Download Agricultural commodities – March quarter 2017

Department of Agriculture
and Water Resources
2017
Agricultural commodities
Research by the Australian Bureau of Agricultural
and Resource Economics and Sciences
MARCH QUARTER 2017
© Commonwealth of Australia 2017
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March quarter 2017. CC BY 3.0.
ISBN: 978-1-74323-330-6 (online)
ISSN: 1839-5627 (online)
ISBN: 978-1-74323-331-3 (printed)
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Contents
Economic overview
4
Crops
Wheat29
Coarse grains
38
Oilseeds46
Sugar55
Cotton63
Horticulture73
Australian wine exports
84
Livestock
Beef and veal
92
Sheep meat and wool
99
Pig meat
111
Chicken meat
115
Dairy119
Fisheries128
Articles
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Productivity in Australia’s broadacre and dairy industries
Disaggregating farm performance statistics by size
The EU sheep meat industry
146
187
203
212
Boxes
Recent developments in Australian agriculture
Market for Australian oilseed meals
Australian wine under the China–Australia Free Trade Agreement The importance of the United Kingdom to the EU sheep meat industry
22
52
87
220
Statistical tables
225
Report extracts
267
ABARES contacts
270
ABARES
Agricultural commodities – March quarter 2017
1
Department of Agriculture
and Water Resources
2017
Regional Outlook
conferences 2017
Join ABARES at a Regional Outlook conference in your area
The ABARES Regional Outlook conferences are an essential
part of sharing our commodity forecasts and research results
directly with regional communities. ABARES works with local
organisations to develop a tailored conference program to
address key local agricultural issues and commodities.
At each Regional Outlook conference, senior ABARES
economists present the economic overview and forecasts for
key agricultural commodities and farm �inancial performance.
A range of regionally based speakers and producers discuss
industry challenges and strategies for growth, investment
and innovation opportunities, natural resource management,
plus case studies from people taking innovative approaches in
their businesses.
To register your interest in
upcoming conferences contact
Email [email protected]
agriculture.gov.au/abares/regional
Conference delegates can hear commodity forecasts, discuss
industry trends, access information and make new contacts
in their community that can encourage new approaches to
traditional issues. Delegates include producers, bankers,
consultants and other service providers, rural counsellors, local
business owners, state and local government staff, regional
development groups and others with an interest in their region.
The Regional Outlook conferences follow from the national
Outlook 2017 conference in Canberra in March with its theme
of Innovation in agriculture – capturing the opportunities.
2017 locations and dates
South Australia
Northern Territory
Victoria
Tasmania
Western Australia
Queensland
New South Wales
Renmark
Darwin
Ararat
Devonport
Kununurra
Toowoomba
Tamworth
3 May
5 July
26 July
23 August
20 September
4 October
25 October
Economic overview
Economic overview
Outlook to 2021–22
Natasha Frawley, Matthew Howden and Kirk Zammit
• World economic growth is assumed to increase from an estimated 3.1 per cent in
2016 to 3.3 per cent in 2017. Over the medium term, it is projected to strengthen
further before easing to around 3.3 per cent by 2022.
• China’s transitioning economy, the policy direction of the new US administration
and geopolitical risks stemming from Brexit and upcoming elections in several
large eurozone economies present uncertainties for global economic growth.
• Australian farm exports are forecast to be around $47.7 billion in 2016–17
and $48.7 billion in 2017–18, up from $44.7 billion in 2015–16. By 2021–22
earnings from agricultural exports are projected to be around $46.6 billion
(in 2016–17 dollars).
Global economic outlook
Economic growth in 2017 and 2018
In preparing this set of agricultural commodity forecasts, world economic growth
is assumed to strengthen in 2017 to 3.3 per cent and in 2018 to 3.4 per cent, led by
stronger growth in emerging economies. This follows world economic growth of
3.1 per cent in 2016, the slowest since 2009.
World economic growth, 2002 to 2022
6
5
4
3
2
1
0
%
2004
2007
2010
2013
a ABARES assumption.
Sources: ABARES; International Monetary Fund
4
ABARES
Agricultural commodities – March quarter 2017
2016
2019a
2022a
Economic overview
Average GDP growth in OECD countries is assumed to strengthen from an estimated
1.6 per cent in 2016 to 1.8 per cent in 2017. GDP growth is expected to rise further to
1.9 per cent in 2018. For non-OECD countries as a whole, economic growth is assumed
to average 4.4 per cent in 2017 and 4.6 per cent in 2018.
The value of world trade fell sharply from late 2014 to the end of 2016. This was
driven largely by a decrease in commodity prices, particularly for oil. Growth in trade
volumes remained largely positive over this period. However, the fall in the value
of trade significantly affected many non-OECD exporting economies, including the
Russian Federation and those in South America, the Middle East and Africa. The value
of trade is expected to increase from 2017 as commodity prices recover. This will lend
support to economic growth in many emerging economies.
Several OPEC member countries agreed at the November meeting to cut production
from January 2017. This decision combined with the fall in output from several
non-OPEC oil-producing countries in 2016 is expected to weaken growth in world
oil production from 2017. Weaker supply and continued growth in demand from
emerging economies are expected to put upward pressure on oil prices in 2017
and 2018.
World merchandise trade growth, September quarter 2007 to September quarter 2016
30
Trade value
Trade volume
20
10
0
–10
–20
–30
%
Sep Sep Sep Sep
2007 2008 2009 2010
Sep
2011
Sep
2012
Sep
2013
Sep
2014
Sep
2015
Sep
2016
Source: World Trade Organization
Slowing growth in China continues to pose a risk to the global economic outlook.
Government stimulus has lessened fears of a sharp economic slowdown in
China in the near term. However, slower than expected growth in the longer
term could adversely affect global trade and business and consumer confidence
inside and outside China. This could lead to weaker global economic activity than
currently assumed.
Policy changes under the new US administration, the exit of the United Kingdom from
the European Union (Brexit) and elections in the Netherlands, France and Germany
pose risks to the outlook. In particular, the possible adoption of inward-looking
policy measures in several of the world’s largest economies could weaken global
economic growth.
ABARES
Agricultural commodities – March quarter 2017
5
Economic overview
Medium-term growth outlook
Global economic growth is assumed to recover to around 3.5 per cent by 2019,
driven by a recovery in emerging markets. Global growth is assumed to moderate to
3.3 per cent in 2022.
Economic growth in OECD economies is assumed to average around 1.8 per cent
in 2019 and 1.7 per cent from 2020 to 2022. The US economy is expected to grow
relatively strongly over the medium term, but economic growth in the eurozone and
Japan is expected to remain subdued.
For non-OECD countries, economic growth is assumed to strengthen to 4.7 per cent in
2019 and 2020 before moderating to 4.6 per cent in 2021 and 2022. China is expected
to continue to be a major driver of growth for non-OECD countries and the world as
a whole.
Regional economic growth, 2016 to 2022
8
2016
2017a
2018a
2019–22a
6
4
2
0
%
OECD
Non-OECD
Asia b
Latin America
World
Eastern Europe,
Russian Federation
and Ukraine
a ABARES assumption. b Includes China.
Sources: ABARES; International Monetary Fund
6
ABARES
Agricultural commodities – March quarter 2017
Economic overview
Keyworld
world
macroeconomic
assumptions
Key
macroeconomic
assumptions
unit
2015
2016
2017 a
2018 a
2019 a
2020 a
2021 a
2022 a
%
2.1
1.6
1.8
1.9
1.8
1.7
1.7
1.7
%
2.6
1.6
2.2
2.2
2.1
2.1
2.0
2.0
%
1.2
0.9
0.6
0.7
0.7
0.1
0.5
0.5
%
2.0
1.7
1.5
1.6
1.6
1.6
1.5
1.5
%
1.5
1.7
1.5
1.6
1.5
1.5
1.3
1.3
%
1.3
1.3
1.4
1.6
1.5
1.5
1.5
1.4
%
0.7
0.9
1.0
1.0
1.0
1.0
0.9
0.9
%
2.2
2.0
1.1
1.4
1.6
1.8
2.0
2.1
%
2.6
2.7
2.5
2.7
2.6
2.6
2.6
2.6
%
3.0
2.8
3.6
3.5
2.9
2.4
2.3
2.2
%
4.1
4.1
4.4
4.6
4.7
4.7
4.6
4.6
%
6.6
6.3
6.2
6.2
6.1
6.0
5.9
5.8
%
4.8
4.8
4.9
5.0
4.9
5.0
4.9
4.8
%
6.9
6.7
6.4
6.2
6.0
5.8
5.7
5.6
%
0.6
1.0
1.7
1.9
2.0
2.0
2.2
2.2
%
2.0
1.7
1.5
2.0
2.4
3.0
3.0
3.0
%
7.2
7.5
7.5
7.8
7.9
7.9
7.7
7.5
%
0.1
– 0.7
1.6
2.1
2.6
2.7
2.7
2.7
%
– 3.7
– 0.6
1.0
1.2
1.5
1.5
1.5
1.5
%
– 9.9
1.5
2.0
3.0
3.5
4.0
4.0
3.5
Economic growth
OECD
United States
Japan
Eurozone
– Germany
– France
– Italy
United Kingdom
Korea, Rep. of
New Zealand
non-OECD
– non-OECD Asia
South-East Asia b
China c
Taiwan
Singapore
India
– Latin America
Russian Federation
Ukraine
Eastern Europe
World d
Inflation
%
3.7
2.9
3.1
3.2
3.1
3.2
3.2
3.3
%
3.2
3.1
3.3
3.4
3.5
3.4
3.4
3.3
%
0.1
1.3
1.9
2.0
2.0
2.0
2.0
2.0
United States
Interest rates
US prime rate e
% pa
3.3
3.5
3.9
4.5
5.0
5.0
5.0
5.0
a ABARES assumption. b Indonesia, Malaysia, the Philippines, Thailand and Vietnam. c Excludes Hong Kong. d Weighted
using 2015 purchasing power parity (PPP) valuation of country gross domestic product by the International Monetary
Fund. e Commercial bank prime lending rates in the United States.
Sources: ABARES; International Monetary Fund; US Bureau of Labor Statistics; US Federal Reserve
ABARES
Agricultural commodities – March quarter 2017
7
Economic overview
Economic prospects for Australia’s major
trading partners
Steady slowdown in China
Economic growth in China was 6.7 per cent in 2016, down from 6.9 per cent in
2015. It is assumed to continue to slow to 6.4 per cent in 2017 and 6.2 per cent in
2018. By 2022 economic growth is assumed to be around 5.6 per cent.
The service sector increased by 7.8 per cent in 2016. Mining and industrial production
grew by around 6.1 per cent over 2016, supported by short-term government
measures to boost demand. These measures included policy changes to encourage
lending for property and increased infrastructure spending. The manufacturing
Purchasing Managers’ Index indicates that expansion in the manufacturing sector
has continued into 2017.
GDP growth by industry, China, December quarter 2006 to December quarter 2016
20
16
12
Services
Mining and industrial
production
Agriculture, forestry
and fisheries
8
4
%
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: National Bureau of Statistics, China
Downside risks to China’s short-term economic outlook include uncertainty about
the duration of the housing market recovery and the potential for increased financial
market volatility as a result of strong capital outflows.
Over the medium term, China’s progress in implementing its reform agenda
and ability to manage high debt levels will be important determinants of
economic growth.
8
ABARES
Agricultural commodities – March quarter 2017
Economic overview
US growth supported by stronger labour market
Economic growth in the United States was 1.6 per cent in 2016 and is assumed to be
2.2 per cent in 2017. Over the medium term, economic growth is assumed to ease to
around 2 per cent in 2021 and 2022.
The biggest driver of the US economy in 2016 was private consumption growth,
supported by the strengthening labour market. Private consumption increased
by 2.7 per cent. Spending on durable goods was particularly strong, reflecting
strengthening US consumer confidence. The University of Michigan’s Index
of Consumer Sentiment remained elevated in 2016, similar to pre–global
financial crisis levels.
The unemployment rate fell throughout 2016 to reach 4.7 per cent in the
December quarter, the lowest quarterly rate since 2007. In 2016 the employment
cost index (a measure of wage growth) increased by 2.2 per cent, the highest rate
of growth since 2008.
Export growth remained subdued in 2016 because of the stronger US dollar. The real
trade-weighted value of the US dollar increased by 10.7 per cent in 2015 and by
3.9 per cent in 2016, reaching its highest level since 2003. Export conditions are
expected to remain challenging in 2017 and 2018 because the US dollar is projected
to remain relatively strong.
Weak export demand and the low price of oil contributed to a sharp fall in private
investment in 2016. Manufacturing investment fell by 4.8 per cent and fixed
investment in mining industries by 45 per cent. The assumed modest increase in the
price of oil is expected to assist growth in the US oil and gas industries.
Real trade-weighted exchange rate index, United States, January 2001 to
January 2017
120
110
100
90
index
Jan
2001
Jan
2003
Jan
2005
Jan
2007
Jan
2009
Jan
2011
Jan
2013
Jan
2015
Jan
2017
Source: US Federal Reserve
ABARES
Agricultural commodities – March quarter 2017
9
Economic overview
The US Federal Reserve increased its official interest rate to between 0.5 per cent
and 0.75 per cent in December 2016. The stronger labour market and an expected
increase in inflation contributed to the decision to raise interest rates. The Federal
Reserve is expected to increase rates at least once before the end of 2017 as domestic
and global economic conditions improve. Over the medium term, the Federal
Reserve is assumed to continue to tighten monetary policy settings in line with the
strengthening economy.
The new US President took office in January 2017. Over the short term the
new administration is expected to apply significant fiscal stimulus measures.
However, until the administration announces its policy direction, effects on
the US economy will remain uncertain.
Modest economic growth in Japan
Economic growth in Japan was 0.9 per cent in 2016 and is assumed to be 0.6 per cent
in 2017. By 2022 the economy is expected to grow by 0.5 per cent.
Private consumption growth remained weak in 2016 at 0.4 per cent. However,
additional government stimulus in 2016 should encourage private consumption
in 2017 and 2018.
Contributions to GDP growth, Japan, December quarter 2012 to
December quarter 2016
5
Public investment
Private consumption
Private investment
Government consumption
Net exports
GDP growth
4
3
2
1
0
–1
–2
%
Dec
2012
Dec
2013
Dec
2014
Source: Cabinet Office, Japan
10
ABARES
Agricultural commodities – March quarter 2017
Dec
2015
Dec
2016
Economic overview
In July 2016 the unemployment rate in Japan fell to a 21-year low of 3 per cent.
The workforce participation rate also improved over 2016, supported in part by
Japanese Government policies including additional welfare payments (such as child
care and aged care payments) to enable parents and carers to re-enter the workforce.
Tax reforms to encourage dependent spouses to work more hours are expected to
further boost the participation rate for female workers.
In 2016 exports fell by 7.4 per cent, largely because of weak global demand and the
relatively high value of the yen. Since the US election in November 2016 and the
increase in the official US interest rate in December 2016, the yen has depreciated
slightly. Continuing weakness could assist growth in Japanese exports and industrial
production in 2017.
Growth in real trade-weighted exchange rate and real value of exports, Japan,
December quarter 2006 to December quarter 2016
50
40
30
20
10
0
–10
–20
–30
–40
25
20
15
10
5
0
–5
–10
–15
–20
%
Exports
Trade-weighted index
(right axis)
%
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Bank of Japan; Cabinet Office, Japan
Japan’s economy is expected to continue to grow modestly over the medium term.
Increased trade activity from emerging economies will improve demand for exports.
Japan exports high value-added components such as vehicle, computer and telephone
parts to China and other low- and middle-income Asian countries for assembly.
Demand for Japanese goods is expected to increase in line with increases in trade
activity in the region. However, Japan’s consumption tax increase planned for
October 2019 is expected to limit growth in 2020.
ABARES
Agricultural commodities – March quarter 2017
11
Economic overview
Eurozone economy shows modest growth
Economic growth in the eurozone was 1.7 per cent in 2016. Growth is expected to
slow to 1.5 per cent in 2017 and 1.6 per cent in 2018 and 2019. It is assumed to be
around 1.5 per cent in 2021 and 2022.
Private consumption remains the main driver of eurozone economic growth. In 2016
it grew by about 2 per cent, assisted by low interest rates, low oil prices and the
strengthening labour market.
Private consumption and GDP growth, eurozone, September quarter 2006 to
September quarter 2016
4
2
Private consumption
GDP growth
0
–2
–4
%
Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Eurostat
The eurozone unemployment rate has continued to decrease since peaking at
over 12 per cent in early 2013. However, in many countries it is still well above the
pre–financial crisis rate and is expected to remain so throughout the medium term.
Wage growth is expected to remain subdued.
Political uncertainty and the possibility of inward-looking policy measures being
adopted are downside risks to the eurozone economic outlook. In 2017 three of the
largest eurozone economies will hold elections: the Netherlands (March), France
(April) and Germany (September). The United Kingdom has publically stated
its intention to trigger Article 50 before the end of March 2017, after which exit
negotiations with the European Union will begin (Brexit). Negotiations are expected
to take at least two years. Brexit is assumed to dampen private consumption and
investment growth in the United Kingdom and other European countries in the short
term. The longer-term effects of Brexit are uncertain.
Over the medium term, accommodative monetary policy and the strengthening
labour market are supportive for economic growth in the eurozone. However, high
unemployment and high debt across the eurozone, and fragility in the banking sector,
are likely to limit economic growth.
12
ABARES
Agricultural commodities – March quarter 2017
Economic overview
Mixed outlook for other non-OECD Asian economies
In 2016 economic growth in many non-OECD Asian countries remained modest
because of slower world growth and weaker demand for exports, particularly
to China.
The general improvement in commodity prices for energy and metals over 2016 and
depreciation of several non-OECD Asian currencies following the US election are
potentially positive for exporters in the region. However, much of the region’s debt
is denominated in US dollars so the falling currency values may affect real economic
growth by raising debt servicing costs.
Exchange rates of select Asian currencies, July 2016 to January 2017
4.7
70.0
4.6
69.5
4.5
69.0
4.4
68.5
4.3
68.0
4.2
67.5
4.1
67.0
4.0
66.5
ringgit/
US$ Jul
2016
Aug
2016
Sep
2016
Oct
2016
Nov
2016
Dec
2016
Malaysian ringgit
Indian rupee
(right axis)
rupee/
Jan US$
2017
Source: US Federal Reserve
South-East Asia
Economic growth in South-East Asia averaged around 4.8 per cent in 2016. It is
expected to increase to around 4.9 per cent in 2017 and 5.0 per cent in 2018. Over the
medium term, average economic growth is expected to remain at around 4.9 per cent,
supported by strong domestic demand and a gradual recovery in exports.
Indonesia’s economy is the largest in South-East Asia. In 2016 it grew by 4.9 per cent,
assisted by strong private consumption and investment growth despite lower
government consumption and a contraction in exports. Economic growth in 2017
and 2018 will be supported by accommodative monetary policy and a budgeted
increase in infrastructure spending.
ABARES
Agricultural commodities – March quarter 2017
13
Economic overview
India
India’s economy grew by an estimated 7.5 per cent in 2016 and is assumed to remain
around the same in 2017.
In early November 2016, as part of an initiative to tackle corruption and criminal
activity, the Indian Government announced that two large banknotes were no
longer legal currency and had to be exchanged for legal currency by the end of 2016.
The banknotes represented 86 per cent of all cash in circulation. Many transactions
in India are made in cash, so this is expected to delay purchases of goods and services.
Consumption in late 2016 and early 2017 is expected to have fallen as a result.
Over the medium term, India’s economic growth should be supported by
ongoing policy reforms aimed at improving the ease of doing business and
reducing corruption.
Economic growth, other Asian non-OECD countries, 2016 to 2022
9
2016
2017a
2018a
2019–22a
8
7
6
5
4
3
2
1
%
India
Malaysia
Singapore
Thailand
Indonesia
Philippines
Taiwan
Vietnam
a ABARES assumption.
Source: ABARES
Australian economy
Economic growth in Australia is assumed to decelerate from 2.7 per cent in 2015–16
to 2 per cent in 2016–17, before recovering to 2.8 per cent in 2017–18.
Temporary weakness in the September quarter 2016, which included delays to
construction projects because of heavy rainfall, resulted in slower than expected
growth of 1.7 per cent year-on-year. These temporary factors alongside assumed
lower household spending and net export growth in the remainder of 2016–17
are expected to result in a deceleration of growth.
14
ABARES
Agricultural commodities – March quarter 2017
Economic overview
GDP growth, Australia, September quarter 2001 to September quarter 2016
6
Quarter-on-quarter
Year-on-year
5
4
3
2
1
0
%
Sep
2002
Sep
2004
Sep
2006
Sep
2008
Sep
2010
Sep
2012
Sep
2014
Sep
2016
Source: Australian Bureau of Statistics
Household consumption growth moderated to 2.5 per cent year-on-year in the
September quarter 2016. Consumption growth of durable goods was particularly
weak. Low interest rates and strong growth in asset prices over recent years
should encourage consumption over the short term despite modest disposable
income growth.
Household consumption and income growth, Australia, September quarter 2002
to September quarter 2016
12
Consumption
Disposable income
10
8
6
4
2
0
%
Sep
2002
Sep
2004
Sep
2006
Sep
2008
Sep
2010
Sep
2012
Sep
2014
Sep
2016
Note: Household sector includes unincorporated enterprises. Disposable income is after tax and interest payments.
Source: Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
15
Economic overview
Residential construction should continue to assist economic growth in 2017–18,
but its contribution to growth is expected to diminish as outstanding construction
work is progressively completed. Non-mining business investment is assumed to
improve gradually as borrowing costs remain low and economic growth strengthens.
The value of commercial building jobs approved increased strongly over the
September quarter 2016. Mining investment—which contracted from 2013–14 to
2015–16—is expected to decline further over 2016–17 and 2017–18, as construction
of major projects is completed. However, the impact of the fall in mining investment
on GDP growth is expected to lessen.
The volume of non-mining exports (including rural goods) increased by 6 per cent
year-on-year in the September quarter 2016. The lower Australian dollar and strong
demand from Asia have supported activity in tradable sectors, including tourism,
education, manufacturing and agriculture. The total volume of exports is expected
to increase in 2017–18, with strong increases expected in resource exports—
particularly liquefied natural gas and iron ore.
GDP growth is assumed to be 3 per cent each year over the period 2018–19
to 2021–22.
Mining and non-mining exports, Australia, September quarter 2000 to
September quarter 2016
50
Non-mining
Mining
40
30
2014–15
$b
Sep
2000
Sep
2002
Sep
2004
Sep
2006
Sep
2008
Sep
2010
Sep
2012
Sep
2014
Sep
2016
Note: Non-mining exports includes manufactured and rural goods, and services; Chain volume measures used
to remove price effect on exports.
Source: Australian Bureau of Statistics
Consumer price index
Inflationary pressures remain weak as a result of low wage growth, strong
competition in the retail sector and easing housing costs. Inflation in Australia has
also been affected by global factors, including the sharp decline in oil prices from the
end of 2014 to early 2016.
In 2016–17 inflation is assumed to be 1.5 per cent, before rising to 1.9 per cent
in 2017–18. It is expected to increase to 2.5 per cent by 2018–19, in line with a
strengthening economy.
16
ABARES
Agricultural commodities – March quarter 2017
Economic overview
Over the period 2019–20 to 2021–22 the inflation rate is assumed to remain at
2.5 per cent, the midpoint of the Reserve Bank of Australia’s inflation rate target
range. This is consistent with strong economic growth over the outlook period.
Australian dollar
The Australian dollar is assumed to average US75 cents and to have a trade-weighted
index value of 64 in 2016–17. In 2017–18 the Australian dollar is assumed to average
US73 cents, with a trade-weighted value of 62. Over the medium term, the Australian
dollar is assumed to appreciate slightly in 2018–19 to US74 cents and remain broadly
steady to 2021–22.
Australia’s terms of trade—the ratio of export prices to import prices—increased by
4.4 per cent in the September quarter 2016. Renewed strength in bulk commodity
prices, particularly for coking coal and iron ore, is expected to raise Australia’s terms
of trade further in 2016–17 and provide support for the Australian dollar.
Bulk commodity prices increased in 2016–17 in response to several temporary
factors, including short-term stimulus and coalmine closures in China and other
global supply disruptions. Prices are assumed to fall in 2017–18 as these temporary
factors fade. However, the outlook remains positive for Australia’s terms of trade
given the expected improvement in global growth and the stabilisation of global
commodity markets for Australia’s major exports.
Improved economic conditions in the United States and the December 2016
increase in its official interest rate exerted downward pressure on the
Australian dollar. Further increases in the official US interest rate could exert
further downward pressure.
Terms of trade and exchange rates, Australia, December quarter 2006 to
December quarter 2016
140
140
120
120
100
100
80
80
60
60
index
Terms of trade index
2013–14=100
Trade-weighted index
(A$) May 1970=100
Exchange rate, USc/A$
(right axis)
USc/A$
Dec
2006
Dec
2008
Dec
2010
Dec
2012
Dec
2014
Dec
2016
Sources: Australian Bureau of Statistics; Reserve Bank of Australia
ABARES
Agricultural commodities – March quarter 2017
17
Economic overview
Key
assumptions
for Australia
Keymacroeconomic
macroeconomic
assumptions
for Australia
unit
2014–15
2015–16
2016–17 a
2017–18 a
2018–19 a
2019–20 a
2020–21 a
2021–22 a
Economic growth
%
2.4
2.7
2.0
2.8
3.0
3.0
3.0
3.0
Inflation
Interest rates b
Nominal exchange rates
%
1.7
1.4
1.5
1.9
2.5
2.5
2.5
2.5
% pa
4.3
4.1
3.9
4.0
4.5
5.5
5.8
6.0
US$
0.84
0.73
0.75
0.73
0.74
0.74
0.74
0.74
63
63
63
– US$/A$
Trade-weighted index
index
67
62
64
62
63
for A$ c
a ABARES assumption. b Large business weighted-average variable rate on credit outstanding. c Base: May 1970 = 100.
Sources: ABARES; Australian Bureau of Statistics; Reserve Bank of Australia
Outlook for Australian agricultural and fisheries exports
Total volume of farm production is forecast to fall by 5.6 per cent in 2017–18,
following record production in 2016–17. The decline reflects an assumed return
to average seasonal conditions in 2017–18. This follows an exceptional year and
a forecast fall in the volume of grain and oilseed production from a record high in
2016–17. This fall is expected to offset a small forecast rise in the volume of livestock
production. Assuming average seasonal conditions, farm production will slowly rise
over the medium term to 2021–22, when it is projected to exceed the 2016–17 level.
Export prices are forecast to increase by 2.8 per cent in 2017–18, as reflected in
the Australian farm exports unit returns index. This follows a forecast increase of
0.8 per cent in 2016–17. Export prices in Australian dollar terms are forecast to rise in
2017–18 for wool, dairy products, sugar, wine, lamb, barley, canola, rock lobster and
mutton. Export prices for cotton and chickpeas are forecast to fall. Prices for beef and
veal, wheat and live feeder/slaughter cattle are forecast to remain around the same
as in 2016–17. Towards 2021–22 the assumed lower Australian dollar and forecast
decline in world prices of many agricultural products will lead to a projected decline
in the unit returns for farm exports, in real terms.
Earnings from farm exports in 2017–18 are forecast to rise by 2 per cent to
$48.7 billion, following a forecast 6.7 per cent increase in 2016–17 to $47.7 billion.
In 2021–22 the value of Australian farm exports is projected to be around
$46.6 billion (in 2016–17 dollars), 4 per cent higher than the five-year average to
2016–17 of $44.6 billion (in 2016–17 dollars).
Crops
Export earnings for crops are forecast to fall to around $26.5 billion in 2017–18 from
a forecast $26.8 billion in 2016–17. The decrease follows record production of wheat
and barley in 2016–17, which resulted from favourable seasonal conditions during
winter and spring.
Export earnings are forecast to decrease in 2017–18 for wheat (down 9 per cent),
coarse grains (down 11 per cent), canola (down 6 per cent) and chickpeas
(down 42 per cent). Partly offsetting these falls are forecast increased export
earnings for sugar (up 10 per cent), cotton (up 35 per cent) and wine (up 5 per cent).
18
ABARES
Agricultural commodities – March quarter 2017
Economic overview
Livestock
Export earnings for livestock and livestock products are forecast to rise to $22.2 billion
in 2017–18 from an estimated $20.9 billion in 2016–17. This rise is partly driven by
recovering world dairy prices as a result of slowing production in New Zealand and
the European Union. This is supporting higher Australian export values for cheese and
skim milk powder. Exports of Australian wool are forecast to increase, reflecting a
forecast rise in production. A moderate increase in demand is also expected to support
export prices.
Export earnings in 2017–18 are forecast to rise for beef and veal (up 1 per cent), dairy
(up 11 per cent), wool (up 10 per cent), lamb (up 3 per cent), live feeder/slaughter
cattle (up 4 per cent) and mutton (up 1 per cent).
Fisheries
Export earnings for fisheries products are forecast to rise by 2.3 per cent to
around $1.5 billion in 2017–18. Export earnings are forecast to rise for rock lobster
(up 6 per cent) as a result of strengthening demand from China. Export earnings for
tuna are also forecast to rise in 2017–18 (up 5 per cent) as higher total allowable catch
lifts domestic production. The value of Australian fisheries exports is projected to be
around $1.5 billion (in 2016–17 dollars) in 2021–22.
ABARES
Agricultural commodities – March quarter 2017
19
Economic overview
Major indicators of Australia’s agriculture and natural resources based sector
MajorindicatorsofAustralia'sagricultureandnaturalresourcebasedsectors
Exchange rate
US$/A$
Australian export unit returns a
index
Farm – real b
index
Value of exports
A$m
Farm
– real b
A$m
Crops A$m
– real b
A$m
A$m
Livestock
– real b
A$m
A$m
Fisheries products
– real b
A$m
Gross value of production c
A$m
Farm
– real b
A$m
Crops A$m
– real b
A$m
A$m
Livestock
– real b
A$m
A$m
Fisheries products
– real b
A$m
A$m
Forestry products
– real b
A$m
Volume of production d
index
Farm
index
– crops index
– livestock
index
Forestry
Production area and livestock numbers
Crop area
grains and oilseeds
’000 ha
million
Sheep
million
Cattle
Farm sector
A$m
Net cash income e
– real b
A$m
Net value of farm production g
A$m
– real b
A$m
index
Farmers’ terms of trade h
2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
0.84
0.73
0.75
0.73
0.74
0.74
0.74
0.74
94.6
97.3
99.2
100.7
100.0
100.0
102.8
100.9
101.7
97.3
101.8
95.1
102.6
93.5
104.0
92.5
44,138
45,402
21,617
22,235
22,522
23,166
1,440
1,481
44,744
45,398
22,598
22,928
22,146
22,470
1,542
1,564
47,737
47,737
26,829
26,829
20,908
20,908
1,489
1,489
48,679
47,771
26,527
26,032
22,152
21,739
1,524
1,496
48,675
46,602
25,875
24,773
22,799
21,828
1,546
1,481
49,245
45,998
25,861
24,156
23,384
21,842
1,591
1,487
50,362
45,894
26,572
24,215
23,790
21,679
1,633
1,488
52,440
46,623
27,955
24,853
24,486
21,769
1,686
1,499
54,431
55,989
27,438
28,224
26,993
27,766
2,761
2,840
2,034
2,093
58,907
59,769
28,175
28,587
30,732
31,181
2,967
3,010
2,271
2,304
63,791
63,791
33,866
33,866
29,925
29,925
3,028
3,028
2,272
2,272
61,296
60,153
30,049
29,488
31,248
30,665
3,000
2,944
2,275
2,233
62,711
60,041
30,225
28,938
32,486
31,103
3,036
2,907
2,280
2,183
63,967
59,749
30,766
28,738
33,200
31,011
3,079
2,876
2,287
2,136
65,257
59,467
31,564
28,764
33,693
30,703
3,152
2,872
2,254
2,054
67,070
59,629
32,649
29,026
34,421
30,603
3,247
2,887
na
na
122.3
125.0
118.1
129.3
120.7
130.4
110.8
139.3
129.8
164.2
102.7
137.9
122.5
142.4
105.2
136.7
124.4
142.2
108.4
135.6
126.1
143.3
110.4
134.6
127.9
144.5
112.6
132.2
130.5
146.3
115.7
na
22,934
70.9
27.4
23,318
68.7
26.1
23,739
73.6
26.6
23,590
76.6
27.2
23,394
78.6
27.8
23,205
80.4
28.4
23,230
81.8
29.0
23,204
83.0
29.4
21,434
25,288
28,515
25,897
25,482
24,201
23,921
24,138
22,048
25,658
28,515
25,414
24,397
22,605
21,799
21,460
15,990
19,762
22,903
20,177
19,624
18,203
17,779
17,848
16,448
20,051
22,903
19,800
18,788
17,002
16,202
15,868
103.9
112.7
113.3
113.6
111.4
107.7
105.7
104.2
a Base: 2016–17 = 100. b In 2016–17 Australian dollars. c For a definition of the gross value of farm production see Table 13. d Chain‐weighted basis using Fisher’s ideal index with a reference year of 1997–98 = 100. e Gross value of farm production less total cash costs. f ABARES forecast. g Gross value of farm production less total farm costs. h Ratio of index of prices received by farmers and index of prices paid by farmers, with a reference year of 1997–98 = 100. s ABARES estimate. z ABARES projection. na Not available.
Sources: ABARES; Australian Bureau of Statistics; Reserve Bank of Australia
20
ABARES
Agricultural commodities – March quarter 2017
Economic overview
Major Australian agricultural commodity exports
2017–18f
2017–18f
2016–17f
Volume Price a Value
Value
$7.20b
$7.10b
Beef and veal
$5.91b
$6.48b
Wheat
$3.97b
$3.61b
Wool
$2.83b
$2.57b
Sugar
$2.67b
$1.98b
Cotton
$2.50b
$2.37b
Wine
$1.86b
$1.80b
Lamb
$1.82b
$1.99b
Barley
$1.64b
$1.75b
Canola
$1.17b
$1.12b
Live feeder/
slaughter cattle
$1.01b
$0.89b
Cheese
$0.76b
$1.30b
Chickpeas
$0.72b
$0.67b
Rock lobster
$0.62b
$0.61b
Mutton
A$b
2
4
6
2%
0%
1%
–8%
0%
–9%
4%
6%
10%
0%
5%
10%
37%
3%
35%
1%
4%
5%
0%
3%
3%
–26%
1%
–8%
–7%
–2%
–6%
4%
0%
4%
2%
12%
13%
–29%
–19% –42%
2%
4%
6%
–3%
4%
1%
8
a Wheat, sugar, cotton, barley, canola and cheese are world indicator prices in US$. Beef and veal, lamb and mutton are saleyard
prices in A$. Wool is Eastern Market Indicator price in A$. All other commodities are export unit returns in A$. f ABARES forecast.
ABARES
Agricultural commodities – March quarter 2017
21
Economic overview
Recent developments in Australian agriculture
Kirk Zammit
The real value of agricultural production increased over the three years to 2015–16,
at an average rate of 5.3 per cent a year. This period of solid growth coincided with
strong demand for Australia’s exports, favourable global market prices for livestock,
a depreciating exchange rate and subdued growth in input costs. Poor seasonal
conditions early in the period detrimentally affected crop production and returns to
producers. However, lower crop production was more than offset by increased returns
from livestock production. This was the result of higher slaughter rates, as producers
responded to reduced pasture availability caused by dry conditions. Returns to
producers continued to increase in 2015–16 as a result of a rise in crop production
nationally and ongoing high cattle turn-off in major cattle-producing regions
of Queensland.
Real farm gross value of production, Australia, 2000–01 to 2015–16
60
50
40
30
20
10
2015–16
A$b
2001
–02
2003
–04
2005
–06
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16s
s ABARES estimate.
Sources: ABARES; Australian Bureau of Statistics
These developments lent additional support to Australia’s real net farm cash income,
which had been rising since 2009–10. This followed a period of declining income
from 2001–02 to 2008–09 as farmers contended with drought, low availability of
irrigation water and rising input costs. Real net farm cash income is estimated to
have been $25.3 billion in 2015–16, well above the 20-year average to 2014–15 of
$15.4 billion (in 2015–16 dollars). However, income growth at the industry level was
more varied. For example, the dairy industry has experienced more difficult conditions
in recent years.
continued ...
22
ABARES
Agricultural commodities – March quarter 2017
Economic overview
Recent developments in Australian agriculture
continued
Real net farm cash income, Australia, 2000–01 to 2015–16
30
25
20
15
10
5
2015–16
A$b
2001
–02
2003
–04
2005
–06
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16s
s ABARES estimate.
Sources: ABARES; Australian Bureau of Statistics
Australian agricultural exports
The total real value of Australian agricultural exports increased for seven consecutive
years from 2008–09 to 2014–15. This growth can be attributed to domestic and
foreign factors. Global demand for food, particularly from Asian countries, has led to a
rise in Australian exports to Asia. Growth in this region is projected to remain strong.
Productivity growth in Australian agriculture has led to a rise in total farm production
and an ability to compete in world markets despite being a higher-cost producer.
Factors such as changes in seasonal conditions and the value of the Australian dollar
have had a more temporary impact on export growth.
Real value of agricultural exports, Australia, 2000–01 to 2015–16
50
40
30
20
10
2014–15
A$b
2001
–02
2003
–04
2005
–06
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
Source: Australian Bureau of Statistics
continued ...
ABARES
Agricultural commodities – March quarter 2017
23
Economic overview
Recent developments in Australian agriculture
continued
Agricultural export prices and the Australian dollar
Strong global demand was a major factor behind increases in the prices received for
some of Australia’s major agricultural exports. This was evident for livestock, when
the volume of beef exported to the United States increased sharply in 2013–14 and
2014–15, leading to stronger returns to Australian exporters. Export returns have
been more variable for the cropping sector since 2000–01.
Export price indexes for crops and livestock, Australia, 2000–01 to 2015–16
140
Livestock index
Crop & livestock
index
Crop index
120
100
80
60
40
20
index
2011–12
=100
2001
–02
2003
–04
2005
–06
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
Note: Annual indexes are calculated on a chained-weight basis using a Laspeyres index with a
reference year of 2011–12 = 100.
Source: ABARES
From 2013 to the end of December 2016 the depreciation of the Australian dollar
relative to the US dollar increased the competitiveness of Australian exports.
Because exports are predominately traded in US dollars, depreciation of the
Australian dollar increased the amount received by exporters and protected
some exporters from bearing the full burden of less favourable price movements.
The positive influence of the weaker dollar on export returns is reflected in the index
of crop and livestock prices, which accounts for prices received for 11 of Australia’s
agricultural export commodities.
continued ...
24
ABARES
Agricultural commodities – March quarter 2017
Economic overview
Recent developments in Australian agriculture
continued
Crop & livestock price index in Australian and US dollars, 2000–01 to 2015–16
120
A$
US$
100
80
60
40
20
index
2011–12
=100
2001
–02
2003
–04
2005
–06
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
Note: Annual index is calculated on a chained-weight basis using a Laspeyres index with a reference year
of 2011–12 = 100.
Source: ABARES
Input costs
Prices paid by farmers for inputs include costs for materials, services, labour, marketing
and overheads. Over the eight years from 2008–09 to 2015–16, real prices paid by
farmers declined by an average of 2.1 per cent a year. Lower input costs have benefited
farmers by reducing the cost of production.
The decline in real prices paid by farmers was principally the result of a decline in
interest paid, which is about one-tenth of total farm costs. The decline in interest
rates and reduced bank lending following the global financial crisis, and more recently
the strong increase in farm income, have reduced the burden of servicing debt and
increased the rate of debt repayment.
Real farm prices paid index, Australia, 2000–01 to 2015–16
120
110
100
90
80
index
1997–98
=100
2001
–02
2003
–04
2005
–06
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16s
s ABARES estimate.
Note: Annual index is calculated on a chained-weight basis using Fisher’s ideal index with a reference year
of 1997–98 = 100.
Source: ABARES
ABARES
Agricultural commodities – March quarter 2017
25
Agriculture
Crops
CROPS
~0%
to US$190/t
in 2017–18
a
1%
to US$155/t b
in 2017–18
2%
to US$418/t
in 2017–18
c
Wheat
World wheat prices to remain low,
reflecting ample supplies.
Coarse grains
World barley prices to remain low due
to abundant supplies and weak
demand for industrial-use
coarse grains.
Oilseeds
World canola prices to fall due to
increased global supply of oilseeds
with high oil content.
5%
Sugar
3%
Cotton
World sugar prices to increase,
reflecting lower stocks.
to USc 22/lb d
in 2017–18
to USc 80/lb e
in 2017–18
World cotton prices to rise due
to forecast consumption
exceeding production.
a US no. 2 hard red winter, fob Gulf. b France feed barley, fob Rouen. c Europe rapeseed, fob Hamburg.
d Intercontinental Exchange, nearby futures, no. 11 contract (October to September). e Cotlook ‘A’ index.
28
ABARES
Agricultural commodities – March quarter 2017
Wheat
Outlook to 2021–22
Sarah Smith
• Wheat prices are projected to remain low in the short to medium term because
of abundant world supplies and competition from other feed grains on the
global market.
• World production of wheat is forecast to decline in 2017–18 but increase in the
medium term as average yields return to historical trends.
• Australian wheat production and export volumes are forecast to fall from large
volumes in 2016–17.
World indicator price expected to remain low
The world wheat indicator price (US no. 2 hard red winter, fob Gulf) is forecast to
average US$190 a tonne in 2017–18, largely unchanged from the forecast average
for 2016–17. If realised, this will be the lowest annual average price since 2001–02
in real terms.
The world indicator price is expected to continue to face downward pressure in
2017–18 because of large carry-over stocks and relatively high forecast production.
Four consecutive years of record global production have resulted in a significant
accumulation of stocks, particularly in exporting countries. In 2017–18 production is
forecast to fall year-on-year. Assuming average seasonal conditions, yields will return
to trend and production will be the third-highest on record. A major production shock
would be an upside risk to international wheat prices, particularly for milling wheat.
Compared with feed wheat, which faces strong competition from corn and barley,
milling wheat has few substitutes and relatively inelastic demand.
In the medium term, prices are projected to decline further in real terms. The area
planted to wheat is projected to fall in high-cost producing regions in response
to continued low prices. However, global production is projected to continue to
increase over the medium term because of productivity improvements, particularly
in Argentina and the Black Sea region. Ample exportable supplies are expected to
be available to satisfy increasing import demand from a growing world population
unless there is a major disruption to supply over the next five years. A strong US dollar
over the outlook period will continue to affect the competitiveness of US wheat
exports and place downward pressure on the world indicator price.
ABARES
Agricultural commodities – March quarter 2017
29
Wheat
World wheat supply and indicator price, 2007–08 and 2021–22
1,000
500
800
400
600
300
400
200
200
100
Production
Opening stocks
US no. 2 hard red
winter, fob Gulf
(right axis)
2016–17
US$/t
Mt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
World wheat production forecast to fall in 2017–18 but
increase in the medium term
Wheat production is forecast to fall by 2 per cent in 2017–18 to 735 million tonnes,
reflecting falls in planted area and average yields. In 2017–18 the average yield is
expected to fall from the 2016–17 record that was achieved because of favourable
seasonal conditions in most wheat-producing regions.
Over the medium term, the area planted to wheat is expected to remain largely
unchanged. High-cost producers are expected to respond to several years of low
prices by reducing the area planted, particularly in Australia, Canada and the United
States. In other major producing regions, the incentive to plant wheat is expected
to remain strong because of either supportive government policies or favourable
exchange rates relative to the US dollar. Average yields are projected to continue
trending upwards in the medium term, particularly in emerging economies such as
Argentina, the Black Sea region and India. As a result, global production is projected
to increase to more than 760 million tonnes by 2021–22.
In Argentina, wheat production is expected to rise in 2017–18 and increase further
in the medium term to 2021–22. The area planted to wheat is forecast to increase by
2 per cent in 2017–18, following 20 per cent growth in 2016–17. Those changes reflect
supportive regulation enacted by the Argentine Government in 2015, including the
elimination of wheat export taxes and quantitative restrictions. Gains in average
yields are also expected to continue in Argentina over the medium term because of
increased use of fertiliser and pesticides.
In the Black Sea region—Kazakhstan, the Russian Federation and Ukraine—
production is forecast to fall by 7 per cent in 2017–18 to 106 million tonnes.
An increase in area planted is expected to be more than offset by a fall in the
average yield from the 2016–17 record that resulted from exceptional seasonal
conditions. In the medium term, production is projected to rise as a result of yield
improvements despite a relatively stable planted area.
30
ABARES
Agricultural commodities – March quarter 2017
Wheat
EU production is expected to recover in 2017–18. This follows the low-yielding,
poor-quality harvest in 2016–17 that resulted from unfavourably wet conditions.
Increasing yields in the medium term are projected to just offset a reduction in
area planted to wheat.
Indian production is forecast to increase by 2 per cent in 2017–18, largely because of
an increase in the area planted. In late 2016 the Indian Government announced the
withdrawal of all 500 and 1,000 rupee banknotes, estimated to make up 86 per cent
of cash in circulation. With less than eight weeks to exchange the obsolete notes,
acute cash shortages raised concerns that the purchase of seed and fertiliser would
be disrupted. However, good soil moisture during the planting window, following the
return of typical monsoonal conditions, is likely to offset any negative impact.
US wheat production is forecast to fall in 2017–18, reflecting a fall in yields from the
record in 2016–17 and a significant decline in planted area. Area planted to wheat
is forecast to contract to its smallest in 100 years, driven by large declines in the
hard red winter plantings. In the medium term, area planted to wheat is expected to
remain below historical averages.
Forecast change in wheat production, 2017−18
15
10
5
0
–5
–10
–15
–20
–25
–30
6
4
2
0
–2
–4
–6
–8
–10
–12
Mt
Volume change
Percentage change
(right axis)
%
Australia
United
States
Black Sea
region Argentina
India
European
Union
World wheat consumption projected to grow
World wheat consumption is forecast to remain largely unchanged in 2017–18 at
735 million tonnes. Growth in wheat for human consumption is expected to offset
a reduction in feed wheat use. Over the medium term, world wheat consumption is
projected to increase by around 1 per cent a year to 762 million tonnes in 2021–22.
Human consumption represents around two-thirds of total world wheat consumption
and is projected to rise by 1 per cent a year over the medium term. Most of this
increase is expected to stem from population growth, with only a modest increase in
per person consumption. However, patterns of consumption are expected to differ
around the world.
ABARES
Agricultural commodities – March quarter 2017
31
Wheat
Asian countries, excluding China, are expected to make the largest contribution to
the volume increase of wheat for human consumption. Human consumption in these
countries is expected to grow as a result of the projected increase in population
and per person consumption in line with increasing incomes and changing diets.
Sub-Saharan Africa is projected to contribute less to the global increase in human
consumption because of a smaller population base. This is despite the expectation
that per person consumption and population will grow strongly. Industrialised
countries, including China, are expected to make an even smaller contribution to
the change in global human consumption of wheat because population growth is
projected to be more modest and per person consumption to fall.
Contribution to global change in human consumption of wheat, by region,
2017–18 to 2021–22
14
Sub-Saharan Africa
Asia, excluding China
Industrialised countries,
including China
12
Population
10
8
6
4
2
0
%
–0.5
0
0.5
1.0
1.5
2.0
2.5
3.0
Percentage change in per person consumption
Note: Circle size represents the total increase in consumption volume.
Feed wheat consumption is typically the more variable component of total wheat
consumption because of the availability of substitutes. Feed wheat use is forecast to
fall by 5 per cent in 2017–18 to 145 million tonnes. Ample supplies of corn and feed
barley underpin considerable competition in the feed grain market. Total feed grain
demand is projected to grow in the medium term because of a projected increase in
meat and dairy production in major livestock-producing regions. Feed wheat use is
projected to increase moderately by 2021–22, but it will continue to face competition
from other feed grains.
Wheat trade to fall year-on-year but remain historically high
The volume of wheat traded internationally is forecast to fall by 1 per cent in 2017–18
from the record in 2016–17 to 165 million tonnes. Production in major exporting
countries is forecast to fall in 2017–18. However, exportable supplies including
stocks remain historically high.
Over the medium term, improved production is projected to support increased export
volumes in all major exporting countries, especially in the Black Sea region. In 2016–17
the Russian Federation overtook the European Union to become the largest global
exporter of wheat. Russian exports are projected to remain strong over the medium
term because of government investment in port capacity and export infrastructure
combined with a projected expansion in production.
32
ABARES
Agricultural commodities – March quarter 2017
Wheat
Wheat exports from major exporters, 2009–10 to 2021–22 a
180
Argentina
Australia
Canada
United States
European Union
Black Sea region
150
120
90
60
30
Mt
2009–10
2015–16
2021–22z
a Export volume is the three-year average to the year shown. z ABARES projection.
Growing global consumption and low prices are expected to drive increasing wheat
imports over the medium term, particularly in Africa and Asia. These two regions are
net importers of wheat and are projected to increase their wheat consumption over
the medium term.
World wheat closing stocks to remain large
World wheat closing stocks are expected to be largely unchanged over the outlook
period. Increasing global consumption is expected to be met with growth in global
production. The Chinese Government’s grain reserve and price support policies
encourage domestic production of wheat. Chinese domestic production is projected
to remain large and outstrip consumption over the medium term. This will add to
growing stocks. By 2021–22 China is projected to hold 45 per cent of the world’s
stocks. Stocks in the rest of the world are projected to decline in the medium term but
remain large.
The stocks-to-use ratio is projected to decline to 2021–22 because world
consumption is expected to grow while world stocks remain unchanged. However,
the stocks-to-disappearance ratio for major exporters is expected to rise. This is
because stocks in major exporting countries are projected to rise at a faster rate
than domestic consumption plus exports. A high stocks-to-disappearance ratio is
an indication of ample exportable supplies that are more likely to enter the global
market if prices rise markedly. Comparatively, stocks in the rest of the world are more
likely to be consumed domestically.
ABARES
Agricultural commodities – March quarter 2017
33
Wheat
World wheat closing stocks, 2007−08 to 2021−22
250
50
200
40
150
30
100
20
50
10
Mt
Rest of world
China
Major exporters a
Stocks-to-use ratio
(right axis)
Stocks-to-disappearance
ratio for major exporters b
(right axis)
%
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
a Argentina, Australia, Canada, the European Union, Kazakhstan, the Russian Federation, Ukraine and the
United States. b Disappearance defined as domestic consumption plus exports. f ABARES forecast.
z ABARES projection.
Outlook for Australian wheat to 2021–22
Wheat production to increase modestly in medium term
The area planted to wheat is forecast to fall by 1 per cent in 2017–18 to
12.8 million hectares. This is because favourable returns to canola, pulses and
sheep are expected to result in increased competition for planting area. The final
area planted to wheat will depend on climatic conditions leading into and during
the planting window (usually between March and June), when cropping decisions
are made.
Assuming average seasonal conditions, wheat production is forecast to fall from
35 million tonnes in 2016–17 to 24 million tonnes in 2017–18. This reflects yields
returning to trend after exceptional seasonal conditions in most wheat-producing
areas resulted in record yields in 2016–17.
Wheat area and production, Australia, 2010–11 to 2021–22
40
15.0
35
14.5
30
14.0
25
13.5
20
13.0
15
12.5
10
12.0
5
11.5
Mt
million ha
2011
–12
2013
–14
2015
–16
2017
–18f
f ABARES forecast. z ABARES projection.
34
ABARES
Agricultural commodities – March quarter 2017
2019
–20z
2021
–22z
New South Wales
Victoria
Queensland
South Australia
Western Australia
Total area (right axis)
Wheat
In the medium term, the area planted to wheat is projected to contract marginally.
Despite low prices, wheat is an important rotational crop and will continue to be
used in cropping mixes. Total winter cropping area faces competition from livestock
production, particularly of sheep. Favourable returns to lamb and wool are projected
in the medium term. However, wheat production is projected to increase modestly
to 25 million tonnes in 2021–22. This is because a gradual increase in average yields
from productivity improvements is projected to offset the reduction in planted area.
Wheat export shipments to decline
The volume of wheat exports is forecast to fall by 8 per cent in 2017–18 to
21 million tonnes from the 23 million tonne forecast in 2016–17. Record production
is expected to boost export shipments in 2016–17.
World import demand is strong, supported by low prices and poor-quality domestic
harvests in China and India. In the final six months of 2016, Australia exported large
volumes of wheat to India. The Indian Government reduced the wheat import duty
from 25 per cent to 10 per cent in September 2016 before eliminating it completely in
December 2016. These changes were driven by a domestic shortage of milling quality
wheat following the lower-quality harvest and a drawdown in stocks. Milling wheat
demand from India is expected to remain strong until at least March 2017, when the
Indian domestic harvest will commence.
Monthly wheat exports to India, Australia, January 2015 to December 2016
350
35
300
30
250
25
200
20
150
15
100
10
50
5
kt
Australian wheat exports
to India
Indian wheat import duty
(right axis)
%
Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec
2015 2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 2016
ABARES
Agricultural commodities – March quarter 2017
35
Wheat
In 2017–18 the volume of Australian wheat exports is expected to fall but remain
relatively high due to ample supplies from the previous season. The combination
of reduced export volumes and weak international prices is forecast to result in a
9 per cent reduction in the value of exports in 2017–18 to $5.9 billion.
Wheat exports, Australia, 2010–11 to 2021–22
25
10
20
8
15
6
10
4
5
2
Volume
Value (right axis)
2016–17
$b
Mt
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
Towards the end of the outlook period, export volumes are projected to stabilise
at around 17 million tonnes. Demand for milling wheat in China, Indonesia and the
Republic of Korea—Australia’s largest export markets—is expected to strengthen
in line with population growth. However, Australian exports will continue to face
competition from other major exporters. Low international prices are expected to
cause the value of exports to fall to around $4.4 billion in 2021–22 in real terms.
36
ABARES
Agricultural commodities – March quarter 2017
Wheat
Outlook
for wheat
Outlook
for wheat
unit
2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
World
Area
Yield
Production
Consumption
Closing stocks
Trade
Stocks-to-use ratio
Price a
– nominal
– real b
Australia
Area
Yield
Production
Export volume c
Export value c
– nominal
– real d
APW 10 net pool return
– nominal
– real d
million ha
221
225
222
221
220
221
222
222
t/ha
3.30
3.28
3.38
3.32
3.35
3.38
3.40
3.43
Mt
730
737
750
735
738
747
755
762
Mt
715
720
737
735
739
748
754
762
Mt
205
221
234
234
233
233
234
234
Mt
153
164
167
165
167
170
172
175
%
28.6
30.8
31.8
31.9
31.6
31.2
31.0
30.8
US$/t
266
211
190
190
188
190
193
196
US$/t
272
215
190
186
181
179
179
178
’000 ha
12,384
12,793
12,917
12,773
12,709
12,645
12,582
12,519
t/ha
1.92
1.89
2.72
1.88
1.91
1.94
1.97
2.00
kt
23,743
24,168
35,134
23,979
24,300
24,570
24,798
24,987
kt
16,571
15,777
22,784
20,872
18,042
17,268
17,095
17,189
A$m
5,547
5,120
6,479
5,914
5,064
4,855
4,877
4,981
A$m
5,706
5,195
6,479
5,804
4,848
4,535
4,445
4,428
A$/t
326
303
270
277
273
274
277
280
A$/t
335
307
270
271
261
256
253
249
a US no. 2 hard red winter wheat, fob Gulf, July–June. b In 2016–17 US dollars. c July–June years. d In 2016–17 Australian dollars.
f ABARES forecast. s ABARES estimate. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; International Grains Council; US Department of Agriculture
ABARES
Agricultural commodities – March quarter 2017
37
Coarse grains
Outlook to 2021–22
Amelia Brown
• World coarse grain indicator prices are forecast to remain historically low in
2017–18 and over the medium term, reflecting abundant world grain stocks.
• Consecutive years of increasing production have resulted in record world
stock levels.
• Australian coarse grain production and exports are forecast to fall in 2017–18
but to increase over the medium term.
Record supplies to continue to pressure prices
The 2017–18 world coarse grain indicator price (US no. 2 yellow corn, fob Gulf) is
forecast to be US$157 a tonne, largely unchanged from the average price in 2016–17.
The world indicator price for barley (France feed barley, fob Rouen) is forecast to
average 1 per cent higher in 2017–18 at US$155 a tonne. These low prices reflect
abundant world coarse grain supply and relatively weak demand for coarse grains
for industrial use.
