Weekly Agribusiness News Recap

This article is bought to you by Wormhit and Extend Security.

By Georgia Devenish - Agricultural Research Analyst at JLL

Agribusiness

A new dairy company, Australasia Pacific Dairy Company (APDC), has announced intentions to enter the dairy market next year paying a premium for quality milk to produce milk-based nutritional drinks and infant formula. APDC managing director, Emmanuel Panourakis, has said, "Our products are going to be quality products. For that, we will need premium milk. We would pay about 5-10 percent more than current farmgate milk prices. And we are hoping for long-term contract". It is understood the company is looking to build a factory in regional Victoria for full commercial production by the end of next year.

Brancourts Manufacturing & Processing Pty Ltd has been placed in voluntary administration. The company has two plants, one at Traralgon in Victoria and the other at Hexham in New South Wales. The administrators, PKF Australia, have said they were considering all restructuring options to place the business back on a sustainable footing with the potential of re-commencing production. United Dairyfarmers of Victoria President, Paul Mumford, said the administrators were confident of finding a new owner for the business.

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Accolade Wines has sold its Haughton winery to neighbouring business, Oakover Vineyards. Oakover Vineyards will acquire the winemaking facility in the Swan Valley along with the adjoining cellar door and vineyard. Accolade will continue to own and produce the 'Houghton' brand at its winery at Nannup in south-west Western Australia.

Ruralco shareholders voted late last week in favour of accepting the takeover proposal from Nutrien. This follows clearances mid-year by the FIRB and ACCC for the $469 million acquisition by the Canadian fertiliser business. The transaction is set to be settled on 30 September 2019.

South Australian bulk handler, Viterra, has reach a new milestone after the company loaded its hundredth train to meet demand out of drought affected regions in the eastern states. Viterra operations manager, Michael Hill, said demand for domestic rail movements had began in earnest in August last year and saw the company make significant adjustments to its supply chain. Prior to the current drought phase, Mr Hill said Viterra had done only "a handful of domestic trains." Viterra has been using key rail sites such as Gladstone, Snowtown, Bowmans, Tailem Bend and Keith to load eastbound trains.

Water

On Monday, Minister for Water Resources, David Littleproud, wrote to the ACCC asking reports of alleged ‘unconscionable conduct' in the water market be investigated. The Minister also wrote to the Murray Darling Basin Authority to ask that they invoke their powers under the Act. Mr Littleproud said, "Horticultural groups have written to me concerned some water holders are inflating prices, which hurts farmers and Basin communities. I take these allegations very seriously. I have written to the ACCC and asked it to investigate the allegations brought to me by the Almond Board and other peak grower groups as soon as possible."

Fisheries/Aquaculture

Released earlier this week, the RaboResearch Food & Agribusiness Australia/NZ podcast 'Fishing For Answers: Trade Wars & Global Seafood Trade' delves into the shakeup in the global marketplace as a result of tensions between China and the US. Angus Gidley-Baird explores the topic with Gorjan Nikolik, Rabobank's senior analyst on seafood.

Animal Protein

The Philippines Department of Agriculture has confirmed recent samples taken from a farm in Rizal has tested positive for African Swine Fever (ASF). Following the announcement, a spokesman for the Australian Department of Agriculture said, "Australia's biosecurity system has been stepped up to counter the threat of African swine fever." Australian Pork Limited chief executive, Margo Andrae, said in the event of an outbreak of ASF in Australia, "We estimate the flow-on effect from losing any of our industries... could go up to in excess of $50 billion, depending on the recovery time frame."

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Merricks Capital has estimated Australian beef prices could increase by up to 50 percent by the end of next year as African Swine Fever takes its toll on global animal protein supplies. The Melbourne-based hedge fund says as the impact of disease was already causing a sharp increase in export substitutes. The extent to which ASF has devastated Chinese pork production is becoming clearer with a sharp rise in export substitutes already occurring. Merricks head of commodities, Adam Davis, said "Chinese beef exports are up 72 percent year-on-year. So its a rising tide for global protein prices and select markets will benefit more."

China's efforts to fill the hole ASF has created in its animal protein supply has led to a further 25 Brazilian meat processing plants being approved this week by authorities for export. It is understood that an additional 17 beef processing facilities, six poultry plants, one pork and one donkey processing facility are now eligible to supply the China market. Brazil now has 89 meat processing plants authorized to sell meat to China. In comparison Australia has 44 processing facilities approved. Despite this disparity, Brazil has approximately the same market share as Australia in China at 19 percent according to June statistics. This share will inevitably grow as these newly approved plants come on line. Full year beef imports into China are anticipated to reach around 1.2 million tonnes this year.