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Hay Supply and Demand Report

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					Hay Supply and Demand Report




A dairy perspective for season 2008/09


                                                      September 2009
                                                          Prepared for the



                                                    Dairy Australia
                                                                      by
                               Australian Fodder Industry Association Ltd


Hay supply and demand report                                         Page 1
Contents

                                                  Page
            Executive Summary                     3
            Objectives and methodology            5
            Victorian hay production              6
            New South Wales hay production        7
            South Australian hay production       9
            Queensland hay production             10
            Western Australian hay production     11
            Tasmanian hay production              11
            Supply and demand analysis            12
            Further analysis                      14
            Implications for the dairy industry   14




Hay supply and demand report                             Page 2
Executive Summary
This report has been commissioned to provide hay production estimates for season 2008/09 and
draw some conclusions on the adequacy of fodder supply for livestock producers for 2009.
Drought was again another major factor for hay producers during season 2008/09. Unlike season
2007/08, the poor winter and spring rains of 2008 also reduced hay produced from cereal crops.
Despite the drought of 2007 restricted crops during grain filling, many crops had sufficient bulk for
grain growers to cut them for hay. If crops are established, hay buyers are willing and grain growers
are prepared to make hay, dry spring conditions can provide favourable a hay supply for dairy
farmers.
With recent survey updates from Australian Bureau of Statistics, we now know that season 2007/08
produced 8.0 mmt a record for Australia. Total hay production reduced from 8.0 million tonnes in
2007/08 to an estimated 5.4 mmt in 2008/09.


                                                                    Australian Hay Production
                                                                             FIve year comparision

                               3,000,000


                               2,500,000


                               2,000,000
  Production (tonnes)




                               1,500,000


                               1,000,000


                                  500,000


                                            0
                                                Western Australia   South Australia    Victoria      News South Wales   Queesland   Tasmania
                        2000/01 ABS Census          826,783            863,815        2,852,068         1,100,335        451,693    288,225
                        2002/03 ABS Survey          905,937            597,133        1,718,397          916,272         543,527    182,578
                        2006/07 ABS Survey         1,031,108           612,378        1,762,288         1,070,233        482,299    186,013
                        2007/08 ABS Survey         1,463,249           890,833        2,916,187         1,862,507        609,944    297,727
                        2008/09 AFIA Est'          1,203,847           783,690        1,750,163          877,282         523,569    182,578




Pasture hay production in the South Eastern states was significantly reduced in the 2008 growing
season with Victoria, New South Wales and South Australia the hardest hit. With the reduced
allocations available to irrigators in the south eastern corner of Australia, irrigated pasture hay
supply was once greatly reduced. Spring rains in the 1st and 2nd decile range limited pasture
production (see diagram below).




Hay supply and demand report                                                                                                                  Page 3
The survey and analysis of twine sales for season 2008/09 has shown that hay production in the
south east of Australia was as little as 50% of the record year of 2007/08. In our analysis we have
tended to use a conservative reduction in hay production in season 2008/09 as often reports of
reduced hay production can be exaggerated.
When considering the total estimated hay production, hay exports and the portion of hay normally
available for dairy use, the hay supply and demand are adequate for south eastern Australia for
season 2008/09. Sufficient hay stocks are available for dairy farmers prior to the new 2009/10
season.
This has only been achievable through reduced demand from dairy farmers. The analysis assumes an
average 200 kg per cow per year reduction in hay demand in all regions.




Hay supply and demand report                                                                 Page 4
                               Hay Supply Estimate Report

Objective

To analyze fodder supply and demand across Australia to determine the likely adequacy of supply to
the livestock industries for the winter/spring period of 2009.

This analysis can be used as a planning tool for dairy farmers with the objective aiming to secure
feed supply for dairy cows.

This data includes production levels of fodder by fodder type (lucerne hay, pasture hay, cereal hay
and other hay) and by ABS Statistical division in each state.

