Malcolm May talks Export Hay Innovation

Jon Paul Driver 0:05
Welcome to the Feed Central May Matters podcast, your go to source for all things hay related in Australia. I’m your host John Paul Driver. In today’s episode, we’re joined by Malcolm May and Tim Ford is also joining us for the first part of this. Tim, do you want to introduce Malcolm?

Tim Ford 0:21
Yeah, thanks, John Paul, great to be here, introduce to the audience, Malcolm May, Malcolm will be well known to many people that have been in the hay industry for some time. Malcolm is a true pioneer in the export hay industry, true visionary for our industry, and as one of the founders of Balco being a very significant hay export business today. So I’ll hand over to yourself John Paul, and Malcolm, but just to say that Malcolm’s a true pioneer and a true visionary in our industry. Malcolm has always given me an enormous amount of time, been a great person in our industry, bringing the industry together in Australia, bringing the exporters and domestic players together, bringing the export players together, has been a great side great friend and mentor of mine over the years. So welcome to the podcast, Malcolm.

Jon Paul Driver 1:15
Malcolm, Tim just gave you a wonderful introduction. Can you take us to where all of this started?

Malcolm May 1:22
Right? Yeah, I guess the easiest way to say, I live at Balaklava, 100 kilometres north of Adelaide. I’m a third generation farmer and I have two sons on my farm now fourth generation. I love country. I’m fiercely, I love Balaklava. We started in the hay industry because we could see the need. Some of the things I’ve done before is that I was foundation member of the Pea Growers Co-Op. We were growing peas and not getting a very good presence in the marketplace. We got a group together, we ended up with 400 people right throughout South Australia. And now the industry is respected, and they do their own storage and goodness knows what. So I’ve been sort of early with some of these things, really. And it’s the same with the hay industry. Our farm’s been in our family for 100 years. Matter of fact, my father’s 100 and he was born on the property. So he’s still going. So maybe I’ve got a few more years too. Wonderful. If I wanted to look at our farm. Now we we used to be a mixed farm, you know, like fallow, wheat, pasture, and have livestock. But now we continuously crop. We’ve got about four or five different things we grow and hay is one of those, oaten hays is a very important part to our program.

Jon Paul Driver 2:39
Let’s dive into that the export hay side of things. When did that start?

Malcolm May 2:44
The export hay industry itself started in the late 80s. And we had a company up at Wallaroo where we were supplying round rolls for export. And I just thought this is a little bit ridiculous going away from the export market to come straight past us back to export. And that was the logic but it was sort of deeper than that. Because we’ve been talking as a community, how do we get our community going? And we started an economic development board in Balaklava. And we weren’t getting anyone coming. And one of the meetings, I was chair, I said hands up who wants to start a business? We started with four of us my brother-in-law that was in livestock marketing, Murray Mickel, there was a machinery agent, Jeff Spencer who was a primary school headmaster, and me as a farmer. And we actually all went out and grabbed $50,000 each from our bank, and started Balco. And it was sort of our introduction from doing the higher sales. And this looked like an expanding market. But it was also a community help thing. Because there was a lot of unemployment. There was a lot of kids in Balaklava. And that, quite frankly, was our driver, was our community.

Jon Paul Driver 3:08
What was happening in the bush at that time?

Malcolm May 4:01
Well, things were fairly tough, really. Even unemployment was tough, too. And I thought farming wasn’t too bad. But you’ve got to have a bigger community. You know, it’s got to be bigger than just yourself. So this was part of this to try and create an industry that could be grown in the area and wider, I guess, which it has shown. Start off in 20 or 30,000 tonne, and now between one and 2 million tonne, we just needed jobs. And since Balco started, we’ve encouraged other people to come here with their businesses. And we’ve got quite a good little group here now of pig industry, the chook industry, growing mushrooms, grain packing, the rail industry, Balco was the seed for a lot of this to try and encourage other people, we were involved in two or three of those things. But we’re a seed to encourage people to come here, even now we have meetings every couple of months and just recently when things were a bit tougher, I said to the guys, righto, our community wants you to actually either double up your production, or introduce us to other people that want to come to our community. And that’s sort of the attitude that we’ve had. Plus, I believe a lot of these industries that come here, the bosses need someone to support them. They need that sort of help and friendship, to feel part of our community, so they want to grow and support this community. But we’ve been very community focused, I guess, our business.

Jon Paul Driver 5:30
It’s nice to have peers as you’re growing and developing a business.