World coarse grain indicator prices, 2003–04 to 2021–22
400
France feed barley,
fob Rouen
US no. 2 yellow corn,
fob Gulf
350
300
250
200
150
100
50
2016–17
US$/t 2003 2005 2007 2009 2011
–04 –06 –08 –10 –12
2013 2015 2017 2019 2021
–14 –16 –18f –20z –22z
f ABARES forecast. z ABARES projection.
38
ABARES
Agricultural commodities – March quarter 2017
Coarse grains
Consecutive years of increasing production have resulted in record world stocks
of coarse grains, which is forecast to result in continued low prices. Area planted
to coarse grains in 2017–18 is expected to decline in response to lower prices—
particularly in the United States, Canada and Australia.
In Argentina, devaluation of the peso and removal of export restrictions have
improved the competitiveness of Argentine corn on the world market. This has
resulted in domestic producers increasing production of coarse grains, particularly
corn. Over the medium term, production and exports from Argentina are projected
to increase.
In the five years to 2021–22 the rate of growth of global coarse grain demand,
particularly corn for industrial use, is expected to be slower than between
2006–07 and 2015–16. The expansion of the US ethanol industry will be limited
over the outlook period as a result of US biofuel policies and constraints on ethanol
consumption. Demand for coarse grains for livestock feed has trended upwards since
2009–10, reflecting increasing demand for livestock products in developing countries.
This is expected to be the main source of growth in world coarse grain consumption
over the outlook period.
World coarse grain prices are forecast to remain at historically low levels over the
medium term because growth in supply is projected to increase to balance growing
demand. Demand for livestock feed is expected to increase over the outlook period,
driven predominantly by expanding world livestock industries. Demand for grain for
human consumption is also expected to increase over the medium term in line with
population growth and rising incomes in developing countries.
World coarse grain stocks are projected to fall in the short term—providing some
support for prices—but to recover towards the end of the outlook period.
Production
In 2017–18 world production of coarse grains is forecast to fall by 3 per cent to
1.28 billion tonnes, reflecting a reduction in area planted. Area planted to corn,
particularly in the United States and China, is forecast to contract in response to
lower prices.
Over the remainder of the outlook period, growth in world coarse grain production
is projected to resume and reach 1.37 billion tonnes in 2021–22.
World coarse grain use, 2006–07 to 2021–22
1,600
400
1,400
350
1,200
300
1,000
250
800
200
600
150
400
100
200
50
Production
Consumption
Price US no. 2
yellow corn, fob Gulf
(right axis)
2016–17
$/t
Mt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
39
Coarse grains
Corn
World corn production is forecast to fall by 5 per cent in 2017–18 to 992 million tonnes
because lower prices are expected to lead to a contraction in area planted in major
producing countries. Corn production in the United States is forecast to fall by 7 per
cent to 359 million tonnes in 2017–18. This fall reflects a reduction in area planted
and yields returning to the long-term average after reaching record highs in 2016–17.
In Argentina, area planted to corn in 2017–18 is forecast to fall to 4.4 million hectares.
This is 2 per cent lower than the record set in 2016–17 but would be the
second-highest level on record, resulting from producers continuing to take
advantage of the Argentine Government’s decision to remove export restrictions
and taxes on corn. Average yields in Argentina are assumed to fall slightly from
2016–17, with overall production forecast to be marginally lower.
Brazilian corn production has increased by 70 per cent over the past 10 years,
boosted by record harvests of its safrinha (second-season) crop. The crop is expected
to account for two-thirds of 2016–17 production. Second-season crop yields have
been trending upwards but are more susceptible to production risks than first-season
crop yields. This is because the safrinha crop is planted after the soybean harvest,
and if the soybean harvest is delayed the chance of sufficient rainfall throughout the
safrinha growing season decreases. Safrinha planted area is expected to continue
to increase over the projection period as a result of the Brazilian Government’s
minimum price guarantee programme. Corn production in Brazil is forecast to
increase by around 1 per cent in 2017–18 to a record 86.5 million tonnes.
Corn production, Argentina and Brazil, 2002–03 to 2016–17
140
Brazil
Argentina
120
100
80
60
40
20
Mt
2002
–03
2004
–05
2006
–07
2008
–09
2010
–11
2012
–13
2014
–15
2016
–17f
f ABARES forecast.
Production of corn in China is forecast to fall for the second consecutive year in
2017–18 to around 206.6 million tonnes, reflecting a further decline in area planted.
In 2016–17 area planted to corn fell in response to the Chinese Government’s March
2016 removal of the corn price support scheme. The scheme had resulted in a
large build-up of domestic corn stocks and a sharp increase in imports of cheaper
alternatives such as barley and sorghum.
40
ABARES
Agricultural commodities – March quarter 2017
Coarse grains
Over the medium term, world corn production is projected to increase from 2018–19
onwards to around 1.1 billion tonnes in 2021–22. Production increases are expected
to come mainly from yield improvements because availability of land for crop
expansion in major developed countries is limited. Corn consumption is projected
to increase in line with growing world population and rising incomes in developing
countries, leading to increased demand for meat and consequently for feed grains
in the livestock sectors.
Barley
World barley production in 2017–18 is forecast to decline by 3 per cent, reflecting a
fall in area planted and an assumed return to average yields. Production decreases
in Australia and Canada will be partially offset by production increases in the
European Union.
EU production is forecast to increase by 2 per cent in 2017–18, with yields assumed
to return to average after poor seasonal conditions in 2016–17. Area planted to barley
is forecast to remain largely unchanged from the previous year.
World barley production over the medium term is projected to increase as area
planted to barley increases modestly and average yields continue to trend upwards.
Area planted to barley in Australia, Canada and the European Union is expected to
remain largely unchanged, reflecting low prices. Area planted in Argentina and the
Black Sea region is expected to increase modestly over the medium term, reflecting
supportive government policies. Demand for barley is forecast to increase in line
with world population growth and rising incomes in developing countries, leading
to increased demand for meat and consequently feed grains. Increasing world
beer consumption is expected to result in the continued increase in demand for
malting barley.
Consumption
World consumption is forecast to remain at 1.3 billion tonnes in 2017–18 and continue
to grow over the medium term. This mainly reflects an increase in demand for feed
grains in world livestock production. Industrial use of barley is also expected to grow
but at a slower rate, largely reflecting the increase in demand for malting barley for
beer production.
Corn
World consumption of corn is forecast to increase by only 1 per cent in 2017–18,
largely as a result of the slowdown in use of corn for industrial purposes.
In 2017–18 US corn consumption is forecast to fall marginally from a record high,
reflecting a reduction in demand. Growth in US corn consumption over the medium
term is expected to be driven primarily by demand from the livestock sector as
production of beef, pork and broiler meat continues to increase.
Growth in US corn consumption was strong over the decade to 2015–16, primarily
as a result of the US Government Renewable Fuel Standard (RFS) programme.
The RFS programme ensures US consumption of ethanol will continue to increase,
but the rate of growth is expected to remain relatively low over the medium term.
ABARES
Agricultural commodities – March quarter 2017
41
Coarse grains
Corn consumption, United States, 2002–03 to 2021–22
350
Feed
Industrial
300
250
200
150
100
50
0 Mt
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2021
–22z
z ABARES projection.
Corn consumption in China is forecast to increase by 2 per cent to 231 million tonnes
in 2017–18. This reflects an expected increase in use of corn in livestock feed
following Chinese Government measures to reduce national corn stocks. It removed
the domestic corn price support scheme in early 2016—which improved corn’s
competitiveness—and is paying subsidies to encourage use of domestic corn.
Over the medium term, world consumption of corn is projected to increase by
around 1 per cent a year to 1,046 million tonnes by the end of the outlook period.
This is expected to be driven by growth in world livestock production in response
to growing world population, evolving diets and higher incomes—especially in
developing countries, particularly in China.
Barley
World consumption of barley is forecast to fall by around 1 per cent in 2017–18,
reflecting decreased production and abundant supply of feed grain substitutes,
such as wheat and corn. Demand for malting barley is forecast to remain strong as
beer consumption continues to increase, particularly in East Asia.
Consumption of barley in China is forecast to fall by 13 per cent to 6.1 million tonnes
in 2017–18, reflecting policy changes that encourage use of domestic corn over
imported feed grains. Demand for malting barley remains strong and consumption
is expected to increase in 2017–18.
Over the medium term, consumption of barley is projected to increase by around
1 per cent a year to 152 million tonnes in 2021–22. This growth is expected to be
driven by demand for malting barley as a result of increasing world beer consumption
and increased demand for barley in livestock feed during the outlook period.
42
ABARES
Agricultural commodities – March quarter 2017
Coarse grains
Trade
World trade in coarse grains is forecast to fall by 1 per cent to 184 million tonnes
in 2017–18. Trade in corn and barley is expected to be lower than the high levels
associated with record global production in 2016–17. US corn exports are forecast
to fall by around 13 per cent in 2017–18 to 49 million tonnes. This is expected to be
partially offset by increased exports from Argentina and Brazil. World trade in barley
is forecast to remain unchanged as lower exports from Australia are offset by the
return of EU exports to normal levels after poor seasonal conditions reduced supply
in 2016–17.
Over the medium term, world trade in corn is projected to increase—primarily
reflecting increased demand for livestock feed. World trade in barley is projected to
grow to 33 million tonnes in 2021–22. This mainly reflects expected growth in world
demand for barley for malt production. Demand for barley for use in feed grains is
also projected to grow but at a slower rate than for malt production.
Stocks
World coarse grain closing stocks are forecast to fall by 5 per cent in 2017–18
to 247 million tonnes as continued growth in world coarse grain consumption
outpaces production.
World closing stocks of corn are forecast to fall by 4 per cent in 2017–18 to
217 million tonnes. This fall mainly reflects a drawdown of stocks in China, the
European Union and the United States. World closing stocks of barley are forecast
to fall by 20 per cent in 2017–18 to 19 million tonnes, reflecting forecast lower
production in major producing countries.
Over the medium term, world coarse grain stocks are expected to tighten in the
first three years of the projection period as consumption growth outpaces increases
in production. Towards the end of the projection period, stocks are expected to
increase slightly as projected increases in production exceed consumption.
World coarse grain stocks, 2007–08 to 2021–22
300
Other
Barley
Corn
250
200
150
100
50
Mt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
43
Coarse grains
Outlook for Australian coarse grains to 2021–22
Production to decrease in 2017–18
Total area planted to coarse grains is forecast to fall by 6 per cent in 2017–18 to
5.2 million hectares. This mainly reflects an expected fall in area planted to barley as
growers respond to lower barley prices by shifting production to pulse and oilseed
crops. Increased competition from livestock production is also expected to constrain
area planted to coarse grains. In 2017–18 barley production is forecast to fall by
37 per cent to around 8.5 million tonnes, largely reflecting a return to average yields
following the record highs achieved in 2016–17.
Area planted to grain sorghum is forecast to increase in 2017–18 following a
significant decline in 2016–17. Demand for grain sorghum for ethanol production
is expected to provide some incentive to increase area planted—particularly in
southern Queensland, given that the Queensland Government’s ethanol mandate
came into effect in January 2017.
China’s demand for feed grain is expected to weaken over the medium term.
However, demand for Australian grain sorghum for the production of baijui—
an alcoholic spirit distilled mainly from grain sorghum—is expected to grow,
providing an alternative market.
Over the medium term, area planted to coarse grains is projected to increase to
around 5.7 million hectares by 2021–22. Barley yields are projected to increase
by around 1 per cent a year, reflecting productivity growth, but planted area
is expected to remain relatively stable. Total barley production is projected to
reach 9 million tonnes by 2021–22. Area planted to grain sorghum is forecast
to increase in 2017–18 after falling sharply in 2016–17 in response to higher
cotton prices. Over the medium term, area planted to grain sorghum is forecast to
increase modestly.
Exports
Total coarse grain exports are forecast to fall in 2017–18, reflecting decreased
production. Record high barley production in 2016–17, combined with Australian
barley being competitively priced on the world market, is forecast to lead to record
volumes exported in 2016–17.
In 2016–17 exports of Australian grain sorghum are forecast to fall by around
40 per cent. This reflects a forecast 39 per cent fall in production combined with
lower feed demand in China, Australia’s largest export market. Exports in 2017–18
are forecast to increase in line with increased production.
Australian coarse grain exports are projected to increase gradually over the medium
term to 8.0 million tonnes in 2020–21, mainly reflecting growing world demand for
feed grain in the livestock sector. Demand for malting barley and grain sorghum for
distilling is projected to remain strong over the medium term.
44
ABARES
Agricultural commodities – March quarter 2017
Coarse grains
Outlook
coarse
grains
Outlook
forfor
coarse
grains
unit
2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
World
Area
Yield
Production
corn
barley
Consumption
corn
barley
Closing stocks
Trade
Stocks-to-use ratio
Corn price a
– nominal
– real b
Barley price c
– nominal
– real b
Australia
Area
barley
oats
triticale
grain sorghum
corn
total
Production
barley
oats
triticale
grain sorghum
corn
total
Export volume
Export value
– nominal
– real d
Price – nominal
feed barley e
malting barley g
grain sorghum h
Price – real d
feed barley e
malting barley g
grain sorghum h
million ha
325
320
324
319
323
327
329
333
t/ha
4.02
3.90
4.11
4.02
4.06
4.08
4.11
4.12
Mt
1,306
1,250
1,331
1,282
1,314
1,335
1,351
1,371
Mt
1,014
961
1,040
992
1,013
1,029
1,042
1,055
Mt
142
149
144
140
149
152
154
159
Mt
1,255
1,266
1,307
1,316
1,329
1,336
1,344
1,357
Mt
964
979
1,015
1,021
1,030
1,036
1,041
1,046
Mt
143
146
146
145
148
149
150
152
Mt
245
246
256
247
232
231
237
251
Mt
186
165
186
184
182
190
195
202
%
19.5
19.4
19.6
18.7
17.4
17.3
17.6
18.5
US$/t
174
168
155
157
167
171
177
170
US$/t
178
170
155
154
161
161
163
154
US$/t
204
173
153
155
163
174
177
174
US$/t
209
176
153
152
157
164
164
157
’000 ha
4,078
4,105
4,035
3,500
3,775
3,800
3,900
3,950
’000 ha
854
832
909
900
910
910
910
910
’000 ha
82
117
96
100
100
100
100
100
’000 ha
732
681
441
631
640
645
650
655
’000 ha
60
67
70
61
61
61
61
61
’000 ha
5,806
5,802
5,552
5,192
5,486
5,516
5,621
5,676
kt
8,646
8,593
13,414
8,500
8,700
8,800
8,900
9,000
kt
1,198
1,308
1,879
1,229
1,471
1,485
1,500
1,515
kt
143
195
247
171
171
171
171
171
kt
2,209
2,037
1,208
1,923
1,952
1,968
1,983
1,998
kt
495
439
467
370
372
373
373
373
kt
12,691
12,571
17,215
12,193
12,666
12,797
12,927
13,057
kt
7,756
6,844
8,560
6,307
7,578
7,700
7,860
7,992
A$m
2,697
2,280
2,372
2,106
2,211
2,213
2,280
2,320
A$m
2,774
2,313
2,372
2,067
2,117
2,067
2,078
2,062
A$/t
252
237
179
185
192
194
196
198
A$/t
282
274
213
234
236
239
241
244
A$/t
301
261
213
221
243
248
253
258
A$/t
259
241
179
182
184
182
179
176
A$/t
290
278
213
230
226
223
220
217
A$/t
310
264
213
217
233
232
231
229
a US no. 2 yellow corn, fob Gulf, July–June. b In 2016–17 US dollars. c France feed barley, fob Rouen, July–June. d In 2016–17
Australian dollars. e Feed 1, delivered Geelong. f ABARES forecast. g Gairdner Malt 1, delivered Geelong. h Gross unit value of
production. s ABARES forecast. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; FranceAgriMer; United Nations Commodity Trade Statistics Database
(UN Comtrade); US Department of Agriculture
ABARES
Agricultural commodities – March quarter 2017
45
Oilseeds
Outlook to 2021–22
James Fell
• The world oilseed indicator price is forecast to average lower in 2017–18, reflecting
abundant stocks at the beginning of the year and another year of good harvests in
major exporting countries.
• Over the outlook period to 2021–22 prices are projected to fall because of a
continuation of strong yield gains and area expansion in South America.
• Production is expected to rise over the outlook period due to growth in
South America. This is despite a projected price-led drop in planted area in
other key soybean- and rapeseed-producing countries.
• In Australia, canola plantings are forecast to rise in 2017–18, reflecting better
returns to producers compared with other cropping alternatives.
South American production growth to push prices down
The world oilseed indicator price (US no. 2 soybeans, fob Gulf) is forecast to fall by
2 per cent in 2017–18 to average US$382 a tonne. An increase in supplies (opening
stocks plus production) is expected to affect global soybean prices. This follows
expected bumper 2016–17 oilseed crops in South America, which will be harvested
through to June 2017.
The world canola indicator price (Europe rapeseed, fob Hamburg) is forecast to fall
by 2 per cent in 2017–18 to average US$418 a tonne, reflecting improved supplies
of high oil-bearing oilseeds in major exporting and importing countries. Prices of
vegetable oil are likely to be affected by improved harvests of palm oil in South-East
Asia, following a recovery from earlier El Niño conditions. This is expected to reduce
processing margins and consequently demand for canola.
46
ABARES
Agricultural commodities – March quarter 2017
Oilseeds
Prices in real terms are projected to fall over the medium term despite a small
upward turn towards the end of the outlook period. Continued expansion of area
planted to oilseeds in South America and growth in yields are expected to affect
prices. A small increase in prices towards the end of the period will be supported
by growth in underlying demand for meal and vegetable oil. A reduction in the area
planted to soybean and rapeseed (including canola) is also expected in response to
overall projected prices.
Oilseed prices in real terms are projected to fall but will remain above the
10-year average to 2007–08.
World oilseed indicator prices, 1993–94 to 2021–22
800
Europe rapeseed,
fob Hamburg
US no. 2 soybeans, fob Gulf
700
600
500
400
300
200
100
2016–17
US$/t 1993
–94
1997
–98
2001
–02
2005
–06
2009
–10
2013
–14
2017
–18f
2021
–22z
f ABARES forecast. z ABARES projection.
South America to drive oilseed production over
medium term
World oilseed production is forecast to rise slightly in 2017–18 to 555 million tonnes,
largely due to increases in cottonseed and rapeseed production. Globally,
rapeseed (including canola) production is forecast to increase by 3 per cent
to 70 million tonnes, mainly reflecting an assumed improvement in seasonal
conditions in the European Union.
Over the medium term, global production is projected to continue its long-term
upward trend. Soybeans dominate global oilseed markets. In South America, soybean
producers will continue a long-run trend to increase area planted. Average yields
grew by 2 per cent a year in Brazil and 4 per cent a year in Argentina over the decade
to 2015–16. In Argentina, production growth is expected to be boosted towards the
end of the outlook period when export taxes are lowered. In Brazil, area planted is
projected to expand, but growth in area planted is projected to slow in response
to low prices. In contrast, area planted in the United States is projected to fall in
response to the overall weakening of prices over the medium term.
ABARES
Agricultural commodities – March quarter 2017
47
Oilseeds
Soybean production in Brazil and Argentina, 1997–98 to 2021–22
200
Argentina
Brazil
160
120
80
40
Mt
1997
–98
2000
–01
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2021
–22z
z ABARES projection.
World rapeseed (including canola) production is projected to grow by 1 per cent a
year to 73 million tonnes by 2021–22 as a result of projected growth in yields.
However, world harvested area is projected to be lower over the medium term as
low crop prices relative to sheep and beef cattle encourage a shift to livestock
production where possible, particularly in Australia and Canada.
World rapeseed (including canola) production, 2006–07 to 2021–22
80
Other
Australia
China
Canada
European Union
60
40
20
Mt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
f ABARES forecast. z ABARES projection.
48
ABARES
Agricultural commodities – March quarter 2017
2017
–18f
2019
–20z
2021
–22z
Oilseeds
Crush demand and ample supplies to underpin consumption
World consumption of oilseeds, predominantly for crush (processing use), is forecast
to rise by 2 per cent to 556 million tonnes in 2017–18. This is in response to ample
supplies of oilseeds globally and generally favourable crush margins due to robust
oilseed product demand.
Assumed continued growth in global livestock product demand is forecast to
raise consumption of oilseed meal by 3 per cent in 2017–18 to 326 million tonnes.
Soymeal is the largest component of world oilseed meal, with China as its top
consumer. China’s soymeal consumption grew by an average of 9 per cent a year over
the decade to 2015–16. However, this rate is projected to slow over the medium term
as softer economic growth limits increases in consumption of livestock products.
World vegetable oil consumption is forecast to rise by 2 per cent a year to
190 million tonnes in 2017–18. This reflects an increase in food and industrial
uses consistent with growth in recent years. Global food demand for vegetable
oils has been increasing in line with population growth and rising incomes in
developing economies.
Over the medium term, growing demand for vegetable oils and meal is expected
to provide favourable incentives for processors to increase demand for oilseeds
for crushing. Seed availability is expected to be ample. Consumption of oilseeds
(mainly for crush) is projected to rise by 2 per cent a year to 608 million tonnes
in 2021–22.
For oilseed meals, assumed economic growth in developing economies is projected
to raise demand for livestock products, which require protein meals as an input.
Global demand for vegetable oils for biodiesel and food use is projected to rise over
the medium term. However, growth is projected to slow significantly after 2019–20
as the current biodiesel policy framework in the European Union expires. US biodiesel
production is expected to increase, using animal fats and recycled oils rather than
vegetable oil.
World vegetable oil industrial use, 2006–07 to 2021–22
50
40
30
20
10
Mt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
49
Oilseeds
Trade to rise
World oilseed exports are forecast to increase slightly to 158 million tonnes in
2017–18, supported by ample supplies in major exporting countries and growth in
demand for soybeans in importing countries. World rapeseed (including canola)
trade is forecast to increase slightly to 14 million tonnes, largely due to an increase
in availability in Australia and Ukraine.
Trade in oilseeds over the medium term is expected to be shaped by large harvests
in South America and importers’ crush (processing) needs. World trade in oilseeds is
projected to rise by 1 per cent a year to 167 million tonnes in 2021–22. The reduction
in soybean export taxes in Argentina is expected to increase export volumes from
that country.
Over the outlook period, weak projected growth in demand for rapeseed in
EU biodiesel production will dampen world trade in rapeseed (including canola).
This is because EU processors have shown a preference for imported vegetable oils,
particularly palm oil and soy oil, over seed.
Stocks to fall but remain ample
World closing stocks of oilseeds are forecast to decline slightly to 96 million tonnes
in 2017–18, reflecting a fall in global production and growth in consumption.
Of this total, rapeseed (including canola) stocks are forecast to fall slightly to
5.7 million tonnes. Over the medium term, closing stocks are projected to decline
but remain above the long-term average.
Outlook for Australian oilseeds to 2021–22
Price incentives to support canola plantings in 2017–18
Area planted to canola is forecast to increase in 2017–18, reflecting favourable
expected relative prices in the upcoming planting window. In contrast to wheat and
barley, local canola prices have risen compared with March 2016. However, actual
area planted to canola will depend on the timing of rainfall in autumn, with early
rainfall supporting plantings. Assuming an average yield of 1.3 tonnes a hectare,
production is forecast to fall by 11 per cent to 3.7 million tonnes in 2017–18 after
record yields in 2016–17.
Over the medium term, increases in the sheep flock are projected to reduce area
planted to canola. This follows an initial increase in area planted in 2017–18
in response to strong canola prices. Assuming modest yield growth in line
with historical trends, production is projected to remain largely unchanged at
3.7 million tonnes in 2021–22.
50
ABARES
Agricultural commodities – March quarter 2017
Oilseeds
Prices of wheat, barley and canola, March 2016 to January 2017
600
CAN1 non-GM canola,
fis Kwinana
APW1 wheat, fis Kwinana
F1 feed barley, fis Kwinana
500
400
300
200
100
A$/t
Mar
2016
May
2016
Jul
2016
Sep
2016
Nov
2016
Jan
2017
fis Free in store.
Domestic consumption of canola is projected to continue growing over the medium
term, reflecting local oil and meal demand. However, Australia’s overall oilseed meal
production is insufficient to meet domestic oilseed meal requirements. Over the
medium term, imports of oilseed meal are projected to increase by 1 per cent a
year to 808,000 tonnes, driven by demand from Australia’s growing meat and dairy
industries (see box). However, growth is expected to be slower than in recent years
due to above average cottonseed production.
Canola exports to remain strong
Australian canola exports are forecast to fall by 7 per cent in 2017–18 to
2.8 million tonnes, reflecting lower production. Over the medium term, canola
exports are projected to remain around 2.8 million tonnes, reflecting largely stable
production and steady international demand.
The value of Australian canola exports is forecast to fall by 6 per cent to $1.6 billion
in 2017–18, reflecting lower volumes. Over the outlook period to 2021–22, the
value of Australian canola exports is projected to average $1.5 billion in real
terms—33 per cent above the 10-year average.
ABARES
Agricultural commodities – March quarter 2017
51
Oilseeds
Market for Australian oilseed meals
James Fell
Processing oilseeds transforms the seed into two products, meal and oil. Oilseed meal
is used as a protein source in livestock feed and complements carbohydrate sources
such as feed wheat, barley and grain sorghum. Demand for meal is driven by growth in
the livestock sector. Meal is also used in aquaculture and pet food.
Oilseed meals include soymeal, canola meal, cottonseed meal, copra, palm kernel
meal, peanut meal and sunflower seed meal. Each oilseed meal has different
characteristics (for example, protein content, fibre content and digestibility).
Soymeal prices are consistently higher than rapeseed (including canola) meal on
international markets, and Australian importers prefer soymeal over any other
protein meal.
Soymeal represents a large share of protein meal inputs in the pig and chicken meat
industries as a result of its high crude protein content and high digestible energy
content for those animals. Beef cattle diets comprise high fibre oilseeds and meals
such as whole cottonseed or cottonseed meal. In Australia, the beef feedlot sector’s
proximity to cotton gins and processors increases the attractiveness of cottonseed
and meal because of reduced transportation costs. The main protein meal for the
dairy industry is canola meal, with the majority of the herd in close proximity to major
canola-producing and canola-processing regions in south-east Australia.
Over the decade to 2015–16 Australia’s consumption of oilseed meal has risen by
40 per cent to an estimated 1.4 million tonnes. Soymeal consumption is estimated
at around 782,000 tonnes, canola meal at 415,000 tonnes and cottonseed
meal at around 242,000 tonnes. The estimates for cottonseed meal include the
meal-equivalent volume of whole cottonseed, which can be fed in a raw form
after ginning.
Consumption of oilseed meal, Australia, 2007–08 to 2015–16
1.6
Other
Cottonseed meal
Canola meal
Soymeal
1.4
1.2
1.0
0.8
0.6
0.4
0.2
Mt
2007 2008 2009 2010
–08 –09 –10
–11
2011
–12
2012
–13
2013
–14
2014
–15
2015
–16s
s ABARES estimate.
Note: Cottonseed meal includes meal equivalent of whole cottonseed used as feed.
continued ...
52
ABARES
Agricultural commodities – March quarter 2017
Oilseeds
Market for Australian oilseed meals
continued
Australia produces mainly canola meal and cottonseed meal. Domestic production
of oilseed meals is insufficient to meet demand and so is supplemented by
imports. Soymeal fills the shortfall in local supply. In 2015–16 Australia imported
706,000 tonnes of soymeal (mostly from Argentina) and only negligible volumes
of other oilseed meals.
Australian soymeal imports, by country, 2007–08 to 2015–16
800
Other
Brazil
United States
Argentina
700
600
500
400
300
200
100
’000 t
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
Over the decade to 2015–16 oilseed meal imports increased as protein meal demand
rose with increases in chicken meat, egg and beef feedlot production. However, the
increase in imports was limited by a large increase in domestic cotton production,
which enabled substitution to cottonseed meal.
Australian soymeal imports, by state, 2007–08 to 2015–16
800
Western Australia
South Australia
New South Wales
Queensland
Victoria
700
600
500
400
300
200
100
’000 t
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
continued ...
ABARES
Agricultural commodities – March quarter 2017
53
Oilseeds
Market for Australian oilseed meals
continued
Soymeal is mostly imported into the east coast states, where livestock feeding
industries are based. Victoria is the largest importer of soymeal, with major livestock
feed industries for chicken meat, layer hens, pigs and dairy. New South Wales and
Queensland import significant volumes to meet the needs of the pig, chicken meat
and layer hen industries and the beef feedlot sector.
Outlook
oilseeds
Outlook
forfor
oilseeds
World
Oilseeds
Production
Consumption
Exports
Closing stocks
Indicator price a
– real b
Canola indicator price c
– real b
Protein meals
Production
Consumption
Exports
Closing stocks
Indicator price d
– real b
Vegetables oils
Production
Consumption
Exports
Closing stocks
Indicator price e
– real b
Australia
Production
Exports
Canola
Area
Production
Export volume g
Export value g
– nominal
– real h
Price i
– real h
unit
2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
Mt
Mt
Mt
Mt
US$/t
537
517
147
93
418
522
526
153
89
373
555
546
157
97
390
555
556
158
96
382
568
568
160
96
380
585
585
166
97
380
595
597
166
95
387
604
608
167
92
401
US$/t
428
379
390
375
365
358
358
363
US$/t
424
415
425
418
414
412
420
436
US$/t
434
422
425
410
398
388
388
395
Mt
Mt
Mt
Mt
US$/t
US$/t
299
294
85
15
427
438
306
305
87
17
345
351
320
318
92
18
349
349
324
326
98
16
350
343
331
331
98
15
351
338
341
341
99
15
354
334
348
348
101
15
359
332
354
354
103
14
364
330
Mt
Mt
Mt
Mt
US$/t
US$/t
176
173
77
20
808
827
176
178
75
19
742
754
187
186
78
19
879
879
190
190
80
19
887
870
195
198
82
16
900
865
202
203
86
15
914
862
206
207
89
14
932
861
211
210
91
15
949
860
kt
kt
4,376
2,617
3,923
2,102
5,709
3,258
5,373
3,231
5,175
3,485
5,112
3,418
5,206
3,362
5,286
3,439
’000 ha
kt
kt
2,897
3,540
2,445
2,357
2,944
1,946
2,327
4,144
3,063
2,800
3,690
2,849
2,700
3,629
2,784
2,650
3,633
2,772
2,625
3,671
2,796
2,600
3,709
2,840
A$m
A$m
1,349
1,388
1,097
1,113
1,749
1,749
1,637
1,607
1,573
1,506
1,552
1,450
1,597
1,455
1,685
1,498
A$/t
484
542
530
532
523
518
529
549
A$/t
498
550
530
522
501
484
482
488
a US no.2 soybeans, fob Gulf. b In 2016–17 US dollars. c Rapeseed, Europe, fob Hamburg, July–June. d Soybean meal, cost insurance
and freight, Rotterdam, 45 per cent protein. e Soybean oil, Dutch, free on board ex-mill. f ABARES forecast. g July–June. h In 2016–17
Australian dollars. i Delivered Melbourne, July–June. s ABARES estimate. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; US Department of Agriculture
54
ABARES
Agricultural commodities – March quarter 2017
Sugar
Outlook to 2021–22
Benjamin K Agbenyegah
• The world indicator price for raw sugar is forecast to increase in the short term
to average around US22 cents a pound in 2017–18 as a result of world sugar
consumption exceeding production.
• The world sugar price is projected to fall to average US19 cents a pound, in 2019–20
before rising to US23 cents a pound (all in 2016–17 dollars) in 2021–22 as world
sugar consumption grows faster than production and stocks decline.
• In 2021–22 returns to Australian growers are projected to increase to average
$56 a tonne (in 2016–17 dollars), reflecting higher world prices.
Strong demand to support world sugar prices
The world indicator price for raw sugar (Intercontinental Exchange, nearby futures,
no. 11 contract) is forecast to increase by 26 per cent in 2016–17 (October to
September marketing year) to average US21 cents a pound. In 2017–18 the world
sugar price is forecast to increase by a further 5 per cent to average around
US22 cents a pound. These forecast price rises reflect an expectation that world
sugar consumption will grow faster than production, reducing world stocks and
the stocks-to-use ratio.
Over the medium term, the world sugar price is projected to ease before rising again
to average US23 cents a pound (in 2016–17 dollars) in 2021–22. The price is projected
to decline to US19 cents a pound, in real terms, in 2019–20, which reflects production
exceeding consumption in 2018–19 and 2019–20 and a projected 3 per cent rise in
world opening stocks to 68.9 million tonnes in 2019–20. World sugar consumption and
production are projected to increase over the remainder of the medium term. However,
consumption is projected to grow faster, leading to further reductions in world stocks
and the stocks-to-use ratio.
ABARES
Agricultural commodities – March quarter 2017
55
Sugar
World sugar indicators, 2009–10 to 2021–22 a
200
35
160
28
120
21
80
14
40
7
Mt
2016–17
USc/lb
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
Production
Stocks
Consumption
Price (right axis)
2021
–22z
a Production, consumption and stocks in raw value equivalent and years from October to September.
f ABARES forecast. z ABARES projection.
Favourable prices to drive world sugar production
World sugar production is forecast to be around 177 million tonnes in 2016–17, up
from 173 million tonnes in 2015–16. This forecast reflects an estimated rise in area
planted to cane and beet in Australia, Brazil, China, the European Union and the
United States. Lower production is forecast in India and Thailand because adverse
seasonal conditions in 2015–16 negatively affected cane yields.
In 2017–18 world sugar production is forecast to increase by a further 4 per cent
to 183.1 million tonnes because cane and beet plantings are expected to increase
in response to favourable world sugar prices. Higher production is expected in all
major producing countries.
Over the medium term, world sugar production is projected to grow at an average
annual rate of around 1.6 per cent to reach 198 million tonnes in 2021–22, compared
with 177 million tonnes forecast in 2016–17. This medium-term projection is based
largely on an expected rise in area planted to cane and beet leading to production
growth in Brazil, China, India, the European Union, Thailand and all smaller major
producing countries. Assuming average seasonal conditions, some improvements
are also expected in cane and beet yields and in the sugar content of cane over the
medium term.
Sugar production in Brazil is projected to reach 48 million tonnes in 2021–22, up from
around 40 million tonnes forecast in 2016–17. This projection reflects an expected
increase in sugarcane production and in the share of cane used for sugar rather than
ethanol production.
56
ABARES
Agricultural commodities – March quarter 2017
Sugar
The projected increase in sugar cane assumes that the Brazilian Government will
continue its Prorenova programme. Prorenova encourages the Brazilian sugarcane
industry to expand or renew the area planted to sugar cane by financing the
renovation of old plantations. The government launched Prorenova in 2012 with
a loan package of US$2.2 billion and a goal of renovating or expanding more
than 1 million hectares of sugar cane. In the first three years Prorenova granted
around US$778.3 million in loans and cane production rose by 8 per cent to
667 million tonnes. In 2015–16 the area planted to cane expanded by 18 per cent
to 11.5 million hectares. Sugarcane area in Brazil is expected to increase to
13.5 million hectares in 2021–22.
Cane in Brazil is used to produce sugar and ethanol. The proportions allocated are
influenced by the Brazilian Government’s biofuels policy and sugar–ethanol price
relativities. Ethanol production in Brazil is projected to increase over the medium
term because of the mandatory ethanol blending ratio and a rise in ethanol prices.
The OECD projects ethanol prices will rise to around US$46 a tonne (in 2016 dollars)
in 2022. In the first 10 months of the 2016–17 season (April to March), sugar prices
were high relative to ethanol and the share of cane allocated to sugar production
increased to around 47 per cent from its low of 41 per cent in 2015–16. This allocation
is forecast to remain at 47 per cent for the rest of 2016–17, leading to higher sugar
production. In 2021–22 the world raw sugar price is projected to be 10 per cent above
the forecast average price in 2016–17, compared with 5 per cent for ethanol. This will
lead to a further increase in the sugar–ethanol price ratio. The allocation of cane for
sugar production is expected to increase to 51 per cent by 2021–22. The projected
price rise is expected to be driven by continued strong demand for world sugar
consumption in developing countries.
Sugarcane allocation and sugar production, Brazil, 2009–10 to 2021–22 a
800
80
700
70
600
60
500
50
400
40
300
200
30
20
100
10
Cane allocated to ethanol
Cane allocated to sugar
Sugar production
(right axis)
Mt
Mt
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
a Sugar production is raw value equivalent and years are from March to April. f ABARES forecast.
z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
57
Sugar
In India, sugar production is projected to increase to 35 million tonnes in 2021–22,
compared with around 28 million tonnes forecast in 2016–17. This projection reflects
forecast increased cane plantings, improved productivity and increased allocation of
cane to sugar production, driven largely by India’s sugar and ethanol support policies.
Sugarcane production in India varies widely from season to season depending on
the performance of the Indian monsoon. Over the medium term, India is expected
to invest further in electricity generation and construction of new irrigation dams
to reduce reliance on monsoon rainfall for cane production. Government support
for domestic sugar production is also expected to continue, including support prices
for cane, minimum support prices for raw and refined sugar, export subsidies and
loan facilities.
Cane crush in India is largely used to produce sugar and gur (jaggery or crude,
non-centrifugal lump sugar). The price relativity determines how cane crush
is allocated to produce each commodity. Since May 2016 the wide gap between
gur and sugar prices has narrowed, reflecting stronger sugar prices in 2016–17.
With favourable sugar prices projected over the medium term, cane allocation is
expected to favour sugar production.
Sugar and gur prices, Delhi market, January 2014 to January 2017
50
Gur
Sugar
40
30
20
10
Indian
rupee/kg
Jan
2014
Jul
2014
Jan
2015
Jul
2015
Jan
2016
Jul
2016
Jan
2017
Sugar production in Thailand is projected to grow to around 16 million tonnes in
2021–22, compared with 10 million tonnes forecast in 2016–17. This projection is
based on expected expansion in harvested area and improvements in cane yields.
The continuation of Thai Government policies for sugar is expected to support
increased cane area and yields. Policies include revenue sharing between cane
growers and millers, domestic price support, low-interest loans, and investment
in technology and farm development. In the 10 years to 2014–15 these support
policies contributed to Thailand’s cane crush more than doubling to a record
106 million tonnes, producing 11.3 million tonnes of sugar.
58
ABARES
Agricultural commodities – March quarter 2017
Sugar
In China, sugar production is projected to rise to 14 million tonnes in 2021–22
compared with 10.5 million tonnes forecast in 2016–17. This projection is expected
to be met through the expansion of cane and beet planted area and improved yield
potential. With sugar prices projected to be relatively high over the medium term,
Chinese farmers are expected to increase cane and beet planted area at the expense
of alternative crops. The Chinese Government is also expected to continue investing
in technology and infrastructure improvements to achieve productivity growth.
Sugar production in the European Union is projected to reach 22 million tonnes in
2021–22, up from the 17 million tonnes estimated in 2016–17. This projection assumes
the EU quota system will be removed in October 2017 and the European Union will
continue to support the sugar industry. The EU quota system restricts the amount
of sugar produced by each member state and provides support through a minimum
sugar beet price. Any production in excess of the quota in any one year can only be
used for export, sold for biofuel or other industrial non-food uses or counted against
the following year’s quota. Efficient production systems in France and Germany are
expected to drive higher production over the medium term despite the departure from
the European Union of the United Kingdom—the third-largest EU sugar producer.
World sugar consumption to grow
World sugar consumption is forecast to rise by 3 million tonnes in 2016–17 to around
184 million tonnes, reflecting strong demand for sugar from food-processing and
beverage industries in developing countries. In 2017–18 world sugar consumption is
forecast to remain largely unchanged at 184.2 million tonnes. Growth in consumption
in 2017–18 is expected to be constrained by forecast relatively high world sugar
prices, compared with alternatives such as high-intensity sweeteners and
high-fructose corn syrup.
Over the medium term, world sugar consumption is projected to grow by an average
of 2.3 per cent a year to reach 200 million tonnes in 2021–22. This projection is based
on continued growth in demand for sugar in developing countries, driven by rapid
expansion in the food-processing and beverage industries. The expansion of these
industries in developing countries is supported domestically by rising incomes,
growing populations and urbanisation. Growth in consumption is projected for
Brazil, China, India, Indonesia, the Russian Federation and Ukraine. However, a
decline in consumption is projected in developed markets, particularly in the
European Union and the United States. This is because of a slowdown in population
growth, dietary changes based on increased health consciousness, and nutritional
policies in these countries.
World sugar exports to increase
World sugar exports are forecast to rise by 3 per cent in 2016–17 to 60 million tonnes.
This forecast reflects increased exports from Australia, Brazil and Mexico, which
are expected to be partially offset by declines in exports from India and Thailand.
In 2017–18 world sugar exports are forecast to increase by a further 7 per cent
to 64 million tonnes, driven by continued growth in world sugar production and
import demand.
Over the medium term, world exports are projected to grow at an average annual
rate of 2 per cent to reach around 69 million tonnes in 2021–22. Increases in
world supplies and strong world import demand are projected to support world
sugar exports. Supplies available for export are projected to increase in all
major exporting countries.
ABARES
Agricultural commodities – March quarter 2017
59
Sugar
Lower world sugar stocks
World closing stocks of sugar are forecast to decline by 10 per cent in 2016–17 to
around 66 million tonnes. This reflects an expectation that world consumption will
continue to exceed production. At this stock level, the world stocks-to-use ratio is
forecast to fall by around 4 percentage points to around 36 per cent.
In 2017–18 continued growth in world consumption is forecast to drive world stocks
lower to around 65 million tonnes and result in a decline in the stocks-to-use ratio to
35 per cent.
World sugar stocks are projected to fall to around 63 million tonnes in 2021–22,
assuming growth in world demand continues to outpace supply over the medium
term. The world stocks-to-use ratio for sugar is projected to decline to around
32 per cent in 2021–22.
World sugar stocks, 2009–10 to 2021–22 a
100
50
80
40
60
30
40
20
20
10
Mt
Stocks
Stocks-to-use ratio
(right axis)
%
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
a Stocks are raw value equivalent and years are from October to September. f ABARES forecast.
z ABARES projection.
Returns to Australian cane growers to increase
Returns to Australian cane growers are forecast to increase by 20 per cent in 2016–17
to average $52 a tonne of cane cut for crushing, largely reflecting the forecast rise
in the world sugar price. Higher world prices are forecast to continue in 2017–18,
further driving up grower returns to average $54 a tonne, a rise of 4 per cent.
In 2021–22 the returns to Australian cane growers are projected to average
$56 a tonne (in 2016–17 dollars), based on projected high world sugar prices.
Modest growth in Australian sugar production
Australian sugar production in 2016–17 is estimated to be marginally higher than
in 2015–16 at around 5.1 million tonnes. This forecast largely reflects an estimated
2 per cent growth in cane production to 36 million tonnes as a result of an increase
in harvested area. Average yield is expected to decline slightly because of adverse
seasonal conditions in 2015–16.
60
ABARES
Agricultural commodities – March quarter 2017
Sugar
In 2017–18 Australian sugar production is forecast to rise by a further 1 per cent to
around 5.2 million tonnes because of a forecast increase in cane production from an
expansion in harvested area.
Over the medium term, the area of sugar cane harvested in Australia is projected to
grow by an average of 1 per cent a year to reach 420,000 hectares in 2021–22. This is
7 per cent higher than the 392, 000 hectares forecast for 2016–17. Limited suitable
land close to existing sugar mills and competition for land use from alternative crops
such as horticulture are expected to constrain growth in area planted to sugar cane.
Australian sugarcane production is projected to reach 38 million tonnes in 2021–22.
This projected growth is based on an expansion in planted area and improvements
in cane yields, assuming average seasonal conditions. Reflecting higher cane crush,
Australian sugar production is projected to rise at an average rate of 2.1 per cent a
year over the medium term to reach around 5.6 million tonnes in 2021–22.
Sugarcane area harvested and average cane yield, Australia, 2009–10 to 2021–22
500
100
400
80
300
60
200
40
100
20
’000 ha
Area harvested
Cane yield (right axis)
t/ha
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
Sugar exports from Australia are forecast to be around 4.3 million tonnes in 2016–17,
9 per cent higher than 2015–16 shipments. In 2017–18 Australian sugar exports are
forecast to remain largely unchanged at 4.3 million tonnes. However, the value of
Australian sugar exports is forecast to increase by 41 per cent in 2016–17 to around
$2.6 billion and in 2017–18 by 10 per cent to $2.8 billion as a result of higher world
sugar prices.
Australian sugar exports are projected to be around 4.7 million tonnes in 2021–22,
supported by increased Australian production and strong import demand from the
Republic of Korea, Indonesia and China. The value of exports is projected to reach
around $3 billion (in 2016–17 dollars) in 2021–22, 18 per cent higher than forecast
for 2016–17.
ABARES
Agricultural commodities – March quarter 2017
61
Sugar
Australian sugar production, exports and returns to cane growers,
2009–10 to 2021–22 a
6
60
5
50
4
40
3
30
2
20
1
10
Production
Exports
Return to cane growers
(right axis)
2016–17
$/t
Mt
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
a Production, consumption and stocks are in raw value equivalent and years from October to September.
f ABARES forecast. z ABARES projection.
Outlook
sugar
a
Outlook
forfor
sugar
a
unit
2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
World b
Production
– Brazil
Consumption
Exports
Closing stocks
Stocks-to-use ratio
Price c
– nominal
– real d
Australia e
Production g
Export volume
Export value
– nominal
– real h
Return to cane growers
– nominal
– real h
Mt
181.8
173.3
176.9
183.1
188.8
192.0
196.2
Mt
37.7
38.1
39.6
41.5
43.8
45.5
46.5
198.0
48.0
Mt
178.9
180.9
183.9
184.2
186.7
191.4
198.7
200.0
Mt
55.6
58.5
60.1
64.0
65.0
66.7
68.2
69.0
Mt
80.5
72.9
65.9
64.8
66.9
67.5
65.1
63.1
%
45.0
40.3
35.8
35.2
35.8
35.3
32.7
31.6
USc/lb
13.4
16.7
21.0
22.0
20.8
20.2
22.3
25.4
USc/lb
13.7
16.9
21.0
21.6
20.0
19.0
20.6
23.0
kt
4,572
4,920
5,087
5,161
5,235
5,305
5,434
5,571
kt
3,675
4,140
4,290
4,300
4,420
4,480
4,590
4,710
A$m
1,643
1,823
2,565
2,833
2,910
2,826
2,993
3,411
A$m
1,690
1,850
2,565
2,780
2,786
2,640
2,727
3,032
A$/t
40
43
52
54
54
54
57
63
A$/t
41
44
52
53
52
50
52
56
a Volumes in raw value equivalent. b October–September years. c Nearby futures price, Intercontinental Exchange, New York, no. 11
contract. d In 2016–17 US dollars. e July–June years. f ABARES forecast. g Raw tonnes actual. h In 2016–17 Australian dollars.
s ABARES estimate. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; Intercontinental Exchange; International Sugar Organization
62
ABARES
Agricultural commodities – March quarter 2017
Cotton
Outlook to 2021–22
Benjamin K Agbenyegah
• World cotton prices are forecast to increase over the short term as a result of
world cotton consumption exceeding production.
• In 2021–22 world cotton prices are projected to average around US80 cents a
pound (in 2016–17 dollars), reflecting continued growth in world consumption
driven by strong demand from non-OECD apparel-producing countries.
• Returns to Australian cotton growers are projected to rise to average $592 a bale
(in 2016–17 dollars) in 2021–22, reflecting higher world prices.
• Cotton exports from Australia are projected to increase to around 1 million tonnes
in 2021–22 from a forecast 774,000 tonnes in 2016–17.
World cotton prices to rise
The world indicator price for cotton (Cotlook ‘A’ index) is forecast to rise by
11 per cent to average US78 cents a pound in 2016–17 (August to July marketing
year). This forecast reflects decreased world cotton supplies following a 19 per cent
fall in world production in 2015–16. World stocks are forecast to fall by 6 per cent to
19.7 million tonnes by the end of 2016–17.
In 2017–18 a further decline in world stocks is forecast to result in a 3 per cent rise
in world cotton prices to average around US80 cents a pound. This is the result of
forecast world cotton consumption exceeding production in 2017–18.
Over the medium term, world cotton prices in real terms are projected to fall in
2018–19 to around US76 cents a pound before rising to average around US80 cents
a pound in 2021–22. The fall in the 2018–19 world average price reflects a projected
8 per cent increase in production in 2017–18. However, average growth in world
cotton consumption is projected to continue to outpace production over the medium
term, leading to a significant decline in world stocks and the stocks-to-use ratio. This
projected growth in world cotton consumption is driven by continued strong demand
for raw cotton in non-OECD apparel-producing countries and a projected rise in world
crude oil prices, leading to an increase in polyester prices over the medium term.
ABARES
Agricultural commodities – March quarter 2017
63
Cotton
World cotton supply and indicator price, 2012–13 to 2021–22
60
120
50
100
40
80
30
60
20
40
10
20
Mt
2016–17
USc/lb
Opening stocks
Production
Price (right axis)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
–13 –14 –15 –16 –17f –18f –19z –20z –21z –22z
f ABARES forecast. z ABARES projection.
World cotton production to grow
World cotton production is forecast to rise by 8 per cent in 2016–17 to around
23 million tonnes despite a 4 per cent fall in the area planted to cotton globally.
Improved seasonal conditions in major cotton-producing countries in 2016–17 are
forecast to result in average world lint yields increasing by 13 per cent. Production is
forecast to increase in Australia, Brazil, India, Pakistan and the United States.
In 2017–18 world cotton production is forecast to rise by a further 8 per cent to
around 24.7 million tonnes, driven largely by an 8 per cent increase in the area
planted to cotton. Higher cotton planting is forecast in response to expected
favourable cotton prices, compared with alternatives at the time of planting.
Production is forecast to increase in all major cotton-producing countries
except China, where production is expected to fall. This fall reflects the Chinese
Government’s changes in 2014–15 to domestic support policies for cotton farmers.
Forecast changes in world cotton production, by country, 2016–17 and 2017–18
1.0
2016–17
2017–18
0.8
0.6
0.4
0.2
0.0
Mt
India
Pakistan
United States
64
Australia
Brazil
Turkey
Uzbekistan
ABARES
Agricultural commodities – March quarter 2017
Other
China
Cotton
Over the medium term, world cotton production is projected to grow at an annual
rate of around 2 per cent a year to 28 million tonnes in 2021–22. This projected
growth largely reflects a gradual increase in world cotton plantings in response to
expected favourable returns to cotton production (compared with alternative crops)
and strengthening demand for raw cotton.
Over the medium term, the area planted to cotton worldwide is projected to grow
at an average rate of 1.2 per cent a year to reach 35 million hectares in 2021–22.
Yield improvements will be constrained over this period because of the almost
complete uptake of the current generation of genetically modified varieties. World lint
yields are projected to average 0.8 tonnes a hectare in 2021–22. Production in Brazil,
India, Pakistan and the United States is projected to increase over the medium term.
However, production in China—the world’s second-largest producer—is projected
to continue to decline over the medium term.
World cotton indicators, 2007–08 to 2021–22
30
180
25
150
20
120
15
90
10
60
5
30
Production
Consumption
Price (right axis)
2016–17
USc/lb
Mt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
In India, the world’s largest cotton producer, production is projected to grow over
the medium term as a result of improved yield and quality. The Indian Government is
expected to encourage cotton production through pest control programmes and to
continue construction of irrigation and electricity infrastructure to reduce reliance
on the monsoon for crop performance. Currently India has the lowest average lint
yield among the major producing countries. Government training in the use of
farm machinery in India will also drive productivity gains through the reduction in
labour-intensive operations such as hand-picking cotton.
US cotton production is expected to grow gradually over the medium term, assuming
average seasonal conditions in the major upland cotton-growing regions in the
United States.
ABARES
Agricultural commodities – March quarter 2017
65
Cotton
Production in Pakistan is expected to grow over the medium term, largely as a result
of improvements in lint yields. Adoption of current generation genetically modified
cotton varieties and investment in irrigation and pest control programmes are
expected to improve yields and productivity in Pakistan over the medium term.
Chinese cotton production is projected to decline over the medium term, reflecting
reduced government support payments, rising production costs, low returns to
cotton relative to other crops and constraints on water supply.
World cotton consumption to grow
In 2016–17 world consumption of raw cotton is forecast to increase slightly to
24 million tonnes, constrained by strong competition from synthetic fibres.
Since 2015 relatively low world crude oil prices have resulted in lower prices for
synthetics and increased price competitiveness against cotton. Cotton consumption
is forecast to rise in Bangladesh, China, Turkey and Vietnam but decline in India,
Pakistan and the United States.
In 2017–18 world cotton consumption is forecast to increase by a further 7 per cent
to around 26.1 million tonnes. This forecast rise is supported by forecast higher
competing fibre prices and strong demand for raw cotton from non-OECD
textile and garment industries. Consumption is forecast to rise in all the major
cotton-consuming countries.
World cotton–polyester price ratio and crude oil prices, August 2013 to
January 2017
1.8
120
1.5
100
1.2
80
0.9
60
0.6
40
0.3
20
ratio
US$/barrel
Jan
2014
66
Jul
2014
Jan
2015
Jul
2015
ABARES
Agricultural commodities – March quarter 2017
Jan
2016
Jul
2016
Jan
2017
Cotton–polyester
price ratio
World crude oil
(right axis)
Cotton
World cotton consumption, by country, 2007–08 to 2017–18
30
Other
Vietnam
Bangladesh
Pakistan
India
China
25
20
15
10
5
Mt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
f ABARES forecast.
Over the medium term, world cotton consumption is projected to grow at an average
rate of around 2.4 per cent a year to 28.7 million tonnes in 2021–22. This compares
with a forecast of 24.3 million tonnes in 2016–17. Strengthened demand for raw
cotton in non-OECD apparel-producing countries—Cambodia, India, Pakistan,
Bangladesh, Vietnam, Indonesia, Brazil and Turkey—is expected to drive
consumption. The textile and garment industries in these countries are expanding
rapidly in response to an expected rise in demand for clothing and textiles in Europe,
the United States, Japan and Australia. Crude oil and synthetic fibre prices are
projected to increase over the medium term, with the World Bank projecting crude
oil to reach around US$102 a barrel (in 2016 dollars) in 2022. As a result, in 2021–22
cotton is expected to regain some of the competitiveness lost between 2014–15
and 2016–17.
Raw cotton consumption in China—the world’s largest consumer—is expected to be
constrained by faster growth of imported cotton yarn and textiles and slower growth
in finished garment exports. China is facing strong competition in the international
textile market from neighbouring, low-cost Asian countries such as India, Bangladesh,
Vietnam, Indonesia and Cambodia.
Strong demand to support world cotton trade to 2021–22
World cotton exports are forecast to rise by 1 per cent in 2016–17 to 7.8 million tonnes,
as increases in exports from the United States and Australia more than offset declines
in exports from India and Brazil. Imports are expected to increase in Bangladesh and
Vietnam but decline in Indonesia, Thailand and Turkey.
In 2017–18 world exports of raw cotton are forecast to increase by 6 per cent to
around 8.2 million tonnes, reflecting increased exportable supplies in the United
States, India, Australia, Brazil and Uzbekistan and strong import demand by
Bangladesh, Turkey and Vietnam.
ABARES
Agricultural commodities – March quarter 2017
67
Cotton
Over the medium term, world cotton exports are projected to increase at an annual
rate of around 1.6 per cent to reach 9.2 million tonnes in 2021–22. This increase will
be supported by projected continued strong import demand in non-OECD countries
and increased world cotton production.
In 2021–22 China—the world’s largest importer—is projected to maintain its raw
cotton imports at 894,000 tonnes (the minimum specified under its World Trade
Organization obligations). Despite a significant fall in domestic raw cotton production
and growing demand for high-quality cotton, Chinese raw cotton imports are
constrained by large national stocks in China, a slowdown in the local textile industry
and rapid growth of competition from neighbouring Asian countries.
World cotton stocks to continue to fall
World cotton stocks are forecast to fall by 7 per cent in 2016–17 to 19.7 million tonnes,
driven largely by rising world consumption. Much of this stock run-down is expected
to occur in China, where consumption is forecast to continue to grow and production
of raw cotton to decline. Chinese cotton stocks are forecast to fall by 17 per cent
to 10.5 million tonnes. Cotton stocks in the rest of the world are forecast to rise by
9 per cent to around 9.2 million tonnes. The world stocks-to-use ratio is expected to
be around 81 per cent in 2016–17, 6 percentage points lower than in 2015–16.
In 2017–18 world cotton stocks are forecast to decline by a further 7 per cent to
18.3 million tonnes, based on the expectation that world consumption will continue
to exceed production. The world cotton stocks-to-use ratio is expected to decline to
70 per cent in the same year.