Methodology

The analysis of the 2008/09 hay production estimates is based on estimates benchmarked to verified
statistics by ABS survey and census data. The bank of data used included:

    a)   2007/08 ABS production survey data
    b)   2006/07 ABS production survey data
    c)   A year of “normal” production - season 2005/06(ABS Census data)
    d)   A year of “below normal” production - 2002/03 (ABS Survey data)

Production estimates were sought from phone surveys of hay producers and contractors throughout
Australia. Further to this, twine and netwrap sales from crop packaging companies were also
aggregated to further verify hay production in the 2008/09 season.

The supply and demand analysis was completed with estimates of hay and straw exports and
domestic demand. Domestic demand was based on information provided by Dairy Australia.

Correction of 2007/08 data

The ABS data for 2007/08 is characterized by error factors between 10 and 25%. The data has been
used as provided from the ABS although some production numbers do appear much higher than
expected.

The estimate made in 2008 for 2007/08 Victorian hay production was 2.772 mmt from 942 kha. In
2009 the final ABS survey reports the actual as 2.909 mmt from 958 kha.




Hay supply and demand report                                                                    Page 5
Victoria
Total Victorian production was estimated to decline from 2.916 mmt in 2007/08 to 1.750 in 2008/09.
With around 40% of Victorian hay produced in Western Victoria, the growing conditions in south
west of the state are critical for hay production. 2007 was characterised by ideal spring rains in
Western Victoria and generous supply of cereal hay from failed grain crops. However in 2008 hay
production decreased due to a dry spring and growing season in Northern Victoria, Southern NSW as
well as Western Victoria. Rains in the south west of the state in late November 2008 did little to
recover hay production. Most hay was cut in late October and early November in the region.
Cereal hay production in the Western District did not suffer as much as pasture hay production.
Silage is an important part of fodder conservation in this region and contractors estimated
production declined approximately 40% from 2007.
Compared to the previous year, twine and netwrap sales in Western Victoria were down between 40
to 50%.


                                                                        Victorian Hay Production
                                                                                 Five Year Comparison
                                800,000


                                700,000


                                600,000
  Production (tonnes)




                                500,000


                                400,000


                                300,000


                                200,000


                                100,000


                                            0
                                                                      Western     Central                                             Ovens-      East
                                                Melbourne   Barwon                           Wimmera   Mallee    Loddon    Goulburn                         Gippsland
                                                                      District   Highlands                                            Murray    Gippsland
                        2000/01 ABS Census       78,501     171,543   711,691    196,939     143,733   148,133   161,934   604,401    78,154    192,620     364,418
                        2002/03 ABS Survey       33,518     90,852    538,614     95,722      76,233   102,872   53,100    283,681    55,360     87,791     300,654
                        2006/07 ABS Survey       49,983     97,348    422,464    214,799     133,886   91,610    81,247    393,817    52,443     81,947     142,744
                        2007/08 ABS Survey       71,825     161,775   726,364    132,155     364,986   206,800   192,639   450,653    114,645   202,746     291,600
                        2008/09 AFIA Est'        35,700     77,904    342,185     74,246     216,801   140,606   146,311   290,004    72,372    148,110     205,925




Wimmera grain growers prefer to harvest grain rather than cut crops for hay, however baling contractors
estimated that around 10 percent of crops in some areas were cut for hay as a result of the poor finish to the
season. Twine sales were down 40% from 2007 levels.

Irrigation allocations around 35% and high prices for temporary water restrained hay production in the
irrigated north. This was off set by further production of cereal hay from failed grain crops in the Mallee and
Loddon areas.

Gippsland was less tarnished by the drought. The November rains were still timely to boost pastures allowing
many to cut average tonnages of hay. Retail merchants reported a 30 % fall in twine sales in Gippsland.


