Hay Market Research: New Zealand

Part
01
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Part
01

Hay Market Research: New Zealand, Part 1

The estimated amount of pasture/lucerne (hay) produced in New Zealand is 13.8 million metric tons, while its market value is estimated to be 5.5 billion NZD. The attached spreadsheet has been populated with the additional requested information.

Summary

  • In 2012, New Zealand harvested 862,057 ha of pasture/lucerne (hay).
  • In 2019, New Zealand exported hay worth $7.46 million.
  • The quantity of hay exported was 28.26 million kg (28,260 tons).
  • The top countries to which New Zealand exports hay to are Japan, Australia, Korea, Hong Kong, Singapore, China, Saudi Arabia, New Caledonia, and the United Arab Emirates.
  • Japan is the largest importer of hay form New Zealand with a share of 42% ($3.17 million). The second-largest importer of hay is Australia, with a share of 31% ($2.33 million), and the third-largest is Korea, with a share of 16.3% ($1.22 million).
  • Lucerne produces 12-20 t DM/ha/yr.

Research Strategy

The research team could not find pre-compiled data for the market value and amount of hay produced after extensive research through government websites, news articles, and market reports. It was, however, able to find useful information that helped triangulate the requested information. The following steps were taken to triangulate the total hay produced (in metric tons) and total market value (in local currency) of hay in New Zealand. We found data on the total amount of pasture/lucerne (hay) harvested in 2012. Using this data, we were able to determine the total amount (in metric tons) of pasture/lucerne produced by multiplying the number of hectares harvested by the average yield of a hectare of land. Lucerne produces 12-20 t DM/ha/yr. The crop's average yield has been assumed to be 16 t DM/ha/yr ((12+20)/2) for the calculations.
The total amount of pasture/lucerne produced = hectares of pasture/lucerne harvested * average yield for the crop.
Total amount of pasture/lucerne produced = 862,057 ha * 16 t DM/ha/y = 13.8 million tons.
Next, the team divided the dollar value of hay exported by the quantity of exported to find the price per 1 ton of hay. The price per 1 ton of hay will be multiplied by the total amount of hay produced in metric tons to get the estimated total market value of hay produced in New Zealand.
The market value of lucerne produced = (total tonnes of hay produced * price of 1 ton of hay)
Price per 1 ton of hay = Total value of exports/ Quantity of hay exported
The quantities that were provided in kilograms were converted into metric tons using a rate of 1 metric ton is equal to 1,000 kg. The quantity of hay exported in metric tons = 28.26 million/ 1,000 = 28,260 tons
Price per ton of hay = $7.46 million/ 28,260 tons = $264
Market value of pasture/lucerne produced = 13.8 million tons * $264 = $3.64 billion.
The market value was converted from USD to NZD, using 1 USD equal to 1.51 NZD.
Market value of pasture/lucerne in local currency = $3.64 billion * 1.51 = 5.5 billion NZD
Part
02
of eight
Part
02

Hay Market Research: New Zealand, Part 2

NZ produces 466,776 tons/ yr. of alfalfa and 110,211 tons/yr. of meadow hay. The available information on the production of different hay types can be found populated in the attached spreadsheet.

Select Findings

  • NZ produces 466,776 tons/ yr. of alfalfa.
  • Ryegrass-white clover pastures account for 110,211 ton/ yr of feed.
  • 32,910 tons of ryegrass seeds were produced in 2018.
  • 4,220 tons of white clover seeds were produced in 2018.
  • 1,110 tons of orchardgrass/ cocksfoot grass seeds were produced in 2018.
  • Bermudagrass and kleingrass pastures can be found in NZ.

Research Strategy

We searched the agricultural census, research reports, and industry portals to obtain the required information. While there is no data available on the quantity of alfalfa hay produced, we found the harvested area for alfalfa. Production statistics for other hay types were not publicly available; however, we were able to identify the more widely used types of hay in New Zealand based on seeds grown and other qualitative information.

Calculations:

Quantity of alfalfa hay produced:
The average yield per hectare of alfalfa hay in Mexico = 12 t DM/ha/yr
Therefore, the amount of hay produced in Mexico = 466,776 tons/ yr. (12 t DM/ha/yr * 38,898 ha)

Quantity of pasture/ meadow hay:

The average yield per hectare of Grass-clover- sheep & beef in Mexico = 9 t DM/ha/yr
The average yield per hectare of Grass-clover-dairy in Mexico = 14 t DM/ha/yr
The average area of grass-clover- sheep & beef in Mexico = 8,685 ha
The average area of dairy in Mexico = 2,289 ha

Therefore, the amount of meadow hay in Mexico = 8,685*9 + 2,289*14 = 110,211 tons/ yr.

