Article by: John Hollenhorst
Published: September 29, 2013
This article focuses on three questions: 1) How can it be cheaper to ship a bulky product like hay from Utah to China? 2) Why are the Chinese looking to Utah for hay instead of producing it themselves? 3) What about Utah’s water problems?
There are several answers to the first question. First, compression equipment is used to pack the hay into shipping containers. Second, the Utah alfalfa market is actually benefited by the severe trade imbalance between the US and China. The US buys twice as many goods from China as it sells, so shipping rates on the return voyage to China are very low. Finally, agricultural production technology in the US far more efficient than in China.
The second question is answered by Chinese born business man Simon Shao, China has plenty of land, but much of it is of poor growing quality. There are 1.3 billion people in China, and its farmers are hard pressed to produce enough food for them let alone for the nation’s dairy cows.
The question concerning water is only briefly mentioned in this article, but will be examined further in a follow up report. Alfalfa takes a lot of water to grow, and critics voice concerns about shipping Utah’s precious water to China in the form of hay.
Tom Bailey of Bailey’s Farms in Ephraim, Utah not only grows alfalfa to ship to China, but has a branch office in Beijing with six employees. Bailey’s exports started in 2007. In 2010, the farm shipped 27,000 tons to China, 58,000 tons last year, and likely more this year. Bailey also exports alfalfa to the Middle East.
Simon Shao owns the 3,287 acre Escalante Ranch in Eastern Utah and exports most of the hay produced there to China (where he was born). Escalante’s exports grew from 5,000 tons in 2007 to 460,000 in 2012, and Shao estimates the tally will reach 600,000 tons this year. Shao mentions that China buys much more soybeans, corn, and wheat from the US than alfalfa.
This article caught my eye because, having been a horse owner in the past, anything with “hay” or “alfalfa” in the title jumps out at me. When my horses were fully boarded, I was basically paying someone else to worry about hay. But, when I moved them to my own property that worry became mine, and so I notice. My first thought wasn’t the water, it was the cost. When I first started buying hay many years ago, good quality hay was available for about $1 per bale. That price stayed steady for quite a while, until a local farmer began to dedicate much more of his acreage to hay production which actually reduced the price for a time.
It’s been quite a while since I’ve had to worry about hay, so I had to pick myself up off of the floor when a quick online search informed me that the price now ranges between $7 and $10 per BALE! Are you kidding me???
That said, there are a lot of factors that go into the pricing of any commodity, and it would take much more research to determine what (if any) effect the exportation of alfalfa to China has on the price Utah horse owners pay to feed their animals. It may have no effect at all on the market for horse hay since cows can eat hay that would make horses sick, so it’s basically two different markets.
As far as the water issue goes, it’s true that Utah is a desert state, but these farms have owned (and continue to pay for) their water rights for many years. Personally, I’m not inclined to interfere with the legal use of one’s own property. And, as was so eloquently stated in one of the online comments attached to the article (I’m paraphrasing!): They’re not exporting water, they’re exporting hay. Hay isn’t water…water is water.