Dry Times – Fodder Supply Outlook

With much of the State of NSW currently experiencing very dry conditions NSW DPI reached out to Tim Ford, Director at Feed Central to provide an update for the industry on the current situation and outlook for fodder supply. Tim presented this information at our recent Dairy Breakfast webinar in conjunction with a presentation from the DPI Climate team on the seasonal conditions and tools available to farmers to help monitor the current conditions and assess forecasts for the period ahead. Feed Central link buyers and sellers of hay and grain across the country and provide feed analysis on what is being sold as well as a visual description. NSW DPI strongly encourage you to purchase feeds based on quality, so feed tests are a ‘must have’, regardless of where you purchase from.  This episode brings you a recording of Tim’s presentation and the show notes have a link to our YouTube page to view the Climate team’s update as well as Tim’s presentation. Also within the show notes are links to resources including feed budgeting tools and NSW DPI’s Seasonal Conditions Information Portal and Feed Quality Testing Service.

Links to useful resources related to this podcast:

Dairy Breakfast Webinar - https://youtu.be/fOs4pCCIOaM

Feed Central | Buy Hay | Hay For Sale | Sell Hay | Feed Testing | Bales

Feed quality (nsw.gov.au)

Seasonal Conditions Information Portal (intersect.org.au)

Drought and Supplementary Feed Calculator (nsw.gov.au)

NSW DroughtHub

Drought - Local Land Services (nsw.gov.au)

Back of the envelope feed budget | Dairy Australia

Monthly back of the envelope feed budget | Dairy Australia

Feeding & Farm Systems | Dairy Australia

This podcast is an initiative of the NSW DPI Dairy Business Advisory Unit

It is brought to you in partnership the Hunter Local Land Services

Please share this podcast with your fellow farmers and colleagues and feel free to contact us with suggestions or comments via this email address thebusinessofdairy@gmail.com

Further NSW DPI Dairy channels to follow and subscribe to include;

NSW DPI Dairy Facebook page

DPI Intensive Livestock Twitter feed

NSW DPI Dairy Newsletter

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The information discussed in this podcast are for informative and educational purposes only and do not constitute advice. 

Transcript

The Business of Dairy 

Episode #30 Transcript – “Dry Times – Fodder Supply Outlook”

Sheena Carter: Welcome to the Business of Dairy podcast. I'm your host, Sheena Carter, development officer with the New South Wales Department of Primary Industries dairy team. With much of the state of New South Wales currently experiencing very dry conditions, New South Wales DPI reached out to Tim Ford, Director at Feed Central, to provide an update for the industry on the current situation and outlook for fodder supply. Tim presented this information at our recent Dairy Breakfast webinar, in conjunction with a presentation from the DPI Climate Team on the seasonal conditions and tools available to farmers to help monitor the current conditions and assess forecasts for the period ahead. 

Feed Central links buyers and sellers of hay and grain across the country, and provide feed testing results on what is being sold, as well as a valuable visual description. New South Wales DPI strongly encourage you to do feed budgets and to purchase feeds based on quality, so feed tests are a must-have regardless of where you purchase from. This episode brings you a recording of Tim's presentation and the show notes have a link to our YouTube page to view the breakfast webinar with the Climate Teams update as well. 

Also within the show notes are links to resources including feed budgeting tools and New South Wales DPI's Seasonal Conditions Information Portal and Feed Quality Testing Service. 

Tim Ford: Good morning everyone, and thank you, Zita, and thank you to New South Wales Department of Primary Industries, probably the most progressive government department that we work with by a long shot, so congratulations across the Department for your work that you do across New South Wales. I'm originally a New South Welshman, so I didn't really like seeing the New South Wales map coloured in maroon there a few minutes ago, so perhaps New South Wales DPI might have to change the colour scheme to make sure the map's not maroon in the future. 

My talk today is predominantly around the drivers affecting the fodder industry, although there's lots and lots of trends that affect this across the whole feed space, so I'll make some reference to the other feed commodities. My specialty is in that hay and fodder space, which is what my company Feed Central specialises in. So, to date we're obviously seeing a lack of rainfall across the country, particularly across New South Wales and southern Queensland. The other thing affecting the market is what I call FOMO or the FOMO El Nino, which, we love our acronyms, so the fear of missing out El Nino, which is driven by some media that I'll talk about in a little bit. The other thing driving is the export of feed, and the export of hay is driving the market as well, the fuel price and the ongoing pressure in freight, the 2022 wet season carryover product, which is a large volume of inventory of low quality sitting in the system, and the backlog of livestock and the supply chain problems within processing livestock, and so forth, that we're experiencing at the moment, all leading to significant price volatility across the feed space, particularly in the hay space. 

