Buyers set sights on more affordable lucerne
Low volumes and high prices have characterised lucerne in the last two years. With irrigation prices a fraction of last year’s, the first cut about to be baled will face a very different market this season.
AFTER years of drought, markets for lucerne hay are undergoing a massive change.
Lucerne-hay production plummeted during the drought of the past two summers, with Queensland and NSW output falling to only a quarter and a third of normal.
Irrigation water has been the limiting factor. Negligible inflows into reservoirs resulted in zero allocations in some irrigation districts in NSW and temporary water prices were as high as $800 a megalitre.
According to lucerne growers, without rainfall, each tonne of hay requires a megalitre of irrigation water, so buyers would need to have inelastic demand for lucerne hay during the drought.
Dairy and other livestock producers were the first buyers to seek alternative sources of protein and palatable fibre.
As COVID-19 had restricted horse events such as pony clubs, gymkhanas, polocrosse and cross-country, there were few horses in work.
These horse owners saw little need for high-priced lucerne with its high level of nutrition, preferring to feed lower quality cereal or grass hay.
Fortunately for some lucerne growers, the racing industry maintained its race meetings within a COVID-safe environment and trainers have continued to buy chaffing quality lucerne.
While horse stables for the racing industry are spread down the east coast of Australia, the epicentre for chaff demand is now the area between Newcastle and Nowra, in NSW.
Rather than supplies from the Peel, Lachlan and Murrumbidgee river valleys, cheaper lucerne has been available from river-water irrigators of the Goulburn and Murray valleys, as well as bore- water irrigators of Naracoorte and Keith in South Australia.
Until a month ago, chaffing-quality lucerne hay with good colour, high leaf content and protein of more than 20 per cent was selling for $650 a tonne plus GST ex-northern Victorian farm.
Now that cutting has started in Victoria and the Riverina, buyers know that growers with carryover supplies of lucerne will soon be competing with a flush of new season’s lucerne.
In addition to this, the first cut has been like a free kick for growers, as there has been no need for irrigation water.
Temporary irrigation water prices have fallen to $170 a megalitre downstream of Barmah in the Victorian Murray system and to $140 a megalitre in the NSW Murray system.
As prices move to $400 a tonne ex-farm, lucerne will become more affordable, just as Australia is removing restrictions on social gatherings, enabling horse events to resume.
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