World cotton stocks and stocks-to-use ratio, 2007–08 to 2017–18
30
120
25
100
20
80
15
60
10
40
5
20
%
Mt
2007
–08
2009
–10
2011
–12
2013
–14
f ABARES forecast.
68
ABARES
Agricultural commodities – March quarter 2017
2015
–16
2017
–18f
Rest of world
China
Stocks-to-use ratio
(right axis)
Cotton
Over the medium term, world cotton stocks are projected to continue to decline as
world consumption continues to exceed production. World stocks are projected to
fall over the medium term at an average rate of around 3.4 per cent a year to around
16 million tonnes in 2021–22. This compares with the record 24.3 million tonnes
in 2014–15. The world cotton stocks-to-use ratio is projected to decline further to
around 56 per cent in 2021–22.
World cotton stocks, 2007–08 to 2021–22
30
120
25
100
20
80
15
60
10
40
5
20
Stocks
Stocks-to-use ratio
(right axis)
%
Mt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
Favourable returns to Australian cotton growers
Returns to Australian cotton growers at the gin-gate are forecast to rise by 7 per cent
in 2016–17 to average $590 a bale (227 kilograms) of lint, including the value of
cottonseed and net of ginning costs. In 2017–18 returns to growers are forecast to
increase a further 1 per cent to average $597 a bale. The increased returns in the
short term are largely driven by a forecast increase in world cotton prices.
Over the medium term returns to Australian cotton growers are projected to increase
to average $592 a bale (in 2016–17 dollars) in 2021–22, reflecting the gradual rise of
world cotton prices.
Australian cotton production to recover
Australian cotton production is forecast to rise by 64 per cent in 2016–17 to
1 million tonnes, reflecting the area planted to cotton more than doubling to
557,400 hectares. This significant increase in cotton plantings was driven
by improved availability of irrigation water, high soil moisture in Australia’s
cotton-growing regions and expected favourable returns to cotton relative to
production alternatives. Irrigated cotton plantings are estimated to have increased
by 66 per cent to 348,000 hectares and dryland plantings by more than 248 per cent
to around 209,000 hectares. The increased proportion of dryland plantings (which
are naturally lower yielding) are assumed to result in a 21 per cent decline in lint
yields to average 1.85 tonnes a hectare.
ABARES
Agricultural commodities – March quarter 2017
69
Cotton
Australian cotton production is forecast to increase by a further 9 per cent in
2017–18 to 1.1 million tonnes. Cotton planting is expected to increase by 2 per cent
to 570,000 hectares and lint yield is assumed to be around the long-term average
of 2 tonnes a hectare. This yield assumption reflects an expected reduction in the
share of dryland plantings from current high levels to average levels in 2017–18.
At 11 February 2017 the average storage level of public irrigation dams serving
Australian cotton-growing regions was 55 per cent of capacity, well above the average
of 39 per cent for 11 February 2016. Assuming average seasonal run-off between
March and November 2017, the level of water in irrigation dams should enable
another large Australian cotton planting in 2017–18.
Storage levels of main irrigation dams, at 11 February
120
2016
2017
100
80
60
40
20
Other Queensland
Beardmore (St George)
Fairbairn (Emerald)
Leslie (Darling Downs)
Other New South Wales
Burrendong (Macquarie)
Pindari (Macintyre)
Keepit (Namoi)
Glenlyon (Macintyre)
Copeton (Gwydir)
%
Over the medium term, Australian cotton production is projected to grow at an
average rate of around 1 per cent a year to reach 1 million tonnes in 2021–22.
This projection is well above the 10-year average to 2015–16 of 636,000 tonnes.
Australian cotton production is projected to decline to 970,000 tonnes in 2019–20,
reflecting an assumed return to a long-term average water level in public
irrigation dams.
Cotton lint yields in Australia are projected to remain largely unchanged over the
medium term at around 2 tonnes a hectare. This is because the uptake in Australia
of the current generation of genetically modified cotton varieties is largely complete.
Genetically modified varieties account for more than 98 per cent of total Australian
cotton planting in an average season.
70
ABARES
Agricultural commodities – March quarter 2017
Cotton
Australian cotton planted area and average lint yield, 2007–08 to 2021–22
600
3.0
500
2.5
400
2.0
300
1.5
200
1.0
100
0.5
’000 ha
Area
Lint yield (right axis)
t/ha
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
Australian cotton exports to increase
Australian cotton exports are forecast to increase by 44 per cent in 2016–17 to
774,000 tonnes. This forecast rise is supported by higher cotton production in
2015–16 and 2016–17 and strong world demand for high-quality Australian cotton.
The value of Australian cotton exports is forecast to be around $2 billion in 2016–17,
56 per cent higher than in 2015–16.
In 2017–18 cotton exports from Australia are forecast to increase by a further
37 per cent to around 1.1 million tonnes. The value of Australian cotton exports is
forecast to increase by 35 per cent in 2017–18 to around $2.7 billion.
Australian cotton exports are projected to be around 1 million tonnes in 2021–22.
The value of Australian exports is projected to be around $2.4 billion (in 2016–17
dollars) in 2021–22, 21 per cent higher than forecast in 2016–17.
Cotton production, exports and gin-gate returns, Australia, 2007–08 to 2021–22
1,400
700
1,200
600
1,000
500
800
400
600
300
400
200
200
100
Production
Exports
Gin-gate return a
(right axis)
2016–2017
$/bale
kt
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
a Value of lint and cottonseed, less ginning costs. f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
71
Cotton
Outlookforfor
cotton
Outlook
cotton
unit
2014–15
2015–16 s
2016–17 f
2017–18 f
2018–19 z
2019–20 z
2020–21 z
2021–22 z
Production
Consumption
Mt
25.9
21.0
22.9
24.7
26.4
26.9
27.4
28.0
Mt
24.3
24.2
24.3
26.1
26.6
27.4
28.1
28.7
Exports
Closing stocks
Mt
7.7
7.7
7.8
8.2
8.8
9.0
9.2
9.2
Mt
24.3
21.1
19.7
18.3
18.1
17.5
16.7
16.0
%
100.3
87.1
81.1
70.0
68.0
63.6
59.5
55.9
USc/lb
70.8
70.4
78.0
80.4
79.0
81.7
84.8
88.0
USc/lb
72.5
71.6
78.0
78.8
76.0
77.0
78.4
79.7
’000 ha
197
270
557
570
520
495
515
530
kt
528
629
1,029
1,117
1,019
970
1,009
1,039
kt
681
536
774
1,056
1,080
997
982
1,015
A$m
1,546
1,269
1,976
2,672
2,674
2,506
2,532
2,683
A$m
1,590
1,288
1,976
2,622
2,560
2,341
2,308
2,385
World a
Stocks-to-use ratio
Cotlook ’A’ index
– nominal
– real b
Australia c
Area harvested
Lint production
Export volume
Export value
– nominal
– real d
Gin-gate return e
– nominal
– real d
A$/bale
516
551
590
597
621
630
638
A$/bale
530
559
590
586
595
589
581
a August–July years. b In 2016–17 US dollars. c July–June years. d In 2016–17 Australian dollars. e Value of lint and cottonseed less ginning costs.
f ABARES forecast. s ABARES estimate. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; US Department of Agriculture
72
ABARES
Agricultural commodities – March quarter 2017
665
592
Horticulture
Outlook to 2021–22
Sarah Smith and Andrew Cameron
• The gross value of horticultural production is projected to increase from
$9.3 billion in 2015–16 to $10 billion in 2021–22 (in 2016–17 dollars).
• Horticultural exports are projected to increase in the medium term from
record levels in 2015–16, supported by new and improved market access.
The gross value of Australian horticultural production is projected to increase
from $9.3 billion in 2015–16 to around $10 billion in 2021–22 (in 2016–17 dollars).
The values of fruit and nuts (excluding wine grapes) and vegetables are projected to
grow in the medium term, in response to growing domestic demand for fresh produce
and favourable export opportunities. The value of nursery products, cut flowers and
turf is projected to remain flat in real terms at $1.3 billion to 2021–22.
Production prospects are particularly favourable for irrigated horticultural
products in the short term. Exceptional spring rainfall across much of Australia in
2016 increased water storage levels. The Murray–Darling Basin was at 79 per cent
capacity in late January 2017 compared with 37 per cent at the same time last year.
Since November 2016 general security water allocations were 100 per cent in the
Murray and Murrumbidgee catchment areas.
Gross value of horticultural production, Australia, 2002–03 to 2021–22
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
2016–17
$b
Vegetables
Fruit and nuts (excluding
wine grapes)
Nursery, flowers
and turf
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
–04 –06 –08 –10 –12 –14 –16 –18f –20z –22z
f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
73
Horticulture
Trade agreements to boost horticultural exports
The real value of exports of horticultural products is expected to increase from
$2.7 billion in 2015–16 to $3.3 billion in 2021–22. Under trade agreements with China,
Japan and the Republic of Korea, import tariffs on several horticultural products
have been reduced—increasing the competitiveness of Australian horticultural
exports. In the 12 months after the China–Australia Free Trade Agreement entered
into force in December 2015, horticultural exports to China rose by 68 per cent
compared with the previous 12 months. In the two years since the Korea–Australia
Free Trade Agreement entered into force in December 2014, horticultural exports to
Korea doubled. Australia’s export competitiveness in these key markets is expected
to improve in the medium term because of scheduled further reductions in or
eliminations of import tariffs under the FTAs, new and improved technical market
access and the assumed lower Australian dollar.
Horticultural imports are projected to increase as a result of growing domestic
demand for processed goods. In 2015–16 imports of processed fruit and
vegetables—78 per cent of total fruit and vegetable imports—were valued at
$1.8 billion. However, growth in the value of imports is expected to be moderated
somewhat by a lower Australian dollar.
Trade in some fresh fruit and vegetable products follows a counter-seasonal pattern,
with products being exported during the Australian production season and imported
at other times of the year. Counter-seasonal trade is important because year-round
consumer demand for many perishable fresh fruits and vegetables can be met by
imports when fresh local produce is not available.
Outlook for fruit and nuts
The gross value of Australian fruit and nut production, excluding wine grapes, is
forecast to increase by 2 per cent to $3.7 billion in 2016–17. Over the medium term,
the gross value of fruit and nut production is projected to reach $3.9 billion in real
terms by 2021–22. Much of the projected increase is attributable to growth in the
production of high-value fruit and nuts and in the value of exports. Reductions in
import tariffs resulting from several preferential trade agreements is projected
to boost Australia’s competitiveness in key export markets.
Outlook for fruit
Fruit exports are projected to rise from $1.2 billion in 2016–17 to around $1.5 billion
(in 2016–17 dollars) by 2021–22. The assumed weaker Australian dollar, coupled with
improved export opportunities in Asia following the implementation of scheduled
tariff reductions under free trade agreements with China, Japan and the Republic of
Korea, is expected to continue to stimulate fruit exports and encourage production.
In the five years to 2015–16 the total value of fruit exports grew by over $500 million
to reach $1.1 billion (in 2016–17 dollars), following a decade of contraction between
2000–01 and 2009–10.
China was the largest export market for Australian fruit in 2015–16 ($190 million),
ahead of Hong Kong ($173 million). Hong Kong had been Australia’s largest fruit
market for much of the previous 20 years. China accounted for 18 per cent of fruit
exports by value in 2015–16, up from 9 per cent in 2014–15. Indonesia, Japan,
Singapore and the United Arab Emirates were also major export destinations.
74
ABARES
Agricultural commodities – March quarter 2017
Horticulture
Table grapes were Australia’s highest value fruit export in 2015–16, followed by
oranges, mandarins and cherries. Table grape exports grew steadily in the five years
to 2015–16. Biosecurity restrictions imposed by Vietnam prevented the export of
fresh grapes to Vietnam during the 2015 season. However, in July 2015 the temporary
suspension was lifted and table grape exports to Vietnam resumed. Vietnam was
Australia’s second-largest market in 2013–14, the year before the suspension.
Table grape exports to Japan and China have increased substantially since trade
agreements came into effect and technical market access was agreed in 2014 for
both markets.
Australian table grape exports by destination, 2010–11 to 2015–16
400
Rest of world
Vietnam
Japan
Hong Kong
Indonesia
China
300
200
100
2016–17
$m
2010
–11
2011
–12
2012
–13
2013
–14
2014
–15
2015
–16
In 2015–16 the total value of fruit imports was $1.3 billion, exceeding exports by
more than $200 million. Import growth has been dominated by processed products
such as canned or frozen fruit because domestic processing costs are high. Fresh fruit
exports almost tripled after 2010–11 to reach $948 million (in 2016–17 dollars) in
2015–16 and exceeded the value of fresh fruit imports by $520 million.
Major fresh fruit imports in 2015–16 included the counter-seasonal trade of table
grapes ($66 million), avocados ($64 million) and kiwifruit ($50 million). In 2015–16
processed products made up two-thirds of fruit imports and the largest sources were
New Zealand, the United States and China.
Citrus
Production of oranges fell by 62,000 tonnes between 2012–13 and 2014–15 to
338,000 tonnes, as a result of lower yields. The Australian orange industry has for
some time been shifting from production of valencia oranges for juicing to navel
oranges for the fresh food market, because imports of orange juice concentrate have
lowered the profitability of juicing oranges. This has seen the composition of orange
orchards change—with plantings of navel trees replacing valencia trees—and a
fall in the total number of trees since 2010–11. No new plantings are expected over
the medium term. As a result, orange production is forecast to increase in 2016–17
as yields for new trees improve but to slowly contract to around 315,000 tonnes by
2021–22 as the total number of trees fall.
ABARES
Agricultural commodities – March quarter 2017
75
Horticulture
Mandarin production grew by an average of 2 per cent a year between 2008–09
and 2014–15 as new plantings began bearing fruit. Production is projected to reach
around 130,000 tonnes by 2021–22, compared with 101,000 tonnes in 2014–15.
Citrus exports are forecast to reach 220,000 tonnes in 2017–18, more than a third
higher than in 2015–16, because of increased production of export-quality fruit and
growing demand from Asia. Japan, Hong Kong and China were Australia’s largest
export markets for citrus in 2015–16. Over the medium term, exports are forecast to
continue growing because of higher Asian demand. Trade agreements are scheduled
to gradually remove tariffs on Australian citrus products in the key markets of China
(by 2023) and Japan (by 2024). This will continue to improve the competitiveness of
Australian citrus products.
Tariff elimination schedule for Australian oranges, by importing country,
2014–2024
60
50
40
30
KAFTA a
Republic of Korea base rate
JAEPA b
Japan base rate
ChAFTA
China base rate
20
10
%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
a Seasonal tariff between April and September. b Seasonal tariff between June and November.
ChAFTA China–Australia Free Trade Agreement. JAEPA Japan–Australia Economic Partnership Agreement.
KAFTA Korea–Australia Free Trade Agreement.
Apples
Apple production in Australia fluctuated at just below 300,000 tonnes between
2004–05 and 2014–15 and is projected to remain around this level to 2021–22.
Apple exports more than doubled to 4,700 tonnes in 2015–16, worth around
$12 million. Increased exports to Thailand and the United Kingdom accounted
for half the increase, with growth in exports to Indonesia, Malaysia and the
United Arab Emirates also strong.
Apple imports remain low and reached only 619 tonnes in 2015–16, down
from 751 tonnes the previous year.
76
ABARES
Agricultural commodities – March quarter 2017
Horticulture
Bananas
Australian banana production is forecast to reach 370,000 tonnes in 2016–17,
3 per cent higher than the record estimated in 2015–16. Favourable seasonal
conditions have supported higher yields. Production is projected to rise to 2021–22
to meet the demands of a growing population. Both short- and medium-term
production is subject to risk from disease and extreme weather events.
Panama disease tropical race 4 is a highly destructive fungal disease that causes
affected banana trees to wilt and prevents them from producing marketable
fruit. Fungus spores can survive in soil for many years and therefore are difficult
to eradicate. The disease was discovered on a Tully banana farm in March 2015.
Strict quarantine regulations were implemented to minimise the spread of the
disease, and national production has not been significantly affected. An outbreak of
the disease is a downside risk factor for banana production in the medium term.
The Australian banana industry is largely domestically focused, with minimal
exports. Fresh banana imports are not permitted to Australia because they pose
a biosecurity risk.
Cherries
Cherry exports have grown strongly, increasing in real terms (in 2016–17 dollars)
from $15 million in 2010–11 to more than $75 million in 2016–17. Australia and
South American countries such as Chile have the same growing season and compete
directly. However, lower airfreight costs give Australian exporters to Asian markets a
competitive advantage over South American exporters.
In 2015–16 the pest-free status of Tasmanian cherries resulted in them being traded
at an 80 per cent premium over cherries grown in other states. Tasmanian cherries
were priced at $17.42 a kilo compared with an average of $9.57 a kilo across other
states. The Japanese and Korean markets currently do not allow imports of cherries
grown on mainland Australia due to the risk of fruit fly contamination.
Value of Australian cherry exports, 1999–2000 to 2015–16
80
Tasmania
Rest of Australia
70
60
50
40
30
20
10
2016–17
$m
1999 2001
–2000 –02
2003
–04
2005
–06
2007 2009
–08
–10
2011
–12
2013
–14
2015
–16
ABARES
Agricultural commodities – March quarter 2017
77
Horticulture
Several importing countries only accept cherries and some other fresh fruit after
a temperature-based treatment if the product is grown in areas of Australia not
recognised as being free from fruit flies. New technologies to irradiate traces of fruit
fly have the potential to reduce the cost of eradication and improve ease of export
from the mainland to several markets. Increasing demand from Asia combined with
potentially cheaper forms of fruit fly eradication are projected to result in continued
growth of cherry exports over the medium term.
Outlook for tree nuts
Production of Australian tree nuts, particularly almonds and macadamias, grew
strongly from 2010–11 to 2014–15. Over this period almond production grew
by 83 per cent to 63,000 tonnes and macadamia production by 38 per cent to
40,000 tonnes. Over the medium term, tree nut production is projected to increase
slowly as tree plantings from the late 2000s reach full maturity.
The real value of tree nut exports almost quadrupled to $945 million in the five years
to 2015–16. Nut exports are forecast to fall year-on-year to $760 million in 2016–17
but to remain at the second-highest on record. Renewed competition from the
United States is expected after several years of limited production due to drought
in California. Exports are projected to recover over the medium term to around
$900 million in 2021–22 (all in 2016–17 dollars).
Australian tree nut exports, 2005–06 to 2021–22
1,000
Other nuts
Pecans
Walnuts
Macadamias
Almonds
800
600
400
200
2016–17
$m
2005–06
2010–11
2015–16
2021–22z
z ABARES projection.
Almonds
Australian almond production expanded rapidly in the five years to 2015–16,
resulting from large plantings in 2006 and 2007. Around 80,000 tonnes of kernel
were produced in 2015–16. Production is expected to reach more than 90,000 tonnes
by 2021–22 as recent plantings reach maturity.
The Australian almond industry is export oriented, with two-thirds of production
exported in 2015–16. Australia is now the second-largest almond exporter in
the world. However, in 2015–16 Australia exported only around 55,000 tonnes
of kernel—less than 10 per cent, by volume, of US exports. India and Spain were
Australia’s largest export markets in that year.
78
ABARES
Agricultural commodities – March quarter 2017
Horticulture
Australian almond prices increased by 60 per cent between mid 2014 and mid 2015
because water scarcity in California constrained production. Prices are expected to
weaken over the medium term, assuming water supplies in California are replenished
and production recovers. Growth in global almond consumption is expected to
continue, supporting Australia’s exports in the medium term. Exports are forecast to
increase to around 65,000 tonnes by 2021–22.
The European Union is the largest consumer and importer of almonds and has been
an important market for Australian almonds since 2005–06. In November 2015 the
Australian Government and the European Commission agreed to begin the process
of working towards a free trade agreement. However, the reduction or elimination of
import tariffs is unlikely to result in a significant competitive advantage for Australia
over the United States, because the import tariff on Australian almonds is already low
and equal to the rate imposed on imports from the United States.
Australian almond exports, by volume, 2005−06 to 2015−16
60
Rest of world
United States
United Arab Emirates
India
European Union
50
40
30
20
10
kt
2005
–06
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
Note: Volume is expressed in kernel weight.
Macadamias
Macadamia production was steady at around 30,000 tonnes in the 10 years to
2013–14. More recent plantings increased production in 2014–15 to 40,000 tonnes,
and production is projected to continue to expand over the medium term.
Australia is the largest global exporter of macadamias. China is the largest market for
Australian macadamias, valued at $55 million in 2015–16. Under the China–Australia
Free Trade Agreement, the tariff rate on macadamia nuts is scheduled to decrease
from the base rate of 24 per cent to zero in 2019. In January 2017 the Chinese
Government announced it would reduce tariffs on global macadamia imports
from 24 per cent to 19 per cent. However, the ChAFTA tariff applied to Australian
macadamia imports will be lower at 9.6 per cent, allowing Australia to maintain its
competitive advantage in the Chinese market.
ABARES
Agricultural commodities – March quarter 2017
79
Horticulture
Tariff applied to macadamias imported into China, 2014 to 2021
30
Most-favoured nation tariff
Tariff under ChAFTA
25
20
15
10
5
%
2014
2015
2016
2017
2018
2019
2020
2021
ChAFTA China–Australia Free Trade Agreement.
Outlook for vegetables
The gross value of vegetable production is estimated to have increased in 2015–16
to $3.7 billion. Vegetable production is projected to reach more than $4 billion
by 2021–22 because of growing domestic market requirements resulting from
population growth and export demand.
Gross value of Australian vegetable production, 2002–03 to 2021–22
5
Other
Carrots
Onions
Mushrooms
Tomatoes
Potatoes
4
3
2
1
2016–17
$b
2003
–04
2006
–07
2009
–10
2012
–13
s ABARES estimate. z ABARES projection.
80
ABARES
Agricultural commodities – March quarter 2017
2015
–16s
2018
–19z
2021
–22z
Horticulture
The value of vegetable exports increased by 16 per cent to $349 million in
2015–16, reflecting growth in the volume of potato, carrot and asparagus exports.
Improved access to key export markets, coupled with opportunities generated by
tariff reductions from trade agreements negotiated in the previous three years,
assisted recent growth in exports and are expected to continue to do so. The value of
vegetable exports is forecast to rise by 10 per cent to $385 million in 2016–17 and is
projected to increase steadily to over $500 million in 2021–22 in real terms.
In 2015–16 almost 70 per cent of Australia’s vegetable exports were fresh.
Carrots, potatoes, asparagus and onions contributed most to the value of fresh
vegetable exports. Singapore, the United Arab Emirates, Japan and Malaysia were
the major export destinations. The value of fresh vegetable exports in 2015–16
was over $230 million, more than twice that of fresh vegetable imports.
Fresh vegetable imports increased by 9 per cent to around $85 million in
2015–16. Garlic, mushrooms and counter-seasonal trade of asparagus made up
much of this value. Most of these fresh vegetables originated in China or Mexico.
Processed potatoes and other processed products dominate Australia’s total
vegetable imports, which increased by 9 per cent to just over $1 billion in 2015–16.
Potatoes
Australian potato production contracted slowly over the 15 years to 2014–15 to
1.2 million tonnes. This was largely because of lower demand for potatoes from the
domestic processing industry, which in 2014–15 was estimated to use more than
half of Australia’s domestic production. Competition from processed potato imports
is expected to remain high in the medium term. As a result, potato production is
projected to fall slowly to around 1.1 million tonnes in 2021–22 as the domestic
processing sector continues to contract.
The price of potatoes (brushed white) doubled between mid September 2016
and mid January 2017, following more than a year of unchanged prices. Poor
seasonal conditions are expected to have constrained production in some of the
major potato-producing regions. Heavy rainfall and localised flooding occurred
in north-west Tasmania throughout much of 2016 and in the SA Riverlands and
Murray regions in October 2016. Fresh potatoes cannot be imported in Australia
because of the biosecurity risks. As a result, limited domestic supply of fresh product
cannot be supplemented with additional imports, and supply shocks can cause
domestic prices to rise in the short term. Production is expected to recover and prices
are expected to fall back to average levels in the coming months.
ABARES
Agricultural commodities – March quarter 2017
81
Horticulture
Potato price index, Australia, January 2014 to January 2017
250
200
150
100
50
index
Jan
2014
Jul
2014
Jan
2015
Jul
2015
Jan
2016
Jul
2016
Jan
2017
Note: Prices are for brushed white potatoes in 20-kilogram bag.
Source: Data Fresh
Brussels sprouts
Brussels sprout exports have grown strongly since 2014–15. Increased demand
from Asia and a lower Australian dollar resulted in export prices doubling in real
terms in the 10 years to 2015–16. Improved export opportunities facilitated by tariff
reductions are also expected to have contributed to the recent export growth. Since
the Korea–Australia Free Trade Agreement came into effect in December 2014, the
import tariff applied to Australian brussels sprouts has fallen progressively from
27 per cent to 11.5 per cent in 2017. The Republic of Korea now accounts for a large
share of Australia’s brussels sprout exports and is expected to remain a key market
over the medium term, with the tariff scheduled to be eliminated by 2019.
Australian brussels sprout exports, by destination, 2013 to 2016
80
70
Rest of world
Republic of Korea
Korea–Australia Free
Trade Agreement
came into force
60
50
40
30
20
10
2013
82
2014
2015
ABARES
Agricultural commodities – March quarter 2017
2016
Nov
Feb
May
Aug
Nov
Feb
May
Aug
Nov
Feb
May
Aug
Nov
Feb
May
Aug
kt
Horticulture
Outlook
horticulture
Outlook
for for
horticulture
unit
2014–15
$m
8,689
9,193
9,527
9,826
10,142
10,493
10,854
11,225
$m
8,938
9,327
9,527
9,642
9,710
9,801
9,891
9,979
$m
3,512
3,649
3,737
3,843
3,976
4,112
4,253
4,399
$m
3,613
3,702
3,737
3,772
3,807
3,841
3,876
3,911
$m
3,350
3,675
3,885
4,041
4,184
4,332
4,485
4,643
$m
3,446
3,728
3,885
3,965
4,006
4,047
4,087
4,128
$m
343
364
376
390
407
424
442
461
$m
353
369
376
383
390
396
403
410
Nursery, cut flowers and turf
– nominal
– real a
$m
1,252
1,264
1,276
1,289
1,301
1,339
1,377
1,415
$m
1,287
1,282
1,276
1,265
1,246
1,251
1,255
1,258
Other horticulture nei b
– nominal
– real a
$m
232
241
252
263
274
285
296
307
$m
238
245
252
258
262
266
270
273
$m
2,060
2,671
2,635
2,823
3,074
3,270
3,507
3,754
$m
2,119
2,711
2,635
2,770
2,943
3,054
3,196
3,338
$m
755
1,072
1,150
1,235
1,331
1,431
1,535
1,644
$m
776
1,088
1,150
1,212
1,275
1,337
1,399
1,461
$m
293
344
385
411
450
491
534
578
$m
302
349
385
403
431
458
486
514
$m
734
930
760
803
852
904
957
1,012
$m
754
944
760
788
816
844
872
900
$m
12
15
20
22
25
29
33
37
$m
12
15
20
22
24
27
30
32
$m
266
310
320
352
415
415
449
484
$m
274
315
320
346
398
388
409
a In 2016–17 Australian dollars. b Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other
miscellaneous horticultural products. f ABARES forecast. s ABARES estimate. z ABARES projection. nei Not elsewhere included.
Sources: ABARES; Australian Bureau of Statistics
430
Gross value
– nominal
– real a
Fruit and tree nuts (excl. grapes)
– nominal
– real a
Vegetables
– nominal
– real a
Table and dried grapes
– nominal
– real a
Exports
– nominal
– real a
Fruits
– nominal
– real a
Vegetables
– nominal
– real a
Tree nuts
– nominal
– real a
Nursery
– nominal
– real a
Other horticulture b
– nominal
– real a
2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
ABARES
Agricultural commodities – March quarter 2017
83
Australian wine exports
Outlook to 2021–22
Andrew Cameron
• The value of Australian wine exports is forecast to increase to $2.37 billion in
2016–17, supported by strong demand for Australian wine in China and Hong Kong.
• Over the medium term, the value of Australian wine exports is projected to peak in
2017–18 before declining because of increased competition from Chile, Argentina
and South Africa.
The Australian wine industry is export focused. Around two‑thirds of Australia’s
wine production is exported, making Australia one of the world’s largest wine
exporters after Spain, Italy, France and Chile. Australia exports large volumes of
red and white wine in bottles and in bulk, as well as relatively smaller amounts
of sparkling wine and fortified wines.
Australia’s major wine export markets in 2015–16 included Canada, China, the
European Union, Hong Kong, New Zealand and the United States. Together, these
markets accounted for almost 90 per cent of the value of Australia’s wine exports.
The European Union accounted for 26 per cent of the total export value, with exports
to the United Kingdom making up 65 per cent.
In 2015–16 the value of Australia’s wine exports rose by 10 per cent to $2.18 billion
despite a 2 per cent decline in volume. The average export unit value of wine
shipments increased by 13 per cent to $3 a litre.
The increase in the value of wine exports in 2015–16 was driven by demand
from China, with exports to that market increasing by 55 per cent in value terms.
Exports to Canada, Hong Kong and New Zealand also grew, in both value and volume
terms. Higher unit values more than offset a fall in volume to lead to overall growth
in the value of exports to the United States.
84
ABARES
Agricultural commodities – March quarter 2017
Australian wine exports
Change in Australian wine exports to major markets, 2015–16
60
Value
Volume
50
40
30
20
10
0
%
Canada
Hong Kong
China
United
Kingdom
New Zealand
United States
Rest of
European Union
Total exports
Value of Australian wine exports, by market, 2015–16
United States
22%
China
19%
United Kingdom
17%
Rest of European Union 9%
Canada
9%
Hong Kong
6%
New Zealand
4%
Other
13%
Australian wine facing strong competition in the
United States
The United States was the largest export market for Australian wine in 2015–16,
accounting for $477 million or 22 per cent of the total value of wine exports.
In 2015–16 in value terms bottled red wine accounted for around 60 per cent of
Australian wine exports to the United States and bottled white wine 30 per cent.
Australia is the second‑largest supplier of wine to the United States by volume behind
France, and the third‑largest by value behind Italy and France. The United States
imports Italian and French wine primarily for the high-end restaurant market.
Australia supplies the lower end of the market and competes with Argentina, Chile
and US producers. Since 2011 bottled Australian red and white wine has had the
lowest import unit value of any major supplier to the United States.
ABARES
Agricultural commodities – March quarter 2017
85
Australian wine exports
The value of Australian exports to the United States increased by 3 per cent in
2015–16, driven by higher unit values for bottled white wine exports. Total export
values fell in the first half of 2016–17 and are forecast to result in the value of
Australian wine exports to the United States falling by around 2 per cent in 2016–17.
In the first five months of 2016–17, the volume of Australian wine imported by the
United States was down by 10 per cent from the same period in 2015–16. In contrast,
the volume of Chilean wine was up by 38 per cent.
In the medium term, Argentina and Chile’s share of the US wine market is expected
to continue to grow. The volume and value of Australia’s exports to the United States
have trended downward since 2010–11. Over the same period, import volumes and
unit values (in US dollars) of bottled wine from Argentina and Chile have remained
largely unchanged.
Unit value of US bottled red wine imports, by major supplier, 2010 to 2016
14
France
Italy
Spain
Argentina
Australia
Chile
12
10
8
6
4
2
2016
US$/L cif
2010
2011
2012
2013
2014
2015
2016
Note: 2016 data are January to October.
China forecast to become largest market by value
China and Hong Kong continued to grow in importance as markets for Australian
wine exports in 2015–16. Exports to China increased by 55 per cent to $416 million
in 2015–16, making China Australia’s second‑largest export market ahead of the
United Kingdom. Exports to Hong Kong, Australia’s sixth‑largest market, rose by
4 per cent to $142 million. In 2016–17 China is forecast to overtake the United States
to become Australia’s largest wine export market.
In the 10 years to 2015–16, the value of Australian exports to China and Hong Kong
increased almost 480 per cent. During the same period, the value of Australian wine
exports to all other markets fell by over 50 per cent. Exports to China and Hong
Kong have added a cumulative $2.8 billion to the value of Australian wine exports
in the 10 years to 2015–16, reversing the downward trend in the value of Australia’s
wine exports that began in 2006–07. The China–Australia Free Trade Agreement is
expected to further improve the competitiveness of Australian wine in China and
support further export growth (see box).
86
ABARES
Agricultural commodities – March quarter 2017
Australian wine exports
Australian wine under the China–Australia Free Trade Agreement
The China–Australia Free Trade Agreement (ChAFTA) entered into force on
20 December 2015. The agreement sets out tariffs on Australian wine, which will
progressively fall to zero by 1 January 2019. The tariff rates in 2017 are 5.6 per cent
for bottled and sparkling wine imports and 8 per cent for bulk wine imports.
The reduction in wine import tariffs is expected to improve the competitiveness
of Australian wine in China, particularly against French and American imports.
China does not have a free trade agreement with either country.
Tariff reduction schedule for Australian wine under ChAFTA, 2015 to 2019
Base rate
(%)
20 Dec
2015
(%)
1 Jan
2016
(%)
1 Jan
2017
(%)
1 Jan
2018
(%)
1 Jan
2019
(%)
Bottled wine a
14
11.2
8.4
5.6
2.8
0
Bulk wine
20
16
12
8
4
0
Sparkling wine
14
11.2
8.4
5.6
2.8
0
Wine
type
a Bottled wine classified as containers holding 2 litres or less.
Index of value of Australian wine exports and total value of exports, selected
countries 2006–07 to 2015–16
800
4,000
700
3,500
600
3,000
500
2,500
400
2,000
300
1,500
200
1,000
100
500
index
2006–07
=100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
–07 –08 –09 –10 –11 –12 –13 –14 –15 –16
Total value of
exports (right axis)
China
Hong Kong
Canada
United States
United Kingdom
2016–17
$m
Bottled red wine accounted for more than 85 per cent of the value of Australian wine
exports to China and Hong Kong in 2015–16. Shiraz, cabernet sauvignon and blends
containing the two varieties accounted for over 60 per cent of bottled red wine
exports by volume. In 2015–16 Australia was the second‑largest supplier of bottled
wine to the two countries (around 15 per cent by volume) behind France, which
accounted for around 40 per cent of the market. Australian bottled wine competes in
the premium end of the Chinese market with wine from France and the United States.
Between 2012 and 2015 Australia achieved the highest average import unit value in
this market.
ABARES
Agricultural commodities – March quarter 2017
87
Australian wine exports
China’s demand for bottled wine continues to grow at a remarkable pace. The volume
of bottled wine imports grew by 65 per cent between 2011 and 2015. In the first
nine months of 2016 China imported more bottled wine than in the whole of 2015.
The value of Australian wine exports to China is forecast to increase by 40 per cent
in 2016–17. Continued expansion of the Chinese middle class and the high quality and
value perceptions of Australian wine are expected to support Australian exports over
the medium term. However, growth is projected to slow as competition intensifies in
China from other suppliers such as Chile, Argentina and South Africa. This is expected
to lead to the value of Australian wine exports to China falling in real terms from
2018–19 onwards.
Exports to the European Union continue to decline
The United Kingdom was the third‑largest market for Australian wine exports in
2015–16, accounting for $371 million. This represented a 1 per cent fall in value
from 2014–15. In contrast, export volume declined by 7 per cent. This largely
reflects exports of bulk red wine falling by 12 million litres.
Australian wine exports to the remaining EU countries collectively accounted
for $203 million over the same period. This represents a fall of 2 per cent in value
terms and 3 per cent in volume terms. Bulk wine accounted for over 80 per cent of
Australian export volumes to the United Kingdom in 2015–16 and over 70 per cent of
volumes exported to the rest of the European Union.
Exports of Australian wine to the European Union (including the United Kingdom)
declined in value every year in the 10 years to 2015–16. This was a result of a shift
to lower-valued bulk wine exports and competition from other countries.
Value of Australian wine exports to the European Union, 2006–07 to 2015–16
1,800
Rest of European Union
United Kingdom
1,500
1,200
900
600
300
2015–16
$m
2007
–08
88
2009
–10
2011
–12
ABARES
Agricultural commodities – March quarter 2017
2013
–14
2015
–16
Australian wine exports
The effect of Brexit on Australian wine exports over the medium term is uncertain.
However, a sharp appreciation of the Australian dollar against the British pound
in the first quarter of 2016–17 coincided with lower than average export volumes.
In the first quarter of 2016–17 the average value of the Australian dollar was
17 per cent higher against the British pound than it was in 2015–16. This contrasts
with the average value of the Australian dollar against the euro, which was 4 per cent
higher over the same period. Exports to the United Kingdom are forecast to fall by a
further 1 per cent in 2016–17. In contrast, exports to the rest of the European Union
are forecast to recover by around 3 per cent, driven by increased demand for bottled
white wine.
Canada
Australian wine exports to Canada increased by 12 per cent in 2015–16 to
$199 million, the second consecutive year of growth. Bottled red and white wine
accounted for 83 per cent of the value of wine exports to Canada. The average unit
price of Australian bottled wine exports to Canada was $5.68 a litre in 2015–16.
In contrast, exports of bottled wine to the United States averaged $4.25 a litre.
The market for imported bottled wine has expanded steadily in Canada. In the
five years to 2015, the total volume of wine imported by Canada grew at an average
of 2 per cent a year and the value grew (in real terms) by an average of 3 per cent
a year. Australia was the fourth‑largest supplier of bottled wine to the Canadian
market in 2015–16, behind Italy, the United States and France. Australian bottled
wine competes in the premium and mid‑tier markets in Canada along with Spain,
France, Argentina, Portugal and South Africa. Australian wine in Canada is relatively
cheaper than French and Spanish wine, which should support the competitiveness
of Australian exports in 2016–17.
Outlook for Australian wine exports
The value of Australian wine exports is forecast to increase by 8 per cent in 2016–17
to $2.37 billion. This will be driven by continued demand growth in China and
Hong Kong combined with a modest recovery in exports to the European Union
(excluding the United Kingdom) and further growth in exports to Canada.
In 2017–18 Australian wine exports are forecast to grow by a further 5 per cent to
$2.5 billion. Growth in the Chinese market is projected to slow as a result of increased
competition from other major exporters, particularly the United States and Chile.
Over the medium term, Australian wine exports are projected to decline in real
terms to $2.34 billion in 2021–22, compared with $2.5 billion in 2017–18. Unit export
values and volumes are projected to fall, largely because of increased competition
from low-cost producers such as Chile, Argentina and South Africa. Competition
for the Chinese market from major exporters is expected to be particularly strong
and lead to the value of Australian exports to China falling in real terms from
2018–19 onwards.
ABARES
Agricultural commodities – March quarter 2017
89
Agriculture
Livestock
LIVESTOCK
~0%
to 540 Ac/kg
in 2017–18
a
3%
Cattle
Australian cattle prices to remain
high as herd rebuilding offsets
weaker export returns.
Lamb
Strong restocker demand is
expected to support lamb prices.
to 600 Ac/kg b
in 2017–18
6%
to 1,440 Ac/kg c
in 2017–18
7%
Wool
Firming export demand is expected
to result in higher wool prices.
Dairy
Milk prices to rise, reflecting firmer
global demand for dairy products.
t0 47 Ac/L d
in 2017–18
a Australian weighted average saleyard price of beef cattle. b Australian weighted average saleyard price of lamb.
c Eastern Market Indicator price, clean equivalent. d Australian average farmgate milk price.
ABARES
Agricultural commodities – March quarter 2017
91
Beef and veal
Outlook to 2021–22
Jack Mullumby
• Australian saleyard prices to decline over the medium term as a result of rising
competition in major export markets.
• Average seasonal conditions are assumed to support herd rebuilding.
• Australian beef production and export volumes are expected to expand gradually
to 2021–22.
• Demand for Australian live cattle is projected to remain relatively robust,
supported by strong income growth in major export markets.
Cattle prices to fall in the medium term
The weighted average saleyard price of beef cattle is forecast to increase by
7 per cent in 2016–17 to 540 cents a kilogram (dressed weight), mainly reflecting
a limited supply of cattle for slaughter from a relatively small opening inventory
of 23.3 million head. Cattle supplies have also been restricted by herd rebuilding,
following an improvement in seasonal conditions in major cattle-producing regions
across Australia in the first half of 2016–17.
Assuming average seasonal conditions in 2017–18, herd rebuilding is expected to
continue to provide support for Australian prices, particularly for young cattle.
However, lower beef prices in Australia’s major export markets are forecast to place
downward pressure on producer prices for cows and heavy steers. Overall, the
weighted average saleyard price is forecast to remain high in 2017–18 at around
540 cents a kilogram.
Over the medium term, Australian cattle prices are projected to remain relatively
strong but decline in real terms to average 465 cents a kilogram (in 2016–17
dollars) in 2021–22. The supply of cattle for slaughter in Australia is expected to
rise slowly over this period, reflecting an expansion of the national herd. Increasing
competition in international markets for Australian beef is also projected to weaken
export returns.
92
ABARES
Agricultural commodities – March quarter 2017
Beef and veal
Weighted average saleyard price and export unit value, Australia, 2008–09
to 2021–22
800
8.0
600
6.0
400
4.0
200
2.0
2016–17
c/kg (dw)
Saleyard price
Export unit value
(right axis)
2016–17
$/kg
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
Cattle slaughter and beef production
Australian beef and veal production is forecast to fall by 13 per cent to
2.0 million tonnes (carcase weight) in 2016–17. A 15 per cent contraction in cattle
and calf slaughter to 7.5 million head will be partially offset by slaughter weights
averaging around 3 per cent higher than the previous year.
Assuming average seasonal conditions in 2017–18, herd rebuilding is expected
to continue to limit the supply of cattle and calves for slaughter to around
7.5 million head. The share of cows and heifers slaughtered is also forecast to remain
low, resulting in relatively higher average slaughter weights and an increase in
Australian beef and veal production of around 3 per cent to 2.1 million tonnes.
Australian slaughter is projected to rise gradually over the next five years to
8.8 million head in 2021–22, 17 per cent above the 2016–17 forecast. Increased cow
and heifer turn-off is expected to result in lower average slaughter weights over this
period, offsetting some of the increase in slaughter. Australian beef production is
projected to expand by around 3 per cent a year between 2017–18 and 2021–22 to
reach 2.3 million tonnes.
ABARES
Agricultural commodities – March quarter 2017
93
Beef and veal
Cattle and calf slaughter and average slaughter weights, Australia, 2007–08
to 2021–22
12
300
10
250
8
200
6
150
4
100
2
50
million
head
Cattle and calf slaughter
Average slaughter
weights (right axis)
kg
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
Cattle herd to expand over the short to medium term
The forecast sharp reduction in Australian cattle slaughter in 2016–17 is expected to
result in an expansion of the national beef cattle herd by 3 per cent to 24 million head
by 30 June 2017.
Assuming average seasonal conditions for the short to medium term, Australian
producers are expected to increase their cattle holdings, driving an increase in
the national herd. However, a relatively small opening cow and heifer inventory
in 2016–17 is expected to restrict the rate of expansion over the medium term by
limiting the number of calves added to the herd. Between 2016–17 and 2021–22,
the national beef cattle herd is forecast to expand by around 2 per cent a year and
reach 26.6 million head in 2021–22.
Beef exports to fall and then rise
The value of Australian beef and veal exports is forecast to fall to $7.1 billion
in 2016–17. This represents a 16 per cent contraction compared with 2015–16.
Beef export volumes are also forecast to fall to 985,000 tonnes (shipped weight),
with lower slaughter and beef production limiting export supplies. Exports to the
United States are forecast to fall sharply in 2016–17, leaving Japan with the largest
share of Australian beef exports at 26 per cent of the total volume.
Over the medium term, expanding beef production is projected to lead to an increase
in Australian beef exports. However, average export unit values are expected to fall
over this period as rising competition in major export markets places downward
pressure on export returns. In 2021–22 the value of Australian beef and veal exports
is projected to be around $7.1 billion (in 2016–17 dollars).
94
ABARES
Agricultural commodities – March quarter 2017
Beef and veal
Beef and veal exports, Australia, 2007–08 to 2021–22
1,500
Other
China
Korea, Republic of
United States
Japan
1,200
900
600
300
kt (sw)
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
Japan
In 2016–17 Australian beef exports to Japan are forecast to fall by 3 per cent to
260,000 tonnes. The United States is expected to continue regaining market share
in Japan, particularly for fresh and chilled beef. This follows Japan’s relaxation of
age restrictions on US beef in 2013. In the first half of 2016–17 Japanese imports of
fresh and chilled beef from the United States accounted for 47 per cent of total fresh
and chilled beef imports, compared with 36 per cent over the same period in the
previous year.
Over the medium term, falling beef production in Japan is expected to result in
increased beef imports. However, competition from the United States is projected
to strengthen, further reducing Australia’s share of the market. Australian beef
exports to Japan are forecast to fall in 2017–18 by 2 per cent to 255,000 tonnes
before declining to around 240,000 tonnes by 2021–22.
United States
Australian beef exports to the United States are forecast to fall by 42 per cent in
2016–17 to 195,000 tonnes (shipped weight) and by a further 2.6 per cent in 2017–18
to 190,000 tonnes. The forecast declines reflect reduced demand for imported
manufacturing beef. Expansion in the US cattle herd is forecast to result in increased
cow slaughter, the primary source of domestically produced lean manufacturing beef
in the United States.
Over the medium term, Australian beef exports to the United States are forecast to
rise gradually to around 210,000 tonnes in 2021–22. US demand for imported beef is
expected to remain weak over this period due to an increasing supply of domestically
produced lean manufacturing beef.
ABARES
Agricultural commodities – March quarter 2017
95
Beef and veal
Over the outlook period, competition for Australian beef in the US market is also
expected to increase from other exporting nations, including Brazil. Imports from
Brazil resumed in September 2016 following the removal of disease-related import
bans on Brazilian product in July 2016. Volumes shipped from Brazil have initially
been small, but average unit values have been considerably lower than those for
Australian beef. In the December 2016 quarter the average import unit value of
Brazilian beef was US$4.01 a kilogram, 33 per cent below the Australian average of
US$6.00 a kilogram.
Average import unit values for beef, United States, January 2016 to
December 2016
7
Australia
All suppliers
Brazil
6
5
4
3
2
1
US$/kg
Feb
2016
Apr
2016
Jun
2016
Aug
2016
Oct
2016
Dec
2016
Republic of Korea
Australian exports to the Republic of Korea are forecast to increase by 4.5 per cent
in 2016–17 to 197,500 tonnes. The increase reflects strong demand for imported beef
in Korea, driven by robust income growth. In 2016 Korean gross domestic product
increased by around 3 per cent. Over the same period Korean beef imports rose by
16 per cent year-on-year and imports from Australia rose by 7 per cent.
Over the short to medium term Australian beef exports to Korea are projected to
gradually increase, rising to 206,000 tonnes in 2017–18 and reaching 232,000 tonnes
in 2021–22. Consumer demand for beef is expected to continue to rise in Korea over
the medium term because of relatively strong income growth. However, Korean beef
production is projected to continue to decline and result in higher import volumes.
The United States is expected to supply most of the increase.
China
Australian beef exports to China are forecast to fall to 99,000 tonnes in 2016–17.
The forecast reflects limited supplies of beef available for export from Australia and
strong competition from Brazil and Uruguay, South America’s largest exporters.
In the first half of 2016–17 Chinese imports of Brazilian beef rose by 48 per cent and
imports from Uruguay by 28 per cent. Over the same period, Chinese import unit
values of Australian beef averaged US$5.40 a kilogram, 21 per cent above the average
of US$4.45 a kilogram for Brazilian beef and 66 per cent above the Uruguayan average
of US$3.24 a kilogram.
96
ABARES
Agricultural commodities – March quarter 2017
Beef and veal
Over the short to medium term, Australian beef exports to China are expected to rise,
reflecting the projected increase in the volume of beef available for export over this
period. In 2017–18 exports to China are forecast to increase to 100,000 tonnes before
expanding to around 126,000 tonnes in 2021–22. Australia’s share of the Chinese
market for imported beef is projected to continue to fall during this period, with
increased Chinese imports to be supplied by South America.
Live exports to recover over the medium term
In 2016–17 Australian live feeder and slaughter cattle exports are forecast to decline
by 18 per cent to 915,000 head. Over this period export unit values are forecast to
average around $1,230 a head, representing a 7 per cent increase on the previous
year. This would be the highest average on record in real terms. The 2016–17 value
of Australian live feeder and slaughter cattle exports is forecast to fall by around
12 per cent to $1.1 billion. Indonesia is expected to continue as the largest market for
Australian live cattle, accounting for over half of the value of the trade.
Australian live cattle exports are projected to increase over the short to medium
term, rising to around 950,000 head in 2017–18 before reaching 1.05 million head
in 2021–22. Indonesia is expected to remain the primary market for Australian live
cattle exports, with strong income growth expected to continue to support relatively
robust demand.
Indonesia’s share of Australian live cattle exports is expected to decline over the
medium term. Live cattle exports to Vietnam and other smaller markets such as
China are projected to increase. However, Chinese import protocols restrict live
imports to cattle sourced from southern Australia. This trade is not expected to
compete directly with the northern Australian cattle trade, the primary source of
Vietnamese and Indonesian imports. The first sea shipment of live Australian cattle
was exported to China in February 2017.
Live feeder and slaughter cattle exports and average export unit value, Australia,
2008–09 to 2021–22
1,500
1,500
1,200
1,200
900
900
600
600
300
300
’000
head
2016–17
$/head
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
Live exports
Export unit value
(right axis)
2021
–22z
f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
97
Beef and veal
Outlook
Outlookfor
forbeef
beefand
andveal
veal
unit
2014–15 2015–16 s
2016–17 f
2017–18 f
2018–19 z
2019–20 z
2020–21 z
2021–22 z
523
Saleyard price a
– nominal
– real b
Cattle numbers cd
– beef cattle c
Slaughterings
Production e
Consumption per person
Export volume g
– to China
– to Japan
– to Korea, Rep. of
– to United States
Export value
– nominal
– real b
Live feeder/slaughter cattle exports
– nominal
– real b
c/kg
364
505
540
540
536
531
527
c/kg
375
513
540
530
513
496
480
465
million
27.4
26.1
26.6
27.2
27.8
28.4
29.0
29.4
million
24.6
23.3
24.0
24.5
25.1
25.7
26.3
26.6
’000
10,103
8,796
7,450
7,525
7,750
8,000
8,300
8,750
2,296
kt
2,662
2,344
2,033
2,091
2,156
2,181
2,216
kg
27.5
24.7
23.4
24.9
26.3
26.0
25.7
25.4
kt
1,376
1,196
985
1,000
1,010
1,025
1,045
1,095
kt
129
129
99
100
101
108
115
126
kt
294
265
260
255
250
248
243
240
kt
165
189
198
206
213
220
227
232
kt
470
336
195
190
195
200
205
210
$m
9,040
8,495
7,100
7,195
7,295
7,435
7,610
8,005
$m
9,298
8,619
7,100
7,061
6,984
6,945
6,935
7,117
’000
1,295
1,114
915
950
1,015
1,025
1,033
1,050
$m
1,163
1,280
1,124
1,167
1,237
1,239
1,239
1,249
$m
1,197
1,299
1,124
1,145
1,184
1,157
1,129
1,111
a Dressed weight. b In 2016–17 Australian dollars. c At 30 June. d Includes dairy cattle. e Carcase weight. f ABARES forecast. g Fresh, chilled and frozen, shipped
weight. s ABARES estimate. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; Meat & Livestock Australia
98
ABARES
Agricultural commodities – March quarter 2017
Sheep meat and wool
Outlook to 2021–22
Peter Berry
• Saleyard lamb and sheep prices are forecast to rise in 2016–17 and 2017–18 as a
result of restocker demand, reduced turn-off and strong export demand.
• The Australian Eastern Market Indicator price of wool is forecast to rise in 2016–17
and 2017–18 before easing in real terms as wool production increases over the
medium term.
• The national sheep flock is forecast to increase to 73.6 million head in 2016–17
and to continue increasing to around 83 million head by 2021–22.
Lamb prices to rise on strong restocker demand
In 2016–17 Australian lamb prices are forecast to increase by 10 per cent to average
585 cents a kilogram, driven by reduced slaughter and strong restocker demand
following greatly improved seasonal conditions in spring 2016.
In 2017–18 lamb prices are forecast to rise by a further 3 per cent to average
600 cents a kilogram. Continued flock expansion is expected to support domestic
saleyard lamb prices, assuming average seasonal conditions and despite a slight
increase in slaughter. Growing export demand, particularly from the Middle East
and the United States, and an assumed lower Australian dollar are also expected
to support lamb prices.
Over the remainder of the outlook period, saleyard lamb prices are projected to
remain relatively high but to ease from 2018–19 in response to a projected increase
in lamb supplies. Saleyard prices are projected to decline to 507 cents a kilogram
(in 2016–17 dollars) in 2021–22.
ABARES
Agricultural commodities – March quarter 2017
99
Sheep meat and wool
Lamb saleyard price and slaughter, Australia, 2002–03 to 2021–22
25
750
20
600
15
450
10
300
5
150
million
head
Lamb slaughter
Lamb saleyard price
(right axis)
2016–17
c/kg
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2121
–22z
z ABARES projection.
Sheep prices to rise
Sheep prices are forecast to increase by 20 per cent to 380 cents a kilogram in
2016–17, reflecting strong demand for flock rebuilding and increased retention of
breeding ewes.
In 2017–18 sheep prices are forecast to increase by 4 per cent to 395 cents a
kilogram. This forecast reflects an expected continuation of low sheep turn-off and
firm restocker demand, assuming average seasonal conditions. Prices for sheep,
particularly productive breeding ewes, are expected to remain relatively high as
a result.
Over the remainder of the outlook period, saleyard prices are projected to decline
gradually as sheep numbers and turn-off increase. In 2021–22 sheep prices are
projected to ease to 329 cents a kilogram (in 2016–17 dollars).
Sheep slaughter and saleyard price, Australia, 2002–03 to 2021–22
15
500
12
400
9
300
6
200
3
100
million
head
2016–17
c/kg
2003
–04
2006
–07
2009
–10
2012
–13
z ABARES projection.
100
ABARES
Agricultural commodities – March quarter 2017
2015
–16
2018
–19z
2121
–22z
Sheep slaughter
Sheep saleyard price
(right axis)
Sheep meat and wool
Wool prices to rise
The Australian Eastern Market Indicator (EMI) wool price is forecast to rise by
8 per cent in 2016–17 to around 1,360 cents a kilogram, largely driven by stronger
processor demand for fine wool set against limited supplies. Excellent seasonal
conditions in 2016 have improved sheep nutrition, resulting in production of stronger
and slightly broader wools. This has slightly reduced the proportion of fine wool in
the national clip and contributed to higher average prices for these wools.
In 2017–18 the EMI is forecast to rise by a further 6 per cent to average 1,440 cents a
kilogram, supported by expected moderate growth in export demand. Strengthening
economic growth in major wool-consuming countries such as the United States and
growing consumer demand in China are expected to result in increased demand for
Australian wool, particularly fine apparel wool.
Eastern Market Indicator wool price, Australia, weekly, 6 July 2012 to
6 January 2017
1,500
50
1,200
40
900
30
600
20
300
10
c/kg clean
EMI
EMI (USD)
Bales offered
(right axis)
’000 bales
Jul
2012
Jan
2013
Jul
2013
Jan
2014
Jun
2014
Jan
2015
Jun
2015
Jan
2016
Jun
2016
Jan
2017
Over the medium term, the EMI is projected to decline in real terms to
1,262 cents a kilogram (in 2016–17 dollars) in 2021–22. This projection is in
response to global supplies of fine apparel wool increasing, largely driven by
increased Australian production.
Flock rebuilding increases sharply
In the first half of 2016–17 a strong improvement in seasonal conditions resulted in
excellent pasture growth in Australia’s major sheep-producing regions. This resulted
in a sharp increase in flock rebuilding activity, greater retention of sheep and lambs
and lower turn-off through saleyards. Yardings between July and December 2016
were 24 per cent lower year-on-year for sheep and 4 per cent lower for lambs.
As a result, the national flock is forecast to increase by 7 per cent to around
73.6 million head by June 2017.
ABARES
Agricultural commodities – March quarter 2017
101
Sheep meat and wool
In 2017–18, assuming average seasonal conditions, graziers are expected to
continue to increase their sheep numbers but at a slower rate than the previous
year. The national flock is forecast to rise by a further 4 per cent to around
76.6 million head by the end of June 2018.
Sheep flock, Australia, 2002–03 to 2021–22
125
100
100
80
75
60
50
40
25
20
million
head
Lambs
Non-breeding adult
sheep (wethers)
Ewes
Share of ewes in adult
flock (right axis)
%
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2121
–22z
z ABARES projection.
