Yves here. An example of neoliberalism gone mad from Down Under. Getting hay to Asian buyers is now putting domestic farms at risk.
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. Cross posted from MacroBusiness
Via the ABC comes another little microcosm of the mismanagement of Australia’s collapsing borders:
Exporters are hitting back at calls for the Federal Government to seize hay supplies destined for Japan and China, saying it will bring about the end of a $500 million industry.
Many drought-stricken farmers have taken to social media calling for a halt to hay exports as demand on domestic supplies reach unprecedented levels.
CEO of the Australian Fodder Industry Association, John McKew, said there has been an extraordinary turnaround in demand as an oversupply in 2017 turned into a shortage.
“We’ve hit this situation where demand has just gone unbelievably strong for fodder products,” he said.
“There’s always going to be hay in the system, but in terms of what’s available commercially, we’re about as low as you’d want to go.”
‘Oversimplification’ that could kill industry
With almost 1.2 million tonnes exported, 2017 was a record year for the industry, but Mr McKew said exports represent 10 to 15 per cent of the total supply.
He said the export industry has taken three decades to build, and that major competitors in north America are ready to step in should Australian exports stumble.
“The relationships that have taken this long to build, you cannot just turn export markets on and off, so if we were to turn our export fodder industry off at anytime, it’s gone — we won’t get it back,” Mr McKew said.
Mr McKew said a seizure of hay exports now would mean the collapse of the domestic hay market once the drought finally breaks and supplies return to a significant surplus.
“We get to the stage where we’ve got a lot of stock available in the industry, what do we do with that?”
“If we use the 2017 figures, that’s 1.2 metric tonnes extra fodder into the domestic market in a good year … the prices will go down even further and we’ll have fodder growers who are going to be in desperate situations,” he said.
Social media and drought stoke fears of shortage
Northern Victorian hay grower, Luke Felmingham, said calls for a seizure of hay exports are short-sighted and “farcical”.
“It’s a bit of a storm in a tea cup, people taking a shot at an industry that’s been around for a very long time,” he said.
“It’s people forming an opinion before they have the information.”
Sentiments about hay exports seen on social media group include comments like “it should not be being exported, it should be sent to our farmers! Another example of our government looking after other countries before our own!”
But Mr Felmingham said while most farmers he has spoken to understand the need for a strong hay export industry, a minority opposed to it are finding a strong voice on social media.
“It’s hurting all the east coast which is really exhausting hay supplies, which is making a lot of people nervy and a lot of people upset as well,” he said.
Mr Felmingham said hay growers have their own contractual commitments and are being unfairly singled out.
“A lot of hay growers and suppliers are farmers too, they have their own stock, they want to be able to meet their market requirements, whether it be domestically supplying the dairy farmer up the road for the next six months, or the exports supplying their contacts.”
An idea worth exploring, says hay broker
Managing Director of Haylink Marketing and Logistics in South Australia, Alister Turner, said with new crops of hay still growing, export supplies should be used to help farmers in the short term.
“It’s something we’d have to manage very carefully because to alleviate a short-term domestic crisis, we in no way want to damage our very valuable and established export hay industry,” Mr Turner said.
“It’s a little frustrating to see carryover of contracts of export hay still sitting in sheds with the new crops almost upon us, when we desperately need hay for our drought regions in particular, and our dairy farms.”
While Mr Turner said a seizure of export supplies would be a draconian measure, exporters and governments need to come to some sort of an agreement.
“The exporters don’t seem to be interested and obviously they have their overseas contracts and things they’ve got to fill … but if we could work together to redirect some of the supply and help short term crisis that would be an ideal situation,” he said.
“Hopefully the new season will provide enough tonnage for us all, but I still think at this point we haven’t had any relief from the drought and it is worsening, so going forward we’re going to ask the exporters to help out.”
The Federal Government would be required to declare a state of emergency in order to seize any export hay supplies.
Minister for Agriculture David Littleproud said the government has no plan for the forced compulsory acquisition of hay.
I don’t want to see the exports collapse. But, likewise, who could have known that Australian farmers would need extra hay from time-to-time? I mean, jeez, droughts are so rare in Australia.
The entire management of Australian resources from milk powder to gas is now managed exclusively for the benefit of North Asian consumers while Australians suffer.
This is not what exports markets are supposed to do for a country.