Part
03
of eight
Part
03

Hay Market Research: New Zealand Part 3

After an exhaustive search, information on how much of the hay produced in New Zealand becomes large bales, small bales, round bales, pellets, and others was not available and could not be estimated. Columns Y-AE, row 13 of the attached spreadsheet have been updated accordingly.

Related Findings

Research Strategy

To provide data on how much of the hay produced in New Zealand becomes large bales, small bales, round bales, pellets, and others, the team commenced with an exhaustive search through government databases for any publication of relevant data. However, while we found data on the total hectares of different forms of hays that were processed in the country, as published by the government of New Zealand in 2017, information on how they were processed was not found.

Our next approach was to search through credible statistical databases specific to New Zealand such as Figure. We also search through the websites of agricultural organizations, educational studies and research, as well as industry reports. We scoured through sources such as FAO, MPI, and others. However, these search attempts did not return any relevant information.

Finally, we tried to search for publications and reports from experts on what percent/share of the total hay produced in the country are processed to become large bales, small bales, round bales, pellets, and others. Again, no useful data was found in the public domain. As such, we have entered N/A in the corresponding cells on the attached spreadsheet.
Part
04
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Part
04

Hay Market Research: New Zealand, Part 4

After an exhaustive search through government databases, reports, and credible research reports, we could not determine how much hay is produced by small-scale farmers vs. commercial farmers. However, we could triangulate the percentage of hay produced and used on farms in New Zealand. This information has been entered into the attached spreadsheet.

Key Findings

  • According to the USDA Foreign Agricultural Service, New Zealand's animal feed demand is expected to continue its growth as its dairy, poultry, and livestock sectors continue to grow.
  • The report forecasts a shortfall in livestock feed by 2020. Demand for feed in various sectors, including horses, and pets is "expected to grow by 104,000 MT or 9% by 2020."
  • Furthermore, combined with the dairy feed shortfall and the likely reduction in PKE imports, feed shortage is expected to increase from "450,000 MT to 1.27 MMT per year by 2020."
  • The Ministry of Agriculture in New Zealand "puts the number of smallholdings (between one and 40 ha) at well over 70,000, and growing fast."

Research Strategy

To locate the percentage of hay produced, used in the farm, and sold for other uses and how much of the hay produced is made by small-scale farmers and commercial producers. We began by scouring through government reports and publications, market research data, and research reports from credible organizations. This search method provided no results.
We got creative and searched through databases such as the International Trade Administration, Food Agricultural Organization, and the USTradeNumber. While we could locate hay market export information, there was no information regarding the percentage of hay used in farms and sold for other uses.
During our search, we discovered that New Zealand was predicted to have a shortfall feed by 2020, the shortage is expected to increase from 450,000 MT to 1.27 MMT per year by 2020. We then made a logical assumption that any feed that is not exported or imported is produced and used on farms in New Zealand. With this, we calculated the percentage of produced, used, and sold hay in New Zealand. However, we could not determine the percentage of hay produced by small scale farmers vs. commercial farmers. Our final step involved scouring industry reports, journals, and other credible agricultural resources in the country. This search method yielded no results. We came across a report that discussed the challenges of drought in the region, especially for small-scale farmers. Other articles suggest a rapid increase in small-scale farming in the area.

Calculations

  • It is logical to assume that New Zealand produces and consumes any amount of its hay produce that is not exported or imported.
  • TrendEconomy states that the country exported about 28,260,950kg (28,260,950/1000 = 28,260 tons) and imported about 688,123kg (688,123/1000 = 688 tons) in 2019.
  • Using the value of total hay produced to be 13.8 million metric tons, New Zealand consumes [13,800,000 — (28,260+688)] = [13,800,000 – 28,984] = 13,771,016 metric tons. The percentage of hay produced and consumed is (13,771,016/13,800,800)*100 =0.997*100= 99.7%
  • The percentage of hay sold is 0.3% (100-99.7)%.
Part
05
of eight
Part
05

Hay Market Research: New Zealand, Part 5

Sheep consume an estimated 432,000 tons of lucerne in New Zealand every year, far more than any other type of livestock. The statistics on hay consumed in NZ by animal types have been populated in columns AM-AQ, row 13 of the attached spreadsheet.