This is just another way of looking at the rainfall across the country. So we're seeing the southern half of the country, from west to east, having a strong drought impact. I suppose when I started preparing for this presentation, and just reviewing these maps, I hadn't reviewed them for a month or so, and I was just surprised by how fast and how widespread the dry is now setting in. So that's from 1st July to 30th September, you can go back to 1st January to 30th September, you get a similar map, but the red areas are certainly growing with each month. It was good to see some rain in the last week in October, particularly through Victoria. Obviously the people in Gippsland who are fighting bushfires one day and floods the next day, our thoughts are out with those people, however, it was great to see some rain across some areas last week. So in relation to the drought so far, it is having an impact on grain yield, especially across New South Wales and southern Queensland. 

Southern New South Wales and Victoria is going to fare really well, however, the New South Wales, southern Queensland supply is going to be back on previous years. We're also seeing, obviously, reduced silage and on-farm hay yield, particularly across the dairy regions through New South Wales and southern Queensland and through Gippsland. So we're seeing an increased demand, just simply because of silage and hay yield on dairy farms, and also obviously pasture growth being impacted by the dry. 

So we're seeing increased demand for all commodities, example – hay, hulls, cottonseed, pellets. We're seeing crazy prices for products such as cottonseed, pellets being in short supply, or shorter supply, and almond hulls being almost unobtainable, and that's all having an impact at the farm level and ability to purchase product in at viable prices. Last week's rain event also did do some damage to hay crops and some product was stacked outside, so just beware buying product off farm. If it was made before the rain, there may be some damage to top bales if it was stacked or if it was left unstacked in the paddock, there could be some rain damage on the bales. There'll also be some damage to product that was in the windrow – not significant – nothing like last year, and on the upside of that rain event, it will increase grain yields. Talking to our suppliers through the Mallee and southern New South Wales, it was a very significant rain in terms of grain yields for those regions that received it. And on the downside it decreases the hay area. A lot of growers were planning on cutting drought type, or near drought type, grain crops for hay and those crops won't be cut now because of that rain, making those crops viable for grain harvest. So, like everything it has, especially at this time of year, a rain event like that does have its positives and minuses, obviously more positives than minuses with majority of rain events. The thing I wanted to touch on was what I call the FOMO El Nino and the headlines that are in the mainstream media. I think this is having an impact. I think that there is a fear of missing out, and it's driving the market a little bit, and I suppose we're just encouraging people to take a chill pill, be alert but not alarmed, and to take their time in purchasing it. You know, it's not toilet paper, there is a supply of hay and grain and product out there, but we are just recommending slow down, form the relationships, do your research and move forward so we don't need to be in this... we're nowhere near a panic situation, perhaps like we were at the end of 2019 or early 2020, we're a long way from that, so we just take our time and work through it with research and diligence would be our recommendation when buying feed. The other impact on the market is that China has reopened its export licenses for Australian hay export facilities. They had restricted the licenses, or specifically the licenses to export hay to Australia, as they expired China was not renewing them. They have renewed them in recent weeks, and I think I was expecting that would take a little bit of time, I was expecting the Chinese government would come and re inspect every plant, and it could take some months or even years to get all the licenses established again, but it appears as though even the expired licenses have been reinstated very quickly. Talking to some exporters in the last week, they have had a record sales month for September, record as in all-time record sales month for September, and the low Aussie dollar is driving sales across all markets, not just China – the Japanese market, China market, Korea. Taiwan market has been particularly strong for cottonseed, as well as hay and other commodities, helped by the low Aussie dollar and the opening up of the China market. The other impact on the market at the moment is the sustained rise in the freight costs and the ongoing pressure on freight in general. 

