Shifting demands, fears of invasive pests pose problems
By MATEUSZ PERKOWSKI
A group of Japanese racehorse owners opened up a world of opportunity for Anderson Hay & Grain roughly four decades ago.
Up until that point, the Ellensburg, Wash.-based company focused on buying and selling hay domestically, initially in the West and eventually elsewhere in the United States.
That first Japanese order for 200 tons of timothy hay in 1971 marked the firm's introduction to exports, which now represent more than 90 percent of its total sales.
Hay and straw grown along the West Coast is now shipped by Anderson to dairy farmers, racehorse owners, beef producers and other customers throughout Asia and the Middle East.
"The hay business is substantially more global today than it's ever been," said Mark Anderson, the company's CEO, whose father, Ron, and grandfather, Clarence, founded the firm.
In the past 15 years, the export volume of U.S. forage products has more than doubled, to 3.9 million metric tons, according to federal trade data. The value of those exports has nearly quadrupled, to more than $1 billion.
Straw exports tripled in volume during that time, to about 200,000 metric tons, while growing nearly fourfold in value to roughly $24 million.
The key to export success is understanding the culture of your customers, Anderson said.
With hay, for example, quality is often determined by subjective criteria, like color and texture, so it's important to understand the client's expectations, he said. "Grading of hay isn't as standardized as grain or cotton or other ag products."
The size and type of client also varies widely, with Anderson selling hay to family feed dealers as well as government entities.
As the demand for hay in Asian and Middle Eastern countries has grown, producers from Spain and South America have also entered the export business, competing with traditional suppliers in the U.S., Canada and Australia, he said.
"The dynamics of the hay business have changed dramatically," Anderson said.
For Anderson, increasing globalization in the hay market means the company must spend more time studying other production areas to see how they will affect total supplies.
The goal is to optimize hay inventories -- the company wants to be able to meet customer expectations but doesn't want to build up major surpluses.
"You're constantly trying to learn more about what you're competing against," Anderson said.
Anderson Hay & Grain's venture into exports hasn't been without some bumps in the road. The company's entry into into Japan nearly resulted in bankruptcy.
Japanese import inspectors, fearing infestations of Hessian flies, a voracious rice pest, began rejecting large quantities of hay from the company in 1974 and stopped shipments completely the following year.
"That was a huge barrier to entry," Anderson said. "It was a huge cost because the hay was coming back."
The USDA, together with Anderson and other hay exporters, developed a fumigation and inspection program that allowed shipments to Japan to resume in 1979.
With that problem solved, exports were poised for a major takeoff in the 1980s, Anderson said. As it grew, the company has made major investments in facilities and quality control systems.
The company now has several processing, compressing and loading facilities along the West Coast to ensure reliable sources of various types of hay and straw from growers in Washington, Oregon and California.
"It gives us diversity in supply," Anderson said.
Traceability -- a big buzzword in the food industry -- is also crucial. The company's needs to document pesticide residue levels for foreign regulators and quality characteristics for clients.
"Ultimately, in the event of a problem, we want to be able to trace the hay all the way back through our system to the field it was grown in," Anderson said.
Anderson Hay & Grain
Employees: 250 to 350, depending on season
Management: The company's CEO, Mark Anderson, is the son of Ron Anderson, who founded the company with his father, Clarence.
Locations: The company has headquarters in Ellensburg, Wash., and processing facilities in Aurora, Ore., and Wilmington, Calif. The company also owns farmland and harvesting equipment.