In Japan, the largest importer of U.S. hay, January and February exports were down 25 percent, March through May exports were up by 18 percent and June through August exports were down again by 15 percent.
A tumbling chain of events has led to a decreased export market, which Szczepanski says will not right itself quickly. One of the catalysts of the declining market that had significant, direct impact was the longshoremen contract dispute last year on the West Coast. The dispute interrupted the export supply chain. Szczepanski said reliability is key to foreign markets, and the U.S. supply chain was unreliable, so markets looked elsewhere for supply and found it. Competition for foreign hay markets is coming from Argentina, Australia, eastern Europe and Spain, and may have shifted towards these markets for the long term.
The United Arab Emirates (UAE) is another example of market adjustment. During the U.S. port slowdown, the UAE found a “new normal” buying hay elsewhere; although, the UAE is still a relatively immature market and is still trying to figure out their own production potential.
Transportation is the critical link in hay exports. During the port slowdown, Szczepanski reported $266,000 per day was lost, container movements were off 45 percent and 1,000 jobs were at stake. Although container movement is back to normal at present, the export markets have not been restored.
However, the Chinese market holds some potential for increase, Szczepanski said, although this market takes a lot of effort to make it work. The U.S. Forage Export Council is still trying to better understand this market, especially in light of the ban on genetically modified (GM) products. Although the government of China has a ban on GM products, Szczepanski said each port has its own personality, which complicates issues and communication.
Other factors that continue to influence the depression in hay exports, Szczepanski said, include:
- Japan’s farm demographics indicate an aging farm population, where herds are sold to meat processors or combined with larger farms.
- Korea, another major consumer of U.S. hay exports, has a quota system, so reliance on domestic product has to be maintained.
- U.S. products are more expensive on the strength of the U.S. dollar. The Japanese yen, for instance, has decreased in buying power, and the Korean won has declined 5 percent in purchasing power.
- In a global marketplace, the “best” hay won’t necessarily win the market – sometimes “good but reliable” is better.
Also presenting to the National Hay Association membership was Peter Friedmann, executive director of the Ag Transportation Coalition. Adding to the challenges of both domestic and export hay markets is truck transportation to markets.
Friedmann said, “No matter how great the product is, if you can’t get it to the customer, you lose. Nobody cares what your delivery problems are.”
Friedmann said U.S. producers have several land transportation issues that are unique:
- Drivers under 23 years old cannot drive semitrucks on interstate roadways, which exacerbates the lack of eligible truck drivers.
- Truck weight limits are not uniform among states.
- Railroads still wield a lot of influence in keeping truck weights lower.
- The general voting public doesn’t understand product weight or volume.
Friedmann said if a line was drawn across the U.S. from Dallas to Chicago, 80 percent of the U.S. population would be on the eastern side of that line, and only 13 percent of the population resides in the Pacific time zone where the hay export market is based. This creates disparity and misunderstanding when regulations are enacted regarding truck weights and transportation issues. FG
