Weekly Agribusiness News Recap

By: "Farm Tender" News
Hay & Fodder News
Jul 04, 2019
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By Georgia Devenish - Agricultural Research Analyst at JLL

Agribusiness

Meat & Livestock Australia (MLA), in collaboration with beef processor, Teys Australia, is looking to develop beef boning automation technology. MLA Donor Company (MDC) will invest up to $32.4 million over five years to enable the project. Teys Australia is co-funding the beef boning automation Research and Development (R&D) room at its Lakes Creek processing facility near Rockhampton in Queensland with matching contributions to come from the federal government. MLA Managing Director, Jason Strong, said with Australia reportedly having one of the world’s most expensive processing sectors, automating beef boning would reduce per head operating costs for the benefit of the entire Australian industry.

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Bubs Australia has announced a partnership with China's largest mother and baby store chain, Kidswant. This is the first major project since the Bubs and Beingmate joint venture was established in May 2019. Bubs Organic food products will now be ranged in 275 of the Kidswant stores throughout China. Bubs Chief Executive Officer, Kristy Carr, said, “Kidswant’s store footprint and full-service integrated membership model provides us with immediate access to our core potential customers in a trusted ecosystem.”

Kialla Pure Foods and Qualipac Produce are two of the most recent recipients of the Queensland government's Rural Economic Development (RED) Grants. The RED Grants program offers emerging projects up to $250,000 in co-contributions to build industry and grow employment opportunities across the state's agricultural sector. A total of 15 businesses have received $3.3 million under the first-round of funding for the RED Grants program. The $10 million grants program provides for three funding rounds over a three-year period ending 2021.

Qualipac Produce located at Gatton in the Lockyer Valley, for example, will use the grant to help fund the development of a state-of-the-art floretting machine capable of processing out of spec food into a saleable product. Broccoli and cauliflower heads too big for market specifications were previously sold below cost for livestock feed. The new technology will cut them up small enough to meet consumer demand in supermarkets and green grocers.

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For the 2018/19 financial year, SunRice Group recorded a 1.3 percent increase in revenue to $1.2 billion. Despite this growth, there was a decline year-on-year (YOY) in net profit after tax. The company's annual report showed a net profit of $32.8 million, down 27 percent YOY. Key movements made by SunRice over the course of the year include the following,

* In September 2018, SunRice acquired Roza’s Gourmet to diversify Riviana’s presence into specialist chilled sauces and dips.

* During November 2018, the SunRice Group completed the acquisition of a rice mill in Vietnam and signed memorandums of understanding with two Mekong Delta provincial governments. These agreements facilitate cooperation to build in those provinces a sustainable and traceable supply chain.

* SunRice listed on the Australian Securities Exchange in April 2019.

* In June 2019, SunRice Group division, CopRice, signed a purchase agreement to acquire 100 percent of the extrusion assets of Feedrite Pty Ltd, one of Australia's leading manufacturers of premium extruded rice bran based equine feed. This investment will support the SunRice Group's $11 million investment in a food grade stabilised rice bran plant at Leeton, which will open in September 2019.

Horticulture

The 'Fresh Produce Industry: State of the Industry Report' was launched by Produce Marketing Association Australia-New Zealand Ltd (PMA A-NZ) at the recent Hort Connections 2019 conference. The report looks at the size and scale of the Fresh Produce industry and what consumer trends are likely to impact the industry in the future.

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Water

The Queensland Competition Authority (QCA) is currently reviewing pricing practices relating to the monopoly business activities of SunWater and Seqwater undertaken for irrigation services. The key objective of the investigation is to recommend irrigation prices for the period 1 July 2020 to 30 June 2024. Last year SunWater outlined its proposed future price paths, which concerned some irrigators over the impact on their business' future operational viability. In June 2019 SunWater revised these prices, which may result in even larger price hikes for some schemes. QCA is scheduled to provide a draft report to the government by 31 August 2019.

Wine/Viticulture

Wine Australia is planning to invest $79 million on behalf of the grape and wine sector in 2019/20 according to its 'Annual Operational Plan 2019/20' released this week. The record investment will go towards research, development and extension, market development and export regulation.

Wine Australia is now in the fifth year of 'Strategic Plan 2015–2020'. Wine Australia’s Chief Executive Officer, Andreas Clark, said that the plan had delivered on its objectives highlighting the strong performance of the industry over the past five years, "in the period from 1 July 2015 to 30 March 2019, total free on board export value has increased by 47 percent from $1.9 billion to $2.78 billion. At the same time, the average value of all exports has increased by 31 per cent from $2.61 per litre to $3.41 per litre with value growth in all price segments."

Wool

Over the 2018/19 selling season, wool auctions generated approximately $3.2 billion. The positive outcome came in strong relief to the flat note on which the season ended as the Eastern Market Indicator (EMI) fell 51 cents to finish at 1,715 cents per kilogram clean. During June 2019, the EMI lost 172 cents representing the second largest monthly fall recorded in the EMI, only behind March 1991, when the reserve price scheme was axed. In terms of volume, a total 1.657 million bales were offered over the season, reflecting a decline of 228,000 bales in comparison to the previous period.

Trade

The European Union has recently announced a Free Trade Agreement (FTA) with the South American trade bloc, Mercosur. The Southern Common Market - as it is officially known - is a trade bloc of South American countries with Argentina, Brazil, Paraguay and Uruguay as full members. European Commissioner for Trade, Cecilia Malmström, noted that agreements with 15 countries had been signed since 2014, and the Mercosur deal "adds four more countries to our impressive roster of trade allies". This deal took 20 years to negotiate and stands in stark relief to Australia's own position in talks on an FTA with the EU which only began in June 2018.

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A draft report recently released by the Department of Agriculture has recommended the importation of fresh Japanese strawberries be permitted, subject to Australian biosecurity conditions. Japan formally requested access for its strawberries to the Australian market in 2016. Currently 99 percent of strawberries produced in Japan are utilised in the domestic market.

Australian horticulture producers are looking to use the request as a bargaining chip in trade negotiations to allow the export of Australian blueberries to Japan, and to gain better access for locally-grown avocados, mangoes, citrus and table grapes. Australia and Japan have a strong two-way trading relationship. Japan is Australia’s second largest market for agricultural, fisheries and forestry products, worth $5.8 billion in 2017/18.

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