Analysts say China holds key in alfalfa, forage exports

Alfalfa and forage growers should benefit in the foreseeable future from expanding export markets serving a protein-hungry global middle class.

There was a strong increase in shipments to China, already California's most important dairy feed export market, and leading analysts said that trend should continue into the future.

"Alfalfa exports to China are up around 21 percent," said Seth Hoyt, who produces the Hoyt Report on feed and forage markets.

While the nation's trade relations face an uncertain future and acceptance of transgenic alfalfa abroad remains a wild card, there is growing demand for California alfalfa hay in important markets.

"Another growing market is Saudi Arabia," Hoyt said. "Even though the largest farm in Saudi Arabia has purchased land in Arizona, it's not nearly enough to meet their needs. This looks like it's going to be a growing market because the larger farms in Saudi Arabia are going to have to import hay."

These expanding markets should fuel overall export growth, as hay shipments to some other destinations have reached plateaus.

"Japan, the United Arab Emirates and Korea are mature markets," Hoyt said. "China is going to lose a million dairy cows in a year, and that could affect the market for hay, but long term it looks like China is going to be a growing market."

With China accounting for a majority of exports, trade relations with that country are of great importance to California's alfalfa hay growers.

"If we do something with China that made them decide to not buy dairy or hay from us, we would be in a world of hurt," said Daniel Sumner, director of the University of California Agricultural Issues Center.

Sumner said he believes trade policy discussions will normalize. Even if trade relationships find their equilibrium, acceptance of the transgenic varieties remains uncertain.

"The Roundup Ready trait is allowed in Japan, but some importers will not accept it," said Dan Putnam, UC Cooperative Extension alfalfa and forage crop specialist. "The trait is not accepted in China; it's a fairly unpredictable process in China."

As more genetically engineered alfalfa varieties come to market, there is a challenge defining acceptable levels, because zero tolerance in a laboratory test may not be realistic.

"The tolerance threshold for a nondetect status must be defined," Putnam said. "A lab has a right to make a nondetect certification at some threshold level. Zero tolerance is not possible, and I think we have to recognize that."

Once the tolerance levels are established, there remains the tricky issue of finding accurate ways to sample.

"Sampling is already a challenge for hay quality," Putnam said. "If the genetically enhanced hay is concentrated within a few bales, all bets are off. We need to define our tolerance levels and develop sampling protocols."

The issue of standards and testing for genetically enhanced hay will greatly influence exports, largely because of the size and importance of the Chinese dairy sector.

"Genetically enhanced alfalfa crops are here to stay," Putnam said. "Some markets, however, are sensitive about genetically enhanced traits, like the export and organic markets. Organic milk is about 4 percent, but exports are the major sensitive hay market. It might be about 55 percent of the exported alfalfa hay that is going to China. It's a pretty substantial part of the value of the crop if you calculate it based on the share of the production."

Hoyt agreed that China holds the key to expanding alfalfa exports.

"The growth markets in the future are China and Saudi Arabia," he said. "Japan, Korea and the UAE are mature markets with not much growth potential. China is by far the biggest market for western U.S. alfalfa hay, but it is not an easy market to ship to."

China has tremendous global market power and can be a relatively tough trading partner. But in the long run, there is a fit between the desire of China's middle class for more protein in their diets and the ability of California growers to produce the best dairy feed available.

"There will be challenges at times exporting alfalfa hay to China, but the demand for western U.S. alfalfa hay from Chinese buyers has been strong and they like the quality," Hoyt said. "Quality alfalfa hay translates into better milk production in China."

(Bob Johnson is a reporter in Davis. He may be contacted at bjohn11135@aol.com.)