Hay has finally been cut and put in the shed much to the relief of many growers, but to get the most out of the investment the final hurdle is to market appropriately.
With increased supply this season due to favourable growing conditions and a successful pasture hay season, marketing may pose a challenge.
At this year’s BCG Main Field Day, JumbukAg consultant Colin Peace explained that it was much easier to market quality over quantity especially in a year of high supply.
Due to the nature of the current world and domestic market, Mr Peace clarified that sacrificing quantity for quality can be a better option financially (listen below).
The drive for quality this year stems from the influx of hay into the market and traditional local buyers not requiring the supply they have in the past.
Many livestock and dairy farmers have been able to produce their own pasture hay, ultimately giving them the supply they need and the option to be selective on any further requirements.
The increase in the export trade in south eastern Australia provides growers with an opportunity to extend beyond the domestic market.
China is the fastest growing importer of hay since 2012 after the melamine in milk crisis caused the Chinese dairy industry to be overhauled.
Japan has also always been a big importer of hay since the 80s, but like China, the Japanese market prefer a quality product.
This rapid demand is evident with the increase in export hay operations found in south eastern Australia. The nine export plants in this area now represent 36 per cent of Australia’s export hay capacity, allowing Victoria to increase total exports compared to the Western Australian market.
Understanding the cost of production (including windrowing, raking, baling, loading, stacking and capping) will assist growers in decision making and enable growers to get the greatest financial return possible.
Cost of production takes into consideration all expenses paid in the production process and can be calculated to get an average for each bale.
Costs included in this calculation are labour, machinery hours and depreciation, supplies, inputs, storage costs, fuel, marketing and so on.
The harvesting cost of hay can be much higher than that for grain, and can vary also with the quantity of product produced. For this reason the cost of harvest for a smaller quality hay cut can be less than a large cut of poor quality hay.
In years like the present when there is a premium for quality hay the margin return can be greater.
For more, listen to Mr Peace’s presentation from the BCG Main Field Day (linked below).
https://soundcloud.com/bcg-birchip/bcg-main-field-day-2016-marketing-your-grain-and-hay-in-2016-colin-peace