Malcolm May 5:33
Yeah, it’s really, I used to have a mentor myself here. And he was a very helpful person to me top, he was very conservative and used to talk to me, but it was quite good that I used to be able to bounce ideas from him and he’d sort of give me a yes or no, or I don’t know about that Malcolm. And it was quite good, really. You need that sort of support.

Jon Paul Driver 5:56
I am a firm believer in acknowledging our mentors, who was that?

Malcolm May 6:00
This guy was Terry Howard and he was a hairdresser. And he also threw out, he was a newspaper guy too. Like he supplied the paper in our community. But he was just a really good guy. And he was patient, and he used to listen. And he used to throw in constructive criticism and positive things, too, I might add. Sure, sure. It’s just part of the community.

Jon Paul Driver 6:29
Isn’t that amazing? How how a mentor can be just about anybody.

Malcolm May 6:33
Yeah, exactly. Exactly. No, it’s just got to be good people.

Jon Paul Driver 6:37
Take me through the building of Bowman’s.

Malcolm May 6:41
Well, if I could Bowman’s the site is where Balco actually makes hay now for export. There’s a grain packer there, and there’s a company called Bowman’s rail, which our family is the major shareholder in that to run that to take the containers down to the port. No, if I look at it, Bowman’s or Balco rather, started in 1990, with those guys I was talking about Balco stands for Balaklava company, like a local community. So Balaklava company, we started first off selling grain for leaf grain, like you know, buying grant money buying grain for leaf grain. And then we we met a guy that had a mobile hay press, and we we actually got hay pressed in people’s paddocks, like small bales. And we met a guy that had done some marketing and we had him come on site. And we just gradually built this relationship up with people and then expanded and our first hay press was at a place called Clare about 30 or 40 kilometres from where we are now but we eventually moved to Bowman’s just outside of Balaklava. And there’s a couple of reasons why, because this was our local home town. But it was also where there was a railway line to the ships to be able to export. And on the way through, we actually joined with some farmers and we bought out a company called Charlex over at Wallaroo, maybe five or six years into when we got started ourselves. And we had a group of farmers over there as a joint venture, doing York Peninsula hay. Eventually, we took that over as far as Balco was concerned, and they became shareholders in Balco. So we’ve had this growth thing, like there’s a group down in York Peninsula, you know, everyone else here, whereas Balco now has got hay plants in three states, you know, doing very well.

Speaker 1 8:36
What are the opportunities in hay and ag looking to the future?

Speaker 1 8:41
Well, I’m pretty excited about agriculture, in general, really, I’ve got two sons, I don’t really do any work on a farm now really, they won’t let me drive a tractor or anything. But I’m really excited about the future because technology where we’re actually going with technology is just mind boggling about, you know, how they sow their crops and the accuracy of GPS and everything like that. And also research and development, you know, what’s on the horizon that they can do. And that’s one thing the hay industry’s got to be mindful of, because if I look at when we started Balco in 1990-91, even farmers, they didn’t really look at gross margins on their property or the margin on their property, they sort of just grew things, because that’s what they traditionally did. Whereas now, there’s accuracy of how they do the work. There’s gross margins on each one. And hay or whatever you do is got to be competitive, to fit that mould. And in the original thing, we were growing hay because of it was in our rotation, and we used to grow for many generations. Before Balco, we used to actually grow a bit of hay and sell it to the abatoirs in Adelaide. My father used to do that. And so we’ve been in the hay for a long time. So when I look at it, what’s the opportunities of agriculture? I think in dryland agriculture, where we’re up to now is very good. The hay industry has to sort of keep out up with research and development. They haven’t been quite as aggressive with that in the recent years, I don’t think, as they had been before, and some of the things we’ve done and as an industry, we actually got together, work together to actually and charge farmer commission or whatever you like to call it. There’s a name for it. Levy. They charge the levy and the whole industry worked together to actually help with new varieties and everything, they formed a company matter of fact, called AEXCO. And that was money going in there for development, working with their breeders and everything. And that was quite good. I think that’s still going, because I’ve been, he’d been out of the industry now for five or six years. Rob will tell you more about that. I reckon the hay business, the beauty of hays here, it started, we were doing round rolls, which is pretty slow and everything. We were doing big squares, like four by fours. And now we do three by fours. And we really make hay really quick, we got the right way to go on trucks and everything. So there’s a lot of pluses about why the hay industry is better to be in now than it was 20 years ago. And there’s still going to have to be some improvements. For that, to be like that, you know, there’s going to have to be just better things within our industry to make it work better, if you know what I mean. Yeah, I just think that it’s part of a rotation, the hay industry is really got to be competitive. And it’s really got to meet a need. One of the things my lads quite like about it is it’s the first bit of income for dryland farming that comes in, so timing of the cash flow that comes in in October, November, whereas their grain harvest comes in in December. And that’s a real important point, why it’s important to what’s good about the industry, there’s always change, if you actually look at the industry, there’s a massive amount of change. I reckon that you’ll eventually see, hay, we’ll get mixed with some other products in Australia where we’re growing them. Even the seaweed contact for cows belching and everything like that, we grow it here, it can be mixed with the hay, and it can be exported, or even by a barley like cross barley can go at a certain number of kilos per bale. And to me that’s a sort of a trend line that could happen is value adding the hay that’s exported, but the farmer, they’ve got to feel part of this. The other thing you’ve got to do is you’ve got to keep the the farmers working, or having a vision about what’s the next thing for him to do. That’s one thing the industry has got to do is keep just making it refreshing itself, but actually encouraging people that there’s a future and it’s a good part of what you’re doing for the next 10 years. If I look around Balaklava, there’s industries that ran for 30-40 years, and eventually they become obsolete. And one thing the hay industry’s gotta look at is that they don’t become obsolete, or there’s a different way of doing it. How do they change? There are a few things now there’s quite the cost of doing hay, and bringing it to a plant and manufacturing it. Could it be that dealing closely with farmers, one of my pet things I reckon they should be doing is bales of four foot wide; they should be three foot 10 inches wide. So they both slide into a container of big bales, push them into a container and these three, three or four by threes or should be three foot ten by threes go three high if they were just compressed a bit more straight from the farmer it go into a container and go for export.

