Moses Lake, WA 98837, USA

Hay export market surviving tariff crisis

Staff Writer

MOSES LAKE — While the trade war with China has affected many agricultural industries in the United States, alfalfa exports are not being affected.

The U.S. mainly exports hay to Japan, Korea, Taiwan, China, the United Arab Emirates and Saudi Arabia. Hay exports peaked in 2017 when China was importing 1.2 million metric tons of hay from the U.S. But on July 6, 2018, when China put new tariffs into place, U.S. exports into the country began to fall. Prior to the tariff increase, China had a 7 percent tariff on U.S. alfalfa. On July 6, an additional 25 percent tariff was added. Since then, shipments of alfalfa into China have been cut to half the pre-tariff numbers.

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“There has been a lot of negativity around (President Donald) Trump starting the trade war,” said Scot Courtright, one of the owners of Courtright Enterprises of Moses Lake. “While it has had a impact on hay and grain shipments, it needed to be done to address trade issues with China.”

Some of the trade issues impacting U.S. exports into China include Chinese businesses with similar trademarks to those of U.S. companies, Chinese businesses backing out of contracts, lots of required documentation and testing of alfalfa and the possibility that government officials could reject the shipment simply because they thought they had too much hay inventory on hand.

“China was backing out of contracts,” Courtright said. “No other country does this.”

With the increase in tariffs, Chinese dairymen have started buying alfalfa from other countries, like Spain and Argentina. With China purchasing hay elsewhere, Middle Eastern countries have been looking to the U.S. for their hay. “What was shipping to China is now going to the Middle East,” said Courtright. “We’re selling at a lower prices, but it is still moving.”

President Trump is currently in negotiations with China to end the trade war.

“The Chinese economy is struggling,” Courtright said. “Their economic numbers are not looking good.”

If an agreement is reached, China may drop the agricultural tariffs. If that happens, Courtright thinks that Chinese dairymen will once again look to the U.S. for hay.

“We have a stable supply,” said Courtright. “Our business is dependent on empty containers here to ship back. We import different goods every month. We have a lot of empty containers. Dairymen overseas know this. I don’t know if it will grow back to what it was. Some dairymen have established new suppliers. However, the forage market all over the world is still growing.”

Courtright doesn’t know if the tariffs have negatively impact hay farmers.

“The 2018 prices are strong,” Courtright said. “Hay has moved mostly on schedule. The people somewhat hurt are the shippers. The shippers honor the price to the farmers, but are selling at a different price.”

If Chinese tariffs continue to remain in place, Courtright thinks China will continue to import hay from other countries. What hay is not shipped to China will be shipped to the Middle East.

“I don’t think it has been negative overall for the hay industry,” said Courtright. “We are going to take hay and ship it somewhere else. China is still importing as much as before. It is just coming from somewhere else. There is still going to be a very strong demand for U.S. alfalfa. A lot will still ship to China from the U.S., just not as much as it was.”

Courtright did say that different exporters have different opinions on the tariffs. Some exporters chose to wait for the lift of the tariffs. Courtright’s company instead chose to sell to other countries.

“Some shippers have a negative attitude,” Courtright said. “I don’t. China has more documentation and testing that you don’t have to do for other countries. They turn inventory away. We have no control over it. I hope President Trump can mitigate some of the risk for shippers like ourselves.

“Currently, the alfalfa market is pretty tight. It is hard to find more alfalfa for sale.”