The national flock is projected to continue increasing over the projection period but
at a slower rate as turn-off and slaughter increase. The Australian sheep flock is
projected to reach around 83 million head by 2021–22.
Lamb production to fall before rising over the medium term
Lamb slaughter is forecast to fall by 3.2 per cent to 22.4 million head in 2016–17
as graziers rebuild their flocks. Lamb production is forecast to fall by 2.5 per cent
to 503,000 tonnes in 2016–17, with higher than average carcase weights partially
offsetting the impact of lower slaughter.
In 2017–18, assuming average seasonal conditions and continued flock rebuilding,
lamb slaughter is forecast to increase by 1 per cent to 22.6 million head and
production to increase by 1 per cent to 507,000 tonnes. Lamb slaughter is projected
to continue increasing throughout the projection period, reflecting the expanding
national flock and a subsequent increase in lamb numbers. In 2021–22 lamb slaughter
is projected to be around 25.3 million head and lamb production 569,000 tonnes.
102
ABARES
Agricultural commodities – March quarter 2017
Sheep meat and wool
Mutton production to remain relatively low
Sheep slaughter is forecast to fall by 20 per cent in 2016–17 to 6.5 million head.
The greater retention of sheep for breeding is expected to reduce slaughter
availability. As a result, mutton production is forecast to fall by 20 per cent to
158,000 tonnes in 2016–17.
In 2017–18 sheep slaughter is forecast to be unchanged at 6.5 million head
as the national flock expands. Mutton production is forecast to fall slightly to
156,000 tonnes for the year, reflecting an assumed return to average seasonal
conditions and slightly lower slaughter weights.
Over the medium term, sheep slaughter is projected to remain relatively low as
producers continue to retain breeding ewes. Sheep slaughter is projected to grow
slowly to around 7.1 million head in 2021–22, and mutton production is projected
to increase to around 171,000 tonnes.
Shorn wool production to grow
Shorn wool production is forecast to increase by 5 per cent to 341,000 tonnes greasy
in 2016–17. This reflects the greatly improved seasonal conditions in the first half
of the year, which are expected to drive a sharp increase in sheep numbers and an
increase in average fleece weights.
In 2017–18 shorn wool production is forecast to increase by 4 per cent to
353,000 tonnes greasy. This reflects an expected increase in the number of sheep
shorn as a result of the expanding national flock, together with a forecast increase in
the number of wethers (non-breeding sheep kept for wool production) in response
to higher wool prices. Partly offsetting this is a forecast fall of 0.5 per cent in average
fleece weights as a result of an assumed return to average seasonal conditions
in 2017–18.
Shorn wool production and price, Australia, 1997–98 to 2021–22
1,000
1,500
800
1,200
600
900
400
600
200
300
Shorn wool production
EMI (right axis)
2016–17
Ac/kg clean
kt
1997
–98
2000
–01
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2021
–22z
z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
103
Sheep meat and wool
Over the medium term, growth in the number of sheep shorn is expected to slow and
shorn wool production is projected to reach 392,000 tonnes in 2021–22. The average
cut per head is forecast to remain relatively static at around 4.53 kilograms, assuming
average seasonal conditions, over the projection period.
Lamb exports to fall but to rise over the medium term
In 2016–17 Australian lamb exports are forecast to fall by 3 per cent to
253,000 tonnes (shipped weight), reflecting lower lamb slaughter and production.
Despite lower export volumes, lamb export earnings are forecast to increase by
2 per cent to $1.8 billion—reflecting higher export unit values.
In 2017–18 the volume of lamb exports is forecast to increase by 0.5 per cent to
around 255,000 tonnes as a result of increased lamb production. Lamb export
earnings are forecast to rise by 3 per cent to $1.86 billion.
Over the remainder of the outlook period, the projected increases in lamb slaughter
and production are expected to drive further increases in exports. In 2021–22
Australian lamb exports are forecast to grow to around 289,000 tonnes, valued at
$1.8 billion (in 2016–17 dollars).
Australian lamb exports, by major destination, 2002–03 to 2021–22
300
Other
United States
Middle East
China
250
200
150
100
50
kt
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2021
–22z
z ABARES projection.
United States
The United States is Australia’s largest single-country market for lamb in value and
volume terms. Over the five years to 2015–16 exports grew strongly and reached a
record 63,000 tonnes, valued at $617 million.
In the first half of 2016–17 lamb exports to the United States fell by 12 per cent
year-on-year to 27,000 tonnes, as a result of weaker US economic growth and
lower Australian supplies. For the year as a whole, Australian lamb exports to the
United States are forecast to fall by 8 per cent to 58,000 tonnes and the value is
forecast to fall by 6 per cent to $580 million.
104
ABARES
Agricultural commodities – March quarter 2017
Sheep meat and wool
In 2017–18 and over the remainder of the outlook period, Australian exports of lamb
to the United States are projected to grow moderately to reach 60,000 tonnes in
2021–22. This forecast increase reflects assumed strengthening economic growth
in the United States and increasing Australian supplies.
Middle East
The Middle East has been a major growth market for Australian sheep meat exports
over the past decade in response to growing incomes, an expanding middle class and
large expatriate populations.
In 2016–17 Australian lamb exports to the Middle East are forecast to fall by
2 per cent to 66,000 tonnes, reflecting lower supplies of Australian lamb and the
effect of lower oil revenues on incomes in some countries in the region.
In 2017–18 lamb exports to the Middle East are forecast to grow by 5 per cent to
69,000 tonnes as export demand and Australian export supplies grow again. Over the
remainder of the outlook period, lamb exports to the Middle East are forecast to grow
moderately—reflecting an assumed improvement in economic growth in the region
and a forecast increase in Australian supplies. Australian lamb exports to the region
are projected to reach 73,000 tonnes in 2021–22.
China
China is a major destination for Australian sheep meat exports—reflecting a large
population, rising incomes and steady growth in consumer demand. Australian exports
to China face strong competition from local sheep meat supplies and NZ lamb.
In 2016–17 Australian lamb exports to China are forecast to increase by 3 per cent to
44,000 tonnes and by a further 3 per cent to 45,000 tonnes in 2017–18. This growth
is the result of a fall in exports from New Zealand (the world’s largest supplier), as a
result of recent dry conditions and an ongoing trend of declining ewe numbers.
Over the medium term, projected growth in Chinese consumer demand for sheep
meat is expected to result in moderate growth in Australian lamb exports to China.
Australian exports to China are forecast to grow to around 50,000 tonnes in 2021–22.
New Zealand maintains a strong advantage in market access
New Zealand is the world’s largest exporter of sheep meat and Australia’s main
competitor in world markets. New Zealand maintains a significant advantage in
access to the major markets of the European Union and China. In the European Union,
New Zealand has access to a country-specific import quota of 228,254 tonnes (carcase
weight equivalent). In contrast, Australian sheep meat exports to the European Union
face an import quota of 19,186 tonnes (carcase weight equivalent), which is almost
fully utilised each year. Under its free trade agreement with China, New Zealand has
had tariff-free access for sheep meat exports from 1 January 2017. In contrast, in
2017 Australian sheep meat exports to China face tariffs ranging from 8 per cent to
15.3 per cent. Under the China–Australia Free Trade Agreement, these tariffs will be
phased out over the period to 1 January 2023.
ABARES
Agricultural commodities – March quarter 2017
105
Sheep meat and wool
Despite New Zealand’s strong advantage in access to some high-value markets,
its sheep meat production and exports have been in decline over the past decade.
Beef + Lamb New Zealand forecast total NZ lamb slaughter to fall by 2.7 per cent in
2016–17 to 19.35 million head, largely reflecting a declining sheep flock.
Over the medium term, NZ lamb production and exports are projected to decline
slowly, reflecting an ongoing shift towards other farm enterprises. Despite the
projected decline in NZ exports to the European Union, Australian sheep meat
producers will be unable to increase exports to the region given the EU quota
limitations and large out-of-quota tariffs.
Mutton exports to remain relatively low
In 2016–17 Australian mutton exports are forecast to fall by 20 per cent to around
125,000 tonnes (shipped weight), reflecting lower mutton production. In 2017–18
mutton exports are forecast to fall by a further 3 per cent to around 122,000 tonnes
as ewes continue to be retained for breeding and flock rebuilding gathers pace.
Over the medium term, mutton exports are projected to grow slowly from 2018–19
as an expanding national flock increases the availability of sheep for slaughter.
In 2021–22 mutton exports are projected to reach around 136,000 tonnes, valued
at $575 million (in 2016–17 dollars).
Australian mutton exports, by destination, 2002–03 to 2021–22
200
Other
North America
China
Middle East
150
100
50
kt
2003
–04
2006
–07
2009
–10
2012
–13
z ABARES projection.
106
ABARES
Agricultural commodities – March quarter 2017
2015
–16
2018
–19z
2021
–22z
Sheep meat and wool
Live sheep exports to grow moderately over the
medium term
In 2016–17 Australia’s live sheep exports are forecast to increase marginally as
a result of a small rise in the availability of sheep for export. In the six months to
December 2016, exports were 1 per cent higher year-on-year. Competition for sheep
from the meat-processing sector will also limit growth in live exports over the next
two years. As a result, in 2017–18 live sheep exports are forecast to grow by 1 per cent
to around 1.9 million head despite increased sheep numbers.
Over the medium term, live sheep exports are projected to continue to increase
slowly and reach 2.3 million head in 2021–22 as the supply of live sheep available for
export grows. Live exports to the Middle East (Australia’s principal destination for
live sheep exports) are projected to grow moderately, reflecting assumed gradual
strengthening of economies in the region over the period.
Australian live sheep exports, by destination, 2002–03 to 2021–22
6
Other
United Arab Emirates
Qatar
Bahrain
Jordan
Saudi Arabia
Kuwait
5
4
3
2
1
million
head
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2021
–22z
z ABARES projection.
Australian wool exports to grow over the medium term
Australian wool exports are forecast to increase by 2 per cent to 426,000 tonnes
(greasy equivalent) in 2016–17, reflecting the forecast increase in the national flock
and a consequent rise in production. Higher prices for wool are forecast to drive a
10 per cent increase in the value of Australian wool exports to around $3.6 billion
in that year.
In 2017–18 wool exports are forecast to rise by 4 per cent to 442,000 tonnes
as an expanding flock drives further increases in the number of sheep shorn.
This trend is expected to continue over the medium term and as a result exports
in 2021–22 are projected to grow to around 492,000 tonnes, valued at $3.9 billion
(in 2016–17 dollars).
ABARES
Agricultural commodities – March quarter 2017
107
Sheep meat and wool
Australian wool exports, by destination, 2002–03 to 2021–22
600
Other
Taiwan
India
Czech Republic
Italy
China
500
400
300
200
100
kt greasy
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2021
–22z
z ABARES projection.
World wool demand to grow moderately
Fine wool is a niche product in the global fibres market. Processor demand for
fine wool is driven by consumer demand for luxury woollen textiles and apparel.
Consumer spending on these goods is discretionary and strongly linked to incomes
and consumer confidence.
The United States is the world’s largest importer of finished woollen apparel. In 2016
US imports of wool products were down by 10 per cent to 538 million square-metre
equivalents. The value of these imports also fell by 9 per cent to US$8.8 billion.
Lower US imports in 2016 were largely a result of slower economic growth and
subdued clothing consumption.
In 2016 in the European Union economic growth and consumer confidence remained
relatively weak and, together with a lower euro, negatively affected consumer
demand. As a result, EU imports of woollen apparel fell by 3 per cent in volume terms
and by almost 4 per cent in value terms to €1.36 billion. Over the same period, the
volume of EU exports of woollen apparel fell by 3 per cent but increased marginally
in value terms to €2.4 billion.
China is the world’s largest producer and exporter of woollen clothing and textiles and
a major consumer of finished woollen goods. Consequently, China is the largest export
destination for Australian wool, accounting for 76 per cent of Australian exports in
2015–16. In 2016 China’s domestic sales of garments made of all fibres (not just wool)
were up by 7 per cent in value terms compared with 2015.
In 2016–17 global demand for wool is forecast to grow, despite slow growth in
consumer demand in the early part of the year. This largely reflects inventory refill
by wool processors and textile manufacturers after a run-down in stocks in 2016.
Growth in wool demand is expected to continue in 2017–18 as consumer demand
improves in response to assumed higher rates of economic growth in the major
wool-consuming economies.
108
ABARES
Agricultural commodities – March quarter 2017
Sheep meat and wool
Over the medium term, global consumer demand for woollen apparel is forecast to
grow. Wool consumption in the United States and the European Union is forecast
to grow relatively slowly as a result of moderate to low rates of economic growth.
In China, wool consumption is forecast to grow more strongly as a result of relatively
high rates of economic growth and increasing domestic consumption of luxury
woollen textiles and apparel.
Price-competitiveness of wool and alternative fibres
The price-competitiveness of wool compared with polyester has weakened as a
result of recent increases in the price of wool and relatively low world crude oil prices.
In 2016 the average ratio of the 21 micron wool price (in US dollars) to the polyester
staple fibre price increased by 23 per cent to 10.1.
The other major competitor for wool is cotton. In 2016 the average ratio of the
21 micron wool price (in US dollars) to the Cotlook ‘A’ price increased by 8 per cent
to 6.7, indicating that the price-competiveness of wool against cotton had also fallen
despite rising cotton prices.
Price ratios of wool and alternative fibres, Australia, monthly, July 2006 to
December 2016
12
21 micron to Cotlook ‘A’
21 micron to China Polyester
10
8
6
4
2
ratio
Dec
2006
Dec
2008
Dec
2010
Dec
2012
Dec
2014
Dec
2016
Source: AWEX 2017
The reduction in the price-competitiveness of wool against cotton and polyester is
likely to result in greater substitution of these fibres for wool in the manufacture of
lower priced textiles and clothing. Wool is expected to maintain its share of the luxury
apparel market, where cheaper alternative fibres have not made significant inroads.
The cost of input materials, such as wool, represents a smaller share of the overall cost
of finished goods in this market.
ABARES
Agricultural commodities – March quarter 2017
109
Sheep meat and wool
Outlook
sheep
Outlook
forfor
sheep
meatand
andwool
wool
unit
2014–15
2015–16 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
– nominal
– real b
Sheep a
c/kg
518
533
585
600
595
590
580
570
c/kg
533
540
585
589
570
551
529
507
– nominal
– real b
Eastern Market Indicator c
c/kg
332
316
380
395
390
385
380
370
c/kg
341
321
380
388
373
360
346
329
– nominal
– real b
Sheep numbers
Total sheep d
c/kg
1,102
1,253
1,360
1,440
1,435
1,430
1,425
1,420
c/kg
1,133
1,272
1,360
1,413
1,374
1,336
1,299
1,262
Prices
Lambs a
million
70.9
68.7
73.6
76.6
78.6
80.4
81.8
83.0
Sheep shorn
Cut per head
Slaughterings
million
76.9
73.4
75.0
78.1
81.1
83.5
85.2
86.5
kg
4.50
4.43
4.55
4.53
4.53
4.53
4.53
4.53
Lambs
Sheep
Production e
’000
22,867
23,131
22,400
22,623
23,211
23,848
24,564
25,317
’000
9,022
8,127
6,500
6,500
6,635
6,782
6,933
7,094
Lamb
Mutton
Wool production (greasy)
kt
507
516
503
507
521
535
552
569
kt
214
196
158
156
159
163
167
171
– shorn
– other g
– total
Consumption per person
kt
346
325
341
353
367
378
385
392
kt
81
79
73
74
76
78
80
83
kt
427
404
415
427
443
456
465
474
Lamb
Mutton
Exports
kg
9.4
9.3
9.0
9.0
8.9
8.9
8.9
8.8
kg
0.5
0.4
0.5
0.5
0.5
0.5
0.5
0.5
Lamb exports h
Lamb export value
kt
254
261
253
255
262
270
279
289
$m
1,779
1,771
1,800
1,855
1,890
1,933
1,964
1,997
$m
1,830
1,797
1,800
1,820
1,810
1,806
1,789
1,775
kt
180
156
125
122
126
130
132
136
$m
824
699
613
621
634
643
649
647
$m
848
710
613
610
607
601
592
575
’000
2,180
1,859
1,875
1,900
1,950
2,025
2,125
2,250
kt
459
417
426
442
458
470
482
492
$m
3,154
3,283
3,605
3,972
4,106
4,199
4,289
4,349
– nominal
– real b
Mutton exports h
Mutton export value
– nominal
– real b
Live sheep exports
Wool exports (gr. equiv.)
Wool export value
– nominal i
– real b
$m
3,244
3,331
3,605
3,898
3,931
3,922
3,909
3,867
a Saleyard prices, dressed weight. b In 2016–17 Australian dollars. c Wool price, clean equivalent. d At 30 June. e Carcase weight. f ABARES
forecast. g Includes wool on sheepskins, fellmongered and slipe wool. h Fresh, chilled and frozen, shipped weight. i On a balance of payment
basis. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; Australian Wool Exchange
110
ABARES
Agricultural commodities – March quarter 2017
Pig meat
Outlook to 2021–22
Jack Mullumby
• Pig prices are forecast to increase in 2016–17 and remain high in 2017–18 in
response to relatively strong consumer demand for pig meat.
• Pig meat production is projected to rise over the short and medium term as a result
of increased slaughter and higher weights.
• Over the short to medium term, pork consumption is expected to face
strengthening competition as beef and sheep meat supplies increase and red meat
prices decline.
• Limited growth in pig meat exports is projected over the medium term, as
producers focus on supplying the domestic Australian market with fresh pork.
Pig prices to fall over the medium term
The Australian weighted average over-the-hooks pig price is forecast to increase
by 1 per cent in 2016–17 to 370 cents a kilogram (dressed weight). The increase
reflects strong demand for fresh pork, supported by relatively high prices for
competing meats.
Pig meat production and over-the-hooks prices, Australia, 2008–09 to 2021–22
450
450
400
400
350
350
300
300
250
250
200
200
150
150
100
100
50
50
kt (cw)
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
Production
Price (right axis)
2016–17
c/kg (dw)
f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
111
Pig meat
Over the short to medium term, pig prices are projected to decline gradually in real
terms (2016–17 dollars), falling by 3.5 per cent to 357 cents a kilogram in 2017–18
before reaching 320 cents a kilogram in 2021–22. This reflects strengthening
competition for fresh pork at the retail level as increased beef and lamb supplies over
the outlook period bring down competing red meat prices.
Australian sow herd to expand
In 2016–17 closing sow numbers are forecast to rise by 3 per cent to 282,000 head,
the fourth consecutive year of expansion. This reflects strong demand for
domestically produced fresh pork.
Over the short to medium term, domestic fresh pork demand is expected to remain
relatively strong and continue to drive expansion in the national sow herd. The rate
of expansion is expected to be gradual, due to the high entry costs of housing sows.
Overall, Australian sow numbers are projected to rise to around 294,000 head
in 2021–22, 5 per cent larger than the forecast 2016–17 closing inventory of
282,000 head.
Increasing slaughter and higher weights
Australian pig meat production is forecast to increase by 4 per cent in 2016–17
to 393,000 tonnes (carcase weight) and by a further 3 per cent in 2017–18 to
405,000 tonnes. The increase in production over this two-year period is anticipated
to be driven mostly by increased slaughter. Higher average slaughter weights are
also expected, with feed prices forecast to remain low.
Feed costs are projected to remain low over the medium term and this is expected
to support expanding production despite weaker prices for pigs. Between 2017–18
and 2021–22 pig slaughter is projected to increase by around 1.8 per cent a year to
reach 5.6 million head. Average weights are also projected to rise over this period
to a record 76.8 kilograms in 2021–22, around 1 per cent higher than in 2015–16.
As a result, pig meat production is projected to rise gradually over the medium term,
reaching 430,000 tonnes in 2021–22.
Pig slaughter and average slaughter weights, Australia, 2008–09 to 2021–22
8
80
7
70
6
60
5
50
4
40
3
30
2
20
1
10
million
head
kg
2009
–10
2011
–12
2013
–14
2015
–16
f ABARES forecast. z ABARES projection.
112
ABARES
Agricultural commodities – March quarter 2017
2017
–18f
2019
–20z
2021
–22z
Slaughter
Average weight
(right axis)
Pig meat
Low import prices to support higher import volumes
Australia has a longstanding ban on imports of fresh pork for direct consumption
because of biosecurity concerns. All pig meat imported into Australia must be
processed before sale, usually into bacon, ham or smallgoods.
Australian pig meat imports are forecast to fall in 2016–17 by around 4 per cent to
159,000 tonnes (shipped weight). The forecast decline reflects changes in storage
policies of major retail purchasers, which have provided importers with incentive to
work down stocks in cold storage. In 2017–18 import demand is expected to recover,
assuming lower opening stocks. This will result in an increase in pig meat imports to
around 162,000 tonnes.
Over the medium term Australian pig meat imports are projected to continue to rise,
reaching 187,000 tonnes in 2021–22. The European Union and North America are
expected to be the largest suppliers during this period. Relatively weak international
pig meat prices are expected to drive higher import volumes. Low international prices
are expected to result from low feed costs and expanding herds and production in
major exporting markets.
Pig meat imports and exports, Australia, 2008–09 to 2021–22
200
Exports
Imports
160
120
80
40
kt (sw)
2009
–10
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
Consumption growth projected to slow
In 2016–17 Australian pig meat consumption is forecast to contract by around
3 per cent to 26.8 kilograms a person (carcase weight). The reduction is expected to
be mainly of imported product, which accounts for around 50 per cent of all pig meat
consumed in Australia. An increase in imports in 2017–18 is forecast to result in
consumption increasing again by around 1 per cent to 27.0 kilograms.
Over the medium term, per person consumption of both processed imported pig
meat and domestically produced fresh pork is projected to expand. However, the rate
of expansion is expected to be gradual, with competition expected to strengthen
from beef and sheep meat. In 2021–22 Australian per person pig meat consumption
is projected to reach 27.8 kilograms, 3.5 per cent above the 26.8 kilograms forecast
for 2016–17.
ABARES
Agricultural commodities – March quarter 2017
113
Pig meat
Value of exports to fall
In 2016–17 the value of Australian pig meat exports is forecast to rise by around
5 per cent to $134 million. The increase reflects higher average export unit values and
a 1,000 tonne increase in export volumes to around 29,000 tonnes (shipped weight).
Over the short to medium term, export volumes are projected to expand slowly,
reaching 30,000 tonnes in 2021–22. However, lower average export unit values during
this period are expected to lead to a fall in the value of exports. In 2017–18 the value
of Australian pig meat exports is forecast to be marginally lower at $133 million
(in 2016–17 dollars) before declining to around $121 million by 2021–22.
Outlook
for pig meat
Outlookforpigmeat
Over‐the‐hooks price a
– nominal
– real b
Sow numbers c
Slaughterings
Production d
Consumption per person
Import volume e
Export volume e
Export value
– nominal
– real b
unit
2014–15
c/kg
c/kg
’000
’000
kt
kg
kt
kt
317
327
270
4,924
371
27.4
160
28.5
2015–16 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
366
371
275
5,000
378
27.7
167
27.9
370
370
282
5,150
393
26.8
159
29.0
364
357
287
5,300
405
27.0
162
29.8
368
353
290
5,430
415
27.2
167
29.8
365
341
291
5,510
420
27.4
173
29.8
361
329
293
5,570
425
27.6
180
29.8
360
320
294
5,620
430
27.8
187
30.3
$m
110
128
134
136
137
136
135
136
$m
114
129
134
133
131
127
123
121
a Dressed weight. b In 2016–17 Australian dollars. c At 30 June. d Carcase weight. e Shipped weight, includes preserved pig meat. f ABARES forecast. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; Australian Pork Limited
114
ABARES
Agricultural commodities – March quarter 2017
Chicken meat
Outlook to 2021–22
Tim Whitnall
• Chicken meat production is projected to continue growing over the medium term,
reaching 1.4 million tonnes in 2021–22.
• Low retail prices for chicken meat relative to other meats are expected to lead to
an increase in per person consumption over the medium term.
• Exports of chicken meat are projected to grow by 3 per cent a year to 38,000 tonnes
in 2021–22.
Australian chicken meat production grew consistently in the five years to 2015–16.
Production growth averaged 3 per cent a year, reaching 1.15 million tonnes (carcase
weight) in 2015–16. Growth in production over this period mostly resulted from an
increase in the number of birds slaughtered to meet growing domestic demand for
chicken meat. Bird slaughter increased by 13 per cent between 2010–11 and 2015–16,
reaching 623 million head.
Chicken meat production is forecast to continue to rise over the outlook period.
In 2016–17 production is forecast to rise by 4 per cent to 1.2 million tonnes and
by a further 3 per cent to 1.23 million tonnes in 2017–18. Growth in chicken meat
production is projected to then continue at around 3 per cent a year, reaching
1.4 million tonnes in 2021–22. Annual bird slaughter is projected to reach
724 million in the same year, at an average slaughter weight of 1.9 kilograms.
Chicken meat production and slaughter, Australia, 2011–12 to 2021–22
1,600
800
1,400
700
1,200
600
1,000
500
800
400
600
300
400
200
200
100
Meat production
Slaughter (right axis)
million head
kt
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
115
Chicken meat
Domestic demand to drive increases in production
Chicken meat production is expected to increase in response to growing domestic
demand, with the retail price expected to remain relatively low compared with that
for beef, lamb and pork.
Consumer price indexes for selected meat, Australia, 1995–96 to 2015–16
250
Chicken meat
Beef and veal
Lamb and goat
Pork
200
150
100
50
index
1995–96
=100
1997
–98
2000
–01
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
Chicken meat is projected to remain the most consumed meat in Australia over the
outlook period. Per person consumption is projected to grow from 47.0 kilograms in
2015–16 to 49.6 kilograms in 2021–22. Chicken meat’s share of total livestock meat
consumption is expected to grow from 42 per cent in 2015–16 to 44 per cent in
2021–22. In contrast, in 2021–22 beef consumption is projected to be
25.4 kilograms per person, pig meat 27.8 kilograms per person and sheep meat
9.3 kilograms per person.
Meat consumption per person, Australia, 2011–12 to 2021–22
50
Chicken meat
Beef and veal
Pig meat
Lamb and mutton
40
30
20
10
kg
2011
12
2013
14
2015
16
2017
18f
f ABARES forecast. z ABARES projection.
116
ABARES
Agricultural commodities – March quarter 2017
2019
20z
2021
22z
Chicken meat
Average slaughter weight is projected to rise from 1.8 kilograms in 2016–17 to
1.9 kilograms in 2021–22. This is expected to result from improved bird genetics
through the import of fertilised eggs from specialised breeders several times a year.
Breeders focus on improving growth rates and yields, feed conversion, animal
welfare and reproductive fitness. Selective breeding practices combined with
chickens’ relatively quick reproductive lifecycle and high number of offspring have
recently resulted in rapid productivity gains. Chickens for meat production reach
their ideal slaughter weight in around 35 days, using a total of around 3.4 kilograms
of feed. In contrast, in the 1970s chickens reached ideal slaughter weight in 64 days
and used 4.7 kilograms of feed.
Exports to grow over the medium term
Australian exports of chicken meat are forecast to rise by 24 per cent to 33,030 tonnes
(shipped weight) in 2016–17 and a further 3 per cent to 34,000 tonnes in 2017–18.
This largely reflects an expected increase in exports to Papua New Guinea following
the PNG Government’s February 2016 decision to lift a trade ban on some Australian
raw poultry meat products. In the first six months of 2016–17, Australian exports of
chicken meat to Papua New Guinea rose by 67 per cent year-on-year to 7,677 tonnes.
Papua New Guinea is the largest export market for Australian chicken meat,
accounting for 39 per cent of exports in 2015–16.
Over the medium term, Australian chicken meat exports are projected to grow by
around 3 per cent a year to reach 38,000 tonnes in 2021–22. This largely reflects
an increase in supplies of frozen cuts and offal (such as feet, kidneys and livers)
available for export. These products account for over 80 per cent of Australian
chicken meat exports because they attract a higher price than in domestic markets.
Demand for these products is expected to grow in South‑East Asia and the Pacific.
These economies are expected to remain Australia’s largest export markets over the
outlook period.
Chicken meat exports by destination, Australia, 2010–11 to 2021–22
40
Other
Solomon Islands
Hong Kong
Philippines
Papua New Guinea
35
30
25
20
15
10
5
kt
2011
–12
2013
–14
2015
–16
2017
–18f
2019
–20z
2021
–22z
f ABARES forecast. z ABARES projection.
ABARES
Agricultural commodities – March quarter 2017
117
Chicken meat
Outlook
chicken
Outlook
for for
chicken
meat meat
unit 2014–15
2015–16 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
Production a
kt
1,116
1,150
1,196
1,228
1,273
1,310
1,360
Consumption per person
Slaughterings
Export volume b
Export value
– nominal
– real c
kg
45.7
47.0
47.0
46.8
47.6
48.1
49.0
49.6
million
590.6
623.3
651.5
664.0
672.0
688.0
704.0
724.0
kt
34.2
26.7
33.0
34.0
35.0
35.9
36.9
38.0
$m
53.7
46.9
48.0
49.1
52.7
54.1
55.7
57.2
50.6
50.7
50.9
$m
55.2
47.6
48.0
48.2
50.4
a Carcase weight. b Shipped weight. c In 2016–17 dollars. f ABARES forecast. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics
118
ABARES
Agricultural commodities – March quarter 2017
1,401
Dairy
Outlook to 2021–22
Tim Whitnall
• World dairy prices are forecast to average higher in 2016–17 and 2017–18 in
response to reduced production in major exporting countries, the lifting of
the Russian dairy embargo and firming demand in Asia, the Middle East and
North Africa.
• World dairy prices are projected to increase each year to 2019–20 as world
consumption grows faster than world supply. World prices are projected to ease
in 2020–21 and 2021–22 as increases in global milk production outstrip growth
in consumption.
• The value of Australian exports is projected to average higher over the outlook
period, peaking at around $3.5 billion (in 2016–17 dollars) in 2019–20.
World prices to rise before easing in 2020–21 and 2021–22
World dairy prices are forecast to average higher in 2016–17. This reflects a rapid
slowing of production in major exporting countries, particularly in New Zealand and
the European Union. World prices for cheese are forecast to increase by 14 per cent
to US$3,650 a tonne and for skim milk powder by 16 per cent to US$2,300 a tonne.
World prices for butter are forecast to increase by 31 per cent to US$4,125 a tonne
and for whole milk powder by 37 per cent to US$3,100 a tonne.
World prices are forecast to rise further in 2017–18—by 11 per cent to
US$4,580 a tonne for butter, by 12 per cent to US$4,080 a tonne for cheese,
by 7 per cent to US$2,450 a tonne for skim milk powder and by 8 per cent to
US$3,360 a tonne for whole milk powder. The factors driving these forecasts are
the expected lifting of the Russian embargo on dairy imports in December 2017 and
strengthening demand in Asia, the Middle East and parts of Africa.
Demand is expected to strengthen throughout the medium term, driven by rising
incomes, changing diets and growing populations in Asia, the Middle East and
North Africa. World dairy prices are projected to average higher each year to 2019–20
before easing in 2020–21 and 2021–22 in response to rising world milk production.
World prices in 2021–22 are expected to average between 2 per cent and 7 per cent
higher in real terms than in 2016–17. However, cheese is projected to remain
9 per cent lower than the 10-year average to 2015–16 in real terms, and skim milk
powder is projected to remain 33 per cent lower.
ABARES
Agricultural commodities – March quarter 2017
119
Dairy
World dairy prices, 2002–03 to 2021–22
6,000
Cheese
Whole milk powder
Skim milk powder
Butter
5,000
4,000
3,000
2,000
1,000
2016–17
US$/t
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16
2018
–19z
2021
–22z
z ABARES projection.
Global milk supplies to rise over the medium term
New Zealand
Milk production in New Zealand averaged 5 per cent lower year-on-year over the
peak production months of October and November 2016. This was largely a result
of wet weather in the largest producing region of Waikato and disruption from
a severe earthquake affecting parts of the second-largest producing region of
North Canterbury. This lower milk production has led to significantly reduced global
butter and whole milk powder supplies. New Zealand is the world’s largest exporter of
these commodities.
For the 2016–17 year as a whole, NZ milk production is forecast to fall by 3 per cent.
The wet spring detrimentally affected silage crops used for supplementary feed,
which will limit farmers’ ability to increase milk yields in the remaining months of
2016–17. In 2017–18 NZ milk production is forecast to grow by 3 per cent, encouraged
by rising farmgate milk prices.
NZ milk production is projected to continue to grow over the medium term in
response to projected higher world prices. This rise is expected to result largely
from improvements in milk yields from improved herd genetics, better pasture
management and increased use of supplementary feed.
120
ABARES
Agricultural commodities – March quarter 2017
Dairy
European Union
EU milk production is forecast to fall by 2 per cent in the 2016–17 marketing year
(April to March), largely reflecting the European Commission’s voluntary milk supply
reduction scheme. EU milk production averaged 4 per cent lower year-on-year over
the first two months of the scheme’s implementation (October and November 2016).
This reduction has been particularly pronounced in the three largest EU milk
producers, with production falling by 8 per cent in France, 4 per cent in Germany
and 7 per cent in the United Kingdom over that time. EU milk production is expected
to remain subdued for the remainder of the marketing year because the supply
reduction scheme will be in effect until March 2017.
EU milk production is forecast to grow by 1 per cent in the 2017–18 marketing year,
reflecting recovering world prices. EU exports of dairy products (particularly butter
and cheese) are forecast to increase after the lifting of the Russian embargo on
EU dairy products, expected at the end of 2017.
Over the medium term, EU milk production is projected to continue to grow in
response to rising world prices and increasing milk yields. Milk yields are expected
to increase as a result of genetic improvements in the dairy herd, wider use of
robotic technology and greater use of feed concentrates.
United States
Milk production in the United States is forecast to rise by 2 per cent in 2016–17
and 1 per cent in 2017–18. This largely reflects increasing yields resulting from
lower feed grain prices and strong domestic demand.
US milk production is projected to continue to grow over the medium term, largely
reflecting projected low feed grain prices and increasing milk yields. The size of
the US herd is expected to remain largely unchanged over the outlook period, but
the transfer of herds to higher yielding states is expected to continue. Among the
10 states with highest milk production, herd numbers declined in New York
(ranked 12th highest among all states for yield per cow) and Pennsylvania
(ranked 28th) but grew strongly in Idaho (ranked 5th) and Michigan (ranked 2nd)
over the 10 years to 2016.
US exports are forecast to remain subdued over 2016–17 and 2017–18 as an assumed
strong US dollar affects competitiveness. However, US exports are expected to rise
over the medium term as prices and production increase.
ABARES
Agricultural commodities – March quarter 2017
121
Dairy
Dairy cow herd size, select US states, at 1 January
700
2006
2016
600
500
400
300
200
100
’000
head
Pennsylvania
New York
Idaho
Michigan
Global demand to strengthen over the medium term
Russian Federation
The Russian Federation is expected to resume importing dairy products from
major exporters in 2018, with the embargo on dairy products from Australia,
Canada, the European Union, Norway and the United States scheduled to be lifted
in December 2017. However, imports are not expected to return immediately to the
levels achieved before the embargo because of a contraction of the Russian economy
over 2015 and 2016 and the depreciation of the Russian currency against the
US dollar.
Before it implemented the dairy trade embargo in August 2014, the Russian
Federation was the largest importer of cheese and butter and the largest market for
EU exports of these products. Russian imports of butter and cheese fell by around
37 per cent in 2015 and are estimated to have risen only marginally in 2016.
Cheese imports, Russian Federation, 2013 to 2015
500
Rest of world
European Union
Belarus
400
300
200
100
kt
2013
122
2014
ABARES
Agricultural commodities – March quarter 2017
2015
Dairy
Over the medium term, the Russian Federation is expected to remain a significant
importer of cheese and butter because local consumption is projected to outpace local
production. Growth in Russian dairy production is expected to be limited over the
outlook period by low investment in the dairy industry in 2015 and 2016. Incentives
for expansion have been limited as a result of uncertainty surrounding the
implementation of government support programmes. However, domestic
consumption is expected to grow consistently over the medium term because
incomes are assumed to rise modestly each year to 2021–22.
China
Chinese imports of dairy products are forecast to rise in 2016–17 and 2017–18,
reflecting low production growth and strengthening local demand for imported
dairy products. Milk production in China is expected to be constrained over this
period following an estimated fall of 5 per cent in the national dairy herd in 2016.
This fall resulted from structural adjustment in the Chinese dairy industry, with
many high-cost producers exiting the industry following sustained competition
from low-priced imports.
Over the medium term, Chinese import demand is projected to continue to
strengthen. As incomes rise, Chinese consumers increasingly favour imports from
major exporters such as New Zealand, the European Union and Australia due to
perceived higher quality and assured food safety. This is particularly the case for
infant milk formula and liquid milk imports, which are projected to rise strongly over
the medium term. However, growth in dairy imports is expected to be slower than
for the previous five years. Chinese production is expected to rise over the outlook
period as import price rises encourage increased investment in the dairy sector.
Middle East and North Africa
Import demand for dairy products in the Middle East and North Africa is forecast to
rise in 2016–17 and 2017–18, reflecting strengthening domestic demand outpacing
domestic supply.
Demand for dairy product imports in the Middle East and North Africa is projected
to continue to strengthen over the medium term, reflecting rising incomes and
population growth. Dairy products are expected to remain an important part of
consumer diets in the region. However, local production growth is likely to continue
to be constrained by limited water availability and unsuitable climatic conditions.
Algeria is the region’s largest importer of milk powders and is a major exception to
this forecast. The Algerian Government has committed to implementing a range
of support measures to expand their dairy industry and reduce reliance on dairy
imports. These measures include subsidising fodder imports, supporting fodder
production and operating programmes to improve herd genetics and breeding
performance. However, Algeria is still expected to remain a large importer of milk
powders over the outlook period because domestic demand is projected to increase
at a faster rate than domestic milk production.
ABARES
Agricultural commodities – March quarter 2017
123
Dairy
Prospects for the Australian dairy industry
Australian milk production is forecast to fall by 7 per cent in 2016–17 to
8.8 billion litres. This is largely due to low production in the first six months of the
year, reflecting low farmgate milk prices, lower opening herd numbers and wet
weather in Victoria—the state with highest production. National milk production
over the peak production months of spring was down 9 per cent year-on-year.
Over the remaining months of 2016–17 production is forecast to improve slightly due
to producers shifting from grass to grain, largely as a result of low feed prices.
Production is forecast to recover by 2 per cent in 2017–18 to 9.0 billion litres,
assuming average seasonal conditions. Herd numbers are forecast to recover by
1 per cent, reflecting forecast rises in farmgate milk prices.
Over the medium term, milk production is projected to rise consistently to around
9.6 billion litres. This projection is based on the expected recovery of the dairy herd
and improvement in milk yields. The major driver of expected yield improvement
is the continued shift towards low-cost grain and concentrate feeds, particularly
in Victoria and Tasmania. Expected improvements in herd genetics, pasture
management and farm technology should also assist yields.
Australian farmgate milk prices to rise
In 2016–17 the Australian farmgate milk price is forecast to increase by 2 per cent
to average 43.8 cents a litre, reflecting an improvement in export returns. The price
is forecast to rise by 7 per cent to 47.0 cents a litre in 2017–18. This reflects an
assumed slight depreciation of the Australian dollar and forecast higher world dairy
product prices.
The Australian farmgate milk price is projected to rise to 50.1 cents a litre
(in 2016–17 dollars) in 2019–20 before easing slightly in 2020–21 and 2021–22 as
world production increases and puts downward pressure on world prices.
Milk production and farmgate price, Australia, 2006–07 to 2021–22
12,000
60
10,000
50
8,000
40
6,000
30
4,000
20
2,000
10
2016–17
c/L
million L
2007
–08
2009
–10
2011
–12
2013
–14
f ABARES forecast. z ABARES projection.
124
ABARES
Agricultural commodities – March quarter 2017
2015
–16
2017
–18f
2019
–20z
2021
–22z
Manufacturing milk
Market milk
Farmgate milk price
(right axis)
Dairy
Australian exports
The total value of Australian dairy exports is forecast to rise by 5 per cent in 2016–17
to $3.2 billion, reflecting forecast higher world dairy prices and an increase in export
volumes of higher valued dairy products such as infant milk formula. In 2017–18
the value of exports is expected to increase by a further 11 per cent due to rising
world prices and some recovery in export volumes of other major Australian dairy
commodities, such as cheese and skim milk powder.
The value of Australian dairy exports is projected to grow consistently to around
$3.5 billion (in 2016–17 dollars) in 2019–20 before declining in the latter half of the
outlook period to $3.3 billion in 2021–22.
Over the outlook period, Australia is expected to remain a significant exporter of
dairy products to South-East Asia and North Asia. Cheese, skim milk powder and
infant milk formula are expected to remain Australia’s largest export products,
reflecting growing demand in these regions.
Value of select dairy exports, Australia, 2015–16
1,000
Rest of world
Middle East and North Africa
South-East Asia
North Asia
800
600
400
200
$m
Cheese
Skim milk
powder
Infant milk
formula
Whole milk
powder
Butter
ABARES
Agricultural commodities – March quarter 2017
125
Dairy
Outlook
dairy
Outlook
forfor
dairy
unit
2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z
World
Indicative price
Butter
– nominal
– real a
US$/t
3,483
3,146
4,125
4,580
4,780
4,930
4,840
4,745
US$/t
3,566
3,199
4,125
4,492
4,597
4,648
4,474
4,300
US$/t
2,592
1,975
2,300
2,450
2,600
2,705
2,600
2,590
US$/t
2,653
2,008
2,300
2,403
2,500
2,550
2,403
2,347
– nominal
– real a
Australia
Cow numbers b
US$/t
3,921
3,200
3,650
4,080
4,260
4,455
4,380
4,300
US$/t
4,014
3,254
3,650
4,002
4,097
4,200
4,048
3,897
’000
1,689
1,663
1,600
1,610
1,625
1,640
1,660
1,665
Milk yields
Production
L/cow
5,761
5,736
5,525
5,584
5,631
5,683
5,711
5,779
ML
9,732
9,539
8,840
8,990
9,150
9,320
9,480
9,622
ML
2,485
2,489
2,500
2,580
2,625
2,660
2,700
2,750
ML
7,247
7,050
6,340
6,410
6,525
6,660
6,780
6,872
kt
119
119
117
119
121
124
126
129
kt
344
344
344
344
351
358
365
372
kt
242
256
211
220
224
229
233
238
kt
97
66
60
58
57
56
55
53
Ac/L
48.5
43.0
43.8
47.0
51.0
53.6
53.5
53.3
Ac/L
49.9
43.6
43.8
46.1
48.8
50.1
48.8
47.4
Skim milk powder
– nominal
– real a
Cheese
Total milk
– Market sales
– Manufacturing
Butter c
Cheese
Skim milk powder
Whole milk powder
Farmgate milk price
– nominal
– real d
Export volume
Butter c
Cheese
Skim milk powder
Whole milk powder
Export value
– nominal
– real d
kt
44
34
32
33
33
34
35
35
kt
159
172
165
168
170
172
173
175
kt
186
181
140
141
142
143
144
145
kt
69
57
60
59
59
58
58
57
A$m
2,876
3,001
3,156
3,516
3,632
3,765
3,682
3,691
A$m
2,958
3,045
3,156
3,450
3,478
3,517
3,355
3,281
a In 2016–17 US dollars. b At 30 June. c Includes the butter equivalent of butter oil, butter concentrate, ghee and dry butterfat.
d In 2016–17 Australian dollars. f ABARES forecast. s ABARES estimate. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics; Dairy Australia, Melbourne
126
ABARES
Agricultural commodities – March quarter 2017
Fisheries
Fisheries
Outlook to 2021–22
David Mobsby, Andrea Bath and Robert Curtotti
• The value of Australia’s fisheries and aquaculture production is forecast to decline
marginally in 2017–18 to $3.0 billion. Forecast increases in the value of rock lobster,
tuna and abalone production are expected to be more than offset by forecast
decreases in the value of prawn, salmonid and other fish.
• Over the medium term, the value of Australia’s fisheries and aquaculture
production is projected to fall in real terms. A projected increase in the value of
rock lobster production is expected to be more than offset by lower production
values for several other species groups.
• The value of Australia’s fisheries and aquaculture exports is forecast to rise in
2017–18, reflecting an increase in the value of rock lobster exports.
• Growth in Asian economies and tariff reductions from Australia’s free trade
agreements are expected to support export demand for products from Australian
fisheries over the medium term.
World fisheries production, consumption and trade
World fisheries production
Global fisheries production reached a record high of 167 million tonnes in
2014. Wild-catch fisheries accounted for 93 million tonnes and aquaculture
74 million tonnes of that total. Wild-catch production remained relatively stable,
averaging 91 million tonnes between 1995 and 2014. In contrast, global aquaculture
production increased at an annual rate of 6 per cent to reach 74 million tonnes.
The rise in global aquaculture production has been critical in meeting the growing
global demand for seafood. Regionally, most of this production increase has been
in Asia (particularly China). In 2014 the region accounted for 89 per cent of global
aquaculture output. World fisheries production is projected to rise by 1.7 per cent a
year from 2017 to reach 188 million tonnes in 2022 (OECD–FAO 2016). All increased
production is expected to be from aquaculture, with wild-catch fisheries forecast to
remain largely unchanged from 2017 to 2022.
128
ABARES
Agricultural commodities – March quarter 2017
Fisheries
World fish production, 1990 to 2022
200
Aquaculture
Wild-caught
150
100
50
Mt
1990
1994
1998
2002
2006
2010
2014
2018f 2022f
f OECD–FAO forecast.
Source: OECD–FAO 2016
World fisheries consumption
Global consumption of fisheries products increased by 22 per cent between 2005 and
2014 to reach 167 million tonnes. In 2014, 87 per cent of products from fisheries were
for direct human consumption. The remainder was used to manufacture fishmeal and
fish oil and for non-food uses.
Over the medium term, drivers of seafood consumption such as income growth,
higher rates of urbanisation and population growth are expected to result in
demand for seafood products continuing to rise. Improvements in the supply chain
from producer to consumer are expected to result in increased global consumption
of seafood through greater volumes of trade and trade of different species types.
Seafood consumption is also expected to be supported by an expanding network
of supermarkets in developing economies that will provide consumers with a
greater range and volume of seafood (FAO 2016a). Consumption decisions, such as
convenience, health and sustainability, are also expected to become increasingly
important (FAO 2016a).
Global seafood consumption is projected to rise by around 3 per cent annually from
2016 to reach 173 million tonnes in 2022 (OECD–FAO 2016), supported by projected
increases in aquaculture production in Asia. Annual global consumption per person
is estimated to increase over the medium term from 20.3 kilograms in 2014 to
21.5 kilograms in 2022 (live-weight equivalent), with total supply of seafood products
expected to rise faster than population growth.
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Fisheries
World fish consumption, 1990 to 2022
200
Other uses
Human consumption
150
100
50
Mt
1990
1994
1998
2002
2006
2010
2014
2018f 2022f
f OECD–FAO forecast.
Source: OECD–FAO 2016
International trade
Fisheries products are highly globalised and traded commodities, with around
36 per cent of total fish production volume (live-weight equivalent) exported in 2014.
The volume of global seafood trade increased by around 4 per cent a year from 1990
to reach 39.9 million tonnes in 2014 (OECD–FAO 2016). Growth in world trade has
been supported by rising world demand, aquaculture production, improvements
in supply chains and trade liberalisation (FAO 2016a). The volume of seafood trade
is projected to reach 43 million tonnes in 2022 (OECD–FAO 2016). Global trade
in seafood is sensitive to economic conditions, as illustrated when the value and
volume of global seafood trade declined in 2009 during the global financial crisis
(FAO 2016a). The value of global trade is estimated to have declined in 2015. This
reflects appreciation of the US dollar and slower global economic growth reducing
demand for major seafood traded products (FAO 2016b).
Prices
Fishery products encompass a diverse range of commodities, and price
trends can differ between species depending on supply and demand factors.
However, substitution between species and common factors such as population
and economic growth provide a price linkage between species.
Global supply is expected to increase for some aquaculture-produced species groups
such as salmonids and prawns. Prices are expected to average lower over the medium
term compared with recent years, assuming an absence of disease outbreaks,
sufficient productivity growth and relatively low input prices. In contrast, supply of
predominantly wild-caught species is constrained, so prices are expected to be driven
by demand-side factors.
130
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Fisheries
World fish indicator prices, 1991 to 2016
30
Prawns
Salmon
25
20
15
10
5
2016
US$/kg
1992
1996
2000
2004
2008
2012
2016
Note: Salmon indicator price is Farm Bred Norwegian Salmon, export price. Prawn indicator price is Shrimp,
No. 1 shell-on headless, 26–30 count per pound, Mexican origin, New York port.
Source: IMF 2017
Australia’s fisheries and aquaculture industry is highly export-oriented.
Consequently, trends in world markets and Australia’s exchange rate influence the
price received for many of Australia’s major species. For example, lobster prices are
expected to rise in real terms, reflecting a constrained global supply response to
higher world demand. In contrast, global prices for premium tuna are expected to
decline in real terms as weakness persists in the key importing market (by value)
of Japan.
Outlook for Australian fisheries to 2021–22
The value of Australia’s fisheries and aquaculture production is forecast to decline
marginally in 2017–18 to $3.0 billion. Forecast increases in the value of rock lobster,
tuna and abalone production are expected to be more than offset by forecast
decreases in the value of prawn, salmonid and other fish production. Of the major
species groups, the value of rock lobster production is forecast to rise by 4 per cent to
$729 million because of higher production volumes and prices. The production value
of salmonids (salmon and trout) is forecast to fall marginally to $772 million because
of lower forecast prices. The value of prawn production is forecast to fall by 5 per cent,
reflecting lower forecast prices more than offsetting an expected partial production
recovery from the white spot outbreak of 2016–17.
Over the medium term, the value of Australia’s fisheries and aquaculture production
is projected to fall in real terms to $2.9 billion (in 2016–17 dollars). A projected
increase in the real value of rock lobster production is expected to be more than offset
by lower production values of several other species groups.
The value of Australia’s fisheries and aquaculture exports is forecast to rise by
2 per cent in 2017–18 to $1.5 billion, reflecting an increase in the value of rock lobster
exports. Assuming a stable exchange rate over the medium term, movements in world
prices will be a major determinant of export values. In aggregate, total export value is
expected to remain largely unchanged in real terms over the outlook period.
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131
Fisheries
Value of Australian fisheries and aquaculture production, 2017–18 and 2021–22
2017–18f
2021–22z
Tuna
Abalone
Prawns
Salmonids
Rock lobster
Other
2016–17 $m 100
200
300
400
500
600
700
800
f ABARES forecast. z ABARES projection.
Growth in Asian economies and tariff reductions under Australia’s free trade
agreements are expected to support export demand for Australian fisheries products
over the medium term. Asia, particularly the China, Vietnam and Hong Kong region, is
an important export market for Australian seafood exports. Barton, Chen and Jin
(2013) estimate that the number of urban Chinese middle-class households will
expand from around 174 million in 2012 to 271 million by 2022. Higher incomes are a
key driver of increased demand for seafood in China. However, as per person income
rises, the relationship between seafood demand and income weakens while the
relationship between income and demand for quality seafood products increases
(Gale & Huang 2007). As the Chinese middle class expands, the rate of seafood
consumed is expected to slow. However, the type of seafood demanded is expected to
shift towards higher-quality products such as lobster, abalone and salmonids.
Value of Australian fisheries and aquaculture exports, 1997–98 to 2021–22
3.5
3.0
2.5
2.0
1.5
1.0
0.5
2016–17
$b
1997
–98
2000
–01
2003
–04
2006 2009
–07
–10
f ABARES forecast. z ABARES projection.
132
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Agricultural commodities – March quarter 2017
2012
–13
2015
–16f
2018
–19z
2021
–22z
Fisheries
Rock lobster
Global lobster production increased from around 255,000 tonnes in 2008 to around
307,000 tonnes in 2014 (FAO 2017). The increase in world supply since 2008 has
largely originated from Canada and the United States. Lobster production from these
two countries combined increased by 9 per cent a year from 2008 to 2014 to reach
around 162,000 tonnes. Average landed prices in the United States reached a low in
2012 but have since trended upwards despite large US and Canadian harvests since
2014. In 2015 total Canadian and US lobster production declined for the first time
since 2007, placing upward pressure on international prices.
Globally, lobster is virtually all wild-caught and only a negligible amount is produced
by commercial aquaculture operations. This largely constrains the supply response to
higher prices. Assuming North American lobster production remains stable over the
medium term, world prices are expected to be driven by demand-side factors. Strong
economic growth in Asia is expected to be a key driver of demand over the outlook
period. Growing demand and constrained supply are expected to result in lobster
prices rising in real terms over the outlook period.
World lobster production, 1990 to 2014
350
United States
Canada
Rest of world
300
250
200
150
100
50
kt
1990
1993
1996
1999
2002
2005
2008
2011
2014
Source: FAO 2017
The value of Australian rock lobster production is forecast to rise by 4 per cent in
2017–18 to $729 million. This growth is supported by a forecast increase in rock
lobster production, an assumed depreciation of the Australian dollar and growing
import demand from Asia. These factors are expected to support beach prices.
Higher projected global lobster prices over the medium term are expected to result in
the gross value of Australian rock lobster production increasing to $779 million in
2021–22 (in 2016–17 dollars). This outlook largely reflects higher average beach
prices in real terms, with production volumes expected to rise moderately over the
outlook period.
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Fisheries
Rock lobster is Australia’s most valuable fishery commodity, with exports valued at
$693 million in 2015–16. The China, Vietnam and Hong Kong region is Australia’s
key export destination for rock lobster, accounting for over 90 per cent of export
value. From around 2010 this market has been subject to rising competition from
the United States and Canada. US and Canadian exports of lobster to the region
increased more than fourfold in real terms from 2006 to reach US$286 million in
2015 (in 2016 US dollars).
Lobster exports to China, Vietnam and Hong Kong, 2007 to 2015
1,200
United States
Canada
New Zealand
1,000
800
Australia
600
400
200
2016
US$m
2007
2009
2011
2013
2015
Source: UN Statistics Division 2017
In late 2016 the Chinese Government announced a tentative reduction of the
most-favoured-nation tariff rate imposed on live, fresh and chilled lobsters.
This would reduce the 15 per cent tariff to 10 per cent in 2017 (USDA–FAS 2017).
Under the China–Australia Free Trade Agreement, in 2017 Australian exporters face a
tariff of 6 per cent for live, fresh and chilled lobsters, a 3 percentage point
reduction on 2016.
The value of rock lobster exports is forecast to rise by 6 per cent in 2017–18 to
$716 million, driven by higher export volumes and prices. Over the medium term the
value of Australian rock lobster exports is projected to reach $763 million (in 2016–17
dollars) in 2021–22, largely reflecting higher export prices. Growth in regional
Asian economies and tariff reductions from Australia’s free trade agreements in
Asia are expected to be the key drivers of Australian rock lobster exports over the
medium term.
Prawns
World prawn production increased at an annual rate of 3.7 per cent from 2005
to reach 8.2 million tonnes in 2014. This was largely the result of a rise in
aquaculture prawn production, which increased by 6 per cent a year during this
period (FAO 2017). Since 2008 global aquaculture prawn production has exceeded
wild-catch production, largely driven by aquaculture production growth in Asia.
OECD–FAO (2016) projects world aquaculture prawn production to grow strongly to
2025. This suggests prices are expected to remain below the highs recorded between
2013 and 2015, which largely reflected international supply disruptions in Asia,
particularly Thailand.
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Fisheries
The Australian prawn industry is highly trade exposed and movements in global
prawn prices and the Australian exchange rate are expected to be reflected in
domestic prices. However, in the short term Australian prices are forecast to
rise, reflecting a forecast decline in domestic production and import bans on
uncooked prawns.
White spot disease, a highly contagious viral infection that affects crustaceans, was
detected in five Queensland prawn farms in late 2016. In early February 2017 white
spot was detected at a sixth farm on the Logan River and in wild-caught prawns
south of the mouth of the Logan River (BINCN 2017). The Queensland Department
of Agriculture and Fisheries has destroyed prawns in the production ponds of five
affected farms. However, decontamination of the production ponds could take several
months (BINCN 2017). The white spot outbreak is expected to result in Queensland
aquaculture prawn production declining significantly in 2016–17. The Department
of Agriculture and Water Resources imposed a ban on the importation of uncooked
prawns (with some exemptions) for six months as of 9 January 2017 (Department of
Agriculture and Water Resources 2017a, b). Uncooked prawns comprise a significant
proportion of Australian prawn imports. The import ban alongside forecast lower
domestic production is expected to result in higher domestic prices in 2016–17.