Jon Paul Driver 13:52
The Krone high density bales are… they’re pushing the bounds of density or you could just load them into a container and you would be better off than having run them through the press.

Malcolm May 14:04
Yeah and what it boils down to is that is change but the balers need to be narrow because see, they’d be four foot so they fit on a coaming rail and eight foot truck. I reckon eventually, they’ll have it that you’ve got side turns on trucks so there’s not so much waste or fluff blowing on the ground straw blowing on the ground. And so they’re narrower, they’ll fit inside of them. They’ll fit inside of containers. And that’s a bit of a risk to the main industry like Balco and Gilmac and Johnson’s, if they can go straight from farmers and don’t need that value add it’s a risk other than they’ve got the market and everything, there’s more than likely still a place for them. But people just need to look a little bit wider than they are and see what they’re going to do. The only thing that happens with like Balco’s plants is that they bring hay in and on their feeder beds into the plant, they’ve actually got four bales going in at once, right? And they can actually blend them up. Yep. Damage side on one side from sun or whatever. And they blend the hay to give a fairly good product. So that’s an important thing. But some of the stuff could actually go that goes straight in a container into a market. And that’s the one of the biggest risks was all of a sudden if you can fit 24 or 25 tonne in a forty foot container, that little bit narrower, you’re there. And you cut out a lot of people, you need them to market it. And that that’s not good for the industry we’ve got now but it changes.

Jon Paul Driver 15:40
What would you say about the quality control that happens at the press versus those uncompressed bales?

Malcolm May 15:47
Well, at the moment, all hay, they go and inspect the … let’s look at Balco, because I know they go out to the paddocks. And they actually inspect the hay, when it’s growing, look for contamination and everything. They talk to farmers. And then when it’s cut, they just keep looking all the time. And then they actually go and core hay out in the paddock before it actually goes into the production shed or into the farmer’s sheds. So they know the quality out there. But what it boils down to once they’ve got the quality, they’ve got samples of everyone’s hay in a room here at Balco. Once they know qualities, they can say, I can mix your hay and this hay together. And I’ll come up with a very good sample for this grade. And that’s the difference compared to straight out of the farmer’s shed. You haven’t got the versatility, but 20-30% or 40%, some years nearly 80% could go straight from a farmer’s shed, because it is very good. But sometimes to meet a market, you’ve got to be able to blend product together. So there’s a balance. But what I’m saying is in Balaklava, there were industries here that have now disappeared, that really with the hay industry, it could change and the Balcos of the world have gotta change to keep up. But I reckon that’s going to be an opportunity for farmers. And then our family, we’re looking at how to value add different things. My daughter-in-law is doing a little bit of flour milling at the moment for durum wheat to get semolina and sell it for pizza making to high end restaurants. So there’s this, how do you take it to the next step? How do you increase your value? And agriculture is really technology, everything’s growing really fast and it’s quite exciting.