Hay supply and demand report                                                                                                                         Page 6
                                                              Victorian Hay Production
                                                                         Crop makeup
                    800,000

                                                                                                              Non Cereal Crops
                    700,000                                                                                   Cereals (inc. Forage Sorghum)
                                                                                                              Pasture (excl. Lucerne)

                    600,000                                                                                   Lucerne



                    500,000
  Production (mt)




                    400,000


                    300,000


                    200,000


                    100,000


                         0
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              2000/01
                              2002/03
                              2006/07
                              2007/08
                              2008/09
                              Melbourne   Barwon   Western     Central Wimmera   Mallee   Loddon   Goulburn   Ovens-      East    Gippsland
                                                   District   Highlands                                       Murray    Gippsland



NSW

NSW hay production declined from 1.862 mmt in 2007/08 to an estimated 0.877 mmt in 2008/09.
The four main hay producing Statistical Divisions of the state, Northern, Central West, Murrumbidgee and
Murray had a mixed production season in 2008. In the Northern Division, spring rainfall was much better than
in 2007 and 2002. Although pasture and lucerne production were much higher, cereal hay production was a
minor contributor as most crops were harvested for grain.

Many crops in NSW and Victoria lacked the growth to make them viable for contractors and producers to cut
for hay in 2008. Poor growing conditions conspired against hay producers in the more southern areas,
particularly in the Murrumbidgee and Murray Divisions. Between Tocumwal and Corowa, baling contractors
reported that hay making activity was quiet in 2008 with approximately 10 – 15% of cereal crops cut for hay
and yields around 1t/ha.

Between Deniliquin and Berrigan most of the cereal crop died and very little baling took place. Growers were
reluctant to make hay based on the bad experiences they had in 2007 with defaults on sales contracts and hay
fires through spontaneous combustion.
The area around Deniliquin and Jerilderie was the worst affected in the Riverina and cut very little hay. One
haymaking contractor suggested that in north east Victoria and the Riverina, only 20% of the area cut for hay
in 2007 was cut in 2008.
Generally through the region hay production was down by 50% from 2007, however hay production in 2007
was abnormally high as drought stressed cereal and canola crops were cut for hay. Little canola hay and silage
was made in 2008.

Twine and netwrap sales were down 60% in southern NSW.

Central NSW was also ravaged by the drought and many crops were not bulky enough to make hay.



Hay supply and demand report                                                                                                                  Page 7
                                                                                                              New South Wales Hay Production
                                                                                                                                                            Five Year Comparison
                                                         450,000

                                                         400,000

                                                         350,000
  Hay Production (tonnes)




                                                         300,000

                                                         250,000

                                                         200,000

                                                         150,000

                                                         100,000

                                                              50,000

                                                                         0                                                                       Richmond-
                                                                                             Hunter                  Illawarra                                           Mid-North Coast                        Northern              North Western                 Central West               South Eastern              Murrumbidgee                          Murray
                                                                                                                                                   Tweed
                                          2000/01 ABS Census                             56,178                        11,637                       6,529                        8,621                          250,495                     81,441                     200,214                     76,737                        157,041                    241,062
                                          2002/03 ABS Survey                             56,451                        11,301                       4,544                        11,748                         177,759                     66,773                     185,221                     57,940                        165,376                    175,762
                                          2006/07 ABS Survey                             79,002                         8,939                      28,148                        28,796                         162,189                     91,802                     145,827                     57,006                        164,770                    295,519
                                          2007/08 ABS Survey                             52,670                        28,030                      14,965                        30,820                         222,750                    216,800                     324,175                     127,070                       433,559                    398,650
                                          2008/09 AFIA Est'                              64,110                        15,865                      17,900                        26,900                         173,476                     78,553                     140,524                     55,198                        149,960                    146,595




Another influential factor resulting in lower hay production in 2008 was grain producers were more
comfortable in grazing failed crops rather than cutting them for hay.


