For every $1M the NT beef industry generated in 2012/13 it created another $510,000 within the NT economy.
For every 100 jobs held in the NT beef industry another 36 are created in the NT economy alone.
(NT DPIF Outlook 2013)
I began writing this blog about service providers to the Live export industry but then realised I couldn’t really do that without showing the fluctuations in the live export markets and how that impact affected producers and thus the flow on to service providers.
Therefore I have broken the post into 2 sections.
1. NT Live cattle export – Darwin
2. Hay & Fodder Suppliers to Live animal export.
I have not addressed animal welfare issues in these posts as I am working on some other blogs to address that.
Some service providers are paid arranged set prices for the goods they may supply such as hay or retail goods. Others rely on commissions in the form of percentages of the gross dollars earned or rates of pay in regards to volumes of animals handled. e.g stock agents. Transporters are paid on a basis of volume carried and the distances they transport the stock on a kilometre rate travelled. Hay producers can be paid either per tonnage or rate of pay per bale supplied.
This post mainly focus’ on the fodder service providers to the NT live animal export industry.
The NT fodder industry has grown steadily in the last 18 years in line with the export of live cattle from the NT
The most common pastures grown for hay production in the north of the NT are Jarra and Cavalcade. Some forage sorghum’s that are suited to the tropics are also used to produce hay, these being Sudan and Sweet Sorghum.
Fodder production in the NT main problems are climate, weed management and nitrogen deficiency in the soils but also experience similar issues to any other cropping enterprise, poor rain seasons, insects, fire and costs of plant and equipment.
Many hay producers were impacted by the ban in June 2011, yet most didn’t produce cattle. Like us, the cattle producers, many hay growers wondered if their business’s were finished in 2011, as some of us thought ours may be. Now in 2014 they simply can’t supply enough hay for the movement of cattle that is now occurring through the NT’s only port Darwin.
Like us fodder suppliers faced difficulties in holding supply and stock in 2011. Now having unexpected market increases and demand for their product due to significant market improvement and influx of other states cattle, 2014 sees NT suppliers purchasing fodder from other states to ensure demands are met.
Pic 3. Hay production, round bale production on natural pasture. South of Katherine. These are the bales we prefer to use simply for ability to lift and use with the smaller machinery we have, and our requirement to feed different small yardings of animals at any one time.
Hay growers produce round or large square bales. Cattle breeders feed these on their properties when handling weaners, working cattle and also to feed cattle intended for sale prior to transport.
On the one hand producers generally give an indication of how many bales they would like to purchase in pre-set agreements. On the other you can never be really sure how many bales you will go through. With the wet occurring late this year (time of writing November 2014) we were feeding hay for much longer period to young cattle than we had originally intended at the end of the dry season. This is a necessary cost we are willing to wear as these weaners could lose too much condition and possibly die without extra feeding. How much longer we will need to feed it is anyone’s guess and depends on the weather gods. We use round bales that weigh about 200kg and are convenient for us to handle.(Early December 2014 we have received some good early wet season storms). Square bales are much larger and heavier and are preferred by many producers. Economically the square bales are more cost-effective to transport and handle but they can weigh up to 500kg each.
Pic 4. Weaners being fed hay. A round bale rolled out. An important practice to teach them handling ability and to learn that hay is food. Feeding hay to animals quietens them and desensitizes them to people.
The NT had a short history of silage production. I haven’t been able to find why this was discontinued.
Hay growers also supply hay to pre-export yards, which process the hay and mix it with other foodstuffs to process into pellets and fed in bunkers similar to feedlots, the cattle also eat the bales directly. Supply numbers to pre-export yards would be very difficult to estimate as some markets and cattle to be processed simply couldn’t be forecast with accuracy more than a few months from when orders are actually realised.
While export yards may have contracts and some degree of idea of numbers they work on, like us they can only store and handle so much hay at any one time, and like us are not likely to know forward export requirements by more than 6 months at best. There is no set pattern of which port a ship or country may obtain cattle from and exporters may rely on regional supply of cattle and the type of animal they require at the time, prior to announcing schedules of shipping.
To illustrate the variance from which port cattle may be exported to the same country I have used Indonesia as the common destination in the 2 following charts.
Pic.7 Large Square bales being fed to export cattle in a pre-export yard south of Darwin. Square bales are approximately 3 times the weight of round bales. These cattle are also fed shipping pellets to prepare for export transport.
Fodder companies utilise hay to process into pellets, which is transported and used in the pre-export yards and on the ships as the animals’ transverse the sea. Supply to the export yards and shipping facilities is a 100% of their business for some fodder suppliers.
Livestock fodder currently loaded onto 5 carriers berthing at the Darwin port through December 2014 are estimated to be worth $1.3M on its own.
