Balco quick to capitalise on China's thawing trade freeze with $100m deal for livestock hay

Balco quick to capitalise on China's thawing trade freeze with $100m deal for livestock hay

Balco Australia's oaten hay harvest. Photo via Facebook.

South Australian agriculture company Balco Australia has moved quickly to capitalise on an easing of trade restrictions with China after striking a $100 million deal to supply oaten hay over the next decade.

The Balaklava-based Balco, which currently exports to Southeast Asia, Japan and the Middle East, has signed an agreement with Chinese partner Bright Farming at the China International Import Expo in Shanghai for the export of about 200,000 tonnes of oaten hay, a prime source of digestible fibre for livestock.

Bright Farming is part of state-owned Chinese food giant Bright Food Group, which has a majority stake in Australia’s Manassen Foods, owner of brands such as Margaret River Dairy Company, Angas Park and Babybel cheeses.

The export deal comes on the heels of a recent visit to China by Balco Australia CEO Rob Lawson, who accompanied a delegation led by South Australian Premier Peter Malinauskas.

South Australian hay exports to China, which previously totalled $33 million a year, were hit by trade restrictions imposed by China in FY22. The new trade deal with Balco represents about a third of that previous total.

Lawson notes that Balco has retained an extended relationship with Bright Farming over many years.

“Bright is one of our key customers who are always looking for good quality and safely supplied feed,” he says.

“We are honoured to sign this long-term agreement today and look forward to the future, seeing the continued success of the Bright Group as they continue to grow.”

The deal comes at an opportune time for the sector with South Australian crops currently delivering record yields.

South Australia’s Minister for Trade and Investment Nick Champion says the state has ‘enjoyed a long and fruitful relationship with China and its companies’.

“I’m pleased to see such a positive outcome from the Premier’s recent visit, paying off for Balco Australia,” he says.

“Our exporters have had it tough in recent years and this $100 million agreement proves how valuable face-to-face conversations are in building business connections.

“This deal comes at a time when China has reopened the door to Australia with the lifting of tariffs on hay exports. I look forward to seeing further improved relations between our two regions.”

Balco Australia is among a number of Australian companies preparing to resume normalised trade relations with China following an easing of trade restrictions.

Among them is Melbourne-based Heritage Wine Estates (ASX: TWE) which last month announced it was ready to re-enter the Chinese market after confirmation that crippling tariffs imposed on the Australian wine industry could soon be lifted.

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