                                                                                                                                                        NSW Hay Production
                                                                                                                                                                                           Crop nakup
500,000

450,000
                                                                              Non Cereal Crops
400,000                                                                       Cereals (inc. Forage Sorghum)
                                                                              Pasture (excl. Lucerne)
350,000                                                                       Lucerne


300,000

250,000

200,000

150,000

100,000

 50,000

                            0
                                2000/01
                                          2002/03
                                                    2006/07
                                                               2007/08
                                                                         2008/09
                                                                                   2000/01
                                                                                               2002/03
                                                                                                         2006/07
                                                                                                                   2007/08
                                                                                                                             2008/09
                                                                                                                                       2000/01
                                                                                                                                                  2002/03
                                                                                                                                                             2006/07
                                                                                                                                                                       2007/08
                                                                                                                                                                                 2008/09
                                                                                                                                                                                           2000/01
                                                                                                                                                                                                      2002/03
                                                                                                                                                                                                                  2006/07
                                                                                                                                                                                                                            2007/08
                                                                                                                                                                                                                                      2008/09
                                                                                                                                                                                                                                                2000/01
                                                                                                                                                                                                                                                          2002/03
                                                                                                                                                                                                                                                                     2006/07
                                                                                                                                                                                                                                                                               2007/08
                                                                                                                                                                                                                                                                                         2008/09
                                                                                                                                                                                                                                                                                                   2000/01
                                                                                                                                                                                                                                                                                                             2002/03
                                                                                                                                                                                                                                                                                                                       2006/07
                                                                                                                                                                                                                                                                                                                                  2007/08
                                                                                                                                                                                                                                                                                                                                            2008/09
                                                                                                                                                                                                                                                                                                                                                      2000/01
                                                                                                                                                                                                                                                                                                                                                                 2002/03
                                                                                                                                                                                                                                                                                                                                                                           2006/07
                                                                                                                                                                                                                                                                                                                                                                                     2007/08
                                                                                                                                                                                                                                                                                                                                                                                               2008/09




                                              Hunter                                            Northern                                   North Western                                             Central West                                    South Eastern                                     Murrumbidgee                                                  Murray




Hay supply and demand report                                                                                                                                                                                                                                                                                                                                               Page 8
Around Wagga Wagga grain crops failed to produce sufficient bulk to cut for hay with many producers
abandoning crops or grazing them. Unlike the 2007 season, the dry spring did not boost hay production via
higher cereal hay production.

In the South Eastern Division, the Bega Valley was severely affected by the drought in 2008. Twine and
netwrap sales were reportedly down 70%. The region relies heavily on spring rain for growth and this did not
occur in 2008, resulting in little conserved fodder. This region has been actively purchasing hay during autumn
and winter from the Wimmera in Victoria, South Eastern South Australia and Southern and Central NSW.



South Australia
The total hay production in South Australia declined from 890 kmt in 2007/08 to 770 kmt in
2008/09.
In the South East of South Australia production was down in 2008 by approximately 20%, like
Northern Victoria and Southern NSW this region cut large acreages of drought stressed cereal crops
in 2007. Although some good winter rains fell in 2008, another dry spring took its toll on pasture
production and fodder production. Pastures were cut much earlier for hay and silage and yields
were much lower than in 2007.



                                                           South Australian Hay Production
                                                                              Five year comparison

                              350,000


                              300,000
  Production (tonnes)




                              250,000


                              200,000


                              150,000


                              100,000


                                50,000


                                            0   Adelaide    Outer Adelaide   Yorke and Lower North   Murray Lands   South East   Eyre     Northern
                        2000/01 ABS Census       4,053         162,616             237,311             134,283       208,444     38,509   78,598
                        2002/03 ABS Survey       4,833         122,104             114,517             70,547        241,656     15,647   27,830
                        2006/07 ABS Survey       1,014         84,760              192,104             79,370        192,583     19,802   42,745
                        2007/08 ABS Survey       3,038         188,139             230,542             98,444        311,400     36,160   23,415
                        2008/09 AFIA Est'        2,945         147,000             203,000             113,680       235,970     24,560   43,285




Further North around the Murray Bridge region hay production, both cereals and lucerne, was
similar to 2007. Silage wrap manufacturers have noted in this region in particular sales of silage wrap
has reduced significantly as the number of dairy farmers are around half of what they were five
years ago. In the southern Mallee frost hit some crops and canola was baled as hay. Between 20 to
30% of cereal hay crops were not harvested and only a few of these had sufficient growth for baling.

