Weekly Agribusiness News Recap

By: "Farm Tender" News
Hay & Fodder News
May 30, 2019
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By Georgia Devenish - Agricultural Research Analyst at JLL.

Horticulture

The newest edition of Vegetables Australia has been released by AusVeg. The publication covers major industry topics including the upcoming Hort Connections 2019 conference in June as well as discussing the impact to the industry from the Fair Work Commissions' announcement of changes to the Horticulture award. The changes to the provision of overtime rates, ordinary hours and pubic holiday rates for casual workers came into effect on 15 April 2019.

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Livestock

Costco, the world's second largest retailer, has told producers at the Angus Australia conference last week that they will only sell Australian Angus beef when it expands into China later this year. The company’s assistant general manager of merchandise, Marcel Moodley, said Costco sold Angus beef in Australia because of the consistency in the program and that future activity would built upon the local sale of more than $14 million of Angus beef in Australia since switching suppliers to Nippon Meats in 2013.

Sheep production may be swinging back into favour in central west Queensland with wild dog exclusion cluster fences providing an opportunity for grazing enterprises to get in - or rather return in some case - to the industry. Between 1991 and 2018, sheep numbers in the central west of Queensland declined more than 75 percent from an estimated 2,000,000 to 450,000 head. Representatives from both Australian Wool Innovation and the Remote Area Planning and Development Board confer that there is increasing potential for expansion of the industry back into areas now protected by cluster fencing.

Dairy

Freedom Foods Group has raised $65 million from institutional investors with another $65 million to come from existing shareholders. Majority of the funds (77 percent) will be used to accelerate its nutritional ingredients production at the company's Shepparton milk processing plant. Freedom Foods began production of nutritional ingredients micellar casein, native whey protein isolate and lactoferrin at the Shepparton plant earlier this year. Managing director Rory Macleod said Freedom Foods was planning to increase the size of its milk pool to more than 400 million litres in 2019/20 as looked to take an “industry-leading role to meet the greater demand for UHT dairy products in Australia, South-East Asia and China.”

Parmalat Australia has announced it will lay off around three quarters of the permanent workforce at its Longwarry Food Park processing plant in Victoria. The Longwarry plant’s cream cheese line and milk powder evaporator have been shut down as south east Australian milk shortages make their mark on the dairy processing industry. The plant was purchased by Parmalat in 2014 for $67 million.

Agribusiness

Websters Limited has announced it expects to achieve a 'near break even' financial result this year. Drought, a drop in walnut prices and lower than expected yields from their walnut orchards have all impacted on the result.

Last week Webster announced it had bought the Temora-based Australian Rainforest Honey. The $8.2 million transaction included 5,500 hives across 1,800 hectares as well as state forest apiary leases in New South Wales and Victoria. The acquisition guarantees Webster access to pollinators for its almond crops.

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Australian Agricultural Company has recently disclosed a series of strategic investments in agricultural technology companies over the past three years in a letter to shareholders in response to an article in the Australian Financial Review published earlier in the month. The article raised questions about the agtech companies involved, some linked to Australian Agricultural Company's major shareholder Tavistock and its directors.

The tech companies targeted for investment operate in fields including assessment and monitoring genetic data, feed conversion efficiency, development of bovine by-products for medical research and development, animal health and welfare, IT infrastructure, management and digital marketing, and data sourcing and analytics.

Water

In the lead-up to the Federal election, Queensland Nationals MP David Littleproud told the ABC one of his priorities was to call on the Australian Competition and Consumer Commission to inquire into irrigation water trading in the southern Murray Darling basin. Now sworn in as the Minister for Water Resources it is anticipated that Mr Littleproud will announce a panel to oversee a basin-wide study of the socio-economic impact of the Murray Darling Basin Plan in the coming weeks.

As part of a $285 million proposed plan to supercharge growth in the Kimberley cattle industry and create hundreds of jobs in the region, Gina Rinehart's Hancock Agriculture could potentially hand over tens of thousands of hectares of pastoral land in the Fitzroy Valley to the Western Australian Government in return for a irrigation water licence. In return for annual access to 325 gigalitres of surface water from the Fitzroy River, the Government would be able to use the land to meet its election commitments of creating a Fitzroy national park. Hancock Agriculture's portfolio in the Kimberley includes the 'Fossil Downs', 'Liveringa' and 'Nerrima' pastoral stations with most of the land being discussed likely to come from 'Fossil Downs' located in the heart of the Fitzroy Valley.

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Under the proposal, water access would focus on off-stream storage that would fill when the river floods. Water captured would be used to irrigate 21,200 hectares of annual cropping land to produce fodder. The proposal requires tenure of the developed cropping area and water storage facility to be transferred from leasehold to freehold.

A new research report released by AgriFutures suggests that logistics are the largest single cost item in the production of many agricultural industries, amounting to as much as 48.5 percent of farm-gate costs. The study delves into the impact of freight costs on farms and provides a comparison to international agricultural supply chains in an effort to benchmark Australia's performance and it's ability to compete on an international platform.

Trade

As African Swine Fever continues to bite into China's pig industry, increased demand for beef from Australia would appears to be good news for the Australian beef industry. However, the outlook for the industry has been dampened by concerns around what sort of impact the China-US trade war may have on the spending power of the Chinese middle class. Already the market is seeing signs of unnerved consumers starting to cut back on luxuries including Australian Wagyu.

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Tim Ryan, a Singapore-based analyst with Meat and Livestock Australia has said, "If the trade war impacted China's economy to the point where it slowed down enough to be a drag on our premium beef imports... a slowdown in the economy is a huge risk. We can't compete with the South Americans on price. We really rely on that premium." However, with sales of Australian beef to China up 66 percent for the first four months of 2019, this, at least, is not a problem yet.