So the fuel price is one factor, and it's almost a little bit surprising when you look a little bit deeper, the low Aussie dollar is driving a higher fuel price, and that is particularly impacted on diesel. There's also a driver shortage and really significant wages being paid to drivers, which is having an impact on per kilometre rates. Also seeing just a competition for freight, particularly last year where the rail network was taken out by flooding and a lot of that product was put on the road. And bad roads, we're seeing a lot of transport companies putting up their prices for increased wear and tear on their vehicles as a contributing factor. What we're seeing as response to that is companies like Feed Central are increasingly aware of bale weights. The heavier the bale, the more tonnes on the truck, which decreases the per tonne freight cost, and that's a significant factor, and we're seeing growers being increasingly aware of bail weights, and we encourage all buyers to look at the delivered prices, and you know, particularly when buying hay, the ex-farm price is one factor, the actual delivered price is another factor. And the delivered price is, more often than not, determined by the weight on the truck and the kilometres that you're travelling. Often the weight on the truck is more important than the distance being travelled. The other thing on a plus is that there is slow and progressive improvement on road train and b-double access into farms, both supply farms and end user farms, and that does have a significant impact. So, you know, when talking to your MPs and when in a policy environment, just keep pushing for that improved road train and b-double access. It's slow, but it's progressive. We're seeing significant changes over the long term, and it is helping with the movement of commodities. And we're seeing, because of the pressure on price on freight, we are seeing a rise in ex-farm prices, so particularly through regional New South Wales, where in the past, that product might have been more viable to bring up from South Australia or Victoria, because of the increased freight costs the actual ex-farm price is increasing. More people competing for a local product, particularly through regional New South Wales. And you know, we're seeing, you know, prices canola hay, chickpea hay, wheat, barley hay, we're seeing really, really strong prices through New South Wales for those commodities, probably record prices, and it's driven by freight and the other factors that we've been talking about. The floods of 2022 do still have a bearing in the market, which seems ironic when we're talking about drought and dry weather. There was extensive weather damage on the product in 2022, and even going back to 2021. There's volumes of that product still in the market, it's unknown exact volumes, of course, but I think it is a significant volume of low quality product still in the market. That's probably a good thing in that it will put a volume of product in the market, which just will underpin the market going forward. It just creates caution for buyers that you know exactly what you're buying, because there will be a whole heap of different quality still available because of the low quality product from previous years. And it should be a relatively affordable roughage, and we strongly encourage working with your nutritionists to help find out where that product fits in your ration and on your farm, and, you know, ensuring that you're buying with a feed test, and we strongly encourage buying with a visual description as well, because particularly with that old season product, the feed test doesn't tell the whole story, but the combined feed test and a visual description certainly helps tell the story. We've sold large volumes of that product, when described properly and adequately, we're not getting the complaints. If something's happened and, you know, you're hearing lots of stories of where product wasn't described properly, then obviously it can cause some problems when it comes to feeding out. 

The other thing affecting the market is the backlog of livestock in the system. I think a lot of people are feeding just simply because they're not happy with the livestock prices being offered at the moment. They have the feeling that the livestock price will rise and there's just too many sheep and cattle trying to go through the system at the moment and the abattoirs aren't keeping up. We won't get into the politics of me commenting on the abattoirs other than, you know, by reading media, it appears as though a lot of those abattoirs are looking at increasing capacity over the next few months, and particularly in the New Year, so we may see some ability for the abattoirs to be able to handle the volume of product coming through. Obviously, with a low Aussie dollar, we should be able to sell the meat overseas, but at the moment the backlog of livestock in the system does appear to be slowing down the flow of livestock into the abattoirs and into consumers, and that is impacting on the amount of feed that's required to keep those animals fed and in good condition at the farm level. In summary, I think the prices of all feed are volatile. We're seeing, probably not always a trend in the feed, we're seeing different prices being offered in different parts of the state, in different parts of the country. Those prices that are offered don't always make a lot of sense, but there is product trading at all levels, particularly in the hay space, so it's hard just to pin down exactly what the market price is. The other thing driving the market is what I call the FOMO, the fear of missing out on the El Nino, and the media reports surrounding that. 

The strength of the export market is also affecting for hay, grain and all feed commodities. The sustained rise in the freight costs and the ongoing pressure on freight. And the 2023 quality is looking to be very good, or mostly good, there will be some damage from last week's rain. And there's large carryover of a very low quality product from 2022. And the backlog of livestock in the system is having an impact on feed demand right now. All resulting in that significant price volatility across hay and the majority of feed commodities and all product is selling quite fast at the moment. 