Hay supply and demand report                                                                                                                         Page 9
In the Mid North, producers reported average oaten hay yield 5 t/ha in 2008 and around 10% of the
wheat crops cut for hay which was less than the year before.


Queensland
While not as severely affected as the southern states by drought, Queensland has still had a drop in
hay production. Queensland’s hay production declined as well from 609 kmt in 2007/08 to 523 kmt
in 2008/09.
Generally throughout the state production was down by 15 to 25%. The major cause of this
reduction is the smaller volume of straw baled after the cereal harvest. During the straw baling
period of October and November, the cereal producing regions in Queensland received above
average rainfall. This rain blackening the straw and further attempts to bale straw was abandoned.


                                             Queensland Hay Production
                                                          Five year coparison
           300,000



           250,000



           200,000



           150,000



           100,000



            50,000



                 0
                                           Wide Bay-   Darling   South              Central                                   North
                      Brisbane   Moreton                                  Fitzroy             Mackay   Northern   Far North
                                            Burnett    Downs     West                West                                     West
   2000/01 Census      3,044     107,151    66,663     146,601   31,985   59,909    4,972     10,125    6,372      9,097      5,774
   2002/03 Survey      3,081     112,909    68,776     170,248   5,237    89,551     650      34,952   20,206      32,859     5,059
   2006/07 Survey      9,297     70,362     75,170     141,078   15,576   75,166    9,576     27,134   19,427      34,056     5,457
   2007/08 Survey     16,669     87,426     73,575     255,271   29,041   62,740    3,291     8,588    32,242      38,368     2,734
   2008/09 Estimate    9,325     107,151    66,663     179,885   31,985   59,909    5,788     10,125   21,016      26,300     5,422



Around the Atherton tablelands seasonal conditions were conducive to an exceptional Rhodes Grass
hay production season. Due to the extremely wet summer, regular purchasers of Rhodes Grass hay
have not needed to supplementary feed their cattle and this stalled trading of hay until August 2009.
Demand tends to limit hay production in Queensland rather than rainfall.




Hay supply and demand report                                                                                                  Page 10
Western Australia
The key dairy area of Western Australia fared better than eastern Australia with around 15% more
hay produced in 2008 than in 2007. This lift in production in the south west reflected the excellent
spring rainfall from September through to December. Other regions in the state experienced
declines from the high levels in 2007.
The downside to this was much of the hay produced was severely weather damaged and not suited
to the traditional export market that requires high quality cereal hay. Bunbury dairy farmers feeling
the effects of a late autumn break in 2009 have been utilising this hay as their own on farm
produced stocks diminish.

                                 600,000                     Western Australian Hay Production
                                                                          Five year comparison
                                 500,000
    Production (tonnes)




                                 400,000



                                 300,000



                                 200,000



                                 100,000



                                           0
                                                                     Lower Great   Upper Great
                                               Perth    South West                               Midlands   South Eastern   Central   Pilbara        Kimberley
                                                                      Southern      Southern

                          2000/01 Census       13,319    290,852      124,487       118,465      211,425       31,964       33,931     125             2,215

                          2002/03 Survey       18,844    289,198      124,321       212,122      179,395       35,098       43,278      0              3,682

                          2006/07 Survey       12,459    274,551      147,814       211,819      303,103       32,515       33,709      0             15,138

                          2007/08 Survey       12,870    349,601      226,728       298,103      478,076       56,280       31,673    4,566            5,351

                          2008/09 Estimate     19,051    396,907      149,740       225,471      322,476       38,065       49,488      0              2,650




Tasmania
Tasmanian hay production, both pasture and lucerne, changed little to that of 2007. The spring was
relatively normal and many dairy farmers managed to produce enough hay in 2008 to get them
through the autumn and winter periods of 2009. Hay supply has not been a critical factor in
Tasmania due to the reliance on silage. There has been a low level of buying interest in hay which
has not inspired growers considering hay as a cash crop.