A forecast partial recovery in domestic production in 2017–18 is expected to result
in prices easing in 2017–18. The gross value of prawn production is expected to fall
in 2017–18 because forecast lower average prices are expected to more than offset a
forecast increase in production. Over the medium term the value of Australian prawn
production is projected to remain largely unchanged in real terms. This assumes that
the Australian dollar will be stable over the outlook period and a moderate increase in
domestic production will offset declining world prices. The value of Australian prawn
exports is forecast to fall in 2017–18 to $101 million but remain largely unchanged
over the medium term at around $97 million a year (in 2016–17 dollars), reflecting
trends in domestic production and world prices.
Abalone
World abalone production increased by around sixfold from 1990 to 2014. This was
driven by aquaculture production, which increased from just 1,124 tonnes in 1990
to 128,207 tonnes in 2014. In contrast, global wild-catch production declined by
around 60 per cent over the same period (FAO 2017). A decline in global wild-catch
stocks, leading to restrictive quotas, contributed to this decline (Cook 2016).
The global price of abalone has gradually declined, reflecting increased supply of
aquaculture-produced abalone.
The increase in global production has largely occurred in China, where abalone
aquaculture production increased at an annual rate of 24 per cent from 2004 to
2014. In 2014 abalone production in China reached 115,397 tonnes, accounting
for 83 per cent of global output (FAO 2017). Rising production has largely been
absorbed into the domestic Chinese market, but exports of abalone products
have risen strongly since 2012. The major abalone species produced in China is
the Pacific abalone, accounting for 95 per cent of domestic abalone production in
2013 (Wu & Zhang 2016). Abalone production in China is expected to continue to
expand, but the growth rate is expected to slow (Cook 2016). Additional Chinese
production of abalone is expected to put downward pressure on world prices over the
medium term.
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135
Fisheries
World abalone production, 2004 to 2014
150
Rest of world
China
120
90
60
30
Mt
2004
2006
2008
2010
2012
2014
Source: FAO 2017
The value of Australian abalone production is forecast to rise by 3 per cent in 2017–18
to $183 million. The volume of wild-catch production is expected to decline, assuming
conservative total allowable catches set by fishery managers over the medium term.
In contrast, the volume of aquaculture production is expected to increase, continuing
a trend from 2005–06 to 2014–15.
Australian aquaculture abalone production increased by 68 per cent to around
900 tonnes from 2005–06 to 2014–15. This trend is expected to continue over the
medium term, but wild-caught volumes are expected to remain constrained, assuming
total allowable catch limits continue to be conservative. Growing aquaculture
production is expected to result in the value of Australian abalone production
increasing by 1 per cent a year to reach $187 million (in 2016–17 dollars) in 2021–22.
Despite production rising rapidly in China, major harvested abalone species in
Australia are different from the major species of abalone produced in China,
supporting Australian exports over the medium term. Over the outlook period the
value of Australian abalone exports is forecast to rise to $192 million in 2017–18,
supported by an assumed depreciation in the Australian dollar and free trade
agreements with major trading partners.
Salmonids
Global production of salmonids (including salmons, trouts and smelts) reached
4.4 million tonnes in 2014. On average, 30 per cent of global production is through
aquaculture from Norway and 22 per cent from Chile (FAO 2017). Both producers
export high volumes, with major importers including Sweden, China and Japan.
Shortages of global supply in 2016 were the result of mass fish deaths caused by an
outbreak of sea lice in Norwegian salmon farms and algae blooms in Chilean farms.
In response to the supply shortage, international salmonid prices have increased and
are expected to remain high in the short term while production recovers. Real unit
international prices show a 10-year high for salmonid prices in 2016 (IMF 2017).
136
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Fisheries
International salmonid price, 2006 to 2016
10
8
6
4
2
2016
US$/kg
2006
2008
2010
2012
2014
2016
Source: IMF 2017
The value of Australian salmonid production is forecast to decrease marginally in
2017–18 to $772 million. This is the result of an expected drop in domestic prices
from 2016–17 to 2017–18 in response to a partial recovery of international supply.
Tasmania produced an average of 96 per cent of total Australian salmonid volumes
from 2005–06 to 2015–16. Total salmonid production grew from 21,000 tonnes
in 2005–06 to an estimated 55,000 tonnes in 2015–16 due to the expansion of
Tasmania’s aquaculture industry. Production in 2017–18 is forecast to increase by
1 per cent to 61,000 tonnes.
Australian salmonid production, 1999–2000 to 2015–16
60
50
40
30
20
10
kt
1999 2001
–2000 –02
2003
–04
2005
–06
2007 2009
–08
–10
2011
–12
2013
–14
2015
–16s
s ABARES estimate.
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137
Fisheries
The value of Australian salmonid exports is forecast to decrease in 2017–18 by
3 per cent to $84 million, with some easing of high international prices. Expansion in
salmonid production in Australia is resulting in increased volumes being exported,
primarily to Japan and China. Australian salmonid exports peaked in 2015–16 at just
over 8,000 tonnes and similar volumes are forecast for 2016–17. Australian producers
are expected to continue exporting high volumes in 2017–18, assuming that the
Australian dollar weakens and international prices remain relatively high despite
some easing as global supplies return.
Total Australian salmonid production is expected to grow at a steady rate to reach
63,400 tonnes by 2021–22, assuming some expansion of the aquaculture industry.
The value of salmonids is expected to reach $672 million by 2021–22, with a return of
prices to longer-term trends after global supply and prices recover. Export volumes
over the medium term are forecast to decline to 73,000 tonnes in 2021–22 in response
to an easing of international prices. Export earnings are expected to fall in line with
volumes, decreasing to $58 million (in 2016–17 dollars) in 2021–22.
Tuna
Global tuna production over the long term has been increasing (FAO 2017).
Major species of tuna produced globally include skipjack, yellowfin and bigeye.
The value of tuna markets varies depending on the species. For example, skipjack
tuna is commonly used in the canned market, while bluefin species are desirable
on the higher-value sashimi market. The biggest importer of tuna worldwide in
volume terms is Thailand, accounting for a third of global tuna import volumes in
2015 (UN Statistics Division 2017). Thailand re-exports most of this tuna to global
markets as canned tuna products. Thailand has one of the world’s largest tuna
canning industries and produces the majority of globally traded canned tuna. The low
production and labour costs for canning in South-East Asian countries such as
Thailand, the Philippines and Indonesia mean that Australian tuna cannot compete
in the canning market. Australia’s advantage in the global tuna market lies in the
production of premium species for the sashimi market.
Global tuna production, 1995 to 2014
7
Other
Bigeye tuna
Albacore
Yellowfin tuna
Skipjack tuna
6
5
4
3
2
1
Mt
1996
1999
2002
2005
Source: FAO 2017
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2008
2011
2014
Fisheries
Japan is the world’s second-largest importer of tuna, accounting for 10 per cent of
global tuna imports (UN Statistics Division 2017). The country’s imports comprise
higher-value species for the sashimi market such as bigeye, yellowfin and bluefin.
In value terms, Japan is the largest importer of tuna. However, demand for tuna in
Japan appears to be decreasing. Younger Japanese are tending towards more Western
diets consisting of beef proteins (Statistics Bureau 2015). This trend is supported by a
longer-term decline in overall tuna exports to Japan.
Tuna production in Australia consists primarily of farmed southern bluefin tuna.
The juveniles are wild-caught using purse seine methods and then fattened in tuna
farms in Port Lincoln, South Australia. Other tuna species that make up production
from wild-catch fisheries include albacore, yellowfin and bigeye. Australian tuna
production is expected to increase in 2017–18 to 13,500 tonnes. This is driven by an
increase in the total allowable commercial catch (TACC) for the Australian Southern
Bluefin Tuna Fishery.
Over the decade to 2015–16 more than 90 per cent of Australian tuna was exported.
This was mostly southern bluefin tuna destined for the Japanese sashimi market.
In 2017–18 increased production is expected to result in the quantity exported
reaching 12,400 tonnes. This would represent a 3 per cent increase from 2016–17.
Export prices for Australian tuna fell from 2012–13 to 2015–16 but recovered in
the first six months of 2016–17 because the Australian dollar weakened against
the yen. Some dampening of prices is expected in 2017–18, with an assumed slight
strengthening of the Australian dollar against the yen. However, the total value of
tuna exported is expected to increase due to higher volumes, increasing value by
4 per cent to $161.1 million.
Over the medium term, the volume of global southern bluefin tuna production is
expected to remain steady to 2021–22 at around 13,500 tonnes. The TACC for the
Australian Southern Bluefin Tuna Fishery is determined by the Commission for
the Conservation of Southern Bluefin Tuna, an international governing body that
ensures sustainable use of the global Southern Bluefin Tuna Fishery. The commission
has increased the TACC for Australia to 6,165 tonnes a year (up from 5,665 tonnes)
through to 2020. Export prices are expected to decrease post 2017–18 due to a
slowing of demand in the Japanese economy and anticipated further strengthening
of the Australian dollar against the yen. The value of exports is anticipated to decline
from 2017–18 to $157 million in 2021–22.
Innovation to increase competitiveness of Australian
fisheries and aquaculture sector
Expanding the production base of Australia’s fisheries and aquaculture sector is
challenging. Many of Australia’s wild-caught fisheries, including those producing
rock lobster, tuna, prawns, shark and finfish species groups are fully developed
and are managed under strict output and/or input controls. These controls
are designed to limit catches to volumes that are economically and biologically
sustainable and to allow any overfished stocks to rebuild. Aquaculture producers face
challenges in identifying suitable sites for aquaculture enterprises and in meeting
planning requirements.
Many Australian fishing and aquaculture enterprises are focusing on innovative
solutions that add value to their products. These solutions help maintain profitability
when changing factors beyond the control of fishers, such as exchange rates and fuel
prices, make fishing less profitable. For aquaculture enterprises, innovation is the key
to developing farming solutions that limit the impact on the broader environment.
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Fisheries
Rock lobster
Since the 1990s the transition of rock lobster exports from predominantly cooked
and frozen products to live products has presented challenges for the industry.
The establishment of live trade required the industry to develop solutions to
managing lobsters from the point of capture to the point of final delivery to the
customer. This has involved building holding infrastructure close to airports and
developing efficient air transport packaging and delivery logistics. Australia’s rock
lobster fisheries have largely been successful in establishing an efficient supply
chain into Asia.
The Geraldton Fishermen’s Co-operative (GFC) manages over 60 per cent of
Western Australia’s western rock lobster catch. In 2016 the GFC established holding
tanks in China, at Guangzhou Baiyun International Airport. The China-based
facility enables GFC to access additional airspace to service existing clients better
during peak demand periods and benefit from tariff reductions for rock lobster
exports under the China–Australia Free Trade Agreement (Braidotti 2016).
Such developments are built on past innovations. These include the management plan
that ensures each fisher’s property right to their share of the total allowable catch,
and the creation of fisher cooperatives that allow fishers to collectively achieve the
economies of scale required to manage their product through the supply chain.
The South Australian Rock Lobster Fishery has also made innovations through the
research development and extension activities of Southern Rock Lobster Limited
(SRL). SRL was formed with funding from the Fisheries Research and Development
Corporation to help southern rock lobster producers understand the critical
relationship between supply, demand and price in key markets for luxury seafood
products. SRL’s strategic plan for the sector outlines activities in three key areas:
adding value to lobster from fisher to customer; optimising fisheries production;
and promoting and supporting people development.
Tuna
Tuna is exported largely as a frozen-whole product to meet the exacting standards
of Japan’s seafood market. It is also exported processed and in smaller portions that
are marketed as value-added products. Innovations in the supply chain have allowed
Australian tuna exporters to maintain access into the highly competitive Japanese
tuna market. A large part of the effort has been on adding value to caught tuna by
catching and towing tuna at low speed to purpose-built grow-out pens in Port Lincoln,
South Australia. The industry in Port Lincoln continues to invest in new ways to
grow out finfish products, such as the recent establishment of aquaculture kingfish
production. Tuna processors at Port Lincoln have invested in advanced processing
and freezing technologies that meet the needs of the export market. The Southern
Bluefin Tuna Fishery is internationally managed under a global quota, shared
between member nations of the Commission for the Conservation of Southern Bluefin
Tuna. The quota in Australia is tightly held by existing tuna farmers. Strong property
rights ensure that the industry is able to capture the benefits of innovation.
140
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Salmonids
Tasmania’s salmonid industry has grown into a major aquaculture earner for the
state. The typical life cycle of a salmonid is three years, from hatchery to harvest.
Over the long grow-out period, producers have to maintain fish health and growth
to ensure profitable yields and a quality product for consumers. The industry breeds
salmon for Tasmanian conditions, a process that involves incorporating selective
breeding programmes into the production process (Tassal 2017a).
Salmonid production can have adverse effects on the environment if not well
managed, largely because production systems are close to shore and coexist with
marine wildlife. The industry uses innovative net designs to reduce the chances of
seals being caught in nets. Media reports in early 2017 highlighted concerns about the
potential effect of salmonid aquaculture on marine ecosystems. Companies involved
in salmonid aquaculture engage with the communities around the production
facilities to ensure that an adequate balance between production and community
amenity is maintained (Tassal 2017b).
Some companies in Tasmania have promoted offshore farming to minimise the effects
of farming on the environment. One of the leaders in this area is Huon Tasmania,
which has recently changed the way it farms by moving some of its production into
offshore lease areas. This has required the reorganisation of existing infrastructure
and the strengthening of pens to withstand higher wave energy conditions in open
water (Huon n.d.). The benefits of offshore farming include improved fish health
and reduced environmental impact and marine debris. Substantial investment
in infrastructure capacity will be required to meet the demand for salmonid
consumption in Australia. Offshore farming is likely to be an important part of the
industry’s growth strategy.
Abalone
Wild-caught abalone production is limited by total allowable catch limits.
The land-based aquaculture facilities in Australia are expensive operations that
require constant monitoring of conditions in the aquaculture site to avoid costly
stock losses. A recent innovation is abalone ranching, where abalone are grown on
purpose-built concrete reefs using hatchery seed stock. This approach could help
grow the abalone export market without compromising sustainability, potentially
adding around 100 tonnes to annual production over the medium term. The first
abalone ranching farm was established in Augusta, Western Australia in 2016.
The project is likely to expand to other areas of Western Australia and to South
Australia (Murphy 2016).
Exporting live product is a recent innovation that helps ensure a price premium for
products. It is attracting growing numbers of exporters, who have until recently
largely relied on the export of processed product. Live export requires exporters to
address every aspect of the supply chain, including the provision of purpose-built
infrastructure to keep abalone in prime condition, from harvest to final consumer.
Some of these aspects have been resolved, including provision of adequate packaging
for live product and improving the logistics of moving abalone through the
supply chain.
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Prawns
To ensure viability, prawn fisheries around Australia typically use prawn trawling
fishing techniques. As a result, most innovations in the commercial prawn industry
aim to achieve higher efficiency from trawling. For a given swept area, it is generally
more efficient to tow multiple nets rather than a single large net. For example, many
operators in Australia’s Northern Prawn Fishery (NPF) use quad gear (four nets
in tow). These nets have been designed to optimise fuel efficiency and to exclude
interactions with significant bycatch species, such as marine turtles.
The production of prawns is also associated with a larger proportion of bycatch than
most other commercial fisheries. Bycatch reduces the productivity of prawn trawling
because it takes time to separate bycatch from the prawn catch and discard it. It also
has negative environmental effects because much of the bycatch discarded is dead.
Several bycatch reduction devices have been deployed in prawn fisheries, but bycatch
remains a significant issue for most prawn trawling operations.
In a bid to reduce bycatch, the Australian Northern Prawn Fishery is trialling
innovative net designs. This is part of the Northern Prawn Fishery Bycatch Strategy
2015–2018 (AFMA 2015), which aims to reduce bycatch by 30 per cent by 2018
through industry initiatives. One such initiative was a prize of $20,000 offered in
2016 by NPF Industry Pty Ltd for skippers, owners or crew who developed devices
or methods to help meet the strategy’s bycatch reduction goal. AFMA trials of the
winning device during the 2016 NPF tiger prawn season indicated that it reduced
small bycatch by an average of 40 per cent, with a less than 2 per cent loss of prawns
(AFMA 2016). Such examples show an active engagement by industry in seeking
innovative solutions to issues.
References
AFMA 2015, Northern Prawn Fishery Bycatch Strategy 2015-2018 (pdf 1.2mb),
Australian Fisheries Management Authority, Canberra.
AFMA 2016, Shrimply irresistible this Christmas!, Australian Fisheries Management
Authority, Canberra, accessed 30 January 2017.
Barton, D, Chen, Y & Jin, A 2013, Mapping China’s middle class, McKinsey and
Company, New York, accessed 30 January 2017.
BINCN 2017, White spot disease, Biosecurity Incident National Communication
Network, Canberra, accessed 13 February 2017.
Braidotti, G 2016, China warehouse secures new route to market, FISH, Fisheries
Research and Development Corporation, Canberra, June, vol. 24, no. 2, accessed
30 January 2017.
Cook, P 2016, Recent trends in worldwide abalone production (pdf 450kb), Centre of
Excellence in Natural Resource Management, University of Western Australia.
Department of Agriculture and Water Resources 2017a, Suspension of uncooked
prawns and uncooked prawn meat imports, Canberra, accessed 30 January 2017.
142
ABARES
Agricultural commodities – March quarter 2017
Fisheries
—— 2017b, Update on temporary suspension of uncooked prawns and uncooked
prawn products, Canberra, accessed 7 February 2017.
FAO 2016a, The state of world fisheries and aquaculture 2016 (pdf 5.58mb),
UN Food and Agriculture Organization, Rome.
—— 2016b, Food outlook: biannual report on global food markets (pdf 7.36mb),
UN Food and Agriculture Organization, Rome, October.
­ — 2017, Statistics—introduction, Fisheries and Aquaculture Department,
—
UN Food and Agriculture Organization, Rome, accessed 15 January 2017.
Gale, F & Huang, K 2007, Demand for food quantity and quality in China (pdf 197kb),
Economic Research Report, no. 32, Economic Research Service, US Department of
Agriculture, Washington, DC.
Huon n.d., The future of fish farming (pdf 716kb), Huon Aquaculture Group Limited,
Dover, Tasmania.
IMF 2017, IMF Commodity Prices, International Monetary Fund, Washington, DC,
accessed 1 February 2017.
Murphy, S 2016, Abalone grown in world-first sea ranch in WA ‘as good as wild catch’,
Australian Broadcasting Corporation, 4 May 2016, accessed 1 February 2017.
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for Economic Co-operation and Development and the UN Food and Agriculture
Organization, Paris, accessed 30 January 2017.
Statistics Bureau 2015, Statistical handbook of Japan (1,277kb), Ministry of Internal
Affairs and Communications, Tokyo.
Tassal 2017a, Our community, Hobart, accessed 30 January 2017.
—— 2017b, Our salmon, Hobart, accessed 30 January 2017.
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challenges (pdf 3.96mb), Centre of Excellence in Natural Resource Management,
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ABARES
Agricultural commodities – March quarter 2017
143
Fisheries
Outlook
fisheries
Outlook
forfor
fisheries
2014–15
2015–16 s
2016–17 f
$m
$m
$m
2017–18 f 2018–19 z
$m
$m
2019–20 z
2020–21 z
2021–22 z
$m
$m
$m
Gross value of fisheries products
Fish
Tuna a
– real b
Salmonids c
– real b
Other fish
– real b
Crustaceans
Prawns
– real b
Rock lobster d
– real b
Other crustaceans
– real b
Molluscs
Abalone
– real b
Other molluscs
– real b
Other nei
– real b
Total value
– real b
Fisheries export value
Fish
Tuna
– real b
Salmonids
– real b
Other fish
– real b
Crustaceans and molluscs
Abalone
– real b
Prawns
– real b
Rock lobster
– real b
Pearls
– real b
Other crustaceans and molluscs
– real b
Other fisheries products
– real b
Total fisheries products
– real b
161
174
167
173
170
169
168
169
165
176
167
169
163
157
153
150
631
702
775
772
755
721
730
756
649
712
775
757
722
673
666
672
434
523
505
460
472
484
497
510
446
530
505
452
452
452
453
453
358
373
375
357
362
370
378
388
369
378
375
350
346
346
345
345
668
692
690
744
762
799
834
872
687
702
690
730
730
747
760
775
65
64
66
67
68
69
69
70
67
65
66
66
65
64
63
62
164
171
178
183
191
198
205
211
169
173
178
180
183
185
187
187
212
224
217
211
210
219
220
220
218
228
217
207
201
205
201
196
68
44
46
49
47
51
47
48
70
45
46
48
45
47
43
42
2,761
2,967
3,028
3,000
3,036
3,079
3,152
3,247
2,840
3,010
3,028
2,944
2,907
2,876
2,872
2,887
151
163
153
161
159
157
157
157
155
166
153
158
152
147
143
140
48
80
86
84
67
67
62
66
50
81
86
82
64
63
56
58
72
111
107
89
91
93
95
98
74
113
107
87
87
87
87
87
174
182
185
193
199
204
210
216
179
185
185
190
190
191
192
192
94
114
109
101
102
104
106
109
97
116
109
99
97
97
97
97
691
693
673
716
750
786
821
859
711
703
673
703
718
734
749
763
111
96
95
94
93
92
91
90
114
97
95
92
89
86
83
80
62
74
53
55
57
59
60
62
64
75
53
54
55
55
55
55
36
28
28
31
29
29
30
29
37
28
28
30
28
27
27
26
1,440
1,542
1,489
1,524
1,546
1,591
1,633
1,686
1,481
1,564
1,489
1,496
1,481
1,487
1,488
1,499
a Exports of tuna landed in Australia. Excludes tuna transhipped at sea or captured under joint venture or bilateral agreements. b In 2016–17
Australian dollars. c Predominantly salmon. Includes trout and salmon-like products. d Includes Queensland bugs. nei Not elsewhere
included. f ABARES forecast. s ABARES estimate. z ABARES projection.
Sources: ABARES; Australian Bureau of Statistics
144
ABARES
Agricultural commodities – March quarter 2017
Articles
Farm performance:
broadacre and dairy farms,
2014–15 to 2016–17
Peter Martin, Walter Shafron and Paul Phillips
Summary
• In 2016–17 farm cash income for broadacre farms nationally is projected to
average $216,000 per farm, the highest recorded in the past 20 years.
• Record winter grain production in most regions, high prices for beef cattle
and good sheep, lamb and wool prices have driven expected record broadacre
farm cash incomes in 2016–17.
• Average farm cash income is projected to increase for broadacre farms in all states
except Tasmania in 2016–17.
• Farm cash income for dairy farms is projected to decline by 17 per cent nationally
to an average of $105,000 per farm in 2016–17, reflecting lower farmgate milk
prices and reduced milk production.
Overview
In 2016–17 favourable seasonal conditions resulted in record winter crop yields and
increased pasture production for grazing beef cattle and sheep throughout most of
Australia’s agricultural regions. Record winter crop production and high prices for
beef cattle, sheep, lamb and wool are projected to result in the highest average farm
cash incomes for broadacre farms in the 20 years since 1996–97. Average farm cash
income for broadacre farms nationally is projected to increase from $182,500 per
farm in 2015–16 to $216,000 per farm in 2016–17 (Box 1).
Broadacre farms grow grains, oilseeds or pulses or run beef cattle or sheep (Box 2)
and are located in all regions across Australia. In aggregate, broadacre farms
accounted for 65 per cent of Australian farm businesses and an estimated 60 per cent
of the total gross value of Australian agricultural production in 2015–16.
146
Expected higher average farm cash income (Box 3) for broadacre farms in 2016–17
follows increases in 2014–15 and 2015–16. These increases were mainly driven
by higher prices for beef cattle combined with high beef cattle turn-off, partly in
response to dry seasonal conditions in northern Australia in 2014–15 and 2015–16
and in parts of New South Wales, Victoria, South Australia and Tasmania in 2015–16.
Beef cattle production is by far the most common and widely dispersed agricultural
activity in Australia, with around 57 per cent of all Australian farms carrying beef
cattle. Increases in average farm cash income in 2014–15 and 2015–16 were also
supported by high overall winter crop production; strong oilseed and pulse prices;
higher sheep, lamb and wool prices; a relatively small increase in farm input costs;
and lower interest rates on farm borrowing.
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Box 1 Farm survey methodology
Each year, as part of its annual farm survey programme, ABARES interviews operators
of around 1,600 broadacre farm businesses in its Australian Agricultural and Grazing
Industries Survey (AAGIS) and 300 dairy farm businesses in the Australian Dairy
Industry Survey (ADIS). The AAGIS is targeted at commercial-scale broadacre farms—
those that grow grains or oilseeds or run sheep or beef cattle and have an estimated
value of agricultural output exceeding $40,000. Broadacre industries covered in
this survey include wheat and other crops, mixed livestock–crops, sheep, beef and
sheep–beef industries. The ADIS is targeted at commercial-scale milk-producing farms.
The information collected provides a basis for analysing the current financial position
of farmers in these industries and expected changes in the short term. Data from the
AAGIS and ADIS were analysed to gain insights into the performance of Australian
broadacre and dairy farms in 2015–16, including projected farm financial performance
in 2016–17.
ABARES uses the latest data available to produce estimates from its surveys.
This means estimates are revised as new information becomes available.
Preliminary estimates previously published are recalculated to reflect updated
benchmark information obtained from the Australian Bureau of Statistics (ABS).
ABARES surveys are designed, and samples selected, on the basis of a framework
drawn from the ABS Business Register. This framework includes agricultural
establishments in each statistical local area, classified by size and major industry.
Data provided in this article were collected through on-farm interviews and
incorporate detailed farm financial accounting information. The estimates presented
were calculated by appropriately weighting the data collected from each sample farm.
Sample weights are calculated so estimates of number of farms, areas of crops
and numbers of livestock in various geographic regions and industries correspond
as closely as possible with the most recently available ABS data, as collected in
agricultural censuses and updated annually with data collected in agricultural
commodity surveys.
Estimates for 2014–15 and earlier years are final. All data from farmers, including
accounting information, have been reconciled. Final production and population
information from the ABS has been included and no further change is expected in
the estimates.
The 2015–16 estimates are preliminary, based on full production and accounting
information from farmers. However, editing and addition of sample farms may be
undertaken and ABS production benchmarks may also change.
The 2016–17 projections are based on data collected through on-farm interviews and
telephone interviews from between October 2016 and January 2017. The estimates
include crop and livestock production, receipts and expenditure up to the date of
interview, together with expected production, receipts and expenditure for the
remainder of the financial year. Modifications have been made to expected receipts
and expenditure for the remainder of 2016–17 where prices have changed significantly
since the interview.
ABARES
Agricultural commodities – March quarter 2017
147
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Box 2 Broadacre sector of Australian agriculture
The sector includes five industry types:
Wheat and other crops industry: specialised producers of cereal grains,
coarse grains, pulses and oilseeds.
Mixed livestock–crops industry: properties engaged in producing sheep and/
or beef cattle in conjunction with substantial activity in cereal grains, coarse grains,
oilseeds and pulses.
Sheep industry: specialised producers of sheep and wool. Sheep industry farms
account for only 30 per cent of Australia’s wool production. Most wool and sheep meat
production occurs on mixed enterprise farms, particularly on mixed livestock–crops
industry farms.
Beef industry: properties engaged mainly in running beef cattle, which currently
account for around 65 per cent of Australia’s beef production. This industry includes
many small farms.
Sheep–beef industry: properties engaged in running sheep and beef cattle.
This industry includes many small farms.
Box 3 Major financial performance indicators
Total cash receipts: total revenues received by the business during the financial year
Total cash costs: payments made by the business for materials, services, finance
costs and for permanent and casual hired labour (excluding owner–manager, partner
and family labour)
Farm cash income: total cash receipts – total cash costs
Farm business profit:
farm cash income + change in trading stocks – depreciation – imputed labour costs
Profit at full equity: return produced by all the resources used in the business
farm business profit + rent + interest + finance lease payments – depreciation on
leased items
Rate of return to total capital used: efficiency of businesses in generating returns
from all resources used (profit at full equity/total opening capital) x 100
Rate of return to owner equity: profit and capital gain generated from all resources
used (profit at full equity including capital appreciation/total opening capital) x 100
148
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Farm cash receipts
High beef cattle turn-off for the three years ending 2015–16 resulted in a reduction
in average herd size in most regions of Australia. Better seasonal conditions in
2016–17 are expected to result in lower turn-off of cattle for slaughter, higher calf
branding rates and a small increase in the size of beef cattle herds in most regions.
Competition between farms to purchase cattle to restock contributed to the
maintenance of high cattle prices in 2016–17.
Nationally in 2016–17, receipts from beef cattle are projected to increase slightly
compared with 2015–16 due to a forecast increase in cattle prices but to decline for
farms undertaking significant herd rebuilding as they reduce cattle sales.
Increased winter grain, oilseed and pulse production in 2016–17 is projected to
result in higher average crop receipts compared with those recorded in 2015–16.
Higher wheat and barley production together with higher pulse prices are projected
to more than offset lower prices for wheat, barley and oilseeds and a reduction in
grain sorghum production. A large increase is projected in receipts for Victorian
grain-producing farms. Record winter crop production is expected in 2016–17 after
dry seasonal conditions reduced production in 2014–15 and 2015–16.
Average farm cash receipts in all states are also projected to be boosted by higher
prices for sheep, lambs and wool.
In 2016–17 average farmgate milk prices are forecast to remain low in southern dairy
regions. Dairy cow numbers and farm inputs are projected to decrease in response to
lower prices, resulting in reduced milk production and milk receipts.
Farm costs
Average farm cash costs for broadacre farms are projected to increase nationally
by around 7 per cent in 2016–17. Higher farm cash costs are partly a result of
higher prices paid for store and breeding cattle and sheep, and fertiliser and crop
chemicals. Grain freight, handling and marketing costs are projected to increase
with the harvest of a larger winter grain crop in 2016–17. Improved crop and
pasture production is projected to result in reduced use of purchased fodder and in
combination with lower fodder prices to result in a reduction of around 15 per cent
in expenditure on purchased fodder. Average interest rates paid on farm debt are
forecast to be around 2 per cent lower in 2016–17.
For dairy farms, expenditure on purchased fodder increased in 2015–16 as a result
of dry seasonal conditions and reduced availability of irrigation water in Victoria,
South Australia and Tasmania. Lower hay and feed grain prices—together with
favourable seasonal conditions in spring and early summer, increased availability of
irrigation water and reduced dairy cow numbers—are projected to result in lower
average farm cash costs in most dairy-farming regions in 2016–17.
ABARES
Agricultural commodities – March quarter 2017
149
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Farm income and profit
Nationally, average farm cash income for broadacre farms has been high in recent
years compared with incomes recorded historically. Farm cash income increased
from $159,640 in 2014–15 to $182,500 in 2015–16. In 2016–17 farm cash income is
projected to increase further to average $216,000 per farm (Table 1), just over double
the 10-year average to 2015–16 of $104,000 in real terms. If achieved, it would be the
highest average farm cash income for broadacre farms in over 20 years (Figure 1).
In 2016–17 average broadacre farm cash incomes are projected to increase in
all states except Tasmania and in all industries compared with those recorded
historically. However, average farm cash incomes differ significantly across
industries, states and regions.
TABLE 1 Financial performance, all broadacre industries, Australia, 2014–15 to 2016–17 average per farm
Measure
Unit
2014–15
2015–16p
Total cash receipts
$
505,800
548,500
(13)
Total cash costs
$
346,150
366,000
(16)
377,000
Farm cash income
$
159,640
182,500
(8)
216,000
Farms with negative farm cash income
2016–17y
594,000
%
14
14
(10)
13
$
24,300
68,600
(24)
112,000
–excluding cap. appreciation
$
65,040
110,000
(16)
152,000
Farm business profit
Profit at full equity
–including cap. appreciation
$
195,050
398,500
(17)
na
Farm capital at 30 June a
$
4,451,650
4,976,300
(3)
na
Net capital additions
$
58,580
62,500
(45)
na
Farm debt at 30 June b
$
536,450
560,500
(5)
571,000
%
5
7
(25)
1
$
3,698,840
3,977,700
(3)
na
%
87
88
(1)
na
Farm liquid assets at 30 June b
$
194,190
209,300
(8)
na
Farm management deposits (FMDs) at 30 June b
$
58,910
66,000
(10)
na
%
26
27
(7)
na
Change in debt – 1 July to 30 June b
Equity at 30 June bc
Equity ratio bd
Share of farms with FMDs at 30 June b
Rate of return e
–excluding cap. appreciation
%
1.5
2.4
(15)
3.1
–including cap. appreciation
%
4.5
8.6
(16)
na
$
36,860
36,200
(11)
na
Off-farm income of owner–manager and partner b
a Excludes leased plant and equipment. b Average per responding farm. c Farm capital minus farm debt. d Equity expressed as a percentage of
farm capital. e Rate of return to farm capital at 1 July. p Preliminary estimates. y Provisional estimates. na Not available.
Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey
150
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Farm cash income is a measure of cash funds generated by the farm business for
farm investment and consumption after paying all costs incurred in production.
This includes interest payments but excludes depreciation and payments to family
workers. It is a measure of short-term farm performance because it does not take
into account depreciation or changes in farm inventories. A measure of longer-term
profitability is farm business profit, because it takes into account capital depreciation
and changes in inventories of livestock, fodder, grain and wool.
In 2016–17 increases in beef cattle and sheep numbers and increases in on-farm
grain stocks in most states will increase farm inventory values and result in a
larger increase in farm business profit compared with that for farm cash income.
Farm business profit for Australian broadacre farms is expected to average
$112,000 per farm in 2016–17. If achieved, this would be the highest farm business
profit for broadacre farms in the 20 years since 1996–97.
FIGURE 1 Financial performance, all broadacre industries, Australia, 1996–97
to 2016–17 average per farm
250
Farm cash income
Farm business profit
200
150
100
50
0
–50
2016–17
$’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Rates of return
The average rate of return to total farm capital, including capital appreciation,
for broadacre farms was high between 2000–01 and 2006–07 but declined after
2007–08 (Figure 2). Strong demand for rural land during most of the 2000s resulted
in a sharp increase in land values in most agricultural regions. This raised the total
capital value of farms. Rapidly rising farm capital values resulted in high rates of
return, including capital appreciation. However, from 2007–08 land values generally
did not increase and reported land values declined in several regions in the five years
to 2013–14. The reduction in reported land values during this period resulted in
lower estimates of average rate of return to total farm capital, including capital
appreciation for broadacre and dairy farms.
ABARES
Agricultural commodities – March quarter 2017
151
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
In 2014–15 and 2015–16 a slight rise in land values was recorded in some high
rainfall and pastoral zone regions. The value of beef and dairy cattle also increased
significantly. This resulted in an increase in average farm capital value and added
around 3.0 per cent to the average rate of return, including capital appreciation, for
broadacre farms in 2014–15 and around 6.2 per cent in 2015–16 (Table 2).
Increases in total farm capital values resulting from the general increase in
land values during the 2000s also acted to reduce rates of return, excluding
capital appreciation.
FIGURE 2 Return on capital, average all broadacre industries, Australia, 1996–97
to 2016–17 average per farm
12
Rate of return, including
capital appreciation
Rate of return, excluding
capital appreciation
10
8
6
4
2
0
%
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
The average rate of return, excluding capital appreciation, for Australian broadacre
farms is estimated to have been 2.4 per cent in 2015–16 and is expected to increase
in 2016–17 to average 3.1 per cent as profit increases for many farms.
In 2016–17 rates of return, excluding capital appreciation, are expected to be positive
across all states. The Northern Territory is projected to have the highest average rate
of return, excluding capital appreciation, at 9.5 per cent.
The projected average rate of return, excluding capital appreciation, is highest in the
wheat and other crops industry, at 4.3 per cent. Since 2013–14 rates of return for the
beef, sheep and sheep–beef industries have increased.
The dairy industry is the lowest ranked industry for 2016–17, with a projected
average rate of return, excluding capital appreciation, of 0.3 per cent compared with
1.3 per cent in 2015–16. In 2016–17 the average rate of return is expected to be
highest in Western Australia (2.7 per cent), similar in Queensland (2.2 per cent) and
lowest in Victoria (–0.4 per cent).
152
ABARES
Agricultural commodities – March quarter 2017
317,490
228,650
144,490
823,580
159,420
Western Australia
South Australia
Tasmania
Northern Territory
Australia
125,100
182,500
2,032,400
147,800
216,400
312,700
187,700
80,300
180,900
(11)
(3)
(16)
(9)
(9)
(9)
(8)
(10)
(6)
$ RSE
2015–16p
103,000
258,000
340,000
222,000
135,000
203,000
$
2016–17y
105,000
216,000
2,098,000
Farm cash income
11,500
79,900
168,000
71,600
–33,100
95,300
63,110
24,190
–10,200
68,600
(215)
(9)
(15)
(142)
(21)
(17)
(23)
(22)
(11)
$ RSE
455,360 1,222,800
24,940
84,750
137,530
–48,540
–16,580
27,390
$
2014–15 2015–16p
–48,000
112,000
2,051,000
30,000
118,000
165,000
144,000
48,000
106,000
$
2016–17y
Farm business profit a
3.2
1.5
3.0
1.4
2.9
3.7
–0.1
0.3
1.6
%
1.3
2.4
6.3
1.0
2.5
4.1
2.2
–0.1
3.0
%
2014–15 2015–16p
(39)
(6)
(8)
(38)
(13)
(12)
(14)
(171)
(8)
RSE
0.3
3.1
9.5
1.4
3.1
3.9
3.3
2.1
3.0
%
2016–17y
Rate of return excluding
capital appreciation b
6.5
4.5
9.2
3.2
9.8
4.5
1.8
6.1
3.4
%
2014–15
5.8
8.6
14.9
4.5
10.2
5.6
8.4
4.7
11.9
%
2015–16p
(26)
(14)
(5)
(17)
(18)
(11)
(7)
(16)
(31)
RSE
Rate of return including
capital appreciation
a Defined as farm cash income plus build-up in trading stocks, less depreciation and the imputed value of operator partner and family labour. b Defined as profit at full equity, excluding capital
appreciation, as a percentage of total opening capital. Profit at full equity is defined as farm business profit plus rent, interest and lease payments less depreciation on leased items.
p Preliminary estimates. y Provisional estimates. RSE Figures in parentheses are standard errors expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey
Australia
156,780
116,030
Queensland
Dairy industry
98,210
140,970
$
2014–15
Victoria
New South Wales
Unit
Measure
TABLE 2 Financial performance of all broadacre industries, by state, Australia, 2014–15 to 2016–17 average per farm
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
ABARES
Agricultural commodities – March quarter 2017
153
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Generally, larger farms generate higher rates of return as a result of increasing
returns to scale, greater access to superior technologies and greater management
skill (Jackson & Martin 2014).
Large wheat and other crops industry farms (Box 4) generated an average rate of
return, excluding capital appreciation, of 5.7 per cent over the five years ending
2014–15, compared with 3.2 per cent for medium-sized wheat and other crops
industry farms and –0.5 per cent for small farms (Table 3). In 2015–16 the average
rate of return for large wheat and other crops industry farms increased to 6.0 per cent
and is expected to increase to 6.8 per cent in 2016–17. Large sheep industry farms
generated an average rate of return of 4.9 per cent over the five years ending 2014–15
and 4.1 per cent in 2015–16. This is expected to increase to 7.0 per cent in 2016–17.
TABLE 3 Rate of return to total capital (excluding capital appreciation) by industry
and farm size, Australia, 2010–11 to 2016–17 average per farm
Industry
Wheat and other crops
Mixed livestock–crops
Sheep
Beef
Sheep–beef
Business
size
2015–16p
2016–17p
%
%
RSE
%
–0.5
3.2
5.7
–0.4
2.8
4.5
–0.3
2.9
4.9
–0.9
1.6
2.0
–0.1
2.1
3.5
–0.5
2.1
6.0
–0.3
1.8
3.7
–0.9
1.8
4.1
0.0
2.4
4.0
0.7
2.3
4.6
(147)
1.1
4.9
6.8
1.5
4.2
4.8
0.5
4.5
7.0
1.0
4.0
7.6
3.2
4.4
6.7
1.8
2.4
(5)
3.2
Small
Medium
0.5
2.8
–0.9
0.3
(147)
(234)
–2.5
0.2
Large
4.8
2.9
(11)
1.5
3.7
1.3
(33)
0.3
Small
Medium
Large
Small
Medium
Large
Small
Medium
Large
Small
Medium
Large
Small
Medium
Large
All broadacre farms
Dairy
Five years
ending
2014–15
All dairy farms
(22)
(7)
(116)
(23)
(15)
(50)
(40)
(15)
(168)
(16)
(10)
(68)
(29)
(11)
p Preliminary estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
The largest increase in rate of return, excluding capital appreciation, in recent years
was for large beef industry farms. Rates of return increased from an average of
2.0 per cent for the five years ending 2014–15 to a projected 7.6 per cent in 2016–17.
For additional information on farm financial performance by farm size, see
‘Disaggregating farm performance statistics by size’ in this publication.
154
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Performance, by state
Projected farm financial performance in 2016–17, and its rank in historical terms,
varies markedly across states and regions (Table 4 and Table 5).
Box 4 Farm sizes
Small farms: farms with a total value of sales of less than $450,000. Small farms
account for 70 per cent of Australian broadacre and dairy farms and around 24 per cent of
the total value of sales (receipts) from broadacre and dairy farms. Small farms are mostly
family owned and operated, typically with a total capital value of less than $5 million.
Off-farm income from wages, salaries, investments and other non-farm businesses often
accounts for more than 50 per cent of the disposable cash income of farm operators.
Medium farms: farms with a total value of sales of between $450,000 and $1 million.
Medium farms account for 20 per cent of Australian broadacre and dairy farms
and around 27 per cent of the total value of sales from broadacre and dairy farms.
Medium farms are mostly family owned and operated, typically with a total capital
value of between $5 million and $9 million. Off-farm income generally accounts for
less than 50 per cent of the disposable cash income of farm operators.
Large farms: farms with a total value of sales exceeding $1 million. Large farms account
for 10 per cent of Australian broadacre and dairy farms and around 49 per cent of the
total value of sales from broadacre and dairy farms. The majority of large farms are
family owned and operated, but complex ownership and operating arrangements are
more common among large farms. Typically, the total capital invested in large farms
exceeds $10 million. Off-farm income usually accounts for only a small proportion of the
disposable cash income of farm operators.
MAP 1 Broadacre zones and regions, Australia average per farm
Pastoral zone
Wheat–sheep zone
71 4
31 1
71 3
High rainfall zone
51 1
71 2
31 3
332
71 1
31 4
31 2
51 2
322
321
41 1
522
521
531
331
1 21
111
421
422
221
1 23
431
222 223
231
1 22 1 31
1 32
631
Note: Each region is identified by a unique code of three digits. The first digit indicates the state or territory,
the second digit identifies the zone and the third digit identifies the region.
Source: ABARES
ABARES
Agricultural commodities – March quarter 2017
155
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 4 Financial performance, broadacre farms, by region, Australia, 2014–15 to 2016–17 average per farm
ABARES region
Year
Unit
New South Wales
111: NSW Far West
121: NSW North West Slopes and Plains
122: NSW Central West
123: NSW Riverina
131: NSW Tablelands
132: NSW Coastal
Victoria
221: VIC Mallee
222: VIC Wimmera
223: VIC Central North
231: VIC Southern and Eastern Victoria
Queensland
311: QLD Cape York and the Gulf
312: QLD West and South West
313: QLD Central North
314: QLD Charleville - Longreach
321: QLD Eastern Darling Downs
322: QLD Darling Downs and Central Highlands
331: QLD South Queensland Coastal
332: QLD North Queensland Coastal
South Australia
411: SA North Pastoral
421: SA Eyre Peninsula
422: SA Murray Lands and Yorke Peninsula
431: SA South East
Western Australia
511: WA Kimberley
512: WA Pilbara and Southern Rangelands
521: WA Central and South Wheat Belt
522: WA North and East Wheat Belt
531: WA South West
Tasmania
Northern Territory
711: NT Alice Springs District
712: NT Barkly Tablelands
713: NT Victoria River District - Katherine
714: NT Top End Darwin and the Gulf
Farm cash income
2014–15 2015–16p
2016–17y
$
$ RSE
$
178,860
108,260
196,210
210,850
81,940
27,540
271,900
245,200
152,400
227,700
148,400
43,400
126,860
73,760
108,780
96,480
49,800
7,500
90,300
99,300
321,880
144,830
133,390
142,800
107,830
157,070
51,060
84,400
424,200
227,600
209,400
252,600
199,500
250,900
73,200
124,400
(30)
255,690
299,790
275,210
126,200
279,600
218,000
263,900
144,800
(34)
1,120,380 2,132,400
451,010 744,200
370,700 306,500
352,050 352,700
86,570 166,300
144,490 147,800
398,490 548,900
3,600,620 6,545,200
337,720 1,728,900
159,690 215,500
(17)
(15)
(12)
(12)
(12)
(22)
(49)
(99)
(17)
(11)
(68)
(27)
(23)
(13)
(10)
(23)
(19)
(23)
(14)
(10)
(21)
(50)
(11)
(18)
(27)
(9)
(33)
(6)
(30)
(99)
Rate of return to total capital
(excluding capital appreciation)
2015–16p
2016–17y
%
RSE
%
383,000
282,000
186,000
244,000
143,000
60,000
5.3
3.9
2.7
3.8
1.8
0.1
207,000
228,000
104,000
112,000
–1.0
–1.5
–0.6
0.6
(99)
1,000,000
162,000
418,000
287,000
173,000
331,000
60,000
127,000
1.6
0.1
0.7
2.4
4.0
3.9
0.1
–1.5
(109)
378,000
286,000
300,000
173,000
4.0
2.9
2.8
1.6
2,163,000
1,181,000
336,000
377,000
139,000
103,000
4.3
10.3
3.4
6.8
1.9
1.0
1,153,000
7,051,000
1,416,000
287,000
0.4
10.7
4.7
3.7
9.6
3.4
2.6
3.5
1.7
0.6
(21)
(15)
(17)
(12)
(22)
(99)
3.6
3.4
1.3
1.7
(23)
(85)
(49)
(99)
(160)
(50)
(18)
(14)
(99)
(63)
3.9
1.6
3.1
4.4
2.9
4.9
1.0
0.8
5.4
4.5
3.0
2.5
(44)
(34)
(17)
(26)
(16)
(27)
(18)
(21)
(26)
(38)
(99)
(8)
(21)
(73)
5.8
12.9
3.5
4.4
2.0
1.4
7.6
11.4
8.7
4.3
p ABARES preliminary estimates. y ABARES provisional estimates. RSE Figures in parentheses are standard errors expressed as a percentage of
the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey
156
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
New South Wales
Average farm cash incomes were high in New South Wales in 2014–15 and increased
further in almost all regions in 2015–16 as a result of higher prices for beef cattle and
increased crop production, particularly in the North West Slopes and Plains region
(Table 4 and Map 1).
In 2016–17 average farm cash incomes are projected to increase further in all regions
of New South Wales as a result of record winter crop production and higher prices for
beef cattle, sheep, lambs and wool. In the Riverina region, increased rice production
as a result of increased availability of irrigation water in 2016–17 is also projected to
contribute to the increase in average farm receipts.
Average broadacre farm cash income in New South Wales is projected to increase
to average $203,000 per farm in 2016–17. If achieved, this would be more than
150 per cent above the 10-year average to 2015–16 of $79,000 and the highest
average farm cash income recorded in New South Wales in the 20 years since
1996–97 (Figure 3).
FIGURE 3 Farm cash income, all broadacre farms, New South Wales and
Queensland, 1996–97 to 2016–17 average per farm
250
New South Wales
Queensland
200
150
100
50
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
ABARES
Agricultural commodities – March quarter 2017
157
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 5 Financial performance, all broadacre industries, by state, Australia, 2014–15 to 2016–17
State
New South Wales
2014–15 2015–16p
2016–17y
2014–15
2015–16p
(4)
568,000
311,610
312,700
Total cash receipts
$
471,020
Total cash costs
$
330,050
352,900
(5)
366,000
213,400
Farm cash income
$
140,970
180,900
(6)
203,000
98,210
Farms with negative farm cash income
533,800
Victoria
2016–17y
(5)
379,000
232,400
(5)
245,000
80,300
(10)
135,000
%
13
12
(20)
11
16
21
(20)
12
$
27,390
95,300
(11)
106,000
–16,580
–33,100
(22)
48,000
–excluding cap. appreciation
$
62,610
132,900
(8)
144,000
8,790
–4,600
(169)
77,000
132,070
na
186,010
164,500
(15)
na
na 3,283,830 3,688,200
(4)
na
(336)
na
Farm business profit
Profit at full equity
–including cap. appreciation
$
522,900
(32)
Farm capital at 30 June a
$ 4,060,120 4,879,900
(5)
Net capital additions
$
60,900
75,000
$
500,520
%
9
Farm debt at 30 June b
Change in debt – 1 July to 30 June b
Equity at 30 June bc
Equity ratio bd
Farm liquid assets at 30 June b
Farm management deposits (FMDs)
at 30 June b
(64)
na
74,640
6,100
549,300
(8)
590,000
290,680
339,700
(9)
356,000
14
(27)
3
10
6
(43)
1
$ 3,429,350 3,821,300
(4)
na 2,925,860 3,094,400
(5)
na
%
87
87
(1)
na
91
90
(1)
na
$
178,520
237,700
(18)
na
155,260
145,300
(12)
na
$
41,410
57,100
(14)
na
44,980
39,300
(20)
na
%
22
25
(13)
na
22
20
(20)
na
–excluding cap. appreciation
%
1.6
3.0
(8)
3.0
0.3
–0.1
(171)
2.1
–including cap. appreciation
%
3.4
11.9
(31)
na
6.1
4.7
(16)
na
$
42,680
38,400
(8)
na
34,880
33,900
(15)
Share of farms with FMDs at 30 June b
Rate of return e
Off-farm income of owner–manager
and partner b
na
continued ...
158
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 5 Financial performance, all broadacre industries, by state, Australia, 2014–15 to 2016–17
State
Queensland
continued
Western Australia
2014–15 2015–16p
2016–17y
2014–15
2015–16p
2016–17y
551,000 1,027,400
1,038,100
(5)1,088,000
Total cash receipts
$
404,270
505,700
Total cash costs
$
288,240
318,000
(5)
329,000
709,920
725,400
(6)
747,000
Farm cash income
$
116,030
187,700
(8)
222,000
317,490
312,700
(9)
340,000
Farms with negative farm cash income
Farm business profit
(5)
%
21
17
(18)
11
11
6
(40)
8
$
–48,540
71,600
(23)
144,000
137,530
168,000
(17)
165,000
Profit at full equity
–excluding cap. appreciation
$
–3,360
111,100
(15)
180,000
216,120
247,700
(13)
241,000
–including cap. appreciation
$
92,340
433,400
(8)
na
262,360
344,900
(11)
na
Farm capital at 30 June a
$ 5,242,980 5,519,200
(4)
na 6,075,810
Net capital additions
$
–19,270
81,200
$
701,900
%
1
Farm debt at 30 June b
Change in debt – 1 July to 30 June b
Equity at 30 June bc
Equity ratio bd
Farm liquid assets at 30 June b
Farm management deposits (FMDs)
at 30 June b
6,347,700
(4)
na
(32)
na
171,740
120,800
(40)
na
637,300
(8)
607,000
945,640
1,027,000
(10)
1,013,000
1
(310)
–2
2
5
(43)
0
$ 4,219,810 4,402,800
(5)
na 4,855,800 5,030,800
(5)
na
%
86
87
(1)
na
84
83
(2)
na
$
185,320
181,900
(10)
na
271,930
241,500
(17)
na
$
44,350
48,500
(16)
na
99,230
96,900
(19)
na
%
22
27
(15)
na
35
29
(15)
na
–excluding cap. appreciation
%
–0.1
2.2
(14)
3.3
3.7
4.1
(12)
3.9
–including cap. appreciation
%
1.8
8.4
(7)
na
4.5
5.6
(11)
na
$
40,840
47,000
(8)
na
22,410
25,300
(15)
Share of farms with FMDs at 30 June b
Rate of return e
Off-farm income of owner–manager
and partner b
na
continued ...
ABARES
Agricultural commodities – March quarter 2017
159
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 5 Financial performance, all broadacre industries, by state, Australia, 2014–15 to 2016–17
State
South Australia
2014–15 2015–16p
Total cash receipts
$
Total cash costs
Farm cash income
Farms with negative farm cash income
Farm business profit
continued
Tasmania
2016–17y
2014–15
2015–16p
2016–17y
428,250
437,400
(6)
602,640
586,600
(6)
628,000
375,000
$
373,990
370,200
(7)
369,000
283,760
289,600
(7)
271,000
$
228,650
216,400
(9)
258,000
144,490
147,800
(9)
103,000
%
6
7
(30)
10
9
4
(58)
12
$
84,750
79,900
(21)
118,000
24,940
11,500
(142)
30,000
Profit at full equity
–excluding cap. appreciation
$
127,380
121,900
(15)
160,000
59,990
43,100
(37)
60,000
–including cap. appreciation
$
434,780
498,200
(19)
na
137,950
189,400
(16)
na
Farm capital at 30 June a
$ 4,749,710
5,318,100
(7)
na 4,302,650
4,338,100
(8)
na
Net capital additions
$
33,680
67,500
(78)
na
–30,480
600
(10747)
na
$
485,970
491,500
(13)
481,000
534,650
445,900
(16)
465,000
%
3
4
(140)
–3
1
–1
(322)
4
$ 4,088,220 4,560,700
Farm debt at 30 June b
Change in debt – 1 July to 30 June b
Equity at 30 June bc
Equity ratio bd
Farm liquid assets at 30 June b
Farm management deposits (FMDs)
at 30 June b
(8)
na 3,633,270
3,533,400
(8)
na
%
89
90
(1)
na
87
89
(2)
na
$
266,970
278,600
(14)
na
147,690
191,600
(22)
na
$
117,990
137,000
(20)
na
66,020
80,900
(40)
na
%
39
45
(13)
na
24
27
(35)
na
–excluding cap. appreciation
%
2.9
2.5
(13)
3.1
1.4
1.0
(38)
1.4
–including cap. appreciation
%
9.8
10.2
(18)
na
3.2
4.5
(17)
na
$
35,350
30,500
(8)
na
23,210
25,800
(15)
Share of farms with FMDs at 30 June b
Rate of return e
Off-farm income of owner–manager
and partner b
na
continued ...
160
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 5 Financial performance, all broadacre industries, by state, Australia, 2014–15 to 2016–17
State
Northern Territory
continued
Australia
2014–15 2015–16p
2016–17y
2014–15
2015–16p
Total cash receipts
$ 2,283,780 3,706,200
(13) 3,830,000
505,960
548,500
(2)
Total cash costs
$ 1,460,190
1,731,000
346,530
366,000
(2)
377,000
Farm cash income
$
(16)2,098,000
159,420
182,500
(3)
216,000
Farms with negative farm cash income
Farm business profit
%
$
1,673,700
823,580 2,032,400
19
(13)
2016–17y
594,000
1
(148)
1
14
14
(11)
13
455,360 1,222,800
(15)
2,051,000
24,190
68,600
(9)
112,000
Profit at full equity
–excluding cap. appreciation
$
564,490 1,355,400
(14)
2,177,000
64,970
110,000
(6)
152,000
–including cap. appreciation
$
1,751,140 3,236,800
(11)
na
194,590
398,500
(14)
na
Farm capital at 30 June a
$ 20,115,480 23,143,900
(10)
na 4,453,380 4,976,300
Net capital additions
$
(75)
na
62,200
58,500
Farm debt at 30 June b
Change in debt – 1 July to 30 June b
Equity at 30 June bc
Equity ratio bd
Farm liquid assets at 30 June b
Farm management deposits (FMDs)
at 30 June b
79,170
230,000
$ 1,223,240
1,183,400
(28)
1,288,000
536,450
1
(1,291)
3
5
$ 7,549,400 9,232,500
(12)
na 3,698,840
%
–8
(2)
na
(28)
na
560,500
(4)
571,000
7
(23)
1
3,977,700
(2)
na
%
86
89
(2)
na
87
88
(1)
na
$
53,330
74,500
(52)
na
194,190
209,300
(8)
na
$
3,540
10,700
(108)
na
58,910
66,000
(8)
na
%
2
3
(73)
na
26
27
(7)
na
–excluding cap. appreciation
%
3.0
6.3
(8)
9.5
1.5
2.4
(6)
3.1
–including cap. appreciation
%
9.2
14.9
(5)
na
4.5
8.6
(14)
na
$
65,580
75,000
(44)
na
36,860
36,200
(11)
na
Share of farms with FMDs at 30 June b
Rate of return e
Off-farm income of owner–manager
and partner b
a Excludes leased plant and equipment. b Average per responding farm. c Farm capital minus farm debt. d Equity expressed as a percentage of
farm capital. e Rate of return to farm capital at 1 July. p Preliminary estimates. y Provisional estimates. na Not available.
Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey
ABARES
Agricultural commodities – March quarter 2017
161
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Queensland
Farm cash incomes increased in all Queensland regions in 2014–15 and again in
2015–16. This was achieved partly through a reduction in cattle herds as cattle
turn-off increased in response to dry seasonal conditions and higher cattle prices.
Further small increases in average farm cash income are projected for some
Queensland regions, with higher cattle prices offsetting reductions in cattle
turn-off in 2016–17. A larger increase is expected in the Cape York and Gulf
region, where a greater increase in turn-off is projected. In West and South West
Queensland, South Queensland Coastal and Eastern Darling Downs, average farm
cash income is projected to decline due to reduced beef cattle turn-off as herd
rebuilding commences.
Farm cash incomes are projected to increase slightly for the Darling Downs and
Central Highlands as a result of increased winter crop production mostly offsetting
the decline in wheat and barley prices combined with a small increase in beef cattle
receipts. Nevertheless, overall crop receipts are projected to decline for some farms
as a result of lower yields from winter crops and an expected reduction in grain
sorghum plantings in 2016–17.
Overall, for Queensland broadacre farms average total farm cash receipts are
projected to increase by 8 per cent. Average total cash costs are projected to increase
by around 7 per cent in 2016–17, mainly as a result of a projected increase in beef
cattle purchase expenditure in some regions.
Average broadacre farm cash income in Queensland is projected to increase to
$222,000 per farm in 2016–17. If achieved, this would be around 140 per cent above
the 10-year average to 2015–16 and the highest recorded for Queensland in the
20 years since 1996–97 (Figure 3).
Victoria
In 2014–15 and 2015–16 farm cash incomes for Victorian broadacre grain farms were
reduced as a result of low winter grain, oilseed and pulse yields due to prolonged dry
seasonal conditions, particularly in the Wimmera region.
In 2016–17 a large increase in production of wheat and barley due to record yields,
together with increased production of pulse crops, is expected to more than
offset lower wheat and barley prices and result in crop receipts increasing by over
60 per cent compared with 2015–16. Reduced turn-off of beef cattle in 2016–17
is projected to result in a small reduction in receipts from beef cattle, despite an
increase in beef cattle prices. Overall, much higher crop receipts together with
increased receipts from sheep, lambs and wool are expected to result in higher farm
cash incomes for broadacre farms in all Victorian regions (Table 4). Average farm cash
income for broadacre farms in Victoria is projected to increase to $135,000 per farm
in 2016–17. If achieved, this would be around 65 per cent above the 10-year average to
2015–16 (Figure 4).
162
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
FIGURE 4 Farm cash income, all broadacre farms, Victoria and Tasmania,
1996–97 to 2016–17 average per farm
150
Victoria
Tasmania
120
90
60
30
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Tasmania
In 2015–16 average farm cash income for Tasmanian broadacre farms was similar
to that recorded in 2014–15. Dry seasonal conditions throughout 2015 resulted in
reduced crop and wool production and a further increase in beef cattle turn-off,
following an increase in 2014–15. Crop, sheep and wool receipts declined and beef
cattle receipts increased due to higher turn-off and higher beef cattle prices.
In 2016–17 average farm cash incomes are projected to decrease in Tasmania as beef
cattle and sheep turn-off is reduced and farms rebuild beef cattle herds and sheep
flocks in response to improved seasonal conditions. Overall, crop receipts are also
expected to be lower as a result of lower grain prices.
On average, farm cash income for broadacre farms in Tasmania is projected to
decline to $103,000 per farm in 2016–17 (Figure 4). This would be lower than the
average recorded in 2015–16 but still around 27 per cent above the 10-year average
to 2015–16.
South Australia
Average broadacre farm cash income was high in 2014–15 and declined only a little
in 2015–16, as a result of slightly lower grain yields and reduced wheat and barley
prices (Figure 5).
In 2016–17 broadacre farm cash incomes are projected to increase to average
$258,000 per farm. This would be around 80 per cent above the 10-year average
to 2015–16.
Increased winter crop production in 2016–17 is expected to result from record yields
and an increase in planted area. This is projected to result in an increase in crop
receipts despite lower wheat and barley prices. Higher crop receipts together with an
increase in receipts from beef cattle, sheep, lambs and wool (due to higher prices) are
projected to result in average farm cash income increasing in all regions in 2016–17.
ABARES
Agricultural commodities – March quarter 2017
163
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
FIGURE 5 Farm cash income, all broadacre farms, South Australia and Western
Australia, 1996–97 to 2016–17 average per farm
400
Western Australia
South Australia
300
200
100
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Higher receipts from lentils also contributed to higher average farm cash incomes for
farms in the Murray Lands and Yorke Peninsula region in 2015–16 and 2016–17.
Adverse spring weather events including frost, wind and heavy rain reduced grain
yields and incomes for some farms.
Western Australia
In 2015–16 a decline in wheat and barley yields and lower grain prices, partly due to
lower grain quality, resulted in a decrease in average broadacre receipts in Western
Australia and a small decline in average broadacre farm cash income. The impact of
lower grain receipts on farm cash income was partly offset by increased beef cattle
and wool receipts resulting from higher beef cattle and wool prices in 2015–16.
In 2016–17 lower prices for wheat and barley are projected to largely offset the effect
of increased wheat and canola production on average crop receipts. In the east of
the Central and South Wheat Belt, severe frost in spring reduced grain yields and
farm recepts. Pool payments received in 2016–17 for grain delivered in 2015–16 are
expected to partially offset the decrease in wheat and barley receipts. As a result, only
a small decrease in average broadacre crop receipts is expected.
Receipts from beef cattle, sheep and lambs are projected to increase as a result of
higher cattle, sheep and wool prices. This is expected to result in higher farm cash
incomes for farms with livestock, including mixed livestock–crops farms.
In the Kimberley region, higher beef cattle prices are projected to increase farm
receipts and raise average farm cash income. In the Pilbara and Southern Rangelands,
higher beef cattle turn-off in addition to higher cattle prices is expected to contribute
to higher average farm cash income (Table 4).
Overall, broadacre farm cash income in Western Australia is projected to increase
from an average of $312,700 per farm in 2015–16 to $340,000 per farm in 2016–17.
If achieved, this would be around 90 per cent above the 10-year average to 2015–16.
164
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Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Northern Territory
Many farm businesses in the upper Northern Territory derive a large share of their
total cash receipts from selling cattle for live export, particularly to Indonesia. The
expansion of the live export trade between 2013–14 and 2015–16 resulted in cattle
being sourced from a much expanded area of northern Australia.
In 2015–16 beef cattle receipts increased by 50 per cent, as a result of a 40 per cent
increase in the average price received for beef cattle and a 10 per cent increase in the
number of beef cattle sold. Average total cash costs increased by 15 per cent, partly
offsetting higher farm receipts. Expenditure was higher on beef cattle purchases,
hired labour, contracts, freight and livestock selling costs. The value of cattle
transferred onto stations by businesses with properties interstate also increased.
Further increases in beef cattle prices are projected to result in a small increase in
average farm cash income for the Northern Territory in 2016–17. Average farm cash
income is projected to decrease in the Victoria River District – Katherine region due
to reduced cattle turn-off. Overall farm cash incomes in the Northern Territory are
projected to increase slightly to average $2,098,000 per farm in 2016–17, compared
with the 10-year average to 2015–16 of $418,000 per farm (Figure 6).
In 2016–17 an increase in cattle numbers is expected due to favourable seasonal
conditions and higher branding rates, increased purchases and transfers onto
corporate properties. This is expected to result in an increase in the value of
inventories and a larger increase in farm business profit.
FIGURE 6 Farm cash income, all broadacre farms, Northern Territory, 1996–97
to 2016–17 average per farm
2,500
2,000
1,500
1,000
500
0
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
ABARES
Agricultural commodities – March quarter 2017
165
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Performance, by industry
Farm financial performance in 2015–16, projected performance in 2016–17 and
historical ranking vary markedly across industries (Table 6 and Table 7).
Wheat and other crops industry
Average farm cash income for the wheat and other crops industry decreased
slightly in 2014–15 and 2015–16, mainly as a result of lower grain and oilseed prices.
The decline in total grain receipts was partly offset by increased receipts for pulses,
particularly in 2015–16. Average farm cash costs did not increase in these two years.
In 2015–16 farm cash income for wheat and other crops industry farms averaged
$318,900 per farm.
In 2016–17 farm cash income for the wheat and other crops industry is projected to
increase to average $398,000 per farm. This is the result of increased winter crop
production in all the major grain-producing states in 2016–17 offsetting lower prices
for grains and oilseeds and increased total cash costs. If realised, farm cash income
will be around 70 per cent higher than the 10-year average to 2016–17 and the highest
recorded in the past 20 years (Figure 7).
Wheat and other crops industry farms recorded the highest average rate of return
excluding capital appreciation (4.3 per cent) of industries surveyed in 2015–16
and 2016–17.
FIGURE 7 Farm cash income, grains industries, Australia, 1996–97 to 2016–17
average per farm
500
Wheat and other crops
Mixed livestock–crops
400
300
200
100
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
166
ABARES
Agricultural commodities – March quarter 2017
2016
–17y
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 6 Financial performance, by industry, Australia, 2014–15 to 2016–17
average per farm
Measure
Farm cash income
Year
2014–15
Unit
2015–16p
Farm business profit p
2016–17y
2014–15
2015–16p
2016–17y
$
$
$
$
$
$
Wheat and other crops
315,990
318,900
398,000
121,810
186,500
206,000
Mixed livestock–crops
172,330
131,100
184,000
38,240
19,000
66,000
Beef industry
93,490
159,300
163,000
–31,550
48,100
96,000
Sheep
118,900
105,000
133,000
22,730
5,700
51,000
Sheep beef
128,330
182,200
202,000
16,870
77,300
144,000
All broadacre industries
159,640
182,500
216,000
24,300
68,600
112,000
Dairy
156,780
125,100
105,000
63,110
–10,200
–48,000
Financial performance measure
Year
Unit
Rate of return
–excluding capital appreciation a
2014–15
2015–16p
Rate of return
–including capital appreciation a
2016–17y
2014–15
2015–16p
2016–17y
%
%
%
%
%
%
Wheat and other crops
3.6
4.3
4.3
8.1
8.7
na
Mixed livestock–crops
2.1
1.5
2.5
6.1
4.7
na
Beef industry
–0.2
1.6
2.4
1.6
11.1
na
Sheep
1.4
0.9
2.3
3.4
6.5
na
Sheep beef
1.0
2.2
3.6
4.2
9.4
na
All broadacre industries
1.5
2.4
3.1
4.5
8.6
na
Dairy
3.2
1.3
0.3
6.5
5.8
na
a Defined as profit at full equity, excluding capital appreciation, as a percentage of total opening capital. Profit at full equity is defined as farm
business profit plus rent, interest and lease payments less depreciation on leased items. p Preliminary estimates. y Provisional estimates.
na Not available.
Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey
Mixed livestock–crops industry
Average farm cash income for the mixed livestock–crops industry decreased in
2015–16 to $131,100 per farm, mainly as a result of lower grain prices and reduced
crop production in Victoria due to dry seasonal conditions. Increases in receipts
for beef cattle, lambs and wool were not sufficient to offset lower crop receipts.
Total cash costs decreased, driven by reductions in expenditure on crop planting and
harvesting. This was the result of reduced area and production of crops in Victoria,
together with lower interest rates on farm debt.
In 2016–17 crop receipts are projected to increase due to increased winter crop
production and higher receipts from beef cattle, sheep, lambs and wool. This is
expected to result in an overall increase in total farm cash receipts of around
17 per cent.
ABARES
Agricultural commodities – March quarter 2017
167
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Total cash costs are projected to increase by around 7 per cent, because of increased
expenditure on harvesting and marketing the larger 2016–17 winter crop and
despite reduced expenditure on interest and fodder.
Average farm cash income for mixed livestock–crops industry farms is projected
to increase to $184,000 per farm in 2016–17, around 35 per cent above the 10-year
average to 2015–16.
Sheep industry
In 2014–15 higher prices for lambs, adult sheep and wool, together with increased
sales of sheep and lambs, resulted in an increase in average farm cash income for
the sheep industry (Figure 8).
In 2015–16 farm cash income for sheep industry farms declined slightly due to
reduced wool production to average $105,000 per farm.
In 2016–17 farm cash income for the sheep industry is projected to increase to
average $133,000 per farm as a result of higher wool, lamb and sheep prices.
Farm cash income will be around 70 per cent higher than the 10-year average to
2015–16 and the highest recorded in the 20 years since 1996–97 (Figure 8).
FIGURE 8 Farm cash income, sheep industries, Australia, 1996–97 to 2016–17
average per farm
250
Sheep–beef
Sheep
200
150
100
50
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Sheep–beef industry
In 2015–16 a large increase in receipts from the sale of beef cattle, together with
smaller increases in receipts from the sale of sheep, lambs and wool, resulted from
higher prices for beef cattle, lambs, adult sheep and wool and despite a reduction in
beef cattle turn-off. In 2014–15 beef cattle turn-off increased, particularly in regions
with drier seasonal conditions in Queensland, northern New South Wales, Victoria,
South Australia and Tasmania. Farm cash income for sheep–beef industry farms
increased to average $182,200 per farm.
168
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
In 2016–17 farm cash income for sheep–beef industry farms is projected to increase
further to average $202,000 per farm as a result of higher prices for wool, lamb, sheep
and beef cattle and despite a reduction in beef cattle turn-off. If achieved, this would
be around 130 per cent above the 10-year average to 2015–16 and the highest average
farm cash income for sheep–beef farms in the 20 years since 1996–97.
Beef industry
Beef industry farm cash incomes increased strongly in 2014–15 as a result of
increased cattle prices and the highest beef cattle turn-off in 36 years, partly as a
result of dry seasonal conditions. Average farm cash income for beef industry farms
is estimated to have increased from $56,000 per farm in 2013–14 to $93,490 in
2014–15 (Figure 9).
Turn-off of beef cattle for slaughter declined sharply in 2015–16 as a result of reduced
numbers of saleable cattle and as some farmers commenced herd rebuilding in
response to improved seasonal conditions in regions previously affected by dry
seasonal conditions. Despite reduced turn-off for slaughter, further increases in
saleyard prices for beef cattle (partly driven by demand from farmers restocking)
resulted in increases in beef cattle receipts and total farm receipts of around
30 per cent in 2015–16. Farm cash income for beef industry farms increased to
average $159,300 per farm in 2015–16.
In 2016–17 farm cash income for beef industry farms is projected to increase only
slightly and average $163,000 per farm. Turn-off of beef cattle for slaughter and
live export is forecast to be further reduced and offset by a small increase in beef
cattle prices.
Favourable seasonal conditions in 2016–17 are expected to result in an increase in
cattle numbers through higher branding rates and reduced turn-off rates, resulting
in an increase in the value of inventories and a relatively larger increase in farm
business profit in 2016–17 (Table 5).
FIGURE 9 Farm cash income, beef industry, Australia, 1996–97 to 2016–17
average per farm
180
150
120
90
60
30
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
ABARES
Agricultural commodities – March quarter 2017
169
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 7 Financial performance, by industry, broadacre and dairy industries, Australia, 2014–15 to 2016–17
average per farm
Industry
Unit
Wheat and other crops industry
2014–15
2015–16p
2016–17y
Mixed livestock–crops industry
2014–15 2015–16p
2016–17y
Total cash receipts
$ 1,055,260 1,061,500
(4)
1,176,000
517,040
468,800
(6)
544,000
Total cash costs
$
739,270
742,600
(4)
778,000
344,710
337,700
(6)
360,000
Farm cash income
Farms with negative farm cash income
Farm business profit
$
315,990
318,900
(6)
398,000
172,330
131,100
(8)
184,000
%
10
10
(18)
15
13
18
(19)
11
$
121,810
186,500
(11)
206,000
38,240
19,000
(58)
66,000
Profit at full equity
–excluding cap. appreciation
$
215,550
277,800
(8)
295,000
79,410
61,400
(20)
109,000
–including cap. appreciation
$
478,780
565,300
(9)
na
226,080
193,600
(25)
na
Farm capital at 30 June a
$ 6,371,490 6,981,900
(4)
na 3,909,950 4,299,300
Net capital additions
$
Farm debt at 30 June b
Change in debt – 1 July to 30 June b
Equity at 30 June bc
Equity ratio bd
Farm liquid assets at 30 June b
Farm management deposits (FMDs)
at 30 June b
$
188,240
122,900
na
46,600
52,000
(5)
na
(193)
na
(7)
1,169,000
540,380
587,200
(11)
608,000
8
(28)
–1
4
4
(77)
1
$ 5,004,420 5,404,800
%
1,188,790 1,144,900
(30)
7
(4)
na 3,284,460 3,558,400
(5)
na
%
81
83
(1)
na
86
86
(2)
na
$
298,170
323,100
(10)
na
174,210
126,200
(10)
na
$
141,410
169,400
(13)
na
62,220
46,700
(14)
na
%
40
44
(9)
na
33
26
(12)
na
–excluding cap. appreciation
%
3.6
4.3
(7)
4.3
2.1
1.5
(18)
2.5
–including cap. appreciation
%
8.1
8.7
(9)
na
6.1
4.7
(26)
na
$
32,010
40,900
(41)
na
30,870
34,900
(10)
na
Share of farms with FMDs at 30 June b
Rate of return e
Off-farm income of owner–manager
and partner b
continued ...
170
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 7 Financial performance, by industry, broadacre and dairy industries, Australia, 2014–15 to 2016–17
average per farm
continued
Industry
Unit
Sheep industry
2014–15
Beef industry
2015–16p
2016–17y
2014–15 2015–16p
2016–17y
Total cash receipts
$
359,830
337,400
(20)
353,000
303,690
391,900
(50)
402,000
Total cash costs
$
240,930
232,300
(21)
220,000
210,200
232,600
(69)
239,000
Farm cash income
Farms with negative farm cash income
Farm business profit
$
118,900
105,000
(22)
133,000
93,490
159,300
(23)
163,000
%
11
14
(27)
10
20
15
(19)
14
$
22,730
5,700
(503)
51,000
–31,550
48,100
(87)
96,000
Profit at full equity
–excluding cap. appreciation
$
44,740
28,500
(107)
72,000
–7,070
71,200
(64)
119,000
–including cap. appreciation
$
107,390
200,800
(23)
na
67,810
486,200
(37)
na
Farm capital at 30 June a
$ 3,320,720 3,285,500
(14)
na 4,262,700 4,830,400
Net capital additions
$
90,060
22,300
$
293,950
%
8
Farm debt at 30 June b
Change in debt – 1 July to 30 June b
Equity at 30 June bc
Equity ratio bd
Farm liquid assets at 30 June b
Farm management deposits (FMDs)
at 30 June b
Share of farms with FMDs at 30 June b
(6)
na
(94)
na
339,100
(11)
346,000
5
(94)
4
(116)
na
12,310
36,600
320,400
(18)
303,000
345,260
10
(54)
0
2
$ 2,966,520 2,765,600
(16)
na 3,577,410 3,804,900
(4)
na
%
91
90
(2)
na
91
92
(1)
na
$
128,180
141,700
(23)
na
195,430
229,800
(16)
na
$
40,750
45,000
(61)
na
27,080
30,000
(17)
na
%
19
18
(21)
na
16
22
(16)
na
Rate of return e
–excluding cap. appreciation
%
1.4
0.9
(101)
2.3
–0.2
1.6
(61)
2.4
–including cap. appreciation
%
3.4
6.5
(24)
na
1.6
11.1
(35)
na
$
26,750
27,700
(10)
na
48,610
39,000
(10)
na
Off-farm income of owner–manager
and partner b
continued ...
ABARES
Agricultural commodities – March quarter 2017
171
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 7 Financial performance, by industry, broadacre and dairy industries, Australia, 2014–15 to 2016–17
average per farm
continued
Industry
Unit
Sheep–beef industry
2014–15
2015–16p
Dairy industry
2016–17y
2014–15 2015–16p
2016–17y
Total cash receipts
$
356,280
453,400
(7)
469,000
786,620
766,800
(3)
706,000
Total cash costs
$
227,950
271,200
(8)
267,000
629,840
641,700
(4)
602,000
Farm cash income
Farms with negative farm cash income
Farm business profit
$
128,330
182,200
(8)
202,000
156,780
125,100
(11)
105,000
%
7
4
(66)
8
21
17
(34)
29
$
16,870
77,300
(22)
144,000
63,110
–10,200
(215)
–48,000
Profit at full equity
–excluding cap. appreciation
$
38,120
98,600
(18)
167,000
132,510
55,500
(36)
14,000
–including cap. appreciation
$
166,000
410,300
(15)
na
269,470
247,000
(30)
na
Farm capital at 30 June a
$ 4,034,370 4,760,000
Net capital additions
$
1,360
59,900
$
309,480
%
3
Farm debt at 30 June b
Change in debt – 1 July to 30 June b
Equity at 30 June bc
Equity ratio bd
Farm liquid assets at 30 June b
Farm management deposits (FMDs)
at 30 June b
Share of farms with FMDs at 30 June b
(6)
na 4,348,920 4,516,700
(6)
na
(28)
na
937,600
(7)
900,000
7
(43)
4
(36)
na
47,930
116,600
360,900
(15)
353,000
902,140
9
(72)
–3
3
$ 3,480,970 4,000,400
(7)
na 3,520,610 3,585,400
(7)
na
%
92
92
(1)
na
80
79
(2)
na
$
113,720
153,300
(23)
na
214,040
193,600
(16)
na
$
31,640
36,400
(42)
na
33,720
32,000
(23)
na
%
22
26
(31)
na
18
21
(21)
na
Rate of return e
–excluding cap. appreciation
%
1.0
2.2
(16)
3.6
3.2
1.3
(39)
0.3
–including cap. appreciation
%
4.2
9.4
(15)
na
6.5
5.8
(26)
na
$
29,200
29,200
(19)
na
18,080
16,800
(14)
na
Off-farm income of owner–manager
and partner b
a Excludes leased plant and equipment. b Average per responding farm. c Farm capital minus farm debt. d Equity expressed as a percentage of
farm capital. e Rate of return to farm capital at 1 July. p Preliminary estimates. y Provisional estimates. na Not available.
Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey
172
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Dairy industry
In 2015–16 average farm cash incomes declined in Victoria, Tasmania and
South Australia, driven by a decline in average farmgate milk prices and a small
reduction in milk production in Victoria and Tasmania (Table 8). Dry seasonal
conditions resulted in increased fodder costs and higher milk production costs in
Victoria and Tasmania. Farm cash income for Victorian dairy farms declined from
an average of $152,080 per farm in 2014–15 to $105,400 in 2015–16 (Figure 10).
In contrast, in Western Australia higher milk prices and an increase in milk
production resulted in a rise in average farm cash income for dairy farms (Figure 11).
In Queensland, higher average milk prices and a small reduction in average farm
cash costs (mainly due to the exit of higher cost producers) resulted in an increase in
average farm cash income. Average farm cash income increased in New South Wales
as result of a slight increase in average farmgate milk prices in northern and central
New South Wales.
In 2016–17 average farmgate milk prices are forecast to increase slightly in southern
dairy regions from 2015–16. However, average farm cash incomes are projected to
decline further in New South Wales, Victoria and South Australia compared with
2015–16 as a result of lower milk prices paid by some processors and reduced milk
production per farm. Farms are continuing to adjust to lower than expected prices
compared with 2013–14 and 2014–15. Cold, wet conditions in early spring also
contributed to lower milk production in southern regions.
Farm cash income for Victorian dairy farms is projected to decline to an average of
$75,000 per farm in 2016–17. Average farm cash incomes in northern New South
Wales, Queensland and Western Australia are projected to remain similar to those
for 2015–16.
In 2016–17 farm cash receipts in all states have been boosted by sales of cull dairy
cows and high prices for other dairy and beef cattle. This has partially offset lower
milk receipts.
Lower fodder and feed grain prices, together with favourable seasonal conditions in
spring and early summer and increased availability of irrigation water, are projected
to result in lower average cash costs for dairy farms in most regions. In Tasmania,
the reduction in farm cash costs is projected to be sufficient to result in a small
improvement in average farm cash income for dairy farms from $133,900 per farm in
2015–16 to $140,000 per farm in 2016–17.
Overall, average farm cash income for Australian dairy farms is projected to decrease
to average $105,000 per farm in 2015–16, around 11 per cent below the 10-year
average to 2015–16.
ABARES
Agricultural commodities – March quarter 2017
173
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
FIGURE 10 Farm cash income, dairy industry farms, New South Wales and Victoria,
1996–97 to 2016–17 average per farm
250
New South Wales
Victoria
200
150
100
50
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Dairy Industry Survey
FIGURE 11 Farm cash income, dairy industry farms, Western Australia and
Tasmania, 1996–97 to 2016–17 average per farm
400
Western Australia
Tasmania
300
200
100
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
y Provisional estimates.
Source: ABARES Australian Dairy Industry Survey
174
ABARES
Agricultural commodities – March quarter 2017
2010
–11
2013
–14
2016
–17y
221,750
156,780
Tasmania
Australia
125,100
133,900
131,700
334,300
137,600
105,400
183,700
(11)
(23)
(27)
(9)
(13)
(19)
(9)
$ RSE
–8,050
63,820
78,660
$
105,000
140,000
111,000
63,110
112,620
10,570
337,000 152,980
167,000
75,000
166,000
$
–10,200
–700
18,200
201,200
63,600
–39,100
55,900
$
2016–17y 2014–15 2015–16p
(215)
(999)
(217)
(18)
(31)
(80)
(35)
RSE
–48,000
–33,000
–70,000
158,000
40,000
–74,000
4,000
$
3.2
4.1
2.2
2.8
1.3
3.3
3.3
%
1.3
1.8
2.1
3.4
3.0
0.6
2.6
%
2015–16p
(39)
(27)
(41)
(14)
(20)
(132)
(17)
RSE
0.3
1.3
0.1
2.7
2.2
–0.4
1.4
%
2016–17y
Rate of return excluding
capital appreciation a
2016–17y 2014–15
Farm business profit
6.5
5.6
3.9
3.8
4.0
7.5
5.8
%
5.8
1.9
2.9
4.0
5.7
6.7
6.3
%
2014–15 2015–16p
(26)
(96)
(39)
(27)
(19)
(35)
(15)
RSE
na
na
na
na
na
na
na
%
2016–17y
Rate of return including
capital appreciation
a Defined as profit at full equity, excluding capital appreciation, as a percentage of total opening capital. Profit at full equity is defined as farm business profit plus rent, interest and lease payments less
depreciation on leased items. p Preliminary estimates. y Provisional estimates. na Not available.
Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey
146,270
236,810
South Australia
Western Australia
91,780
152,080
Victoria
Queensland
179,210
$
2014–15 2015–16p
Farm cash income
New South Wales
Unit
Year
Measure
TABLE 8 Financial performance, dairy industry, by state, 2014–15 to 2016–17 average per farm
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
ABARES
Agricultural commodities – March quarter 2017
175
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Farm investment
Producers’ capacity to generate farm income is influenced by past investments in
additional land to expand the scale of farming activities and in new infrastructure,
plant and machinery to boost productivity in the longer term.
Over the decade to 2015–16 broadacre and dairy farmers invested heavily in land,
plant and machinery. In 2015–16 new investment remained relatively high in
historical terms for broadacre and dairy farms.
Higher farm cash incomes for broadacre farms in 2014–15 and 2015–16 led to an
increase in the proportion of broadacre farms acquiring additional land through
purchase or lease (Figure 12). Around 8 per cent of broadacre farms acquired
additional land in 2014–15 and around 7 per cent in 2015–16. This was above the
average of 5 per cent for the previous 10 years and comparable with the rates of the
late 1990s and early 2000s.
FIGURE 12 Proportion of broadacre farms acquiring land, Australia, 1996–97 to
2015–16 percentage of farms
10
8
6
4
2
%
1997
–98
2000
–01
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16p
p Preliminary estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Between 2009–10 and 2013–14 land values reported for broadacre and dairy farms
declined in some regions, particularly in the pastoral zone of northern Australia
(Figure 13). The increase in land sales led to a slight increase in reported broadacre
land values in some regions in 2014–15 and 2015–16. This was particularly the case
in high rainfall regions and some pastoral zone regions.
176
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
FIGURE 13 Land prices for broadacre farms, by zone, Australia, 1977–78 to 2015–16
average per farm
800
Wheat–sheep
Pastoral
High rainfall
700
600
500
400
300
200
100
index
1977–78
=100
1979
–80
1983
–84
1987
–88
1991
–92
1995 1999 2003 2007 2011
–96 –2000 –04 –08 –12
2015
–16p
p Preliminary estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Farm debt
Debt is an important source of funds for farm investment and ongoing working capital
for the broadacre and dairy industries, because more than 95 per cent of farms in
these sectors are family owned and operated. Funding by family farms for expansion
and improvement is limited to the funds available to the family, the profits the
business can generate and the funds it can borrow.
Nationally, total indebtedness of the agriculture, fishing and forestry industries to
institutional lenders increased by 77 per cent, from $42.0 billion at 30 June 2001 to
$74.3 billion in real terms at 30 June 2009. Total rural debt subsequently declined
in real terms to $68.5 billion at 30 June 2015 before rising to $69.5 billion at
30 June 2016. Bank lending accounts for around 95 per cent of total institutional
lending. Bank lending declined from $66.9 billion at 31 December 2009 to
$64.4 billion at 30 September 2015 before rising to $67.9 billion at 30 September 2016
(RBA 2017a, b).
Change in farm debt over time is the balance between the amount of principal repaid
and the increase in principal owed (new borrowing). The increase in broadacre and
dairy industry debt is the result of increased borrowing together with reduced loan
principal repayments through much of the 2000s.
Lower interest rates from the late 1990s and increased lending fuelled the boom in
land prices. This raised farm equity (net wealth) and induced lenders to provide more
finance. This continued until a correction in land values in some regions after 2009
and a tightening of lending practices by banks in recent years. Provision of interest
subsidies to farmers in drought through exceptional circumstances arrangements
supported debt servicing. In many regions this assistance was sustained for most of
the 2000s.
ABARES
Agricultural commodities – March quarter 2017
177
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Several factors in addition to lower interest rates contributed to the growth in debt
over this period. Structural adjustment resulted in broadacre farmers changing the
mix of commodities produced and increasing farm size. An increase in the average
size of farm enterprises resulted in higher borrowing for ongoing working capital.
Factors that contributed to increased working capital debt included movement away
from less input-intensive wool production into more intensive cropping, changes in
grain payment methods, higher variability in crop incomes compared with livestock
incomes and movement to more intensive production technologies involving greater
use of purchased inputs such as herbicides.
Loan repayment slowed and borrowing to meet working capital requirements
increased during the 2000s drought. Working capital debt accounted for 30 per cent
of the increase in average farm debt for broadacre farms between 2000–01
and 2014–15.
Average broadacre and dairy farm debt more than doubled from 2000–01 to 2014–15,
mainly resulting from an increase in average farm size. The increase in average
debt per farm was modest relative to the increase in average cash receipts per farm
(Figure 14 and Figure 15). Borrowing increased most for land purchase and on-farm
investment. Borrowing for ongoing working capital also rose in line with increases in
average farm size and greater mechanisation and intensification of enterprises.
FIGURE 14 Farm business debt and total farm cash receipts, broadacre farms,
Australia, 1996–97 to 2016–17 average per farm
700
Farm business debt
Total farm cash receipts
600
500
400
300
200
100
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
178
ABARES
Agricultural commodities – March quarter 2017
2016
–17y
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Borrowing to fund new on-farm investment, particularly the purchase of land,
machinery and vehicles, was the largest contribution to the increase in average
broadacre farm debt. In particular, debt to fund land purchase accounted for the
largest share (an estimated 52 per cent) of the increase in average debt for broadacre
farms between 2000–01 and 2014–15.
FIGURE 15 Farm business debt and total farm cash receipts, dairy farms, Australia,
1996–97 to 2016–17 average per farm
1,000
Farm business debt
Total farm cash receipts
800
600
400
200
2016–17
’000
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Dairy Industry Survey
Growth in average debt for broadacre farm businesses slowed between 2009–10 and
2013–14 as a result of a reduction in new borrowing and continued debt repayments.
However, average farm business debt is estimated to have increased for broadacre
and dairy industry farms in 2015–16. Broadacre debt is estimated to have
increased by 7 per cent during 2015–16 to average $560,500 per farm at 30 June 2016.
Dairy industry debt also increased by around 7 per cent to average $937,600 per farm
(Figure 14 and Figure 15).
Most new borrowing during 2015–16 for broadacre and dairy farms funded new
on-farm investment (Figure 16). The proportion of new borrowing to cover operating
expenses was higher in the dairy industry (23 per cent) than the broadacre industries
(19 per cent). This was partly a result of lower farm cash incomes in 2015–16 for
many dairy farms. However, a higher proportion of borrowing for operating expenses
is common for more intensive farm enterprises.
ABARES
Agricultural commodities – March quarter 2017
179
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
FIGURE 16 Purpose of borrowing increases identified by farm operators, Australia,
2015–16p average per farm
Broadacre farms
Operating expenses
19%
Land purchase a
42%
Machinery, equipment
and vehicles
23%
Livestock purchase
1%
Farm development
3%
Debt consolidation
7%
Other b
5%
Dairy farms
Operating expenses
Land purchase a
Machinery, equipment
and vehicles
Livestock purchase
Farm development
Debt consolidation
Other b
23%
29%
18%
3%
9%
9%
10%
a Includes purchase of permanent irrigation water entitlement. b Includes borrowing to fund changes in
farm business ownership/partnership. p Preliminary estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey
Farm equity
Farm business equity on average is strong for broadacre farms (Figure 17).
The average equity ratio for broadacre farms at 30 June 2016 is estimated at
88 per cent, an increase from 87 per cent at 30 June 2015. Around 82 per cent of
farms had equity ratios exceeding 80 per cent at 30 June 2016.
The decline in land values from 2007–08 to 2013–14 reduced farm equity in some
regions and prompted financial institutions to tighten lending. This restricted access
for some farm businesses to more finance.
180
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
FIGURE 17 Farm business debt, owner equity and equity ratio, broadacre farms,
Australia, 1996–97 to 2015–16 average per farm
5,000
100
4,000
90
3,000
80
2,000
70
1,000
60
2016–17
’000
Farm business debt
Equity of business
owners
Equity ratio (right axis)
%
1997
–98
2000
–01
2003
–04
2006
–07
2009
–10
2012
–13
2015
–16p
p Preliminary estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
In pastoral and other regions of northern Australia, farm equity fell significantly over
the five years to June 2014. This was mainly a consequence of reported reductions in
land values. However, farm equity strengthened in other regions because of reduced
farm debt and increased capital investment.
Farm equity for many beef and sheep farms increased with the general rise in prices
for beef cattle and sheep in 2014–15. Farm equity is also estimated to have increased
with small increases in land values in high rainfall and pastoral regions in 2014–15
and 2015–16.
The average equity ratio for dairy farms nationally has declined since 2004–05 as
debt levels have increased with increased herd size and milk production. This is
particularly the case in regions with increased focus on dairy production for export,
including Tasmania, western Victoria and South Australia. The average farm equity
ratio for dairy industry farms at 30 June 2016 was 79 per cent, down 1 percentage
point from 30 June 2015 and around 7 per cent lower than in 2004–05.
Change in farm equity ratios over time should also be considered against the
background of the increase in average farm size. Equity ratios are typically lower
for larger farms because they are generally able to service larger debts.
ABARES
Agricultural commodities – March quarter 2017
181
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 9 Distribution of broadacre farms, by farm business debt and equity ratio, Australia, 30 June 2016 ap
percentage of farms
New
South
Wales
South
Victoria Queensland Australia
Western
Australia Tasmania
Northern
Territory
Australia
Farm business debt b
<$100,000
%
52
(7)
58
(9)
54
(7)
48
(11)
34
(15)
63
(13)
38
(45)
51
(4)
$100,000 and
<$250,000
%
10
(21)
14
(30)
13
(24)
9
(36)
9
(33)
8
(67)
0
–
11
(13)
$250,000 and
<$500,000
%
12
(19)
10
(22)
7
(28)
13
(29)
8
(32)
13
(47)
21
(60)
10
(11)
$500,000 and <$1m
%
11
(18)
8
(23)
10
(20)
16
(21)
13
(29)
2
(75)
10
(99)
11
(10)
$1m and <$2m
%
8
(17)
7
(22)
8
(19)
10
(25)
22
(19)
7
(35)
10
(77)
10
(9)
≥$2m
%
7
(14)
4
(17)
9
(12)
4
(30)
14
(16)
7
(29)
20
(34)
7
(7)
Total
%
100 –
100
–
100
–
100
–
100
–
100
–
100
–
100
–
549
(8)
340
(9)
637
(8)
492
(13)
1,027
(10)
446
(16)
1,183
(28)
561
(4)
Average farm debt at
30 June
$’000
Farm business equity ratio bc
≥90 per cent
%
65
(5)
77
(3)
70
(4)
66
(7)
50
(10)
78
(5)
62
(22)
68
(2)
80 and <90 per cent
%
17
(16)
11
(19)
13
(18)
12
(26)
19
(19)
13
(29)
24
(49)
14
(9)
70 and <80 per cent
%
9 (20)
6
(25)
7
(24)
14
(28)
15
(24)
4
(43)
11
(62)
9
(11)
60 and <70 per cent
%
6 (25)
2
(37)
5
(23)
7
(34)
8
(26)
4
(33)
0
(22)
5
(13)
<60 per cent
%
3 (28)
3
(37)
5
(23)
2
(57)
8
(35)
2
(51)
3
(99)
4
(15)
Total
%
100 –
100
–
100
–
100
–
100
–
100
–
100
–
100
–
Average farm business
equity ratio at 30 June
%
90
(1)
87
(1)
90
(1)
83
(2)
89
(2)
89
(2)
88
(1)
no. 16,760 – 12,530
–
9,380
– 1,000
–
160
– 52,120
–
Population of farms
87
(1)
– 6,190
– 6,100
a Excludes debt for large corporate farms. b Average per responding farm. c Equity ratio defined as total owned business capital at 30 June less
debt as a percentage of total owned business capital. p ABARES preliminary estimates.
Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey
182
ABARES
Agricultural commodities – March quarter 2017
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
TABLE 10 Distribution of farms by industry, by farm business debt and equity ratio, Australia,
30 June 2016ap percentage of farms
Wheat and
other crops
Mixed
livestock–
crops
Sheep
Beef
Sheep–beef
Dairy
Farm business debt b
<$100,000
%
25
(15)
40
(11)
62
(12)
69
(5)
53
(12)
15
(25)
$100,000 and <$250,000
%
10
(24)
17
(19)
10
(32)
11
(26)
6
(68)
9
(37)
$250,000 and <$500,000
%
12
(23)
10
(22)
13
(53)
5
(27)
23
(23)
14
(40)
$500,000 and <$1m
%
18
(15)
13
(20)
5
(48)
8
(20)
9
(30)
31
(21)
$1m and <$2m
%
20
(13)
13
(16)
6
(44)
3
(33)
7
(28)
20
(19)
≥$2m
%
15
(12)
7
(17)
4
(28)
4
(17)
3
(44)
11
(20)
Total
%
100
–
100
–
100
–
100
–
100
–
100
–
$’000
1,145
(7)
587
(11)
320
(18)
339
(11)
361
(15)
938
(7)
Average farm debt at
30 June
Farm business equity ratio bc
≥90 per cent
%
44
(9)
58
(7)
75
(5)
84
(3)
73
(7)
28
(15)
80 and <90 per cent
%
22
(13)
18
(19)
10
(32)
8
(20)
18
(27)
23
(27)
70 and <80 per cent
%
16
(18)
12
(20)
8
(23)
4
(27)
8
(30)
27
(24)
60 and <70 per cent
%
10
(20)
8
(24)
5
(40)
2
(36)
2
(59)
10
(30)
<60 per cent
%
9
(21)
4
(33)
2
(74)
2
(34)
0
(99)
13
(31)
Total
%
100
–
100
–
100
–
100
–
100
–
100
–
Average farm business
equity ratio at 30 June
%
83
(1)
86
(2)
90
(2)
92
(1)
92
(1)
79
(2)
no. 10,970
–
11,190
–
6,280
–
18,790
–
4,900
–
6,620
–
Population of farms
a Excludes debt for large corporate farms. b Average per responding farm. c Equity ratio defined as total owned business capital at 30 June less
debt as a percentage of total owned business capital. p ABARES preliminary estimates.
Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey
Distribution of farms by debt and equity
The proportion of broadacre farms with relatively high debt varies across
jurisdictions and industries (Table 9 and Table 10).
Around 36 per cent of broadacre farms in Western Australia and around 30 per cent
of those in the Northern Territory carried more than $1 million in debt at
30 June 2016. The high proportion of farms with debt exceeding $1 million reflects
a high proportion of larger businesses in those jurisdictions.
Similarly, around 35 per cent of wheat and other crops industry farms and
31 per cent of dairy industry farms nationally carried more than $1 million in debt
at 30 June 2016. Both industries have a high proportion of large farms.
ABARES
Agricultural commodities – March quarter 2017
183
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
In contrast, 69 per cent of beef farms and 63 per cent of sheep–beef farms nationally
were recorded as having debt of less than $100,000 at 30 June 2015. Many of these
businesses are small.
Much of the aggregate broadacre sector debt is held by a relatively small proportion
of mostly larger farms. At 30 June 2016 around 70 per cent of aggregate broadacre
sector debt was held by just 12 per cent of farms. On average, these were large farm
businesses and in aggregate they produced around 50 per cent of the total value of
broadacre farm production in 2015–16.
Aggregate debt is slightly less concentrated among larger farms in the dairy industry.
Nevertheless, around 70 per cent of aggregate dairy sector debt at 30 June 2016 was
held by 30 per cent of farms.
Debt servicing
For the broadacre industries, the proportion of net farm income (total farm cash
receipts less total cash costs excluding interest costs) needed to fund interest
payments rose substantially between 2001–02 and 2006–07. This resulted from
a large increase in farm debt and reduced farm receipts after extended drought
conditions. Interest rate subsidies (paid to farm businesses as drought assistance)
partially offset the increase in interest paid over this period.
Higher net farm income since 2009–10 and reductions in interest rates resulted in a
decline in the average proportion of net income needed to fund interest payments for
broadacre farms (Figure 18).
FIGURE 18 Ratio of interest payments to net farm income, broadacre farms,
Australia, 1996–97 to 2016–17 average per farm
250
50
200
40
150
30
100
20
50
10
2016–17
’000
%
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey
184
ABARES
Agricultural commodities – March quarter 2017
2016
–17y
Net income
Interest to net income
ratio (percentage of
net income used to
pay interest) (right axis)
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
Large increases in borrowing through the 2000s and a reduction in net income
between 2007–08 and 2013–14 resulted in the proportion of net income needed to
fund interest payments being high for the beef industry (Figure 19). The proportion
of net income needed to fund interest payments peaked at just over 60 per cent in
2007–08 as northern beef industry farms commenced rebuilding herds after the end
of the 2000s drought. The proportion trended downwards to 18 per cent in 2015–16
and is projected to remain at around 18 per cent in 2016–17. This is similar to the
proportion recorded in 2001–02, when beef cattle prices were also historically high.
In 2016–17 the ratio of interest payments to net farm income is also projected to
be historically low in the wheat and other crops and sheep industries, at around
16 per cent for both.
FIGURE 19 Ratio of interest payments to net farm income, by industry, Australia,
1996–97 to 2016–17 average per farm
80
Beef
Sheep
Dairy
Wheat and other crops
70
60
50
40
30
20
10
%
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey
For the dairy industry, the proportion of net farm income needed to fund interest
payments increased very sharply in 2002–03, 2006–07 and 2012–13. Dry seasonal
conditions and low milk prices resulted in very low net farm incomes in those years
(Figure 20). In 2016–17 the proportion of net farm income needed to meet interest
payments is projected to increase to 33 per cent for the dairy industry nationally and
to around 36 per cent in Victoria.
ABARES
Agricultural commodities – March quarter 2017
185
Farm performance: broadacre and dairy farms, 2014–15 to 2016–17
FIGURE 20 Ratio of interest payments to net farm income, dairy farms, Australia,
1996–97 to 2016–17 average per farm
280
70
240
60
200
50
160
40
120
30
80
20
40
10
2016–17
’000
Net income
Interest to net income
ratio (right axis)
%
1998
–99
2001
–02
2004
–05
2007
–08
2010
–11
2013
–14
2016
–17y
Note: Interest to net income ratio is percentage of net income used to pay interest. y Provisional estimates.
Source: ABARES Dairy Industry Survey
References
Jackson, T & Martin, P 2014, ‘Trends in the size of Australian farms’, in Agricultural
commodities: September quarter 2014, Australian Bureau of Agricultural and
Resource Economics and Sciences, Canberra.
RBA 2017a, Bank lending to business—total credit outstanding by size and sector,
Reserve Bank of Australia, Sydney, accessed 7 February 2017.
—— 2017b, Rural debt by lender, Reserve Bank of Australia, Sydney, accessed
7 February 2017.
186
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Productivity in Australia’s
broadacre and dairy
industries
Charley Xia, Shiji Zhao and Haydn Valle
Summary
• From 1977–78 to 2014–15, productivity in the broadacre industries grew by
1.1 per cent per year on average as a result of declining input use (–1 per cent a year)
and modest output growth (0.1 per cent a year).
• From 1977–78 to 2014–15 average annual productivity growth in the cropping
industry was 1.5 per cent a year, compared with beef (1.3 per cent), sheep
(0.3 per cent) and mixed livestock–crops (0.9 per cent).
• Since 2001–02 the sheep industry has exhibited strong annual productivity growth
(2.7 per cent a year) compared with the cropping (2.1 per cent), beef (0.5 per cent)
and mixed livestock–crops (1.2 per cent) industries.
• Climate conditions have significantly affected the productivity of cropping farms.
However, adjusting for the effects of climate, the productivity of cropping farms
grew strongly from 1977–78 to 1993–94 (2.5 per cent a year), slowed between
1994–95 and 2006–07 (0.2 per cent) and increased between 2006–07 and
2014–15 (1.7 per cent).
• In the dairy industry, productivity growth averaged 1.5 per cent a year between
1978–79 and 2014–15. This was a result of a 1.3 per cent a year increase in output
and a 0.2 per cent a year decline in input use.
Introduction
Productivity growth is an important measure of performance for Australian
agriculture because in the long term it reflects changes in the efficiency with which
farmers use land, labour, capital and intermediate inputs (for example, chemicals,
fodder and purchased services) to produce outputs such as crops, meat, wool
and milk.
Productivity growth is the key mechanism by which farmers maintain profits.
Profitability improves farmers’ livelihoods and attracts investment and resources
into agriculture. It also helps farmers:
• finance ongoing expenditure on farm inputs
• meet debt-servicing obligations
• fund investments in new technologies
• earn a return on their entrepreneurial ability and capital investments.
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Productivity in Australia’s broadacre and dairy industries
Productivity growth helps farmers offset the impact on profitability of a declining
trend in farmer terms of trade (output prices relative to input prices) (Figure 1).
Improving productivity is the main way farmers can meet the challenges of uncertain
seasonal conditions and other factors beyond their control.
FIGURE 1 Agricultural total factor productivity and farmer terms of trade, Australia,
1948–49 to 2013–14
400
Terms of trade
Total factor productivity
350
300
250
200
150
100
50
index
1977–78
=100
1950
–51
1957 1964
–58 –65
1971
–72
1978
–79
1985 1992 1999 2006 2013
–86 –93 –2000 –07 –14
Sources: ABARES; Sheng & Jackson 2015
Productivity growth is the increase in output beyond associated increased input
use (or a decrease in the quantity of inputs needed to produce a unit of that output).
ABARES preferred measure of productivity is total factor productivity (TFP), the
ratio of gross output to total inputs. TFP takes into account a wide range of inputs
used and outputs produced (Zhao et al. 2012). Long-term TFP growth is a key
indicator of the underlying efficiency of farm businesses. However, short-term
variations in TFP can reflect changes in seasonal conditions, so readers should be
cautious when interpreting year-to-year movements of TFP numbers.
ABARES produces productivity measures for the Australian broadacre and dairy
industries (Box 1). This article updates ABARES productivity statistics to include
data for 2014–15 and summarises some of the previous research on the drivers of
agricultural productivity.
Drivers of agricultural productivity growth
In the long term, technological progress is the main driver of productivity growth.
Public and private investment in research and development (R&D) has contributed
significantly to agricultural productivity growth in Australia (Sheng et al. 2011a).
Farmers have captured developments in technology and knowledge by investing
in higher-yielding, pest and disease-resistant crop varieties, superior planting and
harvesting techniques, and better livestock genetics.
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Productivity in Australia’s broadacre and dairy industries
Box 1 ABARES productivity estimates
ABARES estimates total factor productivity (TFP) as the ratio of a quantity index
of gross output relative to a quantity index of total input. Outputs cover crops and
livestock products. Inputs include land, labour, capital, materials and services.
The Fisher index is used to aggregate across different outputs and inputs into quantity
indexes. Calculating average TFP growth rates is based on fitting an exponential
trend line to the annual productivity indexes.
TFP estimates for the broadacre and dairy industries are based on data collected
through ABARES farm surveys. ABARES surveys approximately 1,600 broadacre
farms and 300 dairy farms each year. Farm data are collected through face-toface interviews with farmers about farm business operations during the preceding
financial year. Interview questions cover farm management, production of crops and
livestock products, labour use, expenditure, assets and debt positions, government
assistances and off-farm activities.
ABARES classifies broadacre and dairy farms in accordance with the Australian and
New Zealand Standard Industrial Classification (ANZSIC) (ABS 2013):
Crops industry (ANZSIC06 class 0146 and 0149)—farms engaged mainly
in growing cereal grains, coarse grains, oilseeds, rice and/or pulses.
Mixed livestock–crops industry (ANZSIC06 class 0145)—farms engaged mainly
in running sheep or beef cattle (or both) and growing cereal grains, coarse grains,
oilseeds and/or pulses.
Beef industry (ANZSIC06 class 0142)—farms engaged mainly in running
beef cattle.
Sheep industry (ANZSIC06 class 0141)—farms engaged mainly in running sheep.
Sheep–beef industry (ANZSIC06 class 0144)—farms engaged mainly in running
both sheep and beef cattle. In this article, TFP estimates are not reported separately
for these farms. However, they are included within the aggregate broadacre estimates.
Dairy industry (ANZSIC06 class 0160)—farms engaged mainly in farming
dairy cattle.
A farm is classified into an industry if more than 50 per cent of its receipts are
generated by that particular enterprise. Farms that do not meet this criterion for any
single enterprise are considered mixed livestock–crops farms. The broadacre industries
accounted for about 60 per cent of the total gross value of Australian agricultural
production in 2014–15.
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Productivity in Australia’s broadacre and dairy industries
In the short term, measures of productivity growth for agricultural industries are
sensitive to climate variability (Hughes et al. 2011; Sheng et al. 2011b). Much of
the productivity growth between the late 1970s and mid 1990s was the result of
generally above average rainfall, which increased cropping yields and contributed
to strong pasture growth. A slowdown in productivity growth since the mid 1990s
is partly a result of adverse seasonal conditions, particularly during the 2000s
(Sheng et al. 2011b).
Reforms in Australian agricultural industries have also affected productivity.
For example, the removal of marketing and price support mechanisms has
contributed directly and indirectly to productivity growth of the broadacre
industries (Gray et al. 2014a). These reforms led to structural change through
the amalgamation of farms, better risk management and changes in the mix of
agricultural commodities produced. These changes altered the allocation of
resources between farms, with more efficient producers tending to gain a greater
market share over time (Sheng & Jackson 2016; Sheng et al. 2016b).
Farm size increased over the four decades to 2014–15 (Figure 2). Individual farms
have expanded and some small farms have left the industry. ABARES has found that
larger farms tend to have higher productivity than smaller farms, partly because
they use different technologies (Sheng et al. 2014). Large farms may benefit more
from adopting innovations than small farms because they have the capacity to fund
investment, and technology providers are more likely to produce solutions that meet
the needs of large farms (Jackson & Martin 2014).
FIGURE 2 Farm population and average farm size, all broadacre industries,
Australia, 1977–78 to 2014–15
140
14,000
120
12,000
100
10,000
80
8,000
60
6,000
40
4,000
20
2,000
no.
(’000)
dse
1979
–80
1984
–85
1989
–90
1994
–95
1999
–2000
2004
–05
2009
–10
Note: Average farm size is measured in dry sheep equivalents (dse).
Source: ABARES
190
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Agricultural commodities – March quarter 2017
2014
–15
Population of
broadacre farms
Average farm size
(right axis)
Productivity in Australia’s broadacre and dairy industries
Farm managers also have a significant bearing on the productivity of farms.
Farming is a complex production process. Managers require knowledge and a broad
range of skills to maximise profits given uncertainty about seasonal conditions and
future prices. Good managers are more likely to make use of information and change
technology when it is advantageous to do so. This allows them to produce maximum
output from a given set of inputs, leading to higher productivity (Nossal & Lim 2011).
Broadacre productivity
Productivity growth in the broadacre industries averaged 1.1 per cent a year between
1977–78 and 2014–15 as a result of declining input use and modest output growth
(Table 1, Figure 3). From 2001–02 to 2014–15 productivity growth increased by an
average of 1.4 per cent a year as a result of a faster decline in input use than in output
production (Table 1).
Total input use in the broadacre industries declined between 1977–78 and 2014–15
at an average annual rate of 1 per cent a year. Land use, which accounts for the largest
share of total broadacre input use, declined on average by 1 per cent a year. Similarly,
use of capital declined by 1.5 per cent and labour by 2.2 per cent a year. In contrast,
use of material inputs including fertiliser, crop chemicals and fodder increased
significantly, reflecting a trend towards more intensive management systems for
livestock and crop production.
Despite declining input use, broadacre output increased by 0.1 per cent a year
between 1977–78 and 2014–15. However, this varied substantially over time, mostly
because of changing seasonal conditions.
FIGURE 3 Total factor productivity, output and input, all broadacre industries,
Australia, 1977–78 to 2014–15
200
Total factor productivity
Output
Input
150
100
50
index
1977–78
=100
1979
–80
1984
–85
1989
–90
1994 1999 2004
–95 –2000 –05
2009
–10
2014
–15
Source: ABARES Australian Agricultural and Grazing Industries Survey
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Productivity in Australia’s broadacre and dairy industries
TABLE 1 Total factor productivity, output and input growth, broadacre industries,
Australia, 1977–78 to 2014–15
Growth rate between
1977–78 and 2014–15 (%)
Growth rate between
2001–02 and 2014–15 (%)
Total factor productivity
1.1
1.4
Output
0.1
–0.4
–1.0
–1.8
Total factor productivity
1.5
2.1
Output
2.6
2.6
Input
1.2
0.6
0.9
1.2
Output
–0.8
–1.6
Input
–1.8
–2.8
0.3
2.7
Output
–2.6
–3.3
Input
–2.9
–5.9
Total factor productivity
1.3
0.5
Output
1.1
0.1
–0.2
–0.3
All broadacre
Input
Cropping
Mixed livestock–crops
Total factor productivity
Sheep
Total factor productivity
Beef
Input
Source: ABARES Australian Agricultural and Grazing Industries Survey
Three key trends can be identified from the varying productivity growth rates
across broadacre industries. First, the cropping industry has had higher average
productivity growth than livestock industries over the long term. For the cropping
industry, TFP growth averaged 1.5 per cent a year between 1977–78 and 2014–15,
compared with mixed livestock–crops (0.9 per cent), beef (1.3 per cent) and sheep
(0.3 per cent) (Table 1). The cropping industry’s higher growth could be a result of
more rapid developments in cropping technologies and reallocation of resources
towards crop production in the three decades to 2006 (Mullen 2007;
Sheng et al. 2016a).
192
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Productivity in Australia’s broadacre and dairy industries
Second, the difference in productivity growth rates between cropping and livestock
industries is narrowing (Figure 4). This can be attributed to a slowdown in the
productivity growth of the cropping industry since the late 1990s (Sheng et al. 2011b)
and productivity improvements in the beef industry in the 25 years to 2014–15
(Figure 4). High productivity growth in the sheep industry from 2001–02 to 2014–15
is the result of a larger decline in input use than output (Table 1). This follows
the removal of the wool reserve price scheme in 1991 and subsequent industry
consolidation, as well as shifts by farmers from wool production to cropping and
sheep meat production.
