Australia’s $160-million hay export market to China could be the latest casualty in the ongoing trade tensions between China and Australia.
- China has failed to renew dozens of hay export licences
- China is Australia’s second largest fodder export market, worth $160 million
- Hay growers are under pressure to change planting plans this season
Since the end of last month, 28 Australian businesses exporting hay to China have not had their expired permits renewed.
Western Australia grows just under half of Australia’s 1.2 million tonnes of hay and straw exports, with South Australia and Victoria other key hay-growing states.
Key markets include Japan, South Korea and Taiwan but China has become a significant buyer of Australian fodder in recent years due to the growth of its dairy herd.
It was buying about 350,000t annually.
Australia’s largest hay exporter, Gilmac, operates five pressing sites in three states with 150 employees nationally.
General manager Munro Patchett said about six months ago applications were made to the General Administration of Customs China (GACC) for renewed five-year export permits.
“To date, the registrations have not been renewed,” he said.
“The GACC it aware of our applications and they’ve said that they’re working on it and that they’ll get back in touch with us.”
Not related to trade tensions
Mr Patchett shied away from suggestions hay could be the latest commodity caught in trade tensions between China and Australia.
“Three companies are still able to export because their expiry isn’t until 2023,” he said.
“I just think it’s probably a smaller industry and they’re busy doing other things.”
Mr Patchett believed that pandemic travel restrictions caused by the pandemic could have affected the renewal of permits.
“They have a process where [Chinese officials] come out and inspect our facilities and make sure we’re doing the right thing and our hygiene standards are correct and they’re not able to travel out here,” he said.
“Maybe that’s having an impact.
“Maybe they’re trying to work out how to renew it without doing those sorts of things. We don’t actually know at the moment.”
Mr Patchett said communications were still open between the hay industry and the GACC and, while he wanted the situation resolved soon, he said growers should be aware of the potential market loss and change planting plans accordingly.
“If it’s not [resolved] I think it’s good that farmers are already thinking about what they might do,” he said.
In WA, farmers are about to start seeding and some say they may reduce the amount of hay they grow in favour of other grains or canola.
Seeding plans change
Narembeen hay grower Justin Fidge said he expected the price of hay to drop by about 20 per cent.
He said uncertainty with the Chinese market came at a precarious time for crop decision-making.
“I won’t react too strongly,” he said.
“I’m not going to plant as much hay.
“I’ll probably swing a bit over to other cereals if weed control isn’t too much of an issue.”
Merredin grower Peter Lynch was also planning to scale back his hay plantings, but would still put in 1,000 hectares of oaten hay.
Mr Lynch said he had been anticipating losing the Chinese hay market.
“They’re dropping off everything from Australia,” he said.
“That’s how I’ve felt, that it was … going to come.”
However, Mr Lynch, who has been growing hay for about 20 years, said peaks and trough in demand and pricing were a normal part of the hay industry.
“It runs in a cycle,” he said.
“My gut feeling is every five years there seems to be this cycle.