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megimoo
08-09-2011, 03:10 AM
U.S. hay, the country’s third-largest crop by value, is now cheaper to ship to China than to farmers in central California, compounding shortages that mean record prices for the dairy industry.

Ocean freight costs about $30 a short ton (0.91 metric tons) to send hay to Asia from Los Angeles, compared with $53 to truck the crop from southern California to the center of the state, according to Greg Braun, the president of Border Valley Trading LLC, a Brawley, California-based exporter. Prices for alfalfa, the most common variety, surged 62 percent in a year and reached a record $186 a ton in July, government data show.

Shipping lines hauling Asian goods to the U.S. are failing to fill boxes on the return journey, driving down costs for the containers used to carry bales of hay. That imbalance is contributing to the biggest U.S. trade deficit in almost three years and threatening earnings for dairies and cattle feedlots that the government had expected would help the U.S. agriculture industry generate record farm income of $94.7 billion this year.

“The hay and alfalfa shortage will get worse before it improves,” said Tom Barcellos, 56, who owns the 800-cow T-Bar Dairy in Porterville, California and farms 800 acres of hay. “So much of the hay is going into the export market that it takes hay away from California dairies.”

http://www.bloomberg.com/news/2011-08-09/hay-cheaper-to-ship-to-china-than-california-hits-dairies-freight-markets.html

Starbuck
08-09-2011, 08:09 AM
Not really a fair comparison, comparing truckload prices to shipload prices. Especially when you consider that neither shipowners nor truckers are becoming wealthy these days.

LA to China: How did it get to LA? And how far away is the hearest hungry cow once it gets to China? China's a big place.

Alfalfa is our #1 export to China. I don't really know who's paying the freight, but it would be interesting to find out.

megimoo
08-09-2011, 10:49 AM
Not really a fair comparison, comparing truckload prices to shipload prices. Especially when you consider that neither shipowners nor truckers are becoming wealthy these days.

LA to China: How did it get to LA? And how far away is the hearest hungry cow once it gets to China? China's a big place.

Alfalfa is our #1 export to China. I don't really know who's paying the freight, but it would be interesting to find out.An interesting point in the piece..The containers are shipped back to China empty so to fill them with baled hay would cost little as normally they go back empty...

Odysseus
08-09-2011, 02:20 PM
Alfalfa is our #1 export to China. I don't really know who's paying the freight, but it would be interesting to find out.

http://4.bp.blogspot.com/-XGXSrb3SjOs/TVYJYtEwHaI/AAAAAAAAAME/6sfa_gOed74/s1600/alfalfa.jpg
Clearly it is some child trafficking ring. :D

Starbuck
08-09-2011, 02:39 PM
An interesting point in the piece..The containers are shipped back to China empty so to fill them with baled hay would cost little as normally they go back empty...

Seems that ships face the same problem as trucks......running empty is costly. But in the trucking industry - and I'm sure in the overseas industry, too - shippers know this and when you take a back haul, as it is called, you often take it at little profit.

Nubs
08-09-2011, 03:13 PM
An interesting point in the piece..The containers are shipped back to China empty so to fill them with baled hay would cost little as normally they go back empty...

This is what has been done with wastepaper for years. Containers bring products to the US then back haul paper back to China for processing into boxes, newsprint, etc (as they do not have virgin pulp capacity (yet)).

When the economy went to shit in 07/08. We bought fewer products from China so there was a decrease in US bound containers, in turn, there were fewer containers to backhaul waste paper to China. Paper backed up at the ports in a hurry. In a span of 3 weeks, waste paper went from $140/ton to $40/ton.