China is by far the largest foreign market for U.S. alfalfa hay, accounting for nearly half of the total U.S. exports in 2016. This dramatic growth has continued in 2017, with the volume of Chinese imports up another 19 percent in the first four months of the year. This growth is driven by the changing production practices in China’s dairy industry, with an increasing number of dairy cows raised by large and modern dairy farms, which prefer using imported hay and commercial feeds.

Foreign competition

The U.S. dominates the imported hay market in China, with 78 percent market share last year for total hay (including alfalfa and other types of hay). Australia was the second largest supplier to China in 2016, exporting oat hay. Australian exports experienced strong increases last year, primarily due to a severe drought in summer 2016 impacting domestic grass production for the Chinese sheep industry.

Spain also exports baled alfalfa hay as well as alfalfa pellets and cubes. Spanish baled hay exports suffered a steep decline in 2016, reportedly over quality concerns. However, Spain dominates the alfalfa pellet and cube market (90 percent market share), and there continues to be great demand for this type of product in China. Currently the U.S. does not have market access for alfalfa pellets and cubes, but importers report that if market access were given, there would be extremely strong demand for this product from the U.S.

Top foreign suppliers of hay to China (by value):

• No. 1 – U.S., 78.6 percent (alfalfa baled hay, $417 million, up 0.72 percent for 2016)
• No. 2 – Australia, 13.8 percent (oat hay, $73 million, up 38.4 percent)
• No. 3 – Spain, 3.48 percent (alfalfa bales/pellet, $18.5 million, down 63 percent)
• No. 4 – Canada, 3.16 percent (alfalfa bales/pellet and timothy hay, $16.8 million, up 85 percent)

Outlook for hay consumption in China

Dairy feed sector

The bulk of alfalfa demand in China comes from the dairy sector. China has over 15 million cows in the dairy industry, among which 1.5 million are high producers (9 tons annual milk yield). Since 2008, the Chinese government has been implementing a Dairy Herd Improvement program; however, there are only 789,000 head currently included in the program. The performance of China’s dairy herd still has great room for improvement, and it is expected that there will be significant growth in the population of high-producing dairy cows, boosting demand for high-quality hay.

Industry analysts estimate that China’s dairy feed sector needs 5 million tons of high-quality hay and 10 to 20 million tons of lesser quality hay annually. By 2020, with the number of high-producing cows rising, China is estimated by some market analysts to need 8 million tons of high-quality alfalfa.

Therefore, even with growth in domestic production of alfalfa, demand for imports should continue to strengthen.

Swine (gestational hog) feed sector

Demand from the swine feed sector for hay is expected to be strong if greater imports of alfalfa pellets and cubes were allowed to enter China. In the past, ATO Guangzhou worked with several large swine farms in south China to conduct feed trials featuring alfalfa hay being fed to sow hogs in gestation. Compared with those traditionally fed with wheat bran, participating swine farmers reported that the trial hog group fed with U.S. alfalfa hay had excellent performance (such as less digestion problems during gestation, better lactation, more piglets after weaning and better sow hog health in general). In recent years, China’s high pork prices brought huge profits to large swine farming companies, and this has motivated these companies to expand their hog production, which has in turn increased the demand for high-quality sow feed.

Horse sector

China’s government currently bans horse racing for gambling, and as a result the racehorse population in China is limited. However, the Hong Kong Jockey Club is building a large horse training facility in Guangzhou, which is expected to need a large amount of different hay products. Other than Guangzhou, some of China’s other large cities such as Nanjing, Wuhan and Chengdu also have large horse racing facilities.  

—From USDA Foreign Agricultural Service