FIGURE 4 Total factor productivity growth, by broadacre industries, Australia,
1977–78 to 2014–15
4
1977–78 to 1989–90
1989–90 to 2001–02
2001–02 to 2014–15
3
2
1
0
–1
%
Broadacre
Cropping
Mixed
Beef
Sheep
Source: ABARES Australian Agricultural and Grazing Industries Survey
Third, from 1977–78 to 2014–15 the mixed livestock–crops industry experienced
modest productivity growth of 0.9 per cent a year on average. The increase in
productivity in this industry was a result of a fall in output (–0.8 per cent a year) and a
greater decline in the use of input (–1.8 per cent a year). In the two decades to 2014,
mixed livestock–crops farms have tended to specialise in either crop or livestock
enterprises (McKenzie 2014). This structural change has shifted inputs away from
this industry and into specialised crop and livestock production.
Cropping
Productivity in the cropping industry grew on average by 1.5 per cent a year between
1977–78 and 2014–15. This was driven by strong output growth (2.6 per cent a year)
relative to input growth (1.2 per cent a year) (Table 1, Figure 5).
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Productivity in Australia’s broadacre and dairy industries
FIGURE 5 Total factor productivity, output and input, cropping industry, Australia,
1977–78 to 2014–15
350
Total factor productivity
Output
Input
300
250
200
150
100
50
index
1977–78
=100
1979
–80
1984
–85
1989
–90
1994
–95
1999
–2000
2004
–05
2009
–10
2014
–15
Source: ABARES Australian Agricultural and Grazing Industries Survey
Jackson (2010) and Knopke et al. (2000) attributed strong productivity growth in the
cropping industry in the 1980s and 1990s to developments in technology such as
larger machinery, new plant varieties, improved water management and a better
understanding of harvesting and planning strategies. Productivity growth in the
cropping industry has slowed since the late 1990s (Sheng et al. 2011b). This has been
attributed to drought, the slower spread of new technology, a slowdown in the
development of breakthrough technologies, the effects of knowledge constraints, loss
of a profitable break crop and a shift in research priorities away from productivityrelated factors (Jackson 2010).
Output has grown strongly in the cropping industry, but input use has also increased.
This is largely due to increased land and material input use. From 1977–78 to
2014–15 cropping farms have operated larger farms, with average farm sowing areas
increasing nearly threefold. Material inputs including fertiliser, fuel, crop chemicals
and seed have increased by an average of 4 per cent a year. Improved understanding
of cropping systems, including plant physiology and determinants of soil fertility,
has expanded the use of fertiliser and crop chemicals (especially nitrogen and soil
ameliorants such as lime and gypsum).
Cropping farms continue to face climate risks. A 2017 ABARES study (Hughes
et al. forthcoming) quantifies the impact of climate conditions on cropping farm
productivity (Box 2).
The Grains Research and Development Corporation (GRDC 2015) identifies three
broad cropping regions across Australia: northern, southern and western. The three
regions all experienced productivity growth between 1977–78 and 2014–15 but
vary in their output and input growth (Table 2). Variations in climate conditions, soil
fertility and operating environment across the regions contribute to differences in
crop varieties and production systems. For example, climate and soil conditions in
the northern region enable farmers to diversify crop production (GRDC 2015). In
contrast, farmers in the western region have practised no-tillage extensively over the
longest period (Llewellyn et al. 2012).
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Productivity in Australia’s broadacre and dairy industries
Box 2 Effect of climate on cropping farm productivity
ABARES productivity estimates are subject to significant climate effects, including
large decreases in drought years. This can make it difficult to discern underlying trends
in farm performance, both in the short term due to annual climate variability and in
the longer term due to climate change.
Over the 20 years to 2013, the CSIRO and Australian Bureau of Meteorology have
observed marked changes in Australia’s climate, including reductions in average
winter rainfall in southern Australia and general increases in temperature (CSIRO &
BoM 2014). Evidence suggests these trends are partly due to climate change (CSIRO
2012; CSIRO & BoM 2016). A 2017 ABARES study (Hughes et al. forthcoming)
quantifies the effects of climate on the productivity of Australian cropping farms
from 1977–78 to 2014–15. The research further presents climate-adjusted productivity
estimates, which measure the performance of cropping farms after climate effects
have been removed.
The climate-adjusted figures suggest that productivity grew strongly during the 1980s
and early 1990s but slowed considerably from around 1993–94 (Figure 6). However,
evidence suggests that productivity growth of cropping farms has been rising since
2006–07 at 1.7 per cent a year. Around 85 per cent of total productivity gains since
1977–78 occurred from 1987–88 to 1993–94 and from 2007–08 to 2013–14.
FIGURE 6 Average climate-adjusted productivity, cropping farms, Australia,
1977–78 to 2014–15
200
Climate-adjusted total
factor productivity
Total factor
productivity
Climate effect
150
100
50
index
1979
–80
1984
–85
1989
–90
1994 1999 2004
–95 –2000 –05
2009
–10
2014
–15
Note: The method used by Hughes et al. (forthcoming) for calculating productivity differs
slightly from that used in this article. Estimates therefore vary.
Source: Hughes et al. forthcoming
continued ...
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Productivity in Australia’s broadacre and dairy industries
Box 2 Effect of climate on cropping farm productivity
continued
In the two decades to 2014–15, climate conditions deteriorated across many
grain-growing regions. Map 1 shows the average effect of climate on productivity levels
from 2000–01 to 2014–15 (relative to long-term average conditions). Southern New
South Wales and northern parts of the western GRDC region were significantly
affected by adverse climate conditions from 2000–01 to 2014–15, due largely to
declines in average winter rainfall. However, from 2000–01 onward some regions
also experienced slight improvements, including the high rainfall zones of southern
Australia, and parts of coastal northern New South Wales and southern Queensland.
The results show that farms have become less sensitive to adverse climate shocks
over the decade to 2014–15. This suggests that cropping farms are adapting to the
longer-term changes in climate by focusing on technologies that improve productivity
in dry years. Anecdotal evidence suggests that farmers have adopted a variety of
management practices, including conservation tillage, to exploit summer soil moisture
in anticipation of reduced winter rainfall.
MAP 1 Average climate effect on productivity levels, cropping farms, Australia,
2000–01 to 2014–15
Less than –20%
–20 to –10%
–10 to –2%
–2 to 2%
2 to 10%
Greater than 10%
Sparse sample
GRDC regions
Note: Climate effect is relative to the period 1914–15 to 2014–15.
Source: Hughes et al. forthcoming
TABLE 2 Total factor productivity, output and input growth, cropping industry,
by GRDC region, Australia, 1977–78 to 2014–15
Region
TFP (%)
Output (%)
Input (%)
Northern
1.3
1.9
0.6
Southern
1.9
2.9
1
Western
1.4
3.7
2.3
Source: ABARES Australian Agricultural and Grazing Industries Survey
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Beef
Productivity growth in the Australian beef industry averaged 1.3 per cent a year
between 1977–78 and 2014–15. Output increased by 1.1 per cent and inputs declined
by 0.2 per cent a year (Table 3 and Figure 7). In the four decades to 2012–13,
productivity improvements in this industry were partly realised through improved
pastures, herd genetics and disease management, which lowered mortalities
and increased branding rates (calves marked as a percentage of cows mated)
(Jackson et al. 2015).
FIGURE 7 Total factor productivity, output and input, beef industry, Australia,
1977–78 to 2014–15
200
Total factor productivity
Output
Input
150
100
50
index
1977–78
=100
1979
–80
1984
–85
1989
–90
1994 1999 2004
–95 –2000 –05
2009
–10
2014
–15
Source: ABARES Australian Agricultural and Grazing Industries Survey
Climate, pastures, industry infrastructure and proximity to markets vary
significantly for beef enterprises in northern and southern Australia. These factors
have contributed to differences in production systems such as in herd structure and
farm operations.
From 1977–78 to 2014–15 productivity growth was higher for northern beef farms
(1.4 per cent a year) compared with their southern counterparts (0.6 per cent a year)
(Table 3). This difference was a result of reduced input use in the north and increased
input use in the south, particularly of fertiliser and chemicals.
Beef farms in the southern region face a more varied climate and are more sensitive
to drought conditions. This can lead to increased feed costs and destocking and
restocking cycles that affect output growth. Beef farms in the southern region
are also smaller and less profitable. This is likely to contribute to lower average
productivity growth (Jackson & Valle 2015).
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Productivity in Australia’s broadacre and dairy industries
TABLE 3 Total factor productivity, output and input growth, beef industry,
by region, Australia, 1977–78 to 2014–15
Region
Northern
Southern
TFP (%)
1.4
0.6
Output (%)
1
1.2
Input (%)
–0.3
0.6
Source: ABARES Australian Agricultural and Grazing Industries Survey
Sheep
Productivity growth in the sheep industry averaged 0.3 per cent a year from 1977–78
to 2014–15 (Figure 8). Sheep industry productivity declined between 1978–88 and
1993–94 but has since rebounded. Sheep industry productivity grew by an average
of 2.7 per cent a year from 2001–02 to 2014–15, the highest growth within the
broadacre industries (Figure 4).
The Australian sheep industry has undergone significant adjustment since the early
1990s, when price support mechanisms for wool were removed. Many farmers
shifted their enterprise mix from wool to cropping, resulting in lower sheep
numbers. Numbers were further reduced by farmers destocking their properties
during periods of drought. Productivity growth in the sheep industry has also been
attributed to advances in animal breeding and genetics and improved herd, disease
and fodder management (Gray et al. 2014b).
From the early 1990s to 2013 a significant increase in the share of ewes in flocks and
a corresponding decline in that of wethers contributed to long-term growth in lamb
production. However, wool production declined at a faster rate (Dahl et al. 2013).
During that period, increased use of non-Merino rams, first-cross ewes and specialty
meat breeds, combined with increased emphasis on selection and breeding for meat
production traits, boosted productivity through higher lamb growth rates and
greater incidence of twinning. Improved pastures and greater use of fodder crops
and supplementary feed improved ewe fertility, reduced lamb mortality rates and
increased average slaughter weights.
FIGURE 8 Total factor productivity, output and input, sheep industry, Australia,
1977–78 to 2014–15
250
Total factor productivity
Output
Input
200
150
100
50
index
1977–78
=100
Collapse of the wool reserve price scheme
1979
–80
1984
–85
1989
–90
1994
–95
1999
–2000
2004
–05
2009
–10
Source: ABARES Australian Agricultural and Grazing Industries Survey
198
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2014
–15
Productivity in Australia’s broadacre and dairy industries
Dairy
Productivity growth in the Australian dairy industry averaged 1.5 per cent a year
between 1978–79 and 2014–15 (Figure 9). This was driven by output increasing
by an average of 1.3 per cent a year and input use declining by an average of
0.2 per cent a year.
FIGURE 9 Total factor productivity, output and input, dairy industry, Australia,
1977–78 to 2014–15
200
Total factor productivity
Output
Input
150
100
50
index
1977–78
=100
1979
–80
1984
–85
1989
–90
1994
–95
1999 2004
–2000 –05
2009
–10
2014
–15
Source: ABARES Australian Dairy Industry Survey
The drivers of productivity growth in the dairy industry were substantially different
after the deregulation reforms implemented in 2000. Throughout the 1980s and
1990s, many dairy farms transitioned to more intensive production systems.
This reduced labour and land requirements but increased material inputs such as
fertiliser and supplementary feed (Ashton et al. 2014). Productivity improvements
during this period were driven by output increasing faster than input use, as farmers
adopted new technologies such as rotary dairies, artificial insemination and
improved pastures (Harris 2011).
In the 2000s many smaller farms exited the dairy industry following deregulation
and total output declined. Productivity growth during this period was driven by
input use declining faster than output, as resources such as land, labour and capital
shifted towards the most efficient farms. In particular, deregulation appears to have
facilitated the movement of resources from farms using the year-round production
system, in which calving and milk production are spread evenly throughout the year,
to those using the seasonal production system, in which production periods are more
synchronised with pasture availability. This resource reallocation effect boosted
industry productivity at a time when on-farm technological progress was slowing
(Sheng & Jackson 2016).
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202
ABARES
Agricultural commodities – March quarter 2017
Disaggregating farm
performance statistics
by size
Tom Jackson and Walter Shafron
Overview
In this article farm performance statistics are presented for 10 size categories.
Each category represents 10 per cent of the farm population in each industry and
region, ranked from smallest to largest according to total farm receipts. For more
information about the design of these statistics see Jackson and Shafron (2016).
Statistics are presented for the broadacre, dairy and vegetable industries.
The broadacre industry is split into wheat and other crops, beef, sheep, mixed
livestock–crops and sheep–beef. The cropping industry is separated into the Grains
Research and Development Corporation western, northern and southern regions
(Map 1) and the beef industry into the Meat & Livestock Australia northern and
southern regions (Map 2).
MAP 1 Grains Research and Development Corporation regions, Australia
Northern
Southern
Western
Source: Grains Research and Development Corporation
ABARES
Agricultural commodities – March quarter 2017
203
Disaggregating farm performance statistics by size
MAP 2 Beef cattle industry, Australia
Northern
Southern
Source: Meat & Livestock Australia
Each table contains the most recent data for a set of variables that summarise the
output and economic performance of farms in each size category. The variables are:
• share of total output produced
• total cash receipts
• total cash costs
• profit at full equity
• total opening capital
• net capital additions
• rate of return including capital appreciation, and equity ratio.
Farm returns vary significantly from year to year, reflecting factors such as seasonal
conditions and commodity prices. Data are averaged over 2013–14 to 2015–16 to
provide the most meaningful picture of farm performance.
Key points for 2013–14 to 2015–16
• The largest 10 per cent of broadacre farms produced 46 per cent of total output,
while the smallest 50 per cent of farms produced 12 per cent of total output.
• The average rate of return including capital appreciation generated by the largest
10 per cent of broadacre farms was 8.2 per cent, while the smallest 10 per cent
generated average returns of –2.8 per cent.
• The largest 10 per cent of broadacre farms had the lowest average equity ratio of all
farms (79 per cent), while the smallest 10 per cent of farms had the highest average
equity ratio (97 per cent).
204 ABARES
Agricultural commodities – March quarter 2017
Disaggregating farm performance statistics by size
TABLE 1 Broadacre farms, Australia, 2013–14 to 2015–16
Size
decile
Output share
(%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
Net capital
Capital ($) additions ($)
Rate of
return (%)
Equity
ratio (%)
1
0.9
49,738
50,090
–48,979
1,427,717
–15,117
–2.8
97.4
2
1.6
89,410
68,697
–34,748
1,848,062
–10,667
1.1
96.4
3
2.3
124,937
93,681
–34,915
2,568,446
–11,909
0.4
96.2
4
3.0
163,256
106,915
–16,372
2,273,310
14,857
1.9
96.0
5
3.9
215,629
162,011
–19,481
3,166,183
–45,866
12.0
92.9
6
5.4
295,834
197,116
18,482
3,358,468
42,027
2.8
91.7
7
7.6
418,576
282,032
69,012
4,258,818
28,098
4.4
90.1
8
11.3
620,849
416,984
102,602
5,371,826
71,861
5.8
87.8
9
18.2
998,062
662,666
232,971
7,791,479
149,636
6.5
85.6
10
45.9
2,523,620
1,730,048
701,875
14,268,766
414,335
8.2
78.5
Source: ABARES Australian Agricultural and Grazing Industries Survey
TABLE 2 Wheat and other crops farms, Australia, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
1
0.6
69,433
69,005
–47,385
1,464,836
–86,732
–1.6
97.9
2
1.6
176,802
138,143
–12,025
2,541,347
–28,773
–0.1
90.1
3
2.8
343,324
261,175
40,504
3,054,287
71,963
2.8
92.0
4
4.2
485,680
328,564
81,035
3,799,303
–9,231
6.7
84.7
5
5.8
661,204
494,349
79,639
4,619,797
109,934
8.9
84.4
6
7.9
865,149
573,721
177,061
5,365,905
22,220
5.8
85.1
7
9.4
1,147,288
757,615
297,460
7,498,020
179,967
8.0
86.3
8
13.5
1,541,323
1,024,860
453,949
7,860,840
240,701
8.8
81.1
9
18.3
2,096,165
1,489,748
574,714
9,806,254
392,274
8.8
74.2
10
35.9
4,122,128
2,812,013
1,350,205
18,255,415
783,000
9.5
75.1
Source: ABARES Australian Agricultural and Grazing Industries Survey
ABARES
Agricultural commodities – March quarter 2017
205
Disaggregating farm performance statistics by size
TABLE 3 Beef farms, Australia, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
1
1.2
40,248
40,014
–47,714
1,539,111
6,900
–4.8
96.3
2
2.1
73,773
56,273
–25,360
1,711,330
6,934
1.2
98.6
3
2.6
94,082
85,060
–56,539
2,480,507
–32,206
0.6
98.3
4
3.1
109,464
82,023
–33,217
3,098,502
–37,506
–0.2
96.6
5
3.9
134,940
88,185
–39,080
2,437,266
–14,558
1.6
96.6
6
4.3
160,265
100,225
–29,680
2,628,336
30,531
1.7
97.0
7
6.0
215,433
148,257
–9,560
4,737,951
–157,792
19.1
94.8
Profit ($)
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
8
9.4
331,304
215,384
53,691
4,399,995
–33,952
4.8
90.8
9
15.5
558,929
322,267
94,684
7,043,509
74,411
3.5
93.6
10
51.9
1,856,275
1,209,401
398,463
16,313,712
270,020
7.1
83.0
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
Source: ABARES Australian Agricultural and Grazing Industries Survey
TABLE 4 Sheep farms, Australia, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
1
1.9
47,293
43,403
–40,611
995,901
687
–0.4
99.2
2
2.9
81,785
51,671
–28,982
1,164,969
20,223
0.9
95.7
3
4.4
130,257
108,946
–35,887
1,862,806
–67,603
1.9
86.4
4
5.2
147,445
77,971
7,681
1,797,216
16,759
1.5
94.6
5
6.3
173,651
136,581
–31,731
1,921,775
36,213
2.1
96.9
Profit ($)
6
7.2
197,765
155,948
–38,283
2,276,133
62,283
1.3
91.4
7
8.7
233,982
170,266
–4,025
2,648,850
26,080
2.5
92.4
8
10.6
297,984
201,289
34,180
3,412,613
116,357
3.5
93.3
9
16.3
447,266
337,491
24,587
4,263,454
70,667
3.1
87.4
10
36.5
1,016,372
676,076
235,920
8,240,087
–105,871
6.6
86.2
Source: ABARES Australian Agricultural and Grazing Industries Survey
206 ABARES
Agricultural commodities – March quarter 2017
Disaggregating farm performance statistics by size
TABLE 5 Mixed livestock–crops farms, Australia, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
1
1.7
94,987
86,117
–47,154
1,738,953
44,233
–1.6
95.1
2
2.7
190,656
134,328
–9,410
1,866,746
–34,683
8.0
91.9
3
4.1
250,473
198,814
–18,563
2,289,849
24,402
1.9
87.5
4
4.7
300,068
202,853
11,029
2,514,223
16,507
3.0
90.0
5
5.8
364,996
233,303
56,643
3,568,085
37,190
2.7
93.3
6
7.3
454,793
312,947
36,564
4,467,015
56,518
2.3
93.1
7
9.2
580,857
402,172
117,372
4,289,289
120,518
5.4
80.5
8
13.2
827,488
557,541
170,668
5,240,522
129,439
7.2
81.9
9
17.5
1,088,675
751,626
226,263
7,667,266
206,153
5.6
85.3
10
33.9
2,151,367
1,543,713
608,946
13,248,519
524,763
6.9
81.8
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
Source: ABARES Australian Agricultural and Grazing Industries Survey
TABLE 6 Sheep–beef farms, Australia, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
1
2.1
65,906
59,246
–27,747
1,145,497
513
0.3
95.2
2
2.1
103,904
54,844
–23,441
1,803,143
8,876
2.7
99.6
3
4.8
160,943
109,995
–13,320
1,976,767
36,589
1.4
95.0
4
3.6
192,310
121,941
–13,356
3,008,995
7,173
2.0
97.7
5
5.0
213,217
151,361
–18,361
2,495,443
8,349
3.3
92.6
6
6.6
269,813
208,895
1,673
3,230,826
21,527
1.7
91.9
7
9.3
351,390
213,467
71,680
2,878,852
2,105
6.5
86.6
8
11.4
468,517
290,580
89,948
4,220,092
73,136
7.5
89.6
9
17.0
717,540
481,902
159,625
7,808,624
140,745
4.4
89.8
10
38.1
1,550,806
1,070,459
369,210
12,497,664
156,479
8.8
86.2
Source: ABARES Australian Agricultural and Grazing Industries Survey
ABARES
Agricultural commodities – March quarter 2017
207
Disaggregating farm performance statistics by size
TABLE 7 Dairy farms, Australia, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
1
2.6
205,595
173,336
–15,992
1,765,173
108,267
0.7
85.7
2
4.1
328,879
305,787
–20,415
2,390,675
62,106
0.9
88.3
3
6.0
439,637
363,568
26,497
3,029,744
47,343
6.8
88.7
4
5.4
535,401
452,680
–7,876
4,148,271
17,332
4.3
79.1
5
7.3
588,268
419,670
84,953
3,470,997
10,022
4.3
82.3
Profit ($)
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
6
9.3
693,715
530,573
93,751
3,857,740
42,750
5.5
82.7
7
9.5
876,520
712,071
119,788
3,553,227
128,892
7.1
74.7
8
13.0
1,039,411
819,566
194,999
5,214,792
37,502
6.8
73.1
9
15.7
1,324,959
1,014,169
245,872
6,063,927
140,459
6.0
78.9
10
27.0
2,239,830
1,851,870
426,098
9,219,940
190,870
7.2
75.5
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
Source: ABARES Australian Dairy Industry Survey
TABLE 8 Vegetable farms, Australia, 2012–13 to 2014–15
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
1
0.4
35,087
37,602
–77,931
909,990
0
–8.3
98.3
2
0.9
84,089
61,834
–54,380
1,529,808
950
–3.1
96.8
3
1.4
135,023
106,631
–52,392
2,367,263
–4,196
–0.2
97.1
4
1.9
195,694
136,933
–17,817
1,964,155
8,068
–0.1
92.0
5
2.7
266,835
231,106
–62,842
3,992,018
94,629
5.6
95.8
6
3.8
374,296
273,442
22,164
2,245,255
–5,092
2.4
89.3
7
5.5
543,886
433,555
36,509
3,123,033
–36,071
1.1
82.1
8
7.9
770,977
563,216
93,236
4,442,115
17,737
3.2
94.1
9
12.6
1,254,616
1,018,676
118,102
6,298,547
63,434
5.3
86.4
10
63.1
6,279,506
5,029,281
1,144,837
13,043,618
164,385
10.3
79.1
Source: ABARES Australian Vegetable Industry Survey
208 ABARES
Agricultural commodities – March quarter 2017
Disaggregating farm performance statistics by size
TABLE 9 Wheat and other crops farms, Western region, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
1
1.5
173,734
127,097
–4,855
2,035,151
15,064
0.8
96.5
2
1.9
250,536
171,562
20,962
2,576,033
28,386
3.0
93.5
3
3.4
380,509
308,410
–227
3,720,448
27,008
0.3
94.9
4
3.6
534,896
374,700
107,846
5,118,157
24,439
2.8
91.7
5
6.8
845,072
565,334
168,411
4,659,711
78,678
5.3
77.2
6
7.9
996,033
656,734
172,379
6,294,604
–31,585
2.6
91.2
7
10.8
1,334,445
962,181
357,394
7,104,497
359,409
5.8
83.6
8
13.3
1,682,940
1,314,079
316,141
8,228,609
269,082
4.1
72.7
9
17.8
2,262,297
1,666,725
585,431
10,059,089
422,939
5.5
74.7
10
33.1
4,206,360
2,892,622
1,337,392
15,645,580
561,218
9.6
74.7
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
Source: ABARES Australian Agricultural and Grazing Industries Survey
TABLE 10 Wheat and other crops farms, Southern region, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
1
1.4
73,800
66,105
–55,303
1,431,989
–54,786
0.0
96.5
2
2.2
120,468
88,450
–28,429
2,299,175
58,236
–0.4
96.2
3
2.8
164,206
130,338
–38,467
1,901,696
–25,724
2.5
93.0
4
4.0
218,835
162,172
–27,015
2,505,068
–512
2.8
91.2
5
5.2
297,262
187,627
28,391
3,103,595
38,799
4.3
92.8
6
7.2
394,020
263,283
55,224
3,940,079
47,826
3.9
90.0
7
9.5
537,751
376,213
68,558
4,598,011
13,543
4.7
88.4
8
12.6
709,686
489,502
111,098
5,594,156
215,343
7.7
88.7
9
18.1
1,008,779
683,127
226,401
7,957,519
174,255
7.8
85.6
10
37.2
2,078,605
1,396,444
560,923
13,167,756
486,356
9.1
84.3
Source: ABARES Australian Agricultural and Grazing Industries Survey
ABARES
Agricultural commodities – March quarter 2017
209
Disaggregating farm performance statistics by size
TABLE 11 Wheat and other crops farms, Northern region, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
1
1.1
2
1.8
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
69,494
69,560
–44,461
1,648,967
–12,658
–1.2
97.5
131,295
100,553
–48,814
2,280,972
1,103
0.5
95.0
3
2.7
188,926
151,480
–48,121
2,340,794
27,617
0.8
91.4
4
3.5
245,295
205,406
–24,154
2,530,158
45,249
1.5
85.1
5
4.9
320,978
219,963
25,022
2,931,966
50,113
1.5
92.4
6
5.8
420,309
289,360
57,530
4,226,537
85,106
3.9
87.8
7
8.0
559,408
384,222
121,845
4,496,082
136,770
6.7
83.5
8
11.8
814,584
543,455
187,915
5,991,519
31,568
7.3
84.5
9
17.8
1,229,521
800,480
359,429
9,080,239
216,985
7.2
82.9
10
42.6
2,981,682
2,078,693
907,298
15,904,151
590,458
9.2
75.9
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
Source: ABARES Australian Agricultural and Grazing Industries Survey
TABLE 12 Beef farms, Southern region, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
1
2.3
55,003
50,806
–50,673
1,191,838
4,132
–2.7
97.5
2
3.1
86,831
64,320
–35,349
1,472,482
–95,821
1.3
99.5
3
4.1
96,217
94,843
–53,360
2,852,631
35,782
1.3
98.3
4
3.9
105,785
78,201
–43,383
2,017,574
–31,883
–1.9
94.0
5
5.1
124,766
70,209
–4,557
3,358,944
–12,959
1.7
98.3
6
5.2
144,638
87,308
–23,151
2,311,772
–18,211
1.1
97.2
7
6.6
174,106
114,970
–14,357
2,978,347
4,459
2.0
96.6
8
9.9
255,243
150,538
2,426
5,121,888
–382,756
28.1
96.3
9
17.0
435,267
266,187
113,261
5,510,633
–30,362
5.0
94.5
10
42.9
1,132,298
680,822
293,021
9,518,840
358,288
8.5
88.8
Source: ABARES Australian Agricultural and Grazing Industries Survey
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Disaggregating farm performance statistics by size
TABLE 13 Beef farms, Northern region, 2013–14 to 2015–16
Size
decile
Output
share (%)
Cash
receipts ($)
Cash
costs ($)
Profit ($)
Net capital
Rate of
Capital ($) additions ($) return (%)
Equity
ratio (%)
1
0.8
33,119
30,470
–53,400
1,769,188
10,326
–7.4
98.7
2
1.1
57,451
56,906
–52,810
1,805,172
–3,015
–1.5
96.1
3
1.6
86,037
69,339
–5,474
2,416,157
11,815
2.3
94.4
4
2.5
124,989
94,431
–68,780
3,578,955
–28,107
–0.2
97.8
5
3.2
155,946
114,574
–35,437
2,559,656
52,271
3.4
96.1
6
4.9
211,412
143,543
–23,594
4,104,800
71,600
3.0
92.8
7
5.6
311,161
241,248
14,351
5,168,894
83,847
3.9
88.8
8
9.0
455,141
272,962
87,242
5,518,672
81,362
4.8
88.8
9
15.5
757,820
491,578
100,059
9,507,488
116,444
3.0
89.2
10
56.0
2,790,413
1,835,615
538,055
24,302,033
98,002
6.5
80.0
Source: ABARES Australian Agricultural and Grazing Industries Survey
References
Jackson, T & Shafron, W 2016, ‘Disaggregating farm performance statistics by size’,
in Agricultural commodities: March quarter 2016, Australian Bureau of Agricultural
and Resource Economics and Sciences, Canberra.
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The EU sheep meat industry
Peter Berry, Matthew Howden and Adrian Waring
Sheep meat comprises only a small proportion of total EU meat consumption.
Nonetheless, the European Union is one of the world’s largest producers and
consumers of sheep meat. A long-term decline in production since the mid 2000s
has been tied to changes in EU domestic support and trade policies. The consequent
strong rise in sheep meat prices relative to other meats, combined with a
range of other factors, has contributed to a similar decline in total EU sheep
meat consumption.
The high price of sheep meat in the European Union has made it a desirable market for
sheep meat exporters. However, Australia’s access to the EU market is restricted by
comparatively low import quotas and high out-of-quota tariffs. This article examines
the EU sheep meat market and the policies that support it to better understand how
Australian exporters could benefit from improved access to this market.
EU sheep meat consumption
The European Union is the second-largest consumer of sheep meat in the world
(OECD 2017). Between 2006 and 2015, an average of 984,000 tonnes (carcase weight)
of sheep meat was consumed annually. This was second only to the amount consumed
in China. In 2015 total EU sheep meat consumption was 871,500 tonnes. About
three-quarters of the region’s consumption was concentrated in the United Kingdom
(44 per cent), Spain (13 per cent), France (11 per cent) and Ireland (6 per cent)
(Figure 1).
Sheep meat is a relatively expensive meat purchased predominantly by older or
wealthier consumers and for special occasions. Its consumption has been in long-term
decline because of the changing European age demographic, its price relative to other
meats and slow consumer income growth (MLA 2016).
Over the 10 years to 2015, total EU sheep meat consumption fell by 31 per cent
(European Commission 2017a). Average per person consumption fell by
34 per cent over the same period, from 2.6 kilograms to 1.7 kilograms a
year. By comparison, per person consumption of pork and poultry has been
consistently higher, at 32.4 kilograms and 22.9 kilograms per person, respectively
(European Commission 2017a).
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FIGURE 1 Total and per person sheep meat consumption, European Union,
2000 to 2015
1,500
3.0
1,200
2.4
900
1.8
600
1.2
300
0.6
kt (cw)
Rest of European Union
Ireland
France
Spain
United Kingdom
European Union
per person (right axis)
kg/person
2000
2003
2006
2009
2012
2015
Source: European Commission 2017a
EU sheep flock and sheep meat production
In 2014 the EU sheep flock was 98 million head, around 8 per cent of the global
sheep flock (FAO 2017). The United Kingdom had the largest sheep flock in the
European Union, with 23 million head, followed by Spain (15 million head),
Romania (10 million head), Greece (9 million head), Italy (7 million head),
France (7 million head) and Ireland (3 million head). Collectively, these countries
accounted for 87 per cent of the total EU sheep flock (European Commission 2017a).
In most countries, sheep are used for the meat and dairy industries, with the Italian
and Romanian flocks more heavily skewed towards milk production (AHDB 2015a, b).
Wool is largely a by-product of sheep meat production (Bertrand 2014; Rintoul 2010).
The European Union is the second-largest sheep meat producer, behind China,
and accounted for about 10 per cent of world production in 2013 (FAO 2017).
In 2015 it produced about 723,000 tonnes of sheep meat (carcase weight)
(European Commission 2017a). Five EU member states accounted for 85 per cent
of total production in that year. The United Kingdom was the largest producer, at
303,000 tonnes, followed by Spain (117,000 tonnes), France (81,000 tonnes), Ireland
(58,000 tonnes) and Greece (55,000 tonnes) (Figure 2).
Sheep numbers and sheep meat production in the European Union have been
in long-term decline. From 2000 to 2015 the flock contracted by 16 per cent
and production by 35 per cent. The most significant period of decline occurred
following the global financial crisis, when rising production costs, falling per person
consumption and the impact of domestic policy reforms reduced the profitability of
the industry.
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The EU sheep meat industry
FIGURE 2 Sheep meat production by member state, European Union, 2000
to 2015
1,200
Other member states
Greece
Ireland
France
Spain
United Kingdom
1,000
800
600
400
200
kt (cw)
2000
2003
2006
2009
2012
2015
Source: European Commission 2017a
EU support policies
Common Agricultural Policy
The European Union supports the sheep and goat meat industries—which it considers
a single industry—through the Common Agricultural Policy (CAP). Goat meat
production is only about 6 per cent of sheep meat production, and it has also been
declining for many years (European Commission 2017a).
Since the early 2000s, the CAP has undergone multiple reforms aimed at increasing
the market orientation of EU agriculture. In the early 2000s the Single Payment
Scheme supported farmers’ incomes, leading to a reduction in sheep and goat
numbers (European Commission 2003). In 2013 the scheme was replaced with the
direct payments scheme under CAP reforms. The direct payments scheme continues
to provide farmers with income support that is not linked to production levels.
However, it provides a more uniform level of support to farmers across the European
Union (European Commission 2013). Under this scheme, two measures available to
sheep and goat farmers in particular are voluntary coupled support (VCS) and the
Basic Payment Scheme.
Voluntary coupled support
Since 2015 VCS has been available to farming sectors that are considered important
for economic, social or environmental reasons and facing certain difficulties. In some
areas of the European Union, the sheep and goat meat industries meet those criteria
and are eligible to receive VCS payments. Payments are linked to production.
The annual VCS budget for the period from 2015 to 2020 is €4.2 billion, which is
10 per cent of the direct payments scheme budget (European Commission 2013).
In 2015 EU sheep and goat farms accounted for the third-largest share of the annual
VCS budget, at 12 per cent or €486 million. VCS payments are linked to animal
numbers for the sheep and goat meat industries, and farmers received an average
of €12 an animal in 2015 (European Commission 2015).
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Participation in VCS is optional, so the amount of support available to farmers
varies significantly between member states and agricultural sectors (Menadue &
Hart 2014). For example, the annual VCS budget allocated to Spain is €586 million,
around 29 per cent of which is for sheep and goat farms (Figure 3). In contrast, Poland
receives €507 million for its VCS budget but allocates only 1 per cent of it to sheep
and goat farms.
Basic Payment Scheme
Member states that opt out of the VCS can reallocate that proportion of their annual
budget to the Basic Payment Scheme. This scheme provides basic income to farmers
regardless of their industry or individual circumstances. For example, in 2015 Ireland
and the United Kingdom opted out of the VCS and each allocated around two-thirds
of their annual direct payments budget to the Basic Payment Scheme. The VCS
accounted for less than 2 per cent of their total direct payment scheme budget
(European Commission 2016a).
The United Kingdom is the largest sheep meat producer in the European Union but
allocates only a small proportion of its annual direct payments budget to the VCS.
This is because the United Kingdom has been actively supporting reforms that
separate the amount of subsidy paid to producers from their levels of production
since the early 2000s (Department for Environment, Food and Rural Affairs 2013).
FIGURE 3 Annual voluntary coupled support, by member state and sector,
European Union, 2015 to 2020
Sheep and goat meat
Milk
Beef
Other agricultural products
All other
member states
Portugal
Bulgaria
Greece
Hungary
Romania
Italy
Poland
Spain
France
€ million
200
400
600
800
1,000
1,200
Source: European Commission 2015, 2016a
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The EU sheep meat industry
EU trade policies
EU tariff-rate quotas for sheep and goat meat
EU sheep and goat meat imports are limited by tariff-rate quotas (TRQs) allocated
to specific trading partners. Because of the way the quotas are administered, both
types of meat are imported under the quotas. However, goat meat makes up less than
1 per cent of the annual total quota volume (European Commission 2017a). In 2016
the total volume of sheep and goat meat imports permitted under the quotas was
286,800 tonnes (Table 1) (European Commission 2011).
Under the sheep and goat meat TRQs, in-quota shipments do not incur duty.
Out-of-quota shipments incur the most-favoured nation tariff of 12.8 per cent and
a specific duty of between €902 and €3,118 a tonne, depending on the animal and
cut of meat (WTO 2016).
New Zealand has the largest quota (almost 80 per cent of the total), followed
by Argentina (8 per cent), Australia (7 per cent) and Chile (7 per cent). A small
tariff-free quota of 200 tonnes of sheep and goat meat, known as the erga
omnes quota, is also available on a first-come, first-served basis to all exporters
(European Commission 2011). A second 200-tonne quota is available to WTO
members that do not already have access to the EU sheep and goat meat markets.
New Zealand, Australia, Argentina, Chile, Uruguay and Iceland are the only
countries that actively used their import quotas over the five years to 2016
(Table 1). However, quota utilisation varied across these countries over the period.
For example, New Zealand averaged 73 per cent utilisation over the five-year period
and Australia almost fully utilised its quota, at 95 per cent, but Argentina utilised less
than 5 per cent. Utilisation of the total quota averaged only 66 per cent (European
Commission 2017a).
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TABLE 1 Sheep and goat meat import quota allocations and utilisation, European Union, 2012 to 2016
Country
New Zealand
Argentina
Australia
Chile
Uruguay
Iceland
Norway
Turkey
Greenland
Faroe Islands
Others a
erga omnes b
TOTAL
Quota
Unit
2012
2013
2014
2015
2016
Allocation
tonnes (cw)
228,254
228,254
228,254
228,254
228,254
Volume shipped
tonnes (cw)
160,269
167,532
155,221
174,374
173,224
Utilisation
%
70.2
73.4
68.0
76.4
75.9
Allocation
tonnes (cw)
23,000
23,000
23,000
23,000
23,000
Volume shipped
tonnes (cw)
1,814
974
1,425
534
832
Utilisation
%
7.9
4.2
6.2
2.3
3.6
Allocation
tonnes (cw)
19,186
19,186
19,186
19,186
19,186
Volume shipped
tonnes (cw)
16,426
19,113
18,996
18,962
18,323
Utilisation
%
85.6
99.6
99.0
98.8
95.5
Allocation
tonnes (cw)
6,800
7,000
7,200
7,400
7,600
Volume shipped
tonnes (cw)
3,123
3,965
3,560
2,502
2,540
Utilisation
%
45.9
56.6
49.4
33.8
33.4
Allocation
tonnes (cw)
5,800
5,800
5,800
5,800
5,800
Volume shipped
tonnes (cw)
3,502
3,199
3,274
1,784
1,583
Utilisation
%
60.4
55.2
56.4
30.8
27.3
Allocation
tonnes (cw)
1,850
1,850
1,850
1,850
1,850
Volume shipped
tonnes (cw)
340
432
822
1,092
1,711
Utilisation
%
18.4
23.4
44.4
59.0
92.5
Allocation
tonnes (cw)
300
300
300
300
300
Volume shipped
tonnes (cw)
0.0
0.0
0.1
0.0
0.3
Utilisation
%
Allocation
tonnes (cw)
0.0
0.0
0.0
0.0
0.1
200
200
200
200
200
Volume shipped
tonnes (cw)
0.0
0.0
0.0
0.0
0.0
Utilisation
%
0.0
0.0
0.0
0.0
0.0
Allocation
tonnes (cw)
100
100
100
100
100
Volume shipped
tonnes (cw)
0.0
0.0
0.0
0.0
0.0
Utilisation
%
0.0
0.0
0.0
0.0
0.0
Allocation
tonnes (cw)
20
20
20
20
20
Volume shipped
tonnes (cw)
0.0
0.0
0.8
1.4
0.6
Utilisation
%
0.0
0.0
4.1
7.2
1.4
Allocation
tonnes (cw)
200
200
200
200
200
Volume shipped
tonnes (cw)
89.6
0.0
20.4
0.0
0.0
Utilisation
%
44.8
0.0
10.2
0.0
0.0
Allocation
tonnes (cw)
200
200
200
200
200
Volume shipped
tonnes (cw)
0.0
0.0
0.0
195.4
185.8
Utilisation
%
0.0
0.0
0.0
97.7
92.9
Allocation
tonnes (cw)
285,910
286,110
286,310
286,510
286,710
Volume shipped
tonnes (cw)
185,564
195,215
183,319
199,445
198,400
Utilisation
%
64.9
68.2
64.0
69.6
69.1
a All other WTO members excluding Argentina, Australia, Chile, Greenland, Iceland, New Zealand and Uruguay. b All WTO members.
Note: Totals may not sum to 100 due to rounding.
Source: European Commission 2011, 2017b
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The EU sheep meat industry
EU sheep meat trade
Exports
The European Union is the world’s third-largest exporter of sheep meat behind
New Zealand and Australia. However, volumes are small by comparison. For example,
in 2015 Australia exported about 450,000 tonnes (carcase weight) of sheep meat
and New Zealand 390,000 tonnes. By comparison, the European Union exported
18,500 tonnes in that year, down from a peak of 34,200 tonnes in 2013. Just over
half of EU sheep meat exports to non–EU countries originate from the United
Kingdom. Spain accounts for about 19 per cent of EU exports and Ireland 10 per cent
(European Commission 2017a).
Over the five years to 2015, Hong Kong was the European Union’s largest
non–EU export destination for sheep meat, accounting for about 45 per cent
of shipments. Destinations in non–EU Europe together accounted for about
17 per cent of exports and Middle-Eastern countries for about 16 per cent
(European Commission 2017a). Sheep meat exports from the European Union
compete with Australian product mainly in the Middle East and Asia. However, the
volume of competing supplies from the European Union in these markets remains
relatively small.
Imports
The European Union is a net importer of sheep and goat meat, and all imports must
comply with EU red meat standards. These standards outline the animal health
and welfare, meat-processing and residue-treatment requirements that accredited
producers, processors and exporters must satisfy to export to the European Union.
For a more detailed overview of the standards, see Mullumby and Howden (2016).
From 2011 to 2015 the annual volume of EU sheep meat imports (excluding goat
meat) averaged 189,000 tonnes (carcase weight), 10 times the volume of exports.
Over that period, New Zealand was the European Union’s main supplier, followed by
Australia. New Zealand had the dominant import share as a result of its large quota.
Small volumes of sheep meat were also imported from South America and from
non–EU Europe (European Commission 2017b).
EU sheep meat imports have been falling since the late 2000s. Over the 10 years to
2010, import volumes averaged 248,000 tonnes a year (carcase weight) (European
Commission 2017b). However, between 2010 and 2015 volumes fell by 15 per cent to
191,000 tonnes (carcase weight). The majority of the decline was from a 12 per cent
drop in imports from New Zealand. Imports from South America also fell.
New Zealand
New Zealand is the largest source of imported sheep meat to the European Union,
with a country-specific import quota of 228,254 tonnes (carcase weight) per calendar
year. This is equivalent to 80 per cent of the total EU sheep meat and goat import
quota, which gives New Zealand significantly greater market access compared with
other sheep meat–exporting countries (European Commission 2011, 2017b).
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New Zealand has had a comparatively high level of access to the EU market since
the United Kingdom’s accession to the European Union in 1973. At that time,
New Zealand’s access to the UK sheep meat market was safeguarded on the grounds
that New Zealand had long and close political, cultural and trade links with the United
Kingdom. Those privileges were subsequently extended to become an EU-wide
commitment (European Commission 2016b).
Over the five years to 2015, the European Union imported an average of
158,700 tonnes (carcase weight) of sheep meat (excluding goat meat) a year from
New Zealand (European Commission 2017b). Almost half of that was imported
by the United Kingdom. The remainder was imported by Germany (14 per cent),
the Netherlands (13 per cent), France (8 per cent) and Belgium (5 per cent)
(European Commission 2017b) (Figure 4).
FIGURE 4 Imports of NZ sheep meat, European Union, 2000 to 2015
250
All other member states
Belgium
France
Germany
Netherlands
United Kingdom
200
150
100
50
kt (cw)
2000
2003
2006
2009
2012
2015
Source: European Commission 2017a
EU sheep meat imports from New Zealand have been falling since 2007. This is
principally the result of a long-term contraction in New Zealand’s sheep meat industry
in favour of its expanding dairy industry (Beef+Lamb NZ 2016) and strengthening
demand from China for NZ lamb (AHDB 2015b). As a result, over the five years to 2015
New Zealand filled only an average of 73 per cent of its EU import quota allocation
(European Commission 2017a).
South America
Some South American countries also have access to the EU market through countryspecific import quotas for sheep and goat meat. Argentina has an import quota of
23,000 tonnes, Chile 7,200 tonnes and Uruguay 5,800 tonnes (carcase weight). Over
the five years to 2015, Argentina exported an average of 1,800 tonnes to the European
Union, Chile 3,900 tonnes and Uruguay 2,400 tonnes. Together these countries filled
an average of 19 per cent of their combined import quota allocations over the period
(Table 1) (European Commission 2017b; MLA 2016).
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The EU sheep meat industry
Argentina has the second-largest quota allocation but utilises a very small proportion
of it (AHDB 2015b). Its quota utilisation declined from 32 per cent in 2009 to less
than 4 per cent in 2016, largely because of the decline in sheep meat production
(AHDB 2015a; European Commission 2017b). By 2013 Argentina had largely ceased
exporting sheep meat and its production went almost entirely to the domestic market
(AHDB 2015b; UN Statistics Division 2017).
In December 2015 Argentina reformed its agricultural export policies. The Argentine
Government removed most of its agricultural export taxes and quantitative
export restrictions on grains, oilseeds and livestock products (Williamson 2016).
These reforms are expected to improve the trading environment for Argentina’s
agricultural exporters, but it is unlikely that the sheep industry will grow
significantly in the short to medium term (Coronato et al. 2015).
The importance of the United Kingdom to the EU sheep
meat industry
The United Kingdom is the largest sheep meat producer in the European Union.
In 2015 it accounted for about 42 per cent of total EU sheep meat production.
It is also the largest consumer of sheep meat, accounting for 44 per cent of total
EU consumption.
In 2015 per person sheep meat consumption in the United Kingdom averaged
5.9 kilograms, the second-highest in the European Union behind Greece. Per person
consumption has been declining, but it has been at a much slower rate than in many
other EU member states and remains significantly higher than the EU average of
1.7 kilograms per person in 2015 (Figure 1).
UK sheep meat imports over the five years to 2015 averaged 105,000 tonnes a
year (carcase weight), around 88 per cent of which was sourced from outside the
European Union. The remaining 12 per cent was sourced from other EU member
states, of which Ireland alone accounted for almost 7 per cent. New Zealand is the
largest non–EU supplier of sheep meat to the United Kingdom. Over the five years to
2015, New Zealand accounted for an average of 72 per cent of UK sheep meat imports
or about 76,000 tonnes a year. Australia is the second-largest non–EU supplier to the
United Kingdom, averaging 14,000 tonnes a year or 13 per cent of annual UK sheep
meat imports over the same period. Small amounts of sheep meat are also imported
from South America.
Annual UK sheep meat exports averaged 91,000 tonnes (carcase weight) over the
five years to 2015, 88 per cent of which were shipped to other EU member states.
On 23 June 2016 the United Kingdom voted to leave the European Union (Brexit).
The United Kingdom has publicly stated its intention to trigger Article 50 before the
end of March 2017, after which exit negotiations with the European Union will begin.
On 17 January 2017 the Prime Minister of the United Kingdom indicated the United
Kingdom would leave the EU single market and customs union. This would enable
the United Kingdom to strike free trade agreements with countries from outside the
European Union, including Australia, once the exit process is complete. The effect
on the trade of sheep meat between the United Kingdom, other EU member
states and other non–EU countries will remain uncertain until the United Kingdom
announces changes to its agricultural policies following the negotiated exit from the
European Union.
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Australia–EU sheep meat trade
Australia is the second-largest source of EU sheep meat imports (excluding
goat meat) after New Zealand. Over the five years to 2015, the European Union
imported an average of 17,600 tonnes (carcase weight) a year from Australia
(European Commission 2017a). The United Kingdom accounted for about 72 per cent.
This was followed by France (13 per cent), Belgium (5 per cent), the Netherlands
(4 per cent) and Germany (3 per cent) (European Commission 2017a).
The European Union is a relatively small market for Australian sheep meat exports,
accounting for about 5 per cent of Australia’s export share by volume. Trade is
constrained by the country-specific import quota for sheep and goat meat of
19,186 tonnes a calendar year. Australia has almost entirely filled this each year
since 2013.
Australia exports sheep and goat meat to the European Union. Over the five years to
2015, 88 per cent of Australia’s trade under the quota consisted of sheep meat and
12 per cent goat meat. Lamb accounted for 78 per cent of the sheep meat exported
and mutton the remainder (ABS 2016).
The European Union is a high-value market for sheep meat–exporting countries.
For Australian exporters this is reflected in the unit export returns for sheep meat to
the European Union (Figure 5). Between 2000–01 and 2015–16 the European Union
was Australia’s second-highest value market after the United States. Unit export
returns (in constant dollar terms) averaged 18 per cent lower than the United States
but 23 per cent higher than the average across all markets (ABS 2016).
In 2015–16 the average unit export value for lamb to the European Union was
$8.90 a kilogram compared with an average of $6.78 a kilogram across all export
markets. The average unit export value for mutton to the European Union was
$7.83 a kilogram compared with an average of $4.65 a kilogram across all of
Australia’s export destinations (ABS 2016).
FIGURE 5 Sheep meat, real unit export values, main markets, Australia, 2000–01
to 2015–16
12
United States
European Union
World average
Middle East
China
10
8
6
4
2
2015–16
A$/kg
2001
–02
2003
–04
2005
–06
2007
–08
2009
–10
2011
–12
2013
–14
2015
–16
Source: ABS 2016
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Conclusion
EU sheep and goat meat imports were limited by a total quota of 286,800 tonnes in
2016. Over the five years to 2016 the utilisation rate averaged only 66 per cent, but
quota utilisation differed significantly between supplying countries. Australia almost
filled its quota each year over that period, unlike its primary competitors in the
EU market.
New Zealand’s supply constraints, the limited growth prospects for Argentina’s
sheep meat exports and Australia’s lack of residual quota are likely to restrict any
significant growth in EU imports in the short to medium term unless the European
Union adjusts quota allocations across sheep-exporting countries. Import demand
from the United Kingdom and the Netherlands has been strengthening since 2012.
These supply and demand factors are expected to put further upward pressure on
EU sheep meat prices.
The Australian sheep meat industry has strong price incentives to seek improved
market access to the European Union. Export unit returns for sheep meat to the
top five EU importers (the United Kingdom, Belgium, France, Germany and the
Netherlands) averaged 34 per cent higher than the EU average over the five years
to 2016. However, future trade with the European Union is likely to be influenced
heavily by the outcome of Brexit negotiations. The United Kingdom exports a
significant volume of sheep meat to the rest of the European Union, so any change
to existing trade policies between the two parties could affect import demand by
all member states. Future expanded trade with the United Kingdom in its own right
could benefit the Australian industry given the United Kingdom’s dominant share
of total EU sheep meat consumption and imports. But opportunities for Australian
sheep meat exporters will be uncertain until the European Union and the United
Kingdom have reached agreement on their own post-Brexit arrangements.
References
ABS 2016, International Trade, Australia: September 2016 [unpublished data],
cat. no. 5465.0, Australian Bureau of Statistics, Canberra, accessed 21 December 2016.
AHDB 2015a, Cattle and sheep market update, Agriculture and Horticulture
Development Board, Issue 31, Kenilworth, England, January, accessed
11 January 2017.
—— 2015b, World sheep meat market to 2025, Agriculture and Horticulture
Development Board, Kenilworth, England.
Beef+Lamb NZ 2016, New season outlook 2016–17, Beef + Lamb New Zealand,
Wellington, September.
Bertrand, M 2014, Shepherding Britain’s wool industry towards more ethical
pastures, Guardian, 4 September.
Coronato, F, Fasioli, E, Schweitzer, A & Tourrand J-F 2015, Rethinking the role of sheep
in the local development of Patagonia, Argentina, Revue d’élevage et de médecine
vétérinaire des pays tropicaux, vol. 68, no. 2–3, pp. 129–33.
Department for Environment, Food and Rural Affairs 2013, Common Agricultural
Policy deal struck, UK Government, London, 20 March.
222
ABARES
Agricultural commodities – March quarter 2017
The EU sheep meat industry
European Commission 2003, Council Regulation (EC) No. 312/2003 of 18 February
2003 implementing for the Community the tariff provisions laid down in the
Agreement establishing an association between the European Community and
its Member States, of the one part, and the Republic of Chile, of the other part,
Official Journal of the European Union, L46/1, Brussels, 18 February.
——2011, Commission Implementing Regulation (EU) No. 1354/2011 of
20 December 2011 opening annual Union tariff quotas for sheep, goats, sheepmeat
and goatmeat, Official Journal of the European Union, L338/36, Brussels, 20 December.
——2013, Regulation (EU) No. 1307/2013 of the European Parliament and of the
Council of 17 December 2013 establishing rules for direct payments to farmers
under support schemes within the framework of the common agricultural policy
and repealing Council Regulation (EC) No. 637/2008 and Council Regulation (EC)
No. 73/2009, Official Journal of the European Union, L347/608, 17 December, Brussels,
17 December.
——2015, Voluntary coupled support—Sectors mostly supported. Notification
of decisions taken by Member States by 1 August 2014, Brussels.
—— 2016a, Direct payments 2015–2020—decisions taken by member states,
June, Brussels.
—— 2016b, Press Release Database, Brussels, accessed 20 January 2017.
—— 2017a, Eurostat, Brussels, accessed 16 January 2017.
—— 2017b, Tariff quota consultation, Brussels, accessed 16 January 2017.
FAO 2017, FAOSTAT, Food and Agriculture Organization of the United Nations, Rome,
accessed 17 January 2017.
MLA 2016, Market snapshot European Union: Sheepmeat, MLA industry insights—
European Union—February 2016, Meat & Livestock Australia, Canberra, February.
Menadue, H & Hart, K 2014, Member state implementation of the CAP for
2015–2020—a first round-up of what is being discussed, CAP2010, Institute for
European Environmental Policy, London, 16 April, accessed 12 January 2017.
Mullumby, J & Howden, M 2016, ‘The EU beef industry’, in Agricultural commodities:
December quarter 2016, Australian Bureau of Agricultural Resource Economics
and Sciences, Canberra.
OECD 2017, Meat consumption, Organisation for Economic Co-operation and
Development, accessed 17 January 2017.
Rintoul, J 2010, Europeans shun wool in favour of meat exports, Farm Weekly, Victoria
Park, Western Australia, 28 May.
UN Statistics Division 2017, UN Comtrade, New York, accessed 23 January 2017.
Williamson, L 2016, 'Recent developments in Argentina’s agricultural export policies',
in Agricultural commodities: March quarter 2016, Australian Bureau of Agricultural
and Resource Economics and Sciences, Canberra.
