Three hay processing companies from Australia are now supplying stock feed to a fast-expanding dairy industry in China.

All three are from South Australia; Balco, based at Balaklava, JT Johnsons of Kapunda and Lithgow Enterprises of Tailem Bend.

Between them, they exported about 18,000 tonnes of oaten hay to China last year.

"When you look at the markets we supply fodder to - Japan, Korea and Taiwan - they are basically full markets, stable markets," said Balco managing director, Malcolm May.

"For our industry to grow, we have to sell hay somewhere else and China has got an absolute appetite for our hay, we believe, in the long term."

Mr May said there were 13 companies registered nationally to sell oaten hay to China for dairy cattle feed, but only the three SA companies had successfully entered the market.

Dairy food is not traditional in the Chinese diet, but over the past decade per-capita consumption has increased four-fold.

In 2000, the average annual consumption was just 7.3 kilograms for the Chinese, but in 2011 it had risen to 28.4 kg, said peak industry body Dairy Australia.

There are now about 12 million dairy cattle on farms in China, which is 10 times the size of the Australian herd.

Australia exports hundreds of thousands of breeding stock to the Chinese.

Taste preference

Stock feed supplies had been limited and of low quality in China, creating the demand for overseas hay.

The United States is the biggest exporter of stock feed, sending alfalfa hay (known as lucerne in Australia).

But Chinese dairy farmers are finding their cattle also like the taste of Australian oaten hay and produce a better-quality milk when it is used in conjunction with other feed.

Oaten hay is harvested when green and baled after drying in the paddocks.

"We have been using oaten hay ever since it entered the Chinese market," said Jing Dehua, a dairy farmer and deputy president of the Shanghai Dairy Association.

"The fibre is beneficial to a dairy cow.

"More dairy farms will use it as their facilities and management improve."

A sticking point is price. A high dollar makes Australian-grown hay expensive compared with supplies from other countries.

Marketing manager at Balco, Tim Latchford, said Chinese dairy farmers were seeing the benefits of oaten hay, but the cost of just over $400 per tonne was an issue.

"Until we see the Australian dollar come off, and I say dramatically, we are certainly going to find it difficult to compete with the American product," he said.


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