fall may have had a dampening effect on export demand.
The Saudi Situation – A million tons imported by 2019? Some experts have estimated that an additional 750 MT per year by 2019 might be required in addition to the volume imported into the Kingdom in 2017 (USDA-FAS reports). Since about 350,000 tons may be imported to the kingdom this year, this may bring the total up to over 1 million tonnes/year. However, it is clear that not all of this will originate in the United States – whether sufficient volume can be obtained is one question, and additionally, the Middle East destinations do not have the large shipping advantage as do Asian ports. The rapid expansion of Saudi demand is the result of the prohibition on continued plantings of alfalfa in the Arabian peninsula due to water limitations. The same decision was made in the UAE a number of years ago, and in the past 10 years, hay exports to the UAE have risen from miniscule to nearly 400,000 MT in 2016 (Table 1). The large size of the Saudi Arabia, coupled with its vigorous and modern dairy farms make the demand from Saudi Arabia an important development. The water linkage for the Saudi demand is unmistakable (see blog in this series: Growth in Saudi Hay Demand likely to have World-Wide Impacts - and illustrates the Global Nature of Water Limitations).
Summary
The rise in export demand from China, Korea, and UAE and very recently Saudi Arabia has increased demand for alfalfa and grassy hays exported from western US ports in 2014-2017 period. 2017 may be on track to exceed 5 million MT of hay products exported, both grasses and alfalfa, from western ports (as a reference, California produced a little over 5.5 million MT in 2016). The China market started at near zero 10 years ago, and now exceeds 1.5 million MT of hay imported from the US. Saudi Arabia imports were near zero 4 years ago, and are projected by some to exceed 1 million MT in a year or two, but not all of this will originate in the US. Although historically a minor export agricultural product, alfalfa hay exports have risen to the equivalent of over 15% of alfalfa production, and 50% of the grass hay production from the 7 western-most states. Given the world demand for forages, primarily for dairy production, the hay export markets may be an important component of the western US hay production scene for years to come.