Northern Territory
A solid wet season in 2007/2008 set the Northern Territory hay production season in good stead and
we can see a slight lift in production by about 5%. The majority of hay produced are grasses and also
cavalcade legume hay. Some Rhodes Grass hay is being produced under irrigation. Demand mainly
comes from the export cattle market and cattle stations for their weaning programs.




Hay supply and demand report                                                                                                                    Page 11
  Supply and Demand Analysis
  The following tables shows the supply data incorporated with the data provided by Dairy Australia.
  South Eastern Australian – Hay supply and demand scenario 2008/09
                                                                                                       North
                                     SA           Vic            Vic          Gipps         SW          Vic        NSW        Total
                                                2008/09
                                  2008/09        early        2008/09        2008/09      2008/09     2008/09    2008/09
Notes                             Estimate      Estimate      Estimate       Estimate     Estimate    Estimate   Estimate
        Production
   1    Lucerne                     129,585        94,780      121,480        37,740       51,440      32,300     358,140    609,205
        Pasture (excl.
        Lucerne)                    174,215       907,948      833,000       290,500      452,750      89,750     160,736   1,167,951
        Cereals (inc. Forage
        Sorghum)                    431,790       602,465      733,429        23,450      215,268     494,711     332,138   1,497,357
   2    Non Cereal Crops             34,850        40,234       46,844         2,345       27,378      17,122      26,549     108,243

        Total Hay                   770,440     1,645,428    1,734,754       416,288      540,027     689,114     877,562   3,382,756

        Hay for beef, dairy
   3    and sheep                   638,892     1,537,417    1,600,094       384,220      476,973     649,576     569,811   2,808,798

        Estimated Export Hay        210,000       112,000      105,000                0     7,350      97,650                315,000

        Available hay for
        ruminants                   428,892     1,425,417    1,495,094       384,220      469,623     551,926     569,811   2,493,798

   4    Silage (DM eq)                                         212,118        37,421      112,770      61,926                212,118

   5    Hay used by dairy (%)              30          70               70        65             75        75          20

        Hay available for dairy     128,668       997,792    1,015,904       249,743      352,217     413,945     113,962   1,268,706


        Demand
        Number of cows
   6    (2007/08)                   102,000     1,100,000    1,100,000       386,000      380,000     334,000     200,000   1,402,000

        Hay used by dairy
   7    cows (kg/cow/year)                500         882              973       600          800        1600         500

        Hay Required                 51,000       970,200    1,070,000       231,600      304,000     534,400     100,000   1,221,000

                                                                                                            -
        Balance                      77,668        27,592       -54,096       18,143       48,217     120,455      13,962     37,534

        Notes
   1    Used mainly for non-dairy
   2    Mainly straw for horticulture
   3    Less 80% of lucerne and non-cereal crops
   4    These silage figures are not included in fodder available for dairy
   5    Estimates only
   6    2007/08 figures for the example and divided in Victorian regions based upon milk statistics YTD for April, 2009.
   7    Hay used by dairy cows reduce by 200 mt/cow/year in all areas to balance supply and demand


  Hay supply and demand report                                                                                   Page 12
Non South Eastern Australian – Hay supply and demand scenario 2008/09


                                                  WA           Qld           NT           Tas          Total
                                               2008/09       2008/09      2008/09       2008/09
Notes                                          Estimate      Estimate     Estimate      Estimate
        Production
    1   Lucerne                                   48,025      221,414         4,459       20,502       294,399
        Pasture (excl. Lucerne)                  426,146      118,917        25,822      151,517       722,402
        Cereals (inc. Forage Sorghum)            727,429      159,940         1,090        5,401       893,860
    2   Non Cereal Crops                           2,247       23,298        20,220        5,158        50,923

        Total Hay                              1,203,847      523,569        51,590      182,578     1,961,585

    3   Hay for beef, dairy and sheep          1,163,630      327,800        31,847      162,050     1,616,263

        Estimated Export Hay                     350,000                                               350,000