Pic. 8. Shipper pellets. Pulverized hay with other grain and fodder supplements, mixed with molasses to form pellets are transported in large ton sized bulk bags to ports for loading to ships. These are fed to cattle pre-export and while on the ships in transit.
Those who specialise in hay production have invested often many years in clearing and developing paddocks to suit their crop types, irrigation, machinery and general soil condition to optimise their cropping harvest abilities.
Most cropping for hay production relies on the wet season rainfall. Planting generally happens about November/December, with the pastures growing through the summer wet months, cutting and baling happening from March on wards through the dry season. Natural pasture production areas may be baled later in the year July through to September.
Peak demand for hay is through the dry with the mustering of cattle and the highest activity of the ships loading at the port.
At times hay producers are left with surplus supplies from the dry season of bales for which they still have on property and need to protect over the wet seasons. To maintain the integrity of the nutritional value of the fodder it is important that it is covered to protect it from water logging. Bales kept dry will be suitable for sale at a later date and therefore valuable to the grower as future income. Wet bales are worthless for fodder, In fact even dampness in bales can cause mould which can then be extremely dangerous for animals to consume.
Rainfall averages of Katherine’s 2.4m and Darwin 3.2m combined with high humidity and temperatures of the top end through the wet would soon turn large uncovered haystacks into soggy, hot and rotting piles of worthless gunk. I have left a hay bale in my garden for mulch as a full bale over one wet and actually seen it was fly blown due to it being perfect conditions for the maggots to survive moisture and temperature.
Pic 9. Source. NT DPI stacking and storing hay. An example of large square bales stack with a tarpaulin cover to protect the hay from water logging through the wet season.
2008 had been a very low fodder production year, with below average rainfalls and ownership of some properties deciding to discontinue hay production.
2009 saw increased production of fodder but with a surplus of supply, some had to store hay over the 09/10 wet.
09/10 wet was a late finish for rains received which enabled record production, but the following wet 10/11 set in early meaning again some producers had surplus hay to demands and had to store it over the wet. The Indonesian imposed import quotas were also having a negative effect on demand due to the fact that the numbers of cattle being exported were in decline.
The 2010/2011 wet season had been a very good season for hay growers as it was a consistent rainfall event allowing for large tonnage of hay to be produced at 83,230t and valued at $19M. Some producers of natural pastures chose not to bale due to reduced demand because of the live export ban.
When the ban of live export to Indonesia occurred, June 2011. The export yards and ships stopped, many hay producers were left holding thousands of tonnes of bales that had been pre-ordered but suddenly those orders were cancelled or had been post-phoned. 2011/12 values of fodder dropped to $13.9M. Many growers had been left with excess bales from 2011 and didn’t want to bale more hay which they possibly couldn’t sell due to the uncertainty of markets at the time, therefore some pastures were left standing in paddocks.
A cubing plant located in Katherine, who had just finished substantial multimillion dollar upgrades, had operational and commitment costs to purchase hay of $500,000 per month when the ban occurred in 2011. They had two full road trains loaded and ready to leave the facility to transport the fodder to ships waiting to load cattle the very day the ban was invoked. Those truck orders were immediately cancelled and the fodder never even left the cubing plant. They had over 8,000 tonnes of hay on site ready to be processed for the coming season’s activity and yet they then had no orders.
The plant had to prepare for what they would do with the hay over the wet if it wasn’t processed. They didn’t have enough tarps to cover the stacks if it wasn’t utilised. Therefore to be prepared for the wet and allow manufacture time they had to order tarps in June, at a cost of over $8,000 each, they needed 10 of them. Some growers didn’t have the cash funds for tarps and simply left the bales to rot.
The cubing plant estimated it lost 90% of its sales within days of the ban being invoked, including subsequent price drops. Then they had to endure undercutting from interstate fodder suppliers when the cattle started to move in late 2011, everyone was desperate to shift their produce!
The plant had expected to use 2,000 tonnes of hay a month to process, but actually only processed 300 tonnes a month for several months following the ban. After the ban was lifted they supplied 3-4 boats a month, prior to the ban they had budgeted supplying 4 a week.
A contract hay baler who would travel with his equipment to properties around Katherine went from producing 30,000 large square bales in the 2010 season to only 10,000 in 2011 due to cancelled work. This cost his business, immediately! Over half a million dollars in lost income. People didn’t want to go to the expense of baling hay which probably couldn’t be sold, if they didn’t have tarp coverage for the hay it would deteriorate over the wet season and be of little value the following year.
Many hay producers immediately felt the financial strain of lost income when the ban occurred; they now had few outlets to sell too. This was increased when the 2011/12 wet season approached and large stands of hay stacks remained uncovered in paddocks or yards. Most didn’t have tarps.
