Weekly Agribusiness News Recap

By: "Farm Tender" News
Hay & Fodder News
May 02, 2019
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By Georgia Devenish - Agricultural Research Analyst at JLL.

Horticulture.

Tasmanian potato producers have grown a record crop this year, but flat prices and growing costs are putting pressure on profit margins. Competing in a global market with high labour costs has been cited as a significant issue not only for potato growers, but across many vegetable industries.

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On average, the cost of growing and harvesting potatoes is between $15,500 and $16,500 per hectare. Last season Simplot paid growers on average around $320 per tonne. McCain potato grower committee chairman, Rob Bayles, said growers would need a price increase of $26.49 per tonne just to get back to where they were ten years ago.

Livestock

Meat & Livestock Australia has forecast a decline in the national cattle herd of 7.7 percent to 25.2 million head in the year to June 2019. At the same time, MLA suggests good rain has the potential to prompt major movements in the cattle market with market fundamentals appearing strong. Australian beef has been selling well in overseas markets, particularly China. It is worth noting the potential increase in appetite for protein imports to China due to the spread of African Swine Fever (ASF), the effects of which will play out over at least the next two years.

At a meeting in Perth last month, the boards of the Australian Livestock Exports Council and Livecorp acknowledged synergies between the two bodies that warranted the investigation of a possible merger. The Australian Livestock Exports Council is the peak industry policy-setting council representing livestock exporters, while Livecorp is the livestock export industry’s research and development organisation. Mergers of this kind are a key reform option currently being considered across the entire red meat sector as part of a review of the red meat industry Memorandum of Understanding.

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Cropping

Shipments of Australian canola for February were 162,525 tonnes, having fallen 65 percent from the previous month according to the ABS. Largely driving this decline was the disappointing 2018 crop in New South Wales which fell short of covering the state's domestic crushing requirements.

Wine/Vineyards

Treasury Wine Estates made an announcement on Wednesday to the ASX reporting "continued positive momentum in Asia with record depletion for the nine months ending March 2019". This comes after Wine Australia reported broad declines in volumes to Australian wine exported to China overall.

Wine Australia chief executive officer Andreas Clark said the volume decline was predominantly confined to exports in the below $2.50 per litre value segment. Increased competition from Chile and a tightening of Australian supply in this price segment have been cited as the two major reasons for the decline. Mr Clark also pointed to figures from the Global Trade Atlas which suggest for the 12 months to February 2019, Australia had a 29 percent share of the imported wine market in China, up from 26 percent a year earlier.

Dairy

Fonterra Australia’s Farm Source general manager Matt Watt said the North Fresh contract price would be reset for the 2019-20 season to reflect the changed global market. Mr Watt said the contract price until July next year might be higher, but would remain at a minimum of $6.71 per kilogram of milk solids. Under the North Fresh contracts, suppliers are contracted to supply a minimum volume of milk at their seasonal lowest monthly level and must produce at least one million litres of milk annually, or 83,333 litres per month.

Wool

Australia’s wool clip is forecast to be down 12.7 percent (43 million kilograms) on last year and the lowest yield since 1924. Beyond the implications for producers, this has also had implications for processors, some of who are reporting that some of the wools they received were more dirt and grease than wool. Michell Wool (a wool processing company based in Adelaide) chief executive officer, Steven Read, said "we've got fleece wools coming in here that are 55 per cent grease and dirt and 45 per cent of fibre. Typically, those wools can be 60 to 70 per cent yield," he said.

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Agribusiness

Bub’s Australia has reported a record third quarter revenue of $11.83 million, up 103 percent from the previous comparable period. In March 2019, the goat milk infant formula's gross revenue was $6.91 million setting another record for the company. China sales were up 884 percent with domestic sales lifting 71 percent.

Naturo Technologies, a Queensland food technology company based in Coolum, has claimed to develop processing technology which allows for natural milk to stay safe for human consumption for more than 60 days. The technology has been approved by Dairy Food Safety Victoria as an "alternative treatment to pasteurisation for raw milk". Naturo is now seeking investment funds to build a pilot plant in Australia capable of producing 10 million litres of milk annually.

Naturo Technologies is also well known for its development of the the 'Natavo Zero' process which effectively switches off the enzyme that causes avocados to go brown, improving the shelf life of frozen avocado.

Saputo Dairy Australia has entered into an agreement to acquire Lion-Dairy & Drinks Pty Ltd. for $280 million. The sale will include all brands - King Island Dairy, Tasmanian Heritage, South Cape, Mersey Valley, Heidi Farm and Australian Gold - while assets included in the acquisition are the cheese making plant at Burnie, Tasmania as well as another manufacturing plant and two dairy farms, “Horizon Glen” and “Kyeema”, on King Island. The sale agreement is subject to approvals from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.

AgTech

InFarm, an agtech startup from Goondiwindi in southern Queensland, has received grant support from Microsoft through its 'AI for Earth' program. InFarm specialises in drone imagery, weed identification and precision agriculture with a particular focus on combating Harricia cactus and Feathertop Rhodes grass.

Of the six Australian entities to receive grants, InFarm was the only private company. The other recipients included Monash University, Griffith University, Queensland University of Technology, the Australian Wildlife Conservancy and Bush Heritage Australia.

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Earlier this year the first blockchain-credentialled shipment of Australian beef arrived in China as part of Australian tech company BeefLedger’s Export Smarts Contract program. The program is jointly funded by Food Agility CRC, the Queensland University of Technology, and Asta.

The initial shipment was comprised of 100-day grain finished black angus from 'Blue Lake Station' on the South Australian Limestone Coast, with the next shipment to be a smaller grass-fed consignment sourced from Queensland.

Water

Driven by the effect of dry conditions across the eastern seaboard of Australia, farmers used 7 percent more water on their crops last financial year according to the ABS. Water sourced from the temporary market rose by 86 percent to reach a record level during the year. Cotton remained the crop for which the greatest volume of irrigation water was utilised, accounting for 28 percent of all irrigation water used.

Weather

Despite some huge rain events across parts of Queensland during the first part of 2019, 65.2 percent of the state is officially still in drought. This is up from 58 percent of the state drought declared in mid-March.

Property

Consolidated Pastoral Company (CPC) has sold a second property to Sterling Buntine following his company's - Baldy Bay Pty Ltd - purchase of 'Mimong Station' (80,000 hectares) near Kynuna in north west Queensland in March 2019. 'Comely Station' covers approximately 23,000 hectares in the Bauhinia district of Central Queensland. Estimates suggest a sale price of close to $50 million bare.

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