8 August 1997

AMERICANS MAKE HAY AS FAR EAST EXPANDS HERDS

The Far East market for hay is proving lucrative for US producers.

Mike Williams reports

DAIRY and beef farmers in Japan and other Far East countries are buying 1.5m tonnes of hay a year from the United States and Canada, and the market is still expanding.

Although Japan is easily the biggest market, Korea is also emerging as a major importer and there is growing demand in Taiwan. The customers in all three countries are farmers who rely on purchased feeds to expand their stock numbers at a time when demand for beef and dairy products is growing rapidly.

One of the farmers who is helping to meet the demand is Jim Kuhn, president of Kuhn Farms at El Centro in southern California. His 4000ha (10,000 acres) are cropped with Sudan and Bermuda grass and alfalfa for hay production, and he harvests another 2000ha (5000 acres) from land he farms on a contract basis. With export markets currently boosting demand he is also buying in standing crops to cut and bale with his own equipment.

Kuhn Farms is in an area with less than 75mm (3in) of rainfall each year, but 700 farms in the area share an irrigation scheme with plentiful supplies of water costing the equivalent of about £20.50/ha (£8.30/acre) foot – enough to cover an acre to a depth of one foot. Mr Kuhn expects to harvest his grass at least four times a year and take up to eight cuts of alfalfa. Self-propelled windrowers do the cutting and about 80% of the crop goes into small conventional bales and the rest into big square bales.

Mr Kuhn sells some of the hay locally, feeds some to the 800 Jerseys and 1200 Holsteins in his dairy feedlot, and the rest is packed and exported to the Far East. Kuhn Farms, which has its main hay storage and handling depot beside a railway siding, also operates a packing and shipping service for other hay growers in the area.

"The Far East market has grown very quickly, and we think there is a lot more growth still to come," he said. "The Japanese market is still expanding, but Korea is also emerging as a very big market.

High grain diet

"They have to buy hay because their cattle are on a high grain diet, and they use the hay as a source of fibre. The customers are looking for hay with a low protein content and plenty of fibre, and that is what we can provide. A lot of farmers on the west coast are now growing for this market, and we are one of about 30 companies doing the packing and shipping."

The economics look attractive. The local ex-farm price for hay in small bales is $80/t to $90/t, equivalent to about £53/t at current exchange rates. Mr Kuhn says Japanese buyers are currently paying just over $300/t, or about £190/t.

To achieve this price Mr Kuhn and his fellow suppliers have to remove the strings from the small bales and put them through a compacting machine. This more than doubles the density, reducing the 1.2m (48in) long bales to between 45 and 50cm (18 and 20in) to provide a more economical container weight. This allows 25t to be packed into a standard 12m (40ft) container.

Compacted bales are bundled together and fastened with plastic tape to provide a pack which can be handled by a forklift, and each pack is wrapped round its circumference with plastic film. Film wrapping reduces the amount of dust released as the packs are loaded into the container and unloaded again at the other end, providing a more acceptable environment for the forklift operators.

Profitable

One of the factors which helps to make hay exporting profitable, says Mr Kuhn, is the massive imbalance in the trade in manufactured goods between the United States and the industrialised countries in the Far East. Japan, Korea and Taiwan all export far more to the States than they import, and this creates problems for the container companies which have a stream of loaded containers going one way, but a shortage of loads for the return journey to the Far East.

"It means a lot of the containers are returned empty, which the container companies dont like," explains Mr Kuhn. "This makes it possible for small operators like ourselves to negotiate very favourable rates for shipping hay.

"You probably have a similar situation in Europe, because you also have a trade imbalance with countries like Japan. The situation is different in Australia, and I think this may be one reason why we havent seen any competition from Australian growers when we are exporting hay. If you have to pay the full rate for containers it would make a lot of difference to the profitability," he says. &#42

Californian farmer Jim Kuhn – packing and exporting hay to the feed dairy cows in the Far East.

Kuhn Farms grows 4000ha (10,000 acres) of grass and alfalfa for hay, and 2000ha (5000 acres) of hay is harvested on a contract farming basis.