Jon Paul Driver 17:43
I have this question that I ask my mentors. Can you give us a thought around a particularly difficult time and how you manage through it?

Malcolm May 17:53
Yeah. More about the community, I used to just bounce off of him. And that is a good point. I’ve got people I suppose I do talk to about that now that I know in the community and I’m fairly open. It doesn’t particularly worry me what people know about me. I’m just quite happy. I’ve got more than only half a dozen guys I talk to about my own business, now. See, I’m in charge of Bowman’s Rail now that’s doing it pretty tough at the moment. But I’ve got a group of mentors that I talk to about what should I do? And I find that very helpful. And actually I do it to people in Balaklava. I’m in a building in the bottom floor from where I am, there’s a flower shop in there. And I actually help these girls in a few different ways within the building in a few things. And it was what I found really good one of the fathers at the local football match come up and said, you don’t know me, but I want to say thank you for what you did for my daughter. And that’s the… but I do a bit of that in the town, really, because I’m on the local council. I’m on the Regional Development Board, I’m quite heavily involved and so’s my family and the community as well.

Jon Paul Driver 18:59
Leaning into community and mentors is your advice when it comes to tough times?

Malcolm May 19:04
Yeah, it does. Because a problem solved is half the problem, isn’t it? And sometimes you think you know, but you just need someone to say something go yes, that’s right. Just takes you in another way. And you’ve got to realise you just need help. You’re not that smart in your corner, if you just stay in your corner and think you’re gonna solve everything, it doesn’t work. And it’s the same for the hay industry. And that’s one of the things we’ve done very well, I think as far as Balco, we’ve actually evolved everyone else in the hay industry. These guys have all their competition. We’ve been very influential I think in forming an industry of working together. I know you’re talking to Dennis Johnson later on, but he was on it for a little while and I was on a Fodder Industry Association, and we formed an Exporter’s Association. And then as we needed money I knew which exporters to ask how about dropping in 10,000 and others, I knew it wouldn’t work. Whereas then, by now say 10 years later, they’re all working a lot better together. And they’ve got some common goals even though the competition and even we, in the early days, we went over to Japan together, you know, presented, found customers, and and we’re great mates. Rob will talk about it with Balco. They have the hay cut with Johnson’s play quarterly golf so it’s a lot of fun as well as a lot of business is done too.

Jon Paul Driver 20:35
Do you have any closing thoughts?

Malcolm May 20:37
Yeah, I think the hay industry, it’s been a great success story, really, in agriculture, like, you know, as far as getting export, I was tied up with a company called Pea and Grain Exporters, and the old guys there said, ‘Oh, God, you got to be careful in exporting’. But one thing about hay, it has to be compressed in the country of origin to actually make it economic to export. So it’s been a pretty good company can’t have pretty good thing to do. But now, the market or the… is catching up. We’re baling and we’re crimping all the hay so it dries quicker. We’ve got balers, high density balers, that helps, and we’re putting out say eighty bales… You’re over doubling your production with your machinery. and then you’re filling your trucks to take anywhere chock-a-block. And it’s taken to the next level. So the things that you know, margining down, the hay industry will be here for a while, a long time, because there’s markets overseas, and there’s a real need for marketers, but you just got to keep in mind on what’s going to happen with it. Because the domestic side of it with how efficient farmers are is catching up with why these guys have got their sheds and big presses. There’s a fine line that. Oh, no, it’s been a great, great industry and it’s been great for our community. Balco over here and Balaklava and Gilmac have got a hay plant here as well. There’s healthy competition, mainly in Victoria, Western Australia, and South Australia for the export market. A little bit in New South Wales. But it’s been a good value add market as an extension to a farmer, because you’ve actually got to go back to the farm. Why does someone want to want to grow it? And where’s the market? And how do you get there and where do I fit, that’s what it is.

Jon Paul Driver 22:31
Malcolm, this has been a wonderful conversation and thank you very much for your thoughts. Again, I’ve been joined by Malcolm May an export hay industry pioneer, and I really appreciate it and I want to say a special thank you for your comments around an industry that needs constant refreshing, that sense of community. I really appreciate that.

Malcolm May 22:51
Well thank you very much for your interview and, and good luck with the rest of your interviews, more or not they’ll be a lot smarter than this one [laughter].