Findings

  • Lucerne/ hay consumed by cows in NZ: 47,328 tons/ yr.
  • Lucerne/ hay consumed by beef in NZ: 55,392 tons/ yr.
  • Lucerne/ hay consumed by equine in NZ: 1,168 tons/ yr.
  • Lucerne/ hay consumed by sheep in NZ: 432,000 tons/ yr.
  • Lucerne/ hay consumed by pets in NZ: N/A

Research Strategy

The 2012 Agricultural Census of New Zealand provides supplementary feed crop data by farm type. The area harvested for maize silage, cereal silage/ cereal balage, other crops silage, lucerne, maize green feed, forage brassicas, and other supplementary crops, according to the farm type has been published. The only hay type for which data has been provided is Lucerne.

Statistics

Dairy cattle farming: 2,958 ha
Equine farming: 73 ha
Sheep farming (specialized): 20,121 ha
Beef farming (specialized): 2,580 ha
Sheep-beef cattle farming: 7,280 ha
Grain-sheep and grain-beef cattle farming: 481 ha
Deer farming: 1,786 ha
Pig farming: 22 ha
Other livestock farming: 13 ha

Calculations

Lucerne produces 12-20 t DM/ha/yr. The average yield for the crop has been assumed to be 16 t DM/ha/yr ((12+20)/2) for the calculations.

Lucerne consumed by cows = 2,958 ha * 16 t DM/ha/yr = 47,328 tons/ yr.
Lucerne consumed by equine: 73 ha * 16 t DM/ha/yr = 1,168 tons/ yr.

We calculated the sheep farming component and the beef farming component in "sheep-beef cattle farming" and "grain-sheep and grain-beef cattle farming," based on the following:

Beef farming component = proportion of beef farming (specialized) / (beef farming (specialized) + sheep farming (specialized)) = 2,580 ha/ (20,121 ha + 2,580 ha) = 11.37%

Sheep farming component = proportion of beef farming (specialized) / (beef farming (specialized) + sheep farming (specialized)) = 20,121 ha / (20,121 ha + 2,580 ha) = 88.63%

Combined beef and sheep farming = Sheep-beef cattle farming (7,280 ha) + Grain-sheep and grain-beef cattle farming (481 ha) = 7,761 ha
Beef farming component = 11.37% * 7,761 ha = 882 ha
Sheep farming component = 88.63% * 7,761 ha = 6,879 ha

Total sheep farming: 20,121 ha + 6,879 ha = 27,000 ha
Total beef farming = 2,580 ha + 882 ha = 3,462 ha
Lucerne consumed by sheep = 27,000 ha * 16 t DM/ha/yr = 432,000 tons
Lucerne consumed by beef = 3,462 ha * 16 t DM/ha/yr = 55,392 tons


Part
06
of eight
Part
06

Hay Market Research: New Zealand, Part 6

The most familiar way of measuring hay's feed value when sold in New Zealand includes keeping track of contents like DM (dry matter). It also involves measurement of metabolizable energy for every kilogram of dry matter (known as M/D for short or MJME/kg DM), percentage of CP (crude protein) content, NDF content (neutral detergent fiber), SSS content (soluble sugars and starch), and percentage of fat. Additional insights on the hay market for New Zealand are in the attached spreadsheet.

Value of Hay in New Zealand: Definition

  • According to DairyNZ (the organization that currently represents every dairy farmer in New Zealand), the most familiar ways of measuring hay's feed value (whenever it is traded in New Zealand) include measuring and defining its contents like DM (dry matter).
  • Determining the value of hay in New Zealand also involves measurement of metabolizable energy for every kilogram of dry weight (known as M/D for short or MJME/kg DM), evaluation of percentage of CP (crude protein) content, NDF content (neutral detergent fiber), SSS content (soluble sugars and starch), and an assessment of the percentage of fat content.
  • M/D or MJME/kg DM: In New Zealand, the value of feed (including hay) is analyzed in terms of energy. Its value is often quantified in mega-joules of metabolizable energy per kilogram of dry matter M/D for short (or MJME/kg DM).
  • Percentage of CP (Crude Protein): Crude protein content is one of the quality factors of significant importance in New Zealand. Crude protein includes the hay's nitrogen content, including amino acids and non-protein nitrogen (such as urea).
  • Neutral Detergent Fiber (NDF) Content: Neutral detergent fiber (known as NDF) measures the cell wall or fibrous fraction of hay. This analysis includes cellulose and lignin.
  • Soluble Sugars and Starch (SSS Content) is a parameter used to define hay's value in New Zealand. Most meadow hay in New Zealand contains 10 to 20% starch plus soluble sugar.

Stakeholders: Those Involved in the Sale of Hay In New Zealand

  • There is a nationwide hay feed shortage in New Zealand. Some critical stakeholders involved in hay sales (combating this shortage) are small block farmers, commercial-scale farmers, and farmers associations like East Coast Young Farmers. Other stakeholders often participate in hay sales across New Zealand, including local council catchment staff, civil defence staff, and rural advisory group leaders.
  • Hay (to be used for feed) often originates from farms in Manawatu, North, and Hawkes Bay area of New Zealand.