WTO 2016, Tariff download facility, World Trade Organization, accessed
13 December 2016.
ABARES
Agricultural commodities – March quarter 2017
223
Running Main Header Milo Pro Medium 8pt
Running Sub Header Milo Pro Light 8pt
Statistical tables
Figures
1
Contribution to GDP Australia, chain volume measures, reference year 2014–15
227
2
Markets for Australian merchandise exports
227
3
Sources of Australian merchandise imports
228
4
Principal markets for Australian agricultural, forestry and fisheries exports
229
5
Contribution to exports by sector, balance of payments basis
235
Tables
1
Indexes of prices received by farmers
2
Indexes of prices paid by farmers, and terms of trade
233
3
Farm costs and returns
234
4
Volume of production indexes
236
5
Industry gross value added
236
6Employment
226
232
237
7
All banks lending to business
237
8
Rural indebtedness to financial institutions
238
9
Annual world indicator prices of selected commodities 238
10
Gross unit values of farm products
239
11
World production, consumption, stocks and trade for selected commodities
240
12
Agricultural, fisheries and forestry commodity production
242
13
Gross value of farm, fisheries and forestry production
244
14
Crop and forestry areas and livestock numbers
246
15
Average farm yields
247
16
Volume of agricultural and fisheries exports
248
17
Value of agricultural and fisheries exports (fob)
250
18
Agricultural exports to China (fob)
252
19
Agricultural exports to Indonesia (fob)
253
20 Agricultural exports to Japan (fob)
254
21
Agricultural exports to the Republic of Korea (fob)
255
22
Agricultural exports to the United States (fob)
256
23
Volume of fisheries products exports
257
24
Value of fisheries products exports (fob)
258
25
Volume of fisheries products imports
259
26
Value of fisheries products imports
260
27
Value of Australian fisheries products trade, by selected countries
261
28
Volume of forest products exports
262
29
Value of forest products exports (fob)
263
30 Volume of forest products imports
264
31
Value of forest products imports
265
32
Value of Australian forest products trade, by selected countries
266
ABARES
Agricultural commodities – March quarter 2017
GDP, exports
FIGURE 1 Contribution to GDP Australia, chain volume measures, reference year 2014–15
2005–06
2015–16
$1,265.5b
$1,660b
Services
Manufacturing
Services
Building and construction
77%
8%
77%
8%
Building and construction
Mining
7%
5%
Mining
Manufacturing
7%
6%
Agriculture, fishing and forestry
3%
Agriculture, fishing and forestry
2%
FIGURE 2 Markets for Australian merchandise exports in 2015–16 dollars
2005–06
Total
$195.7b
Agriculture
$37.2b
Fisheries
$2.0b
2015–16
New Zealand
India
United States
European Union 28
Korea, Rep. of
Japan
China
Other
6%
5%
6%
12%
8%
20%
31%
12%
United States
European Union 28
New Zealand
Japan
Other Asia
ASEAN
China
Other
4%
9%
18%
11%
11%
21%
16%
10%
New Zealand
Singapore
Indonesia
China
Japan
Hong Kong
Vietnam
Other
1%
2%
0%
7%
28%
38%
1%
23%
$243.4b
$46.5b
$1.5b
New Zealand
India
United States
European Union 28
Korea, Rep. of
Japan
China
Other
4%
4%
5%
7%
7%
14%
28%
31%
United States
European Union 28
New Zealand
Japan
Other Asia
ASEAN
China
Other
4%
7%
10%
10%
11%
17%
19%
22%
New Zealand
Singapore
Indonesia
China
Japan
Hong Kong
Vietnam
Other
2%
2%
1%
7%
15%
18%
44%
11%
ABARES
Agricultural commodities – March quarter 2017
227
Import markets
FIGURE 3 Sources of Australian merchandise imports in 2015–16 dollars
2015–16
2005–06
Total
228
$214.9b
Agriculture
$9.3b
Fisheries
$1.6b
ABARES
Agricultural commodities – March quarter 2017
Singapore
New Zealand
Malaysia
Germany
Japan
United States
China
Other
6%
3%
4%
5%
10%
14%
14%
44%
Other Asia
China
United States
New Zealand
ASEAN
European Union 28
Other
5%
5%
11%
19%
15 %
31 %
14%
United States
Indonesia
New Zealand
Vietnam
China
Thailand
Other
4%
3%
13%
11%
8%
21%
40%
$263.3b
$18.1b
Singapore
New Zealand
Malaysia
Germany
Japan
United States
China
Other
3%
3%
4%
5%
7%
11%
23%
44%
Other Asia
5%
China
7%
United States
10%
New Zealand
18%
ASEAN
20%
European Union 28 24%
Other
14%
$2.1b
United States
Indonesia
New Zealand
Vietnam
China
Thailand
Other
3%
5%
10%
12%
15%
20%
35%
Export markets
FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports in 2015–16 dollars
2005–06
2015–16
Quantity wheat
Value wheat
Japan
Japan
Yemen
Yemen
Korea, Rep. of
Korea, Rep. of
Vietnam
Vietnam
China
China
Indonesia
Indonesia
1,000
kt
2,000
3,000
4,000
$m
Quantity barley
200
400
600
800
1,000
1,200
Value barley
Korea, Rep. of
Korea, Rep. of
Kuwait
Kuwait
United Arab
Emirates
United Arab
Emirates
Japan
Japan
Saudi Arabia
Saudi Arabia
China
China
kt
500
1,000
1,500
2,000
2,500
3,000
$m
Quantity sugar
United States
China
China
Malaysia
Malaysia
Japan
Japan
Indonesia
Indonesia
Korea, Rep. of
Korea, Rep. of
300
600
900
1,200
1,500
$m
Quantity wine
New Zealand
Netherlands
Netherlands
Canada
Canada
China
China
United States
United States
United Kingdom
United Kingdom
50
100
600
800
1,000
100
200
300
400
500
600
700
Value wine
New Zealand
ML
400
Value sugar
United States
kt
200
150
200
250
300
$m
300
600
900
1,200
1,500
continued ...
ABARES
Agricultural commodities – March quarter 2017
229
Export markets
FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports in 2015–16 dollars
2005–06
2015–16
Quantity wool
Value wool
Malaysia
Malaysia
Italy
Italy
Czech Republic
Czech Republic
Korea, Rep. of
Korea, Rep. of
India
India
China
China
kt
50
100
150
200
250
300
350
Canada
Indonesia
Indonesia
China
China
Korea, Rep. of
Korea, Rep. of
Japan
Japan
United States
United States
200
300
400
$m
Quantity sheep meat
Papua New
Guinea
Saudi Arabia
Malaysia
Malaysia
United Arab
Emirates
China
United Arab
Emirates
China
United States
United States
20
40
60
80
100
$m
Quantity cheese
Singapore
United States
United States
Malaysia
Malaysia
Korea, Rep. of
Korea, Rep. of
China
China
Japan
Japan
20
40
2,000
2,500
500
1,000
1,500
2,000
2,500
3,000
100
200
300
400 500
600 700
800
400
500
Value cheese
Singapore
kt
1,500
Value sheep meat
Papua New
Guinea
Saudi Arabia
kt
1,000
Value beef and veal
Canada
100
500
$m
Quantity beef and veal
kt
continued
60
80
100
$m
100
200
300
continued ...
230
ABARES
Agricultural commodities – March quarter 2017
Export markets
FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports in 2015–16 dollars
2005–06
2015–16
Quantity paper and paperboard
Value paper and paperboard
Japan
Japan
Papua New
Guinea
Papua New
Guinea
Malaysia
Malaysia
China
China
United States
United States
New Zealand
New Zealand
kt
50
100
150
200
250
$m
Quantity edible fish
Hong Kong
Vietnam
Vietnam
United States
United States
New Zealand
New Zealand
China
China
Japan
Japan
3
6
9
12
$m
Quantity edible crustaceans and molluscs
Singapore
Taiwan
Taiwan
China
China
Japan
Japan
Hong Kong
Hong Kong
Vietnam
Vietnam
2
4
100
150
200
250
300
350
6
8
10
50
100
150
200
250
Value edible crustaceans and molluscs
Singapore
kt
50
Value edible fish
Hong Kong
kt
continued
$m
100
200
300
400
500
600
700
ABARES
Agricultural commodities – March quarter 2017
231
Prices
STATISTICS
TABLE
1 Indexes of prices received by farmers Australia
1Indexesofpricesreceivedbyfarmers
Australia
Commodity
Crops Grains
barley
canola
grain sorghum
lupins
oats
wheat
total grains a
Cotton
Hay
Fruit
Sugar
Vegetables
Total crops
Livestock
Livestock for slaughter
cattle
lambs sheep
live sheep for export
pigs
poultry
total livestock for slaughter
Livestock products
wool
milk
eggs
total livestock products
Store and breeding stock
Total livestock
Total prices received
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
173.4
142.1
148.9
173.5
172.9
158.3
147.9
98.2
144.9
156.5
117.5
172.8
129.3
167.9
144.1
177.2
176.4
156.0
159.8
149.9
103.9
160.9
158.8
125.4
174.1
131.1
175.6
130.6
178.1
149.3
183.1
151.7
147.0
104.4
169.6
170.4
127.2
179.1
131.8
155.8
142.4
154.0
148.2
183.1
144.7
142.0
111.6
176.4
162.0
135.9
172.9
129.2
126.6
137.9
126.0
132.8
151.1
123.7
125.4
119.5
180.4
164.4
160.9
175.4
123.6
133.6
140.2
130.7
140.5
147.8
131.9
129.9
121.0
180.4
167.5
166.2
178.8
126.7
164.2
182.8
200.0
247.6
132.5
114.4
158.6
156.3
201.8
250.8
233.4
151.7
116.9
161.2
196.4
233.4
337.8
286.6
156.4
126.2
192.4
295.3
256.1
329.8
312.3
181.0
128.9
253.1
315.7
288.1
423.4
319.1
183.1
125.4
269.4
315.7
295.5
440.1
326.7
180.1
124.7
270.2
147.3
153.5
159.1
186.5
196.5
134.7
169.1
162.6
144.1
146.8
107.4
112.7
114.6
112.7
113.5
136.1
157.2
155.8
153.9
158.5
173.8
169.2
209.7
297.4
325.2
149.0
157.4
177.8
218.1
230.9
138.2
142.9
152.4
168.9
170.6
a Total for the group includes commodities not separately listed. f ABARES forecast. s ABARES estimate.
Note: The indexes for commodity groups are calculated on a chained weight basis using Fisher’s ideal index with a reference year of 1997–98 = 100. Indexes for most individual commodities are based on annual gross unit value of production. Prices used in these calculations exclude GST.
Source: ABARES
232
ABARES
Agricultural commodities – March quarter 2017
208.0
157.5
114.6
167.9
330.7
235.1
174.2
Prices
STATISTICS
TABLE
2 Indexes
prices paid
farmers,
and terms
trade of
Australia
2 Indexes
of of
prices
paidbyby
farmers,
and of
terms
trade Australia
Category
Farmers’ terms of trade a
Materials and services
Seed, fodder and livestock
fodder and feedstuffs
seed, seedlings and plants
store and breeding stock
total seed, fodder and livestock
Chemicals
Electricity
Fertiliser
Fuel and lubricants
Total
Labour
Marketing
Overheads
Insurance
Interest paid
Rates and taxes
Other overheads
Total
Capital items
Total prices paid
Excluding capital items
Excluding capital and overheads
Excluding seed, fodder and livestock
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
95.3
98.2
103.9
112.7
113.3
113.6
127.1
126.8
134.5
138.5
130.5
133.8
128.0
130.6
130.4
129.1
122.5
125.8
173.8
169.2
209.7
297.4
325.2
330.7
137.9
136.9
151.2
173.0
172.7
176.5
110.3
113.6
115.0
116.2
117.5
119.2
180.8
185.7
176.4
178.9
181.5
184.9
157.9
153.2
154.7
157.8
165.0
164.1
216.8
221.1
196.8
179.1
175.5
175.5
149.5
150.8
155.1
162.8
164.3
166.9
159.2
163.5
166.3
168.6
171.1
174.3
153.5
159.3
152.9
148.3
149.1
152.0
190.0
195.2
198.5
201.3
204.2
208.1
96.4
85.3
79.5
75.6
72.3
74.1
156.4
160.6
163.4
165.6
168.0
171.2
151.7
155.8
158.5
160.7
163.0
166.1
117.6
110.6
107.1
104.7
102.7
105.1
157.0
161.5
164.4
166.9
169.5
172.8
145.1
145.5
146.7
149.8
150.6
153.3
143.9
143.9
144.9
148.1
148.7
151.4
151.9
154.3
156.8
162.0
163.5
166.2
146.5
147.3
145.5
144.8
145.7
148.2
a Ratio of index of prices received by farmers and index of prices paid by farmers. f ABARES forecast. s ABARES estimate.
Note: The indexes for commodity groups are calculated on a chained weight basis using Fisher’s ideal index with a
reference year of 1997–98 = 100. Prices used in these calculations exclude GST.
Sources: ABARES (compiled from various market sources); Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
233
Costs and returns
STATISTICS
TABLE
3 Farm costs and returnsAustralia
Australia
3Farmcostsandreturns
Category
Costs Materials and services
Chemicals
Fertiliser
Fuel and lubricants
Marketing
Repairs and maintenance
Seed and fodder
Other
Total materials and services
Labour
Overheads
Interest paid
Rent and third‐party insurance
Total overheads
Total cash costs
Depreciation a
Total farm costs
Returns Gross value of farm production
Net returns and production Net value of farm production b
Real net value of farm production c
Net farm cash income d
Real net farm cash income c
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
$m
$m
$m
$m
$m
$m
$m
$m
$m
1,369
2,168
2,232
3,849
4,121
4,619
4,545
22,903
4,298
1,406
2,091
2,248
4,108
4,529
4,650
4,711
23,741
4,364
1,455
2,121
1,978
4,118
4,922
4,938
4,727
24,259
4,303
1,508
2,182
1,788
4,152
5,461
5,089
4,754
24,933
4,250
1,508
2,280
1,754
4,901
6,067
4,908
4,999
26,416
4,400
1,530
2,282
1,762
4,334
6,001
5,165
4,989
26,062
4,568
$m
$m
$m
$m
$m
$m
4,259
537
9,094
31,997
5,197
37,194
3,956
551
8,871
32,612
5,345
37,957
3,874
561
8,738
32,997
5,444
38,441
3,868
569
8,687
33,619
5,526
39,145
3,883
577
8,859
35,276
5,613
40,888
4,181
588
9,337
35,399
5,720
41,120
$m
48,684
51,494
54,431
58,907
63,791
61,296
$m
11,490
13,537
15,990
19,762
22,903
20,177
$m
12,348
14,163
16,448
20,051
22,903
19,800
$m
16,687
18,882
21,434
25,288
28,515
25,897
$m
17,933
19,755
22,048
25,658
28,515
25,414
a Based on estimated movements in capital expenditure and prices of capital inputs. b Gross value of farm production less total farm costs. c In 2016–17 Australian dollars. d Gross farm cash income less total cash costs. f ABARES forecast. s ABARES estimate.
Note: Prices used in these calculations exclude GST.
Sources: ABARES (compiled from various market sources); Australian Bureau of Statistics
234
ABARES
Agricultural commodities – March quarter 2017
Exports
FIGURE 5 Contribution to exports by sector, balance of payments basis Australia
Proportion of
merchandise exports
2015–16
Other
merchandise
17%
Rural a
20%
Other
merchandise
16%
Rural a
18%
Other
merchandise
14%
Rural a
16%
Other
merchandise
15%
Rural a
16%
Other
merchandise
15%
Mineral
resources
70%
Services credits
20%
Rural a
15%
Mineral
resources
53%
Services credits
17%
Rural a
13%
Mineral
resources
58%
Services credits
18%
Rural a
13%
Other
merchandise
12%
Mineral
resources
69%
2011–12
Mineral
resources
50%
Other
merchandise
12%
Mineral
resources
70%
2012–13
Rural a
15%
Other
merchandise
12%
Mineral
resources
66%
2013–14
Services credits
22%
Other
merchandise
13%
Mineral
resources
63%
2014–15
Proportion of exports
of goods and services
Rural a
15%
Mineral
resources
57%
Services credits
16%
Other
merchandise
12%
Rural a
13%
Mineral
resources
59%
a ABARES rural balance of payments adjusted to include farm, fisheries and forestry products classified as other merchandise by
Australian Bureau of Statistics.
Sources: ABARES; Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
235
Sectors
STATISTICS
TABLE
4 Volume of production indexes Australia
4Volumeofproductionindexes
Australia
Commodity
Farm
Grains and oilseeds
Total crops
Livestock slaughterings
Total livestock
Total farm sector
Forestry a
Hardwood
Softwood
Total forestry
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
index
index
index
index
index
138.4
133.2
116.1
104.7
119.6
144.9
131.9
127.7
111.4
122.3
138.8
125.0
137.0
118.1
122.3
137.2
130.4
126.5
110.8
120.7
198.0
164.2
114.9
102.7
129.8
142.7
142.4
117.7
105.2
122.5
index
89.0
107.5
121.8
132.0
130.9
130.0
index
123.0
130.4
136.2
145.9
144.4
142.9
index
106.7
119.4
129.3
139.3
137.9
136.7
a Volume of logs harvested excluding firewood. f ABARES forecast. s ABARES estimate.
Note: ABARE revised the method for calculating production indexes in October 1999. The indexes for the different groups of commodities are calculated on a chained weight basis using Fisher’s ideal index with a reference year of 1997–98 = 100. Sources: ABARES; Australian Bureau of Statistics
STATISTICS
TABLE
5 Industry
gross
valueadded
added abab Australia
Australia
5 Industry
gross
value
Industry
Agriculture, forestry and fishing
Agriculture
Forestry and fishing
Total
Mining
Manufacturing
Food, beverage and alcohol
Textile, clothing, footwear and leather
Wood and paper products
Printing, publishing and recorded media
Petroleum, coal, chemical products
Non-metallic mineral products
Metal products
Machinery and equipment
Total manufacturing
Building and construction
Electricity, gas and water supply
Taxes less subsidies on products
Statistical discrepancy
Gross domestic product
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
32,339
32,716
32,479
32,712
32,958
30,935
$m
5,336
5,502
5,524
5,554
5,619
5,536
$m
37,680
38,219
38,001
38,267
38,578
36,471
$m
77,878
83,741
91,548
100,426
108,178
114,236
$m
25,713
26,301
26,779
26,606
25,915
25,326
$m
5,359
5,145
5,087
5,097
5,248
5,284
$m
6,844
6,277
6,273
6,373
6,473
6,482
$m
4,171
3,749
3,705
3,528
3,349
3,264
$m
20,195
20,557
19,425
19,176
18,613
18,081
$m
6,311
5,984
5,713
5,767
6,244
6,158
$m
18,030
18,406
16,912
17,204
16,660
15,690
18,988
$m
21,503
22,440
21,401
20,020
19,647
$m
108,134
108,847
105,251
103,722
102,151
99,272
$m
112,247
123,717
127,156
132,925
130,585
134,390
$m
41,683
41,932
42,240
41,185
41,953
42,809
$m
105,063
106,944
108,243
108,364
109,447
110,929
$m
0
0
-1
0
-1
5,529
$m 1,447,478 1,500,084 1,538,634 1,578,785 1,617,016 1,660,026
a Chain volume measures, reference year is 2014–15. b ANZSIC 2006.
Note: Zero is used to denote nil or less than $0.5 million (absolute value).
Sources: Australian Bureau of Statistics, Australian national accounts: national income, expenditure and product, cat. no. 5206.0,
Canberra; Australian Bureau of Statistics, Balance of payments, Australia , cat. no. 5302.0, Canberra
236
ABARES
Agricultural commodities – March quarter 2017
Employment, banks
STATISTICS
TABLE
6 Employment
ab Australia
6Employment
abAustralia
Industry
Agriculture, forestry and fishing
Horticulture c
Sheep, beef cattle and grain
Other crop growing
Dairy cattle
Poultry
Other livestock d
Other agriculture nfd
Total agriculture
Forestry and logging
Forestry support services
Aquaculture
Fishing
Hunting and trapping
Fishing, hunting and trapping nfd
Agriculture and fishing support services e
Total agriculture, forestry and fishing
Manufacturing Food product
Beverage and tobacco
Wood product
Pulp, paper and converted paper product
Total manufacturing
Total employment
unit
’000
’000
’000
’000
’000
’000
’000
’000
’000
’000
’000
’000
’000
’000
’000
’000
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
59
133
9
27
10
12
45
294
5
3
4
6
1
1
20
337
57
129
9
22
10
10
39
277
8
3
4
6
0
1
20
321
57
107
14
20
9
11
44
261
6
3
3
5
0
1
19
301
63
107
6
26
4
9
55
270
6
3
5
3
0
0
22
311
51
116
5
21
6
17
59
275
5
3
7
6
1
0
18
318
67
94
3
30
13
13
62
282
6
3
5
5
0
1
17
322
195
186
190
188
197
194
’000
25
33
26
35
31
34
’000
36
38
37
48
43
42
’000
19
15
15
14
13
13
’000
970
938
934
926
913
877
’000
11,115
11,249
11,385
11,450
11,654
11,881
’000
a Average employment over four quarters. b ANZSIC 2006. c Includes nursery, floriculture, vegetable, fruit and tree nut growing. d Includes deer farming. e Includes agriculture, forestry and fishing support services not further defined. nfd Not further defined.
Notes: Australian Bureau of Statistics advises caution using employment statistics at the ANZSIC subdivision and group levels because estimates may be subject to sampling variability and standard errors too high for most practical purposes. Zero is used to denote nil or less than 500 persons.
Source: Australian Bureau of Statistics, Labour force, Australia, cat. no. 6291.0.55.003, Canberra
STATISTICS
TABLE
7 All banks lending to business
a Australia
7Allbankslendingtobusiness
aAustralia
Industry
Agriculture, forestry and fishing
Mining
Manufacturing Construction
Wholesale and retail trade, transport and storage
Finance and insurance
Other
Total
unit
Jun–15
Sep–15
Dec–15
$b
65.0
64.4
63.3
$b
38.2
42.1
38.4
$b
46.9
47.8
46.8
$b
30.4
30.3
31.2
$b
109.1
114.4
113.0
$b
136.9
152.3
164.9
$b
394.7
405.6
414.8
$b
821.1
856.8
872.4
a Includes variable and fixed interest rate loans outstanding plus bank bills outstanding.
Source: Reserve Bank of Australia, Bank lending to business‐selected statistics, Bulletin Statistical Table D8
Mar–16
64.3
34.6
45.5
31.7
114.1
164.2
426.9
881.3
Jun–16
66.9
34.6
44.8
32.0
115.1
172.4
431.5
897.4
Sep–16
67.9
32.5
45.3
32.8
117.2
178.9
437.8
912.4
ABARES
Agricultural commodities – March quarter 2017
237
Farm debt, world prices
STATISTICS
TABLE
8 Rural
indebtednessto
to financial
financial institutions
Australia
8 Rural
Australia
indebtedness
institutions
Institution
Rural debt
All banks a
Other government agencies b
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
60,184
59,749
61,778
62,461
64,966
66,912
$m
1,871
2,076
2,236
2,451
878
973
Pastoral and other finance companies
Large finance institutional debt c
Deposits
Farm management deposits
$m
2,010
1,801
1,569
1,486
1,463
1,622
$m
64,065
63,626
65,583
66,397
67,307
69,508
$m
3,216
3,532
3,721
4,139
4,604
5,068
a Derived from all banks lending to agriculture, fishing and forestry. b Includes the government agency business of state banks and
advances made under War Service Land Settlement. c Sum of rural debt.
Sources: ABARES; Department of Agriculture and Water Resources; Reserve Bank of Australia, Estimated rural debt to specified
lenders, Bulletin Statistical Table D9
STATISTICS
TABLE
9 Annual world indicator prices of selected commodities
9Annualworldindicatorpricesofselectedcommodities
Commodity
Crops
Wheat a
Corn b
Rice c
Soybeans d
Cotton e
Sugar g
Livestock products
Beef h
Wool i
Butter j
Cheese j
Skim milk powder j
unit
US$/t
US$/t
US$/t
US$/t
USc/lb
USc/lb
2012–13
2013–14 2014–15
2015–16
2016–17 f
2017–18 f
348
312
565
597
88
18
317
219
429
547
91
17
266
174
419
418
71
13
211
168
386
373
70
17
190
155
382
390
78
21
190
157
403
382
80
22
USc/kg
440
440
551
451
435
430
Ac/kg
1,035
1,070
1,102
1,253
1,360
1,440
US$/t
3,727
4,498
3,483
3,146
4,125
4,580
US$/t
4,150
4,817
3,921
3,200
3,650
4,080
US$/t
3,731
4,513
2,592
1,975
2,300
2,450
a US no. 2 hard red winter wheat, fob Gulf. b US no. 2 yellow corn, fob Gulf. c USDA nominal quote for Thai white rice, 100 per cent, Grade B, fob, Bangkok (August–July basis). d US no. 2 soybeans, fob Gulf. e Cotlook ‘A’ index. f ABARES forecast. g Nearby futures price (October–September basis), Intercontinental Exchange, New York no. 11 contract. h Cow 90CL US cif price. i Australian Wool Exchange eastern market indicator. j Average of traded prices (excluding subsidised sales). Sources: ABARES; Australian Bureau of Statistics; Australian Wool Exchange; Cotlook Ltd; Dairy Australia; Intercontinental Exchange; International Grains Council; Meat & Livestock Australia; New York Board of Trade; US Department of Agriculture 238
ABARES
Agricultural commodities – March quarter 2017
Gross unit values
STATISTICS
10 Gross
unit
farm
products
a
TABLE
10 Gross
unitvalues
values ofof
farm
products
a
Commodity
Crops b
Grains
Barley
Corn (maize)
Grain sorghum
Oats
Rice
Triticale
Wheat
Oilseeds
Canola
Soybeans c
Sunflower seed c
Pulses
Chickpeas
Field peas
Lupins
Industrial crops
Cotton lint d
Sugar cane (cut for crushing)
Wine grapes
Livestock
Beef cattle
Lambs
Pigs
Poultry
Livestock products
Wool
Milk
Eggs
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
$/t
276
267
280
248
201
213
$/t
238
297
330
366
328
341
$/t
252
300
301
261
213
221
$/t
236
213
250
250
206
202
$/t
260
340
395
410
375
394
$/t
249
258
256
237
189
198
$/t
313
316
300
286
245
261
$/t
548
555
503
549
532
541
$/t
468
538
588
560
640
571
$/t
570
660
756
652
612
594
$/t
394
352
567
656
841
691
$/t
406
419
413
460
375
380
$/t
340
345
292
290
260
275
c/kg
199
229
199
226
243
267
$/t
37
40
40
43
52
54
$/t
499
441
476
526
516
526
c/kg
318
304
382
575
614
614
c/kg
371
410
474
520
585
600
c/kg
262
300
310
358
362
357
c/kg
205
209
226
231
225
223
c/kg
568
604
626
734
773
818
c/L
40
50
49
43
44
47
c/dozen
195
221
229
223
225
227
a Average gross unit value across all grades in principal markets, unless otherwise indicated. Includes the cost of
containers, commission and other expenses incurred in getting the commodities to their principal markets. These expenses
are significant. b Average unit gross value relates to returns received from crops harvested in that year, regardless of when
sales take place, unless otherwise indicated. c Price paid by crusher. d Australian base price for sales in the financial year
indicated. f ABARES forecast. s ABARES estimate.
Note: Prices used in these calculations exclude GST.
Sources: ABARES; Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
239
World
STATISTICS
11 World
production,
stocks
trade
for selected
commodities
TABLE
11 World
production,consumption,
consumption, stocks
andand
trade
for selected
commodities
a
Commodity
Grains
Wheat
production
consumption
closing stocks
exports bc
Coarse grains
production
consumption
closing stocks
exports b
Rice
production d
consumption d
closing stocks d
exports be
Oilseeds and vegetable oils
Oilseeds
production
consumption
closing stocks
exports
Vegetable oils
production
consumption
closing stocks
exports
Vegetable protein meals
production
consumption
closing stocks
exports
Industrial crops
Cotton
production
consumption
closing stocks
exports
Sugar
production
consumption
closing stocks
exports
2014–15
2015–16 s
2016–17 f
a
unit
2012–13
2013–14
2017–18 f
Mt
658
717
730
737
750
735
Mt
678
699
715
720
737
735
Mt
171
190
205
221
234
234
Mt
142
157
153
164
167
165
Mt
1,137
1,280
1,306
1,250
1,331
1,282
Mt
1,141
1,226
1,255
1,266
1,307
1,316
Mt
164
211
245
246
256
247
Mt
123
164
186
165
186
184
Mt
473
478
480
472
482
486
Mt
467
479
478
473
482
485
Mt
117
116
118
117
118
119
Mt
38
43
42
39
41
41
Mt
475
504
537
522
555
555
Mt
469
493
517
526
546
556
Mt
68
78
93
89
97
96
Mt
119
134
147
153
157
158
Mt
162
170
176
176
187
190
Mt
159
170
173
178
186
190
Mt
21
22
20
19
19
19
Mt
68
70
77
75
78
80
Mt
268
282
299
306
320
324
Mt
265
279
294
305
318
326
Mt
13
14
15
17
18
16
Mt
79
82
85
87
92
98
Mt
27
26
26
21
23
25
Mt
23
24
24
24
24
26
Mt
20
22
24
21
20
18
Mt
10
9
8
8
8
8
Mt
183
182
182
173
177
183
Mt
176
176
179
181
184
184
Mt
71
78
81
73
66
65
Mt
61
58
56
59
60
64
continued ...
240 ABARES
Agricultural commodities – March quarter 2017
World
STATISTICS
TABLE
11 World production, consumption, stocks and trade for selected commodities a acontinued
continued
11Worldproduction,consumption,stocksandtradeforselectedcommodities
Commodity
Livestock products Meat egh
production
consumption
closing stocks
exports b
Wool i
production
consumption ej
closing stocks k
exports l
Butter eh
production
consumption
closing stocks
exports
Skim milk powder ehm
production
consumption
closing stocks
exports
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
Mt
Mt
Mt
Mt
267
263
2.9
28
271
266
3.1
29
274
268
2.8
28
277
271
2.8
29
281
276
2.8
30
287
281
2.9
30
kt
kt
kt
kt
1,163
1,162
35
553
1,163
1,154
35
551
1,158
1,158
30
549
1,155
1,155
33
547
1,154
1,154
35
548
1,156
1,156
37
549
kt
kt
kt
kt
9,249
8,716
231
868
9,636
9,023
250
924
9,893
9,175
340
916
10,089
9,405
347
991
10,327
9,689
291
1,006
10,534
9,883
259
1,026
kt
4,051
4,512
4,773
4,784
4,779
4,875
kt
3,488
3,592
3,790
3,749
3,910
3,988
kt
383
513
606
903
881
784
kt
1,759
1,968
2,077
1,968
2,127
2,170
a Figures sourced from external organisations may not based on precise or complete analyses. b Excludes intra‐EU trade. c Includes the grain equivalent of wheat flour. d Milled equivalent. e On a calendar year basis, e.g. 2011–12 = 2012. f ABARES forecast. g Beef and veal, mutton, lamb, goat, pig and chicken meat. h Selected countries. i Clean equivalent. j Virgin wool at the spinning stage in 65 countries. k Held by marketing bodies and on‐farm in five major exporting countries. l Five major exporting countries. m Non‐fat dry milk. s ABARES estimate. Sources: ABARES; Argentine Wool Federation; Australian Bureau of Statistics; Capewools South Africa; Commonwealth Secretariat; Economic Commission for Europe; Fearnleys; International Grains Council; International Sugar Organization; International Wool Textile Organisation; Ministry of Agriculture, Forestry and Fisheries (Japan); New Zealand Wool Board; Poimena Analysis, Melbourne; UN Food and Agriculture Organization; US Department of Agriculture; Uruguayan Association of Wool Exporters
ABARES
Agricultural commodities – March quarter 2017
241
Australian production
STATISTICS
TABLE
12 Agricultural, fisheries and forestry commodity production Australia
12Agricultural,fisheriesandforestrycommodityproduction
Australia
Commodity
Crops
Grains
barley
corn (maize)
grain sorghum
oats
rice
triticale
wheat
Oilseeds
canola
cottonseed
soybeans
sunflower seed
other oilseeds a
Pulses
chickpeas
field peas
lupins
Total grains, oilseeds and pulses b
Industrial crops
cotton lint
sugar cane (cut for crushing)
sugar (tonnes actual)
wine grapes
Horticulture
Fruit
apples
bananas
oranges
Vegetables
carrots
onions
potatoes
tomatoes
Livestock
Slaughterings
cattle and calves
lambs
sheep
pigs
chickens Live exports
cattle c
sheep d Meat produced e
beef and veal lamb mutton pig meat
chicken meat total meat produced
242
ABARES
Agricultural commodities – March quarter 2017
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
kt
kt
kt
kt
kt
kt
kt
7,472
506
2,229
1,121
1,161
171
22,855
9,174
390
1,282
1,255
819
126
25,303
8,646
495
2,209
1,198
690
143
23,743
8,593
439
2,037
1,308
250
195
24,168
13,414
467
1,208
1,879
870
247
35,134
8,500
370
1,923
1,229
870
171
23,979
kt
kt
kt
kt
kt
4,142
1,439
70
38
41
3,832
1,252
32
18
27
3,540
746
37
30
21
2,944
890
40
25
24
4,144
1,455
48
33
29
3,690
1,580
47
34
23
kt
kt
kt
kt
813
320
459
43,439
629
342
626
45,726
555
290
549
43,459
1,006
205
607
43,387
1,407
415
1,031
63,092
947
297
503
44,995
kt
kt
kt
kt
1,017
30,001
4,248
1,642
885
30,521
4,364
1,438
528
32,360
4,572
1,608
629
34,828
4,920
1,710
1,029
35,410
5,087
1,610
1,117
35,556
5,161
1,540
kt
kt
kt
289
330
401
267
254
350
295
252
338
300
360
420
300
370
420
300
374
345
kt
kt
kt
kt
272
302
1,273
456
243
256
1,171
326
261
315
1,155
389
305
320
1,155
395
310
340
1,100
395
318
381
1,182
389
’000
’000
’000
’000
million
8,457
21,122
8,192
4,745
563
9,473
21,899
10,066
4,778
580
10,103
22,867
9,022
4,924
591
8,796
23,131
8,127
5,000
623
7,450
22,400
6,500
5,150
651
7,525
22,623
6,500
5,300
664
’000
’000
634
2,000
1,133
2,020
1,379
2,180
1,258
1,859
1,015
1,875
1,050
1,900
kt
kt
kt
kt
kt
kt
2,245
457
183
356
1,046
4,287
2,464
474
228
360
1,084
4,610
2,662
507
214
371
1,116
4,869
2,344
516
196
378
1,150
4,584
2,033
503
158
393
1,196
4,283
2,091
507
156
405
1,228
4,388
continued ...
Australian production
STATISTICS
TABLE
12 Agricultural, fisheries and forestry commodity production Australia Australiacontinued
continued
12Agricultural,fisheriesandforestrycommodityproduction
Commodity
Livestock products wool g
milk h
eggs
butter i
cheese
skim milk powder
whole milk powder
buttermilk powder
Forestry products j
hardwood
softwood
total forestry products
Fisheries k
tuna salmonids l
other fish prawns
rock lobster m abalone
scallops
oysters
other molluscs
other crustaceans
unit
kt
ML
million dozen
kt
kt
kt
kt
kt
3
’000 m
’000 m3
3
’000 m
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
435
9,317
335
118
338
224
109
11
419
9,372
322
116
311
211
126
11
427
9,732
318
119
344
242
97
12
404
9,539
326
119
344
256
66
11
415
8,840
339
117
344
211
60
11
427
8,990
348
119
344
220
58
11
9,029
13,551
22,580
10,899
14,367
25,266
12,356
14,999
27,355
13,390
16,076
29,466
13,279
15,904
29,183
13,183
15,742
28,925
kt
10.6
10.7
12.4
14.2
12.6
13.2
kt
43.0
41.8
48.6
55.0
60.4
61.0
kt
106.5
101.3
101.0
113.5
109.3
100.8
kt
21.3
25.0
25.1
23.4
22.2
22.8
kt
10.3
10.4
10.3
10.2
10.4
10.5
kt
5.0
4.7
4.6
4.5
4.5
4.6
kt
6.8
4.4
4.3
4.9
4.9
4.8
kt
12.4
11.6
10.9
9.9
9.0
9.2
kt
8.0
5.9
7.1
7.1
7.2
7.2
kt
5.3
5.5
5.6
5.6
5.6
5.6
a Linseed, safflower seed and peanuts. b Total includes components not listed separately. c Includes all bovine for feeder/slaughter, breeding and dairy purposes. d Includes animals for breeding. e In carcase weight and includes carcase equivalent of canned meats. f ABARES forecast. g Greasy equivalent of shorn wool (includes crutching), dead and fellmongered wool and wool exported on skins. h Includes the whole milk equivalent of farm cream intake. i Includes the butter equivalent of butter oil, butter concentrate, ghee and dry butterfat. j Excludes logs harvested for firewood. k Liveweight. l Includes salmon and trout production. m Includes Queensland bugs. s ABARES estimate.
Note: Zero is used to denote nil or less than 500 tonnes.
Sources: ABARES; Australian Bureau of Statistics; Australian Fisheries Management Authority; Dairy Australia; Department of Fisheries, Western Australia; Department of Primary Industries, Parks, Water and Environment, Tasmania; Fisheries Queensland, Department of Agriculture, Fisheries and Forestry; Fisheries Victoria, Department of Primary Industries; Industry & Investment New South Wales; Northern Territory Department of Regional Development, Primary Industry, Fisheries and Resources; Primary Industries and Regions, Fisheries, South Australia; Pulse Australia; Raw Cotton Marketing Advisory Committee; South Australian Research and Development Institute; state and territory forest services; various Australian forestry industries
ABARES
Agricultural commodities – March quarter 2017
243
Value of production
STATISTICS
TABLE
13 Gross value of farm, fisheries and forestry production Australia
13Grossvalueoffarm,fisheriesandforestryproduction
Australia
Commodity
Crops
Grains
barley
corn (maize)
grain sorghum
oats
rice
triticale
wheat
other cereals
Oilseeds
canola
soybeans
sunflower seed
other oilseeds a
Pulses
chickpeas
field peas
lupins
other pulses
Total grains, oilseeds and pulses b
Industrial crops
cotton lint and cottonseed c
sugar cane (cut for crushing)
wine grapes
total industrial crops
Horticulture
table and dried grapes
fruit and nuts (excl. grapes)
vegetables
nursery, cut flowers and turf
other horticulture nei d
total horticulture
Other crops nei e
Total crops
244 ABARES
Agricultural commodities – March quarter 2017
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
$m
$m
$m
$m
$m
$m
$m
$m
2,063
120
562
265
302
43
7,154
110
2,453
116
384
268
279
32
7,998
115
2,417
163
666
300
273
37
7,124
90
2,132
160
531
327
103
46
6,918
100
2,703
153
258
388
326
47
8,592
105
1,808
126
425
248
343
34
6,254
110
$m
$m
$m
$m
2,270
33
22
33
2,129
17
12
26
1,782
22
23
26
1,617
23
16
19
2,203
31
20
23
1,995
27
20
18
$m
$m
$m
$m
$m
320
130
156
347
13,927
222
143
216
391
14,800
315
120
160
425
13,943
660
94
176
534
13,456
1,183
156
268
881
17,336
654
113
138
516
12,828
$m
$m
$m
$m
2,174
1,118
858
4,150
2,002
1,226
672
3,900
1,200
1,304
765
3,268
1,529
1,499
899
3,927
2,677
1,835
831
5,343
2,942
1,922
810
5,674
$m
$m
$m
$m
$m
$m
$m
$m
303
3,662
3,770
1,285
251
9,271
1,245
28,592
331
3,187
3,510
1,247
233
8,507
1,490
28,697
343
3,512
3,350
1,252
232
8,689
1,538
27,438
364
3,649
3,675
1,264
241
9,193
1,600
28,175
376
3,737
3,885
1,276
252
9,527
1,660
33,866
390
3,843
4,041
1,289
263
9,826
1,720
30,049
continued ...
Value of production
TABLE
13 Gross value of farm, fisheries and forestry production
Australia continued
13 Grossvalueoffarmandfisheriesproduction
Australiacontinued
Commodity
Livestock
Slaughterings
cattle and calves gh
sheep h
lambs h
pigs h
poultry
Live exports
cattle exported live i
sheep exported live j
Total livestock k
Livestock products wool l milk m
eggs
honey and beeswax
total livestock products
Total farm
Forestry products n
Hardwood
Softwood
Total forestry products
Fisheries products o
Tuna Salmonids p
Other fish q
Prawns
Rock lobster r
Other crustaceans
Abalone
Scallops
Oysters
Pearls Other molluscs Other nei
Total fisheries products
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
$m
$m
$m
$m
$m
7,136
329
1,696
934
2,214
7,495
513
1,943
1,081
2,344
10,175
650
2,401
1,149
2,610
13,468
580
2,686
1,353
2,747
12,491
599
2,943
1,424
2,768
12,847
616
3,044
1,444
2,828
$m
$m
$m
589
194
13,192
1,049
185
14,740
1,356
245
18,765
1,551
228
22,828
1,284
234
21,969
1,352
243
22,606
$m
$m
$m
$m
$m
$m
2,472
3,687
653
88
6,900
48,684
2,530
4,729
710
88
8,057
51,494
2,676
4,722
729
101
8,227
54,431
2,965
4,102
728
110
7,905
58,907
3,204
3,872
763
116
7,956
63,791
3,498
4,225
789
130
8,642
61,296
$m
$m
$m
680
836
1,516
822
1,018
1,840
969
1,066
2,034
1,117
1,154
2,271
1,120
1,153
2,272
1,124
1,152
2,275
$m
176
147
161
174
167
173
$m
518
543
631
702
775
772
$m
446
403
434
523
505
460
$m
278
339
358
373
375
357
$m
439
586
668
692
699
729
$m
64
64
65
64
66
67
$m
178
164
164
171
178
183
$m
15
11
11
13
12
13
$m
94
91
92
90
89
86
$m
79
61
68
69
66
68
$m
40
33
41
52
50
44
$m
59
27
68
44
46
49
$m
2,385
2,470
2,761
2,967
3,028
3,000
a Linseed, safflower seed and peanuts. b Total includes components not listed separately. c Value delivered to gin. d Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. e Mainly fodder crops. f ABARES forecast. g Includes dairy cattle slaughtered. h Excludes skin and hide values. i Includes all bovine for feeder/slaughter, breeding and dairy purposes. j Includes animals exported for breeding purposes. k Total livestock slaughterings includes livestock disposals. l Shorn, dead and fellmongered wool and wool exported on skins. m Milk intake by factories and valued at the farm gate. n Excludes logs harvested for firewood. o Value to fishers of product landed in Australia. p Includes salmon and trout production. q Includes an estimated value of aquaculture. r Includes Queensland bugs. s ABARES estimate. nei Not elsewhere included.
Note: The gross value of production is the value placed on recorded production at the wholesale prices realised in the marketplace. The point of measurement can vary between commodities. Generally the marketplace is the metropolitan market in each state and territory. However, where commodities are consumed locally or where they become raw material for a secondary industry, these points are presumed to be the marketplace. Prices used in these calculations exclude GST. Sources: ABARES; Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
245
Areas, stock
STATISTICS
14 Crop
andand
forestry
andlivestock
livestock
numbers
Australia
TABLE
14 Crop
forestryareas
areas and
numbers
Australia
Commodity
Crop areas
Grains
barley
corn (maize)
grain sorghum
oats
rice
triticale
wheat
Oilseeds
canola
soybeans
sunflower seed
other oilseeds a
Pulses
chickpeas
field peas
lupins
Total grains, oilseeds and pulses b
Industrial crops
cotton
sugar cane c
wine grapes d
Livestock numbers e
Beef cattle
Dairy cattle
milking herd g
Total cattle
Sheep
Pigs
sows
Forestry plantation area
Hardwood
Softwood
Total plantation area h
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
’000 ha
3,644
3,814
4,078
4,105
4,035
3,500
’000 ha
78
52
60
67
70
61
’000 ha
647
532
732
681
441
631
’000 ha
729
715
854
832
909
900
’000 ha
113
75
70
23
86
86
’000 ha
99
80
82
117
96
100
’000 ha
12,979
12,613
12,384
12,793
12,917
12,773
’000 ha
3,272
2,721
2,897
2,357
2,327
2,800
’000 ha
48
25
20
21
28
32
’000 ha
33
17
25
23
29
30
’000 ha
33
21
13
15
15
15
’000 ha
574
508
425
663
814
789
’000 ha
281
245
237
238
230
227
’000 ha
450
387
443
490
515
438
’000 ha
23,856
22,583
22,934
23,318
23,739
23,590
’000 ha
443
392
197
270
557
570
’000 ha
349
356
378
381
392
400
’000 ha
133
127
132
133
134
140
million
26.46
26.30
24.60
23.29
23.96
24.49
million
2.83
2.81
2.81
2.79
2.67
2.69
million
1.69
1.65
1.69
1.66
1.60
1.61
million
29.29
29.10
27.41
26.08
26.63
27.18
million
75.55
72.61
70.91
68.70
73.60
76.55
million
2.10
2.31
2.27
2.23
2.38
2.45
’000
260
266
270
275
282
287
’000 ha
976
963
928
na
na
na
’000 ha
1,024
1,024
1,035
na
na
na
’000 ha
2,013
2,000
1,973
na
na
na
a Linseed, safflower and peanuts. b Total includes components not listed separately. c Cut for crushing. d This figure is for grapes
for wine only. e At 30 June. f ABARES forecast. g Cows in milk and dry. h Includes areas where plantation type is unknown.
s ABARES estimate. na Not available.
Sources: ABARES; Australian Bureau of Statistics; Pulse Australia
246 ABARES
Agricultural commodities – March quarter 2017
Yields
STATISTICS
15 Average
yieldsAustralia
Australia
TABLE
15 Averagefarm
farm yields
Commodity
Crops
Grains
barley
corn (maize)
grain sorghum
oats
rice
triticale
wheat
Oilseeds
canola
soybeans
sunflower seed
Pulses
chickpeas
field peas
lupins
Industrial crops
cotton (lint)
sugar cane (for crushing)
wine grapes
Livestock products
wool a
whole milk
unit
2012–13
2013–14
2014–15
2015–16 s
2016–17 f
2017–18 f
t/ha
2.05
2.41
2.12
2.09
3.32
2.43
t/ha
6.49
7.45
8.30
6.54
6.67
6.07
t/ha
3.45
2.41
3.02
2.99
2.74
3.05
t/ha
1.54
1.76
1.40
1.57
2.07
1.37
t/ha
10.28
10.94
9.91
10.90
10.16
10.16
t/ha
1.73
1.57
1.76
1.67
2.57
1.71
t/ha
1.76
2.01
1.92
1.89
2.72
1.88
t/ha
1.27
1.41
1.22
1.25
1.78
1.32
t/ha
1.46
1.27
1.86
1.93
1.75
1.45
t/ha
1.16
1.05
1.20
1.10
1.12
1.13
t/ha
1.42
1.24
1.31
1.52
1.73
1.20
t/ha
1.14
1.40
1.23
0.86
1.80
1.31
t/ha
1.02
1.62
1.24
1.24
2.00
1.15
t/ha
2.30
2.26
2.68
2.33
1.85
1.96
t/ha
86
86
86
91
90
89
t/ha
12.3
11.3
12.1
12.9
12.0
11.0
kg/sheep
4.47
4.37
4.50
4.43
4.55
4.53
L/cow
5,518
5,692
5,761
a Shorn (including lambs). f ABARES forecast. s ABARES estimate.
Sources: ABARES; Australian Bureau of Statistics; Dairy Australia; Pulse Australia
5,736
5,525
5,584
ABARES
Agricultural commodities – March quarter 2017
247
Export volumes
STATISTICS
16 Volume
of agricultural
andfisheries
fisheries
exports
Australia
TABLE
16 Volume
of agricultural and
exports
Australia
Commodity
Farm
Crops
Grains
barley a
corn (maize)
grain sorghum
oats
rice
wheat b
Oilseeds
canola
cottonseed
other oilseeds c
Pulses
chickpeas
peas d
lupins
other pulses
Total grains, oilseeds and pulses
Industrial crops
raw cotton e
sugar
wine
Meat and live animals
beef and veal g
live feeder/slaughter cattle h
live breeder cattle i
lamb g
live sheep j
mutton g
pig meat gk
poultry meat g
Wool
greasy ls
semi-processed
skins
total wool ls
Dairy products
butter m
cheese
casein
skim milk powder
whole milk powder
unit
2012–13
2013–14
2014–15
2015–16
2016–17 f
2017–18 f
kt
5,165
7,124
6,208
5,498
7,389
5,500
kt
134
83
58
41
129
74
kt
1,291
701
1,205
1,075
673
374
kt
241
213
284
230
369
359
kt
584
544
461
317
210
475
kt
21,265
18,336
16,571
15,777
22,784
20,872
kt
3,488
3,194
2,445
1,946
3,063
2,849
kt
754
464
167
147
184
366
kt
10
14
6
10
11
15
kt
852
562
674
1,140
1,379
983
kt
208
155
179
143
240
209
kt
416
274
270
220
595
349
kt
691
795
597
588
1,118
929
kt
35,100
32,458
29,124
27,133
38,144
33,353
kt
1,305
1,036
681
536
774
1,056
kt
3,004
3,052
3,675
4,140
4,290
4,300
ML
717
717
745
727
790
800
kt
1,000
1,052
1,214
1,376
1,196
985
’000
513
1,006
1,295
1,114
915
950
’000
121
127
83
144
100
100
kt
208
236
254
261
253
255
2,000
2,020
2,180
1,859
1,875
1,900
kt
153
186
180
156
125
122
kt
27
28
29
28
29
30
kt
32
37
36
29
35
36
’000
kt
316
295
325
296
310
323
kt (gr. eq.)
34
35
41
35
33
35
kt (gr. eq.)
86
97
92
86
84
84
kt (gr. eq.)
437
428
459
417
426
442
kt
54
49
44
34
32
33
kt
174
151
159
172
165
168
kt
4
3
0
0
0
0
kt
147
143
186
181
140
141
kt
87
94
69
57
60
59
continued ...
248 ABARES
Agricultural commodities – March quarter 2017
Export volumes
TABLE
16 Volume
of agricultural
and
fisheriesexports
exports Australia
Australiacontinued
continued
16 Volume
of agricultural
and
fisheries
Commodity
Fisheries products
tuna
salmonids
other fish
abalone
prawns
rock lobster
other crustaceans and molluscs
total edible n
unit
2012–13
2013–14
2014–15
2015–16
2016–17 f
2017–18 f
kt
8.9
11.0
12.1
13.8
12.0
12.4
kt
2.6
1.8
5.0
8.0
8.1
8.1
kt
6.3
5.8
6.5
20.6
14.9
7.1
kt
2.8
2.7
2.6
2.6
2.6
2.7
kt
3.9
7.1
6.5
6.7
6.2
6.3
kt
7.8
8.0
8.2
8.0
8.0
8.1
kt
2.9
2.5
2.4
2.4
2.4
2.5
kt
35.3
38.9
43.3
62.1
54.3
47.2
a Includes the grain equivalent of malt. b Includes the grain equivalent of wheat flour. c Includes soybeans, linseed, sunflower seed, safflower
seed and peanuts. Excludes meals and oils. d Includes field peas and cowpeas. e Excludes cotton waste and linters. f ABARES forecast.
g In shipped weight. Fresh, chilled or frozen. h Includes buffalo. i Includes dairy cattle and buffalo. j Includes breeding stock. k Includes
preserved pig meat. l Australian Bureau of Statistics recorded trade data adjusted for changes in stock levels held overseas. m Includes ghee,
dry butterfat, butter concentrate and butter oil, and dairy spreads, all expressed as butter. n total non-edible export volume not avaliable
Note: Zero used to denote nil or less than 500 tonnes.
Sources: ABARES; Australian Bureau of Statistics; Department of Foreign Affairs and Trade; United Nations Commodity Trade Statistics
Database (UN Comtrade)
ABARES
Agricultural commodities – March quarter 2017
249
Export values
STATISTICS
17 Value
of agricultural
andfisheries
fisheries
exports
TABLE
17 Value
of agricultural and
exports
(fob) (fob)
AustraliaAustralia
250
Commodity
Farm
Crops
Grains
Barley a
Corn (maize)
Grain sorghum
Oats
Rice
Wheat b
Oilseeds
Canola
Cottonseed
Other oilseeds c
Pulses
Chickpeas
Peas d
Lupins
Other pulses
Total grains, oilseeds and pulses
Industrial crops
Raw cotton e
Sugar
Wine
Total industrial crops
Horticulture
Fruit
Tree nuts
Vegetables
Nursery
Other horticulture g
Total horticulture
Other crops and crop products
Total crops
Meat and live animals
Beef and veal
Live feeder/slaughter cattle h
Live breeder cattle i
Lamb
Live sheep j
Mutton
Pig meat
Poultry meat
Total meat and live animals
Wool
Greasy k
unit
2012–13
2013–14
2014–15
2015–16
2016–17 f
2017–18 f
$m
1,626
2,199
2,137
1,790
1,991
1,822
$m
50
36
30
22
61
36
$m
364
253
424
364
190
119
129
Semi-processed
Skins
Total wool k
$m
83
80
106
104
130
$m
459
490
506
412
212
463
$m
6,776
6,103
5,547
5,120
6,479
5,914
$m
2,094
1,929
1,349
1,097
1,749
1,637
$m
219
168
75
69
88
175
$m
13
18
14
19
19
24
$m
533
297
414
1,013
1,304
757
$m
89
67
91
86
123
100
$m
143
116
119
97
208
127
$m
418
539
541
584
861
670
$m
12,869
12,296
11,352
10,776
13,417
11,974
$m
2,695
2,355
1,546
1,269
1,976
2,672
$m
1,437
1,384
1,643
1,823
2,565
2,833
$m
1,867
1,847
1,983
2,184
2,367
2,497
$m
5,999
5,587
5,172
5,277
6,909
8,002
$m
634
724
755
1,072
1,150
1,235
$m
348
610
734
930
760
803
$m
260
270
293
344
385
411
$m
12
11
12
15
20
22
$m
224
250
266
310
320
352
$m
1,478
1,865
2,060
2,671
2,635
2,823
$m
2,240
2,603
3,033
3,874
3,868
3,728
$m
22,585
22,351
21,617
22,598
26,829
26,527
$m
5,052
6,422
9,040
8,495
7,100
7,195
$m
339
795
1,163
1,280
1,124
1,167
$m
251
255
192
271
160
185
$m
1,128
1,534
1,779
1,771
1,800
1,855
$m
194
185
245
228
234
243
$m
510
772
824
699
613
621
$m
90
94
110
128
134
136
$m
43
50
56
54
54
58
$m
7,516
10,011
13,300
12,797
11,085
11,324
$m
2,261
2,212
2,497
2,590
2,936
3,244
$m
209
238
282
281
267
300
$m
398
426
375
412
402
429
$m
2,869
2,877
3,154
3,283
3,605
3,972
continued ...
ABARES
Agricultural commodities – March quarter 2017
Export values
STATISTICS
TABLE
17 Value
of agricultural
fisheries
exports
(fob)Australia
Australia
continued
17 Value
of agricultural
andand
fisheries
exports
(fob)
continued
Commodity
Dairy products
butter
cheese
casein
skim milk powder
whole milk powder
other dairy products l
total dairy products
Other livestock and livestock products
Total livestock exports
Total farm exports
Fisheries products
tuna
salmonids
other fish
abalone
prawns
rock lobster
other crustaceans and molluscs
pearls
other fisheries products
Total fisheries products
unit
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
2012–13
2013–14
2014–15
2015–16
2016–17 f
2017–18 f
180
784
46
467
312
942
2,731
2,512
15,628
38,213
243
765
42
708
532
904
3,194
2,876
18,958
41,309
198
823
10
682
294
868
2,876
3,192
22,522
44,138
156
859
10
516
257
1,202
3,001
3,066
22,146
44,744
195
891
9
446
275
1,341
3,156
3,061
20,908
47,737
216
1,007
9
489
305
1,489
3,516
3,340
22,152
48,679
$m
163
136
151
163
153
161
$m
25
17
48
80
86
84
$m
70
72
72
111
107
89
$m
186
170
174
182
185
193
$m
52
101
94
114
109
101
$m
447
590
691
693
673
716
$m
59
52
62
74
53
55
$m
152
144
111
96
95
94
$m
21
22
36
28
28
31
$m
1,175
1,304
1,440
1,542
1,489
1,524
a Includes malt. b Includes wheat flour. c Includes soybeans, linseed, sunflower seed, safflower seed and peanuts. Excludes meals and oils. d Field
peas and cowpeas. e Excludes cotton waste and linters. f ABARES forecast. g Other horticulture includes mainly coffee, tea, spices, essential oils,
vegetables for seed and other miscellaneous horticultural products. h Includes buffalo. i Includes dairy cattle and buffalo. j Includes breeding stock.
k On a balance of payments basis. Australian Bureau of Statistics recorded trade data adjusted for changes in stock levels held overseas. l Other
dairy products include food preparations identified by industry as containing a high proportion of dairy products.
Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra; United Nations Commodity Trade
Statistics Database (UN Comtrade)
ABARES
Agricultural commodities – March quarter 2017
251
Agricultural exports
STATISTICS
TABLE
18 Agricultural
exportsto
to China
China (fob)
18 Agricultural
exports
(fob) Australia
Australia
Commodity
Farm
Crops
Grains
barley a
grain sorghum
wheat b
other grains c
Oilseeds
Pulses
Total grains, oilseeds and pulses
Industrial crops
raw cotton d
sugar
wine
total industrial crops
Horticulture
fruit
tree nuts
vegetables
nursery
other horticulture e
total horticulture
Other crops and crop products
Total crops
Meat and live animals
beef and veal
live breeder cattle g
lamb
mutton
other meat and live animals h
total meat and live animals i
Wool
greasy
semi-processed
skins
total wool
Dairy products
butter
cheese