by BETTER FARMING STAFF
Ontario Forage Council’s manager plans to join an eight-day fact-finding mission exploring the feasibility of shipping Canadian hay to the Middle East.
Ray Robertson says exports to the Middle East are already taking place but bans on using water to irrigate forage have ramped up the region’s demand for hay. “That part of the world is almost next to a desert in some cases,” he says. And without access to irrigation, “forage is only one of the products there’s going to be a demand for.”
The mission, which takes place mid-March and will travel to Saudi Arabia and the United Arab Emirates, comes as the recession, plummeting milk prices and a higher Canadian dollar affect U.S. demand for Canadian-grown hay. The primary destination for Ontario hay exports has historically been the eastern United States from New York State to Florida.
The Middle East is not the only market where opportunity may exist for Canadian hay.
Over the past summer two delegations from China have looked at Canadian forage, says Robertson. As well, the council’s forage Internet-based listing service has experienced hits from as far away as Jordan and China.
Market opportunity might exist but there is competition from the United States and Australia. “Our understanding is that it’s (Middle East demand) big enough for everybody but we need to be there, we need to get in on the ground floor,” says Robertson.
Glenn Friesen, forages business development specialist with Manitoba Agriculture, Food and Rural Initiatives, says the mission plans to learn about the region’s market needs. In recent years the United Arab Emirates annually tendered for 600,000 tonnes of hay; in 2007, it only received 480,000 tonnes. Demand there could rise as high as 1.3 million tonnes in the next two years, he says. In Saudi Arabia, he estimates demand will eventually rise to 2-5 million tonnes per year.
One of the biggest hurdles facing such a venture is shipping and ensuring the hay is properly preserved for transport. Shipping “is a significant cost,” Robertson says. “That’s another thing we need to be on top of.” Lobbying the federal government may be necessary “to provide us with a level playing field that we can be competitive with, say the United States, for example.”
He notes that forage councils across Canada and interested commodity groups have been working over the past few months to form the Canadian Forage and Grassland Association. The association met for the first time this week in Ottawa.
The new association and the Middle East mission are components of a long-term industry strategy that has received $46,000 from the federal Agri-Marketing Fund for development. Industry groups have contributed a matching amount.
According to an Agriculture and Agri-Food Canada 2008 information sheet on Canada’s forage industry, farm cash receipts for hay totaled $148 million in 2007. Farm sales account for less than 10 per cent of the country’s tame hay production. The sheet also noted that there is potential to expand Canadian forage production for export and observed that the country exported $140.5 million in mostly timothy hay in 2007. Japan accounts for more than 85 per cent of the country’s exports.
Robertson says export statistics for hay are questionable. Border crossing records are not accurate and discrepancies have been found between statistics provinces keep and information coming from those involved in exporting.
“Forage has kind of been the forgotten sector in agriculture sometimes,” he says. Council estimates based on the 2006 Census of Agriculture put the value of Ontario’s crop at more than $500 million and the number of dedicated acres at more than 2.5 million. But with the majority fed to on-farm livestock, no check-off fee in place and few sales records, it’s a difficult crop to quantify, Robertson admits.
Western Canada’s drier climate carries advantages for hay production but he says there’s opportunity for Ontario growers as well.
Friesen says the demand is mainly for 100 per cent alfalfa, something that is not commonly grown in Ontario. The size of the demand in the Middle East, however, could mean that importers may eventually have to change their requirements, he says.
He notes that the region does not have a big demand for pelletized forage but that could change in the future too.
In October, the Ontario Forage Council launched the Ontario Hay Marketing Forum which is intended to help Ontario hay exporters obtain information on opportunities. BF
