Last month’s CAFA column had a few sentences about China’s increasing demand for milk and alfalfa from California and other Western states. So far this year, China’s dairy industry has continued to build its appetite for U.S. alfalfa and it’s being watched more closely for its impact on the hay market.     

China’s dairy industry took a huge hit four years ago when melamine, which is used in materials like plastics, adhesives and countertops, was found in milk.  Watered-down milk was tainted with melamine powder in order to pass crude protein tests and tragically, at least six babies died, and thousands suffered from kidney problems.     

China’s government took charge, and was determined to be a dominant milk producer. The dairy industry is making a comeback and it can be seen in the amount of forages being imported. China is now the most important buyer of dairy cows worldwide. In addition, investors from Hong Kong and countries such as Germany and New Zealand are working to rebuild and improve China’s dairy industry on a much larger scale, which improves opportunities for U.S. alfalfa exports to China.

As China becomes a bigger player in the hay market, dairy and forage cconomist Katelyn McCullock recommends watching closely to see if export activity may be able to forecast prices in the coming months. McCullock, who’s at the Livestock Marketing Information Center in Denver, Colo., was featured in Hay & Forage Grower magazine last month and noted that it’s too early to get a handle on whether or not China will keep buying at “a steady clip. China’s needs are difficult to anticipate because they haven’t been in the U.S. market very long,” she pointed out.

Currently, however, there has been a good uptick that has continued through the first quarter of this year. Three years ago China purchased about 75,000 metric tons of alfalfa in the U.S. In the next year the amount of alfalfa that was purchased hit the 140,000 mark, and in 2011 it was increased to 177,000 metric tons despite record prices in California and other states.

In the first three months of this year nearly 97,000 tons of alfalfa in the U.S. were purchased for China’s dairy industry, which is more than half the amount that was bought last year.