As producers, like ourselves we were extremely wary of market improvements in the coming 2012 and 2013 years. We had been abandoned by the government when they had implemented the ban and the mood in general of market improvement was one of scepticism and wariness. Add to that the phone tapping scandals and poor intergovernmental relations between Indonesia and Australia. It appeared the Australian government wasn’t too concerned about re-establishment of good trade relations. It was hoped markets would improve but it wasn’t going to be quick, relationships were being rebuilt but it was a slow process, Cattle producers realised ESCAS would take time to develop and implement. So we waited. When Indonesia and other markets did open up late in 2011 and throughout 2012 the specifications of requirements for cattle were stringent and this also limited export numbers.
We slashed our budgets accordingly, which meant we curtailed any spending to only what was absolutely necessary. Hay orders were kept to the minimum as we simply didn’t handle many selling animals and they were returned to paddocks if markets weren’t available. We simply didn’t buy our normal levels of orders for steel, animal health, fencing equipment and machinery repairs.
The hay producers followed suit, they didn’t plant much when the planting period of November / December came and went over the 12/13 wet. and they knew if we were not going to shift cattle then they also would have limited markets to sell too and thus income. A few years previously the 12/13 year had been forecast to have fodder value at $14.8M, in reality it achieved only $12.4M.
We were all highly stressed and we were in self-preservation mode.
If we were going to go broke, we were taking a lot of others with us, not intentionally, but we were all linked. The thing was, we had to hold off going broke as best we could because we couldn’t sell our property on a sliding property market with poor prospects of live export for trade. So we did hope that markets come back because there’s really nothing else we could do but simply ride it out.
The hay producers in 12/13 wet again limited the planted areas to hay production. The wet season was below average with rainfall occurring in deluges then with long periods of dry spells in between. This caused poor germination and affected plant viability, some crops failed all together. Production was down for the coming 2013 dry season as the fodder was simply not as dense as usual and proteins levels had been affected. Fodder shortages did occur late in the dry season of 2013.
Cattle markets steadily improved in 2013 for live export cattle producers and there were murmurs of easing of the import quotas from Indonesia and substantial orders to Vietnam, but they hadn’t come on-line at that stage and prices while increasing were still only at break even. People were optimistically cautious.
2013 saw Indonesia presidency elections in full swing, with quiet acknowledgement that their self-efficiency would not be attainable in the short-term. In fact people were demanding meat and the governments needed to increase imports to meet their people’s demands. They implemented quotas based on the pricing of secondary cuts on their own wet meat markets late 2013 and into 2014. Vietnam was giving strong indications of not only surpassing their previous year’s cattle purchases but tripling them in 2014. We were optimistic, but the proof is only when the orders are called.
Hay producers again held back extensive planting for the 13/14 period. Cattle producers viewed reports of massive market number requirements with healthy scepticism, the growers wanted to actually see numbers shipped before they would commit themselves to large plantings.
2014 was a turnaround for live export for the cattle producers. The majority of Australia was in severe drought, cattle turnoff, including females was exceeding previous records dating back many years, cattle producers weren’t only selling normal stock they were selling breeders because of feed shortages. QLD and northern NSW was processing 11% higher than in 2013, southern states processing 23% higher(Weekly times 29/10/2014). The Australian processors were flooded with cattle and dropped their prices accordingly.
We finally had some serious competition in markets for cattle, Vietnam orders had materialised and Indonesia was importing near record numbers. Prices were above $2.00/kg and remaining stable. Other states producers were sending cattle to live export who had never live exported in their lives, the ability to sell feeder animals in a light weight of less than 350kg was a god send to some for income, otherwise they had no where else to sell. some meat processors were taking bookings months ahead with no quotation of prices. Live export was enabling many producers an income that was paramount to their financial survival, half of the 415,000 exported from the Darwin port at the end of October 2014 were from QLD.
This has placed un-prepared for demand for hay and fodder in the areas that supply the export yards, ships and general spelling of cattle, No only Darwin but spelling yards such as Cloncurry where animals were transited all needed hay.
2014 has seen such a massive demand for fodder that the hay producers in the north have been cleaned out and have received good prices. This is good for them and hopefully means many of them can regain some serious income going into 2015 as they conduct plantings now with the live export markets positive for the coming year.
The interesting things is, that Katherine cubing plant has had to truck in so much hay from down south to keep up with demand, they have dedicated 3-4 full road trains a week only for hay cartage. This has meant the cost of production has actually kept their profit margins down. They have seen producers leave the industry and the whole landscape and changed since the ban. After the ban the plant had so much hay in storage they didn’t buy any fodder off local suppliers in 2011 or 2012. This affected locals badly whose income was hay production, some sold up and left the industry entirely.
Recent articles concerning hay looks positive for good market supply of hay for the coming year. Ironically I hope the increased demand for hay doesn’t mean that cattle producers can’t afford to buy it. Quiet simply we can’t operate without hay. As my husband would say “ hay is worth a couple of good men”. We need to have market accessibility and competition to achieve sustainable beef production. We also need our service providers.