So recommendations for those, particularly those buying feed, is don't panic. We don't think it's necessary to be getting caught up in the fear of missing out. It's not toilet paper. We can slow down a little bit and take our time and make the right decision, there will be some summer production, especially lucern. And focus on quality, there will be, as we said, there will be some low quality product in the market and there'll be some very good quality in the market, and so think about what works for you. Work with your nutritionist to help make those purchasing decisions. We're recommending to rekindle relationships or to form those relationships with selected suppliers, we think that's very important. There's a lot of volatility in the market, but those long term relationships with suppliers are working. You know, in our example we've got buyers through the dairy regions of New South Wales, and through the country really, that we've been working with for a very, very long period of time, and they certainly get preference and advice and one on one service, and so just encourage everyone to think about those relationships, and whether it be direct with a farmer or with a trader, an agent, think through who your relationships are with and whether they're helping your business and how they can help with the business. Also, having a relationship with a supplier is not always going to be a win. You know, you'd be thinking that it has to be a win most of the time, and it's like all relationships, there'll be some ups and some downs. So if you're chasing price every single time, it's going to be difficult to have that long term relationship. If you're in that relationship for the long term, knowing that over the long term, you'll gain out of as many deals and you'll form a genuine and long term relationship with the supplier. And talk to the suppliers and make sure they know what you want, so you know, they're in there in the market batting for you because they know what you want, it's just an important part of that relationship. And review the third party risks of your relationship, there's a lot of suppliers out there. Does your supplier have viable contracts? Does your supplier have proper inventory management so that when the going gets tough and you're calling on that product, will it be available? And so dealing with reputable suppliers, and in the trade we call it the third party risk, and so think seriously about that third party risk, particularly as it looks as though we're going deeper into supply issues, predominantly around drought. And now, if you are a hay grower, if you have the capability to make hay, we strongly encourage it. The market is strong, it will sell. We always say at this time of year, it's 365 days until the next harvest, and so, if we're making hay, think about shedding, think about your ability to hold that product, think about the long term marketing of that product. Because we've got, you know, there's 365 days until the next harvest from now. So if you can make hay then we'd encourage the hay production, and of course silage as well. Finally, a departing tip and a bit of a plug for our company, research is free online and only costs $0.20 on the phone. So through systems like Feed Central, you can get a delivered price, all lots are inspected by certified independent inspectors, and all lots are feed tested, and that information is available either online or over the phone. Just really strongly encouraging people just to slow down a little bit, do the research, make the right decision that suits your business. So I'm happy to have any questions from people that are listening, Zita. 

Zita Ritchie: Thanks very much Tim, that was excellent. Lot to take in there, but it was a great summary. Ken, you've got a question. 

Ken: Thanks, Tim, great presentation. You mentioned the rain saved a lot of the grain crops, particularly in Victoria, is that the case right through New South Wales as well, so we would be seeing less grain crop converted to hay? 

Tim Ford: I think, roughly, Forbes, Dubbo, north, it was probably too late and there wasn't really significant rain, but certainly south of Dubbo, Forbes, where people were thinking about making hay, if they got rain they'll most likely let it go through to grain. And certainly through the Mallee, through Victoria, which is a very large hay supply region, yeah, it was very timely rain for that grain crop. 

Zita Ritchie:  As we discussed before Tim, maybe it's just, for those on the call, just a consideration, it sounds like most of the fodder is being sourced from southern parts of the country, but if farmers are considering, you know, sourcing from Queensland that there is red fire ant restrictions in certain areas, you know, just to look up the regulations and rules about importing that from Queensland to New South Wales, that's just a thing to be mindful of. 

Tim Ford:  Yeah, the fire ant thing from Queensland is predominantly restricted to south east Queensland, there is information on the New South Wales DPI website about that. The growers in that area are highly aware of it, they're putting in concrete floors in their hay sheds, and they are leaving the product on the ground for minimal periods of time, and they're monitoring the fire ants very seriously. So it's, you know, it's certainly being managed this end, but it's something to be definitely aware of. 

The other one is, you know, the weeds is an increasing issue as well, particularly the parthenium weed, which is predominantly a central Queensland issue, I don't believe that we're anywhere near the supply shortages of what we were in the last big drought, so there shouldn't be any need to be bringing product from central Queensland into New South Wales. 

Sheena Carter: Thank you for listening to this month's podcast produced by the New South Wales DPI Dairy Business Advisory Unit. This series is brought to you with funding and support from the Hunter Local Land Services. Don't forget to access the show notes for resources mentioned in this podcast and to view the breakfast webinar, which includes the Climate Teams Update. We'd love you to share this podcast with your networks, and feel free to send any feedback or suggestions for future episodes to thebusinessofdairy@gmail.com