Weekly Agribusiness News Recap

By: "Farm Tender" News
Cattle News
Jun 27, 2019
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By Georgia Devenish - Agricultural Research Analyst at JLL.

Agribusiness

Australian Dairy Nutritional Group (ADNG) has raised $12 million from institutional investors in an effort to transform its company into a vertically integrated organic infant formula and dairy nutritionals business. A portion of the $12 million will go towards the acquisition of an offshore secondhand infant formula plant which the company bought in April 2019. ADNG planned to ship back to Australia and rebuild it at the Camperdown Dairy Company site, with the aim to be in a position to produce its own branded range of organic infant formula by mid-2020. ADNG chief executive Peter Skene said, “the funds will also allow us to continue our strong focus on developing company-owned dairy brands and building additional capacity for our existing fresh dairy products plant, Camperdown Dairy Company.”

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Freedom Foods has announced it has signed a long-term agreement to supply Lactoferrin to a global pharmaceutical company. While further details remain confidential, the company stated that the contract would utilise a significant component of current and planned capacity for Lactoferrin at the nutritional ingredients facility at Shepparton, Victoria. Managing director, Rory Macleod, confirmed prices for the key ingredient contracts had been achieved at or above initial business plan assumptions.

Freedom Foods recently completed a $130 million equity raising, which will predominantly be used to accelerate Freedom Foods’ growth strategy. Part of this strategy is to utilise $100 million to expand its capacity to process nutritional ingredients.

Sun Asia Group, an Australian-based fresh produce supplier, has secured a contract valued at $25 million per annum to supply table grapes, stonefruit and citrus to Asia. Sun Asia Group has partnered with Mayuresh Protenz, the agricultural division of Indian conglomerate Mayuresh Group, which has supply agreements with a range of Asian customers.

Sun Asia Group was acquired by data analytics company, Invigor Group, at the end of May. The $2 million transaction aimed to combine Invigor’s technology platform with a large WeChat Pay-powered retail distribution footprint in China established by its business partner Winning Group Holdings, and the supply chain built by Sun Asia. Invigor chief executive officer, Gary Cohen, said, "this sales agreement is a pleasing start to Sun Asia’s farm-to-plate growth strategy and Mayuresh is an excellent partner that gives us wide distribution channels into multiple Asian markets.”

Water

The South Australian Government has committed $58,500 towards a feasibility study to explore opportunities to provide a more reliable and secure water supply for wine grape growers in the Clare Valley region. Minister for Primary Industries and Regional Development Tim Whetstone said “one option this study will explore to meet the increasing water needs of the Clare Valley and Barossa wine regions, is a strategic expansion of the NAIS [North Adelaide Irrigation Scheme] as a secure source of water." The feasibility study is being supported by funds from the $1.8 million South Australian Wine Industry Development Scheme.

Dairy

Milk production in Tasmania may hit record levels this year with overall production forecast slightly above last year's record of 913 million litres. Tasmania's share of production on a national basis may also break new ground, with forecasts suggesting the state's industry is on track to produce more than 10 percent of national production for the first time. Sentiment amongst Tasmanian dairy farmers had dipped in response to high grain and input costs according to Dairy Australia’s Situation and Outlook report, however may have improved since its release on the back of the recent announcements of strong opening prices by major processors Saputo and Fonterra.

Forestry

ABARES has released its biannual 'Australian Forest and Wood Products Statistics' report this week. The report suggests that Australia’s forestry industry continues to show signs of growth. The total value of logs harvested in 2017/18 was a record high of $2.7 billion, up 4 percent from 2016/17.

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In contrast to these positive trends, ABARES estimated small declines in wood processing industry output in 2017/18. Softwood and hardwood sawn wood production both decreased, down by a combined 2 percent over the year. In the first half of 2018/19, the number of new houses commenced decreased by 4 percent, with other residential building commencement down 10 percent, compared with the first six months of 2017/18.

Weather

COSMIC-2, a mission of six satellites designed to improve weather forecasts and space weather monitoring, was scheduled for launch on 25 June (AEST) from Cape Canaveral, Florida, aboard a SpaceX Falcon Heavy rocket. The satellites, flying on the U.S. Air Force’s Space Test Program-2 mission, are known as the Constellation Observing System for Meteorology, Ionosphere and Climate (COSMIC-2). The launch is the culmination of years of planning and cooperation between agencies including the Bureau of Meteorology, the Taiwan National Space Organization (NSPO), NASA, and the US National Oceanic and Atmospheric Administration (NOAA).

Bureau of Meteorology chief data officer Dr Anthony Rea said, the COSMIC-2 satellites would orbit near the equator and improve Australia's weather monitoring, particularly for tropical cyclones, "once the satellites complete their kind of in-orbit check-out period the data will start flowing into our real-time operational systems and we will be using the data in our weather models."

Cropping

Strong demand for faba beans has caused their price to increase more than 91 percent year-on-year. Egypt is Australia’s largest export market for faba beans, buying approximately 70 percent of all Australian exports. Lotema commodity brokers managing director Todd Lees said, “Egypt have imported about 180,000 tonnes of Australian faba beans during the 2018/19 season...that has restocked their supply chain domestically, and we’ve started to see prices soften dramatically."

The recent Australian Bureau of Agricultural and Resource Economics and Sciences crop report showed faba bean plantings nationally had dropped from 313,000 hectares in 2017/18 to 178,000 hectares in 2018/19. Plantings for the 2019/20 season are forecast to increase 27.5 percent to 227,000 hectares.

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Estimates from Pulse Australia put the production of lentils at 341,000 tonnes, up 5 percent on last year, despite a reduced planted area. This comes in the face of high lentil stocks given the current imposition of a 33 percent tariff on lentil imports to India, a key market for Australian producers. Pulse Australia chief executive officer, Nick Goddard, said “the stock levels, combined with access restrictions to India, have brought a bearish sentiment to planting intentions for this year, with growers favouring barley, faba beans or peas."

Livestock

China has announced a ban on all Canadian meat imports. The decision comes after Chinese custom inspectors found residues in Canadian imported pork products of growth promotant product, Ractopamine which is banned in China. Ractopamine is not registered for use in Australia either.

The Chinese Embassy said Tuesday it asked Canada to suspend all meat exports after Chinese customs inspectors detected residue from a feed additive that is restricted in China in a batch of Canadian pork products. A subsequent investigation of Canadian health certificates attached to a batch of pork exported to China found them to be counterfeit and have cited this as a criminal offence.

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This ban will have serious implications for the whole supply chain in the Canadian meat industry which up until this point had been seeing significant export growth to China. According to Statistics Canada, Canada exported approximately 388 percent more beef and veal to China for the year to April 2019 compared with the preceding period, and approximately 53 percent more pork.