In light of the altered fodder outlook caused by the recent flood events across eastern Australia, Dairy Australia commissioned the Australian Fodder Industry Association (AFIA) to produce a Fodder Insights Report (spring-summer 2022) to provide a detailed analysis of the current situation and outlook for the coming months.
While the main consequence has been reductions in both the quality and quantity of new-season hay able to be produced, delayed harvest schedules and damage to transport infrastructure are creating flow-on impacts to further complicate the situation.
With high input costs and attractive grain prices turning many away from hay production earlier in the year, the direct and indirect effects of this widespread flooding have compounded an anticipated supply contraction.
It is estimated that this season’s overall production of traded hay/fodder is down to around 30 to 40 per cent of average production levels, with five per cent of vetch estimated to be successfully harvested, and both cereal hay and lucerne hay down to 30 per cent and 40 per cent of average production respectively.
These flood events not only downgraded new-season crops destined for both hay and grain production, but many farmers were also left to contend with waterlogged spring pastures, inundated stored feed and an inability to access paddocks and sow summer forage crops.
Amid this outlook and with higher prices already a reality for many, a lot of growers are holding extra stock on-farm for their own use rather than making it available on the market, further tightening supply.
While the impacts of recent flood events vary across each region, fodder crops across the south-eastern states have been severely flood-affected and many are facing very limited hay and silage production as well as a hesitancy to bring excess supply off-farm.
This shortage of supply contributed to silage becoming the predominant fodder type being produced and sold along the east coast through late spring and into summer.
Across south-east Queensland and northern NSW, expected shortages are being somewhat mitigated by the greater potential of more supply becoming available in autumn, if summer hay crops succeed.
After a mostly promising start to this season, and despite warnings allowing growers to salvage some crops at risk of inundation, parts of South Australia are still facing a reduced production outlook due to interrupted cutting and baling schedules. This is bringing expectations of both reduced quality and yield.
This is in contrast to southern and central Western Australia, where harvest continues, and a strong supply of hay and silage is expected throughout the region.
Transport costs, however, may hinder the ability of the region to support the eastern states.
With this overarching supply shortfall generating strong demand for dwindling carryover supplies of old-season hay and reduced quality of in-paddock dry feed, prices are expected to continue climbing.
A direct result of limited supply, price inflation is being further amplified by labour shortages and higher transport costs, with current fuel costs and transport availability contributing to a projected 25 to 50 per cent increase in transport costs overall.
With current prices expected to keep increasing as harvest finishes and stock relying on dry paddock feed start to require supplementary feeding, higher price floors for all fodder types are expected to be a feature in the coming months.
For locally delivered lucerne hay within NSW and Victoria as an example, minimum prices are expected to jump from the current $350-$550/tonne to $600/tonne within the next four to six months.
For more information and to access the full report, contact Isabel Dando on Isabel.dando@dairyaustralia.com.au