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Export forage update: Shipping woes amid increased demand

John Szczepanski for Progressive Forage Published on 02 April 2021

U.S. exports set new record

The roller coaster ride that was 2020 is over. A bit dazed (but undefeated), forage exporters can reflect upon a difficult year full of challenges that nonetheless yielded a new record for international sales.

According to the most recent data available from the USDA, U.S. forage exports reached $1.36 billion in 2020, surpassing the previous year by $32 million, a slim margin of just over 2%. Given the difficulties exporters faced amid a global pandemic and shipping crisis, this can be considered a major accomplishment.

The USDA released export data in early February, closing the books on 2020 and showing that the U.S. exported nearly $110 million of forage in December. This was the strongest month since last July when shipments began getting squeezed by carriers who began to reject cargo so they could return and reposition empty containers to Asia to earn more profitable rates.

For the final month of 2020, alfalfa accounted for over 69% of total sales – the highest percentage ever, given that for many years, alfalfa represented about half of all exports. For all of 2020, alfalfa exports totaled over $900 million, which is more than all forages – alfalfa plus others – that the U.S. exported 10 years ago, in 2010.

U.S. forage exports, January-December 2020

Three countries accounted for over three quarters of alfalfa sales. China was the largest customer for U.S. alfalfa, buying just over $400 million, reaching that plateau for the first time ever. Japan bought just over half China’s volume, $206 million of alfalfa. The next-largest alfalfa destination was Saudi Arabia, purchasing half of Japan’s total, or $103 million.

China accounted for 30% of all U.S. forage exports, outpaced by Japan at 35%. In addition to alfalfa, Japan was the leading customer (over 60%) of other hay, purchasing $281 million of forages, such as timothy, klein and ryegrass straw.

China’s dairy market drives forage exports

Much of the export success of 2020 can be attributed to the Chinese market. China is set to overtake the U.S. as the world’s largest dairy market in 2022, and that should be good news for those supplying inputs, such as high-quality forage.

Market growth has been spurred by an expanding middle class that is developing an appetite for milk, cheese and yogurt. China’s per-capita consumption of dairy products was estimated at 77 pounds in 2019 and is expected to grow another 25% by 2025. The International Dairy Federation indicates this is less than one-third of the global average, suggesting there is considerable room to grow, which the Chinese government hopes to satisfy by expanding domestic production.

Percentage figures represent 2020 market share


China’s ascent to the top of the world’s dairy market has been supported by its national and local governments that seek to expand regional economies and add jobs in rural communities. In December 2018, the Chinese government announced a production goal of 45 million tons by 2025, representing a 50% increase over 2018 volume. To accomplish this, the government made a number of commitments, which include helping dairy farmers develop the size and quality of the country’s dairy herd, expanding farm scale and productivity, and embracing new technologies.

China’s dairy sector has seen some dramatic changes in just the past few years. In 2007, a year before Chinese dairies gained access to U.S. alfalfa, the country had over 2.5 million dairy farms, when “dairy farm” typically meant less than five cows maintained by a single family. However, by 2018, the number of dairy farms in China had fallen to 660,000 despite the national herd size remaining about the same; meanwhile, production yields soared. During that decade, Chinese dairy farms came to embrace new systems such as total mixed ration (TMR), whose share grew from 30% to 90%.

Canceled bookings threaten export growth

U.S. forage exporters continue to struggle to secure bookings on ocean carriers, one of many transportation challenges that impact the agricultural community. It’s finally getting some attention in powerful circles, putting pressure on the Federal Maritime Commission (FMC) whose mission is to ensure a competitive and reliable ocean transportation system that supports the U.S. economy.

As the leading voice of the forage export community, the U.S. Forage Export Council (USFEC) has joined with members of the Agriculture Transportation Coalition (AgTC) to contact legislators, government agencies and even the FMC itself to demand action. At the end of 2020, efforts appeared to be working, as the FMC issued a public statement that it was opening a formal investigation on alleged unfair practices by ocean carriers and marine terminals.

The AgTC’s executive director, Peter Friedmann, called this “terrific news” but urged agricultural shippers, truckers and freight forwarders to continue their outreach efforts to make sure the FMC acts promptly and doesn’t just investigate but enacts “meaningful enforcement of fair and reasonable practices.”

In a major meeting held in December, one AgTC member spoke bluntly about the FMC’s investigation. A representative of the U.S. Shippers Association said, “We don’t need a study that takes three months with another month of discussion. We need action now.”

Friedmann encouraged the agricultural community to ask legislators to contact FMC commissioners and emphasize the urgency and importance of the investigation. According to Friedmann, an FMC commissioner told him, “We’re getting a lot of calls from Congress – and we have to take those calls.”

GMO alfalfa continues to be an issue

As the largest customer of U.S. alfalfa, China has an outsized influence on the international market. Its total ban on genetically modified hay impacts all aspects of the export forage process, including decisions about whether or not to purchase, pricing and storage.

Says one exporter, “It’s the first question we ask before we consider buying.” Another adds, “We don’t usually know where we’re going to sell it when we buy hay in the field, so we always have to consider what China will allow.” Product is usually tested twice, adding time and cost, and the exporter still risks having the entire shipment rejected in China if even one container tests positive for even a trace of Roundup Ready Alfalfa. “It’s a big risk,” notes a shipper. “One weak link in the process can screw it up for everybody.”

The USFEC has been working with other industry organizations and the U.S. government to push China to expedite its approval process, which has dragged on for over 10 years. In the meantime, exporters urge growers to maintain vigilance and to understand this issue isn’t going away. One processor warns, “If an exporter tells you that GMO alfalfa isn’t a problem, then you’re probably talking to someone who’s cheating the system.”

A strong finish to 2020 enabled U.S. forage exports to beat the previous record, with shippers scrambling to meet customer orders in the face of container shortages and vessel cancellations. With true grit, exporters demonstrated they were up to the challenge, but they should be forgiven for hoping that 2021 will be a little less dramatic.  end mark

As USFEC director since 2007, John Szczepanski has represented the U.S. forage industry in negotiations with domestic and foreign governments. He’s worked in the private and public sectors, including both federal and state departments of agriculture. Szczepanski teaches seminars in international marketing and business storytelling, and consults with food-related businesses.

John Szczepanski is the Executive Director with the U.S. Forage Export Council. Email John Szczepanski.