Common Practices

  • Traditionally, farmers in New Zealand farmers depend on fresh grass to feed their animals like cows and make their supplementary hay. Recently, companies like PKE have become famous for delivering feed (including hay) to New Zealand farms.
  • In New Zealand, hay bales get tied to weigh up to weigh about 900kg before sales. Traditional smaller squares of hay are still available across several parts of the country. Hay is packed in polyethylene bags (aquamarine raincoats) before sales.
  • Hay contractors often shy away from small bales that require human handing due to lack of labor for offloading sold hay items. They prefer massive mounds of hay, which they handle using machinery worth several millions of dollars.
  • Some companies like SGS New Zealand Limited are involved in testing the quality of hay before purchase.•

Research Strategy

In order to provide an overview of the hay market in New Zealand, the research brief has reviewed government publications and market research data such as resources published by DiaryNZ, among other organizations. This strategy examined details like the value of hay sold across New Zealand. It also investigated stakeholders' details (those involved in the sale of hay) and standard practices in the hay market in New Zealand. The research examined if hay is sold immediately after production and inventoried on the farm before being utilized as feed. DairyNZ is the organization that currently represents dairy farmers across New Zealand. Credible sources like DiaryNZ revealed information on the value of hay. There is a limited insight on stakeholders' details and standard practices involved in the sales of hay covering New Zealand in its entirety. This research brief assumes that information found on the 2020 copyrighted website of DairyNZ is up to date. Where data for the whole country is not available, the research has examined discrete pieces of information or regional data and has used it as a proxy for the whole of New Zealand.
Part
07
of eight
Part
07

Hay Market Research: New Zealand Part 7

Market Research:

New Zealand Exports:
-Value of exports: $5,236,143
-World Share of exports: 0.18%

New Zealand Imports:
-Value of imports: $229,052
-World Share of imports: 0%

New Zealand Agriculture Facts and Statistics:

- Grain seed and Fodder cropland consist of 490,502 hectares (102,052 hectares in North Island, and 388,450 hectares in South Island)
- Pasteur/Lucerne (Hay, Silage, and Balage) consist of 801,882 hectares (369,498 hectares in North Island, and 432,384 hectares in South Island)
- Lucerne (Alfalfa) cropland consist of 50,716 hectares (10,105 hectares in North Island, and 40,611 hectares in South Island)
- Cropland for 'Other Supplementary Feed Crops' comprises 67,576 hectares (33,523 hectares in North Island, and 34,053 hectares in South Island).

Research Methodology:

Evidently, during five hours of research, information regarding market size, growth rates, market forecast regarding the Hay market in New Zealand could not be found. Alternatively, relevant statistics related to animal feed production (which includes Hay, Alfalfa, Silage, Pasteur, Fodder) have been presented in this research document. It is clear that due to increasing domestic demand for hay and fodder crops, New Zealand does not capture a global share of the Hay market. In order to meet its increasing demands, New Zealand imports most of the animal feed hay; statistics relevant to this fact have been illustrated in this document.


Part
08
of eight
Part
08

Hay Market Research: New Zealand, Part 8

New Zealand's hay market has been growing steadily over the past ten years. However, recent droughts and the global economic situation has hurt the market. A complete SWOT analysis of this industry has been provided in row 13, column AY, of the attached spreadsheet. The findings are also presented below.

New Zealand's Hay Market SWOT Analysis

Strengths
  • The process of mowing, tedding, raking, and baling nowadays "requires much less manpower, and production is much quicker."
  • Lucerne hay's export value in this country had a CAGR of 40.3% between 2006 and 2016, as per the latest data.
  • New-season crops are currently (September 2020) "performing well."
Weaknesses
  • Other products, like silage and haylage, have replaced hay in popularity.
  • As of September 2020, grain movement has been slow-moving in New Zealand.
  • Feed contract pricing for 2021 is expected to be slightly behind compared to 2020.
Opportunities
  • In 2019, hay prices in New Zealand decreased by 4.4%, which represents an opportunity to attract new businesses.
  • In May 2020, the crop industry received a contribution from the government due to the latest drought experienced in the country. This could also be an opportunity for the industry to cope with financial burdens suffered by farmers.
Threats
  • Hay production in New Zealand is "getting increasingly harder" because of the changing weather patterns that are not providing "dry, hot breaks when the hay is ready."
  • Currently, border restrictions have caused a "shortage of foreign agricultural workers." This could represent a threat to the agricultural sector.
Sources
Sources

From Part 07