        Available hay for ruminants              813,630      327,800        31,847      162,050     1,266,263

    4   Silage (DM eq)

    5   Hay used by dairy (%)                          20            25            10           90

        Hay available for dairy                  162,726       81,950         3,185      145,845       393,706


        Demand
    6   Number of cows (2007/08)                  53,000      105,000              0     140,000       298,000

        Hay used by dairy cows
        (kg/cow/year)                                700           700            700         700

        Hay Required                              37,100       73,500              0       98,000      208,600


        Balance                                  125,626         8,450        3,185        47,845      185,106

        Notes
    1   Used mainly for non-dairy
    2   Mainly straw for horticulture
    3   Less 80% of lucerne and non-cereal crops
    4   These silage figures are not included in fodder available for dairy
    5   Estimates only
        2007/08 figures for the example and divided in Victorian regions based upon milk statistics YTD for
    6   April, 2009.




Hay supply and demand report                                                                             Page 13
Further analysis
The value of these reports in the future will hinge on a robust analysis of supply and demand data.
While ABS provides some although declining level of hay production statistics, this analysis can be
improved through:
    •   Better silage production data
    •   Some survey data of hay consumed per cow in the various dairy regions

    •   Improved understanding of hay demand from the other livestock sectors
    •   A retention of the full breakdown of the crop types within each ABS survey and census. Only
        total hay production is reported currently.


Implications for the Australian dairy industry
This analysis does highlight the increasing dependancy of the dairy industry on cereral hay and in
particular the traded proportion of cereal hay. The table below show the percentage of cereal hay
produced in each state over the analysis period. The timing and geographic spread of spring rains are
critical for hay production.
Cereal hay as a proportion of total hay produced

            2000/01     2002/03    2007/08    2008/09
            Census      Survey     Survey     Estimate
 Aust         25.8%      32.2%       50.8%      44.6%
 Vic          11.5%      10.3%       38.2%      41.9%
 NSW          22.9%      45.6%       64.0%      37.9%
 SA           54.7%       41.5%      66.2%       56.0%
 WA           54.3%       60.2%      67.3%       60.4%
 Tas           2.8%        3.0%       6.9%        3.0%


If rains for inland grain growers are timely for grain fill yet rains for coastal dairy farms are poor, the
dairy industry will be vulnerable to some shortages of palatable fibre sources. In this scenario, straw
baling may provide a backup supply when baled early in the new year following grain harvest.
There are a number of risk management issues for dairy farmers to manage with hay procurement.
Currently hay production and trade to dairy farmers is restricted through a percieved lack of demand
and affordability from dairy farmers. Forward contracts for hay can enable dairy farmers to ensure
they have some hay purchased for their autmn and winter needs. If this hay is stored and financed
by the growers, the dairy farmer will not suffer an up front cost of filling a hay shed as hay loads can
be paid for after delivery.
Hay growers and dairy farmers rarely use proper commodity contracts and objective measures.
Disputes discourage grain growers to produce hay as a cash crop.
Hay produced from inland growers is renowned for its high quality having been cured in dry sunny
conditions on extensive farms with low costs of land and production. Dairy farmers have shown
Hay supply and demand report                                                                       Page 14
interest in reducing this need for hay imported from other farms and are developing their own
agronomic packages for cereal hay production on dairy farms.
In this envirionment fast curing of hay at higher moisture will be critical to retain as much of the
plant’s nutrients in the conserved form. Further research into the effectiveness of hay additives
including innoculants and acids coud prove valuable.
Also alternative concervation methods such as alkalage could be encouraged. By harvesting mature
whole grain crops at 30% moisture content, coastal dairy farmers may reduce their dependancy on
imported grain and fibre sources. This could lower their vulnerability to dry conditions and a high pH
feed make prove useful in a dairy diet. Feed trials could show that feeding alkalage with silage can
improve milk production.




Hay supply and demand report                                                                     Page 15

				
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Description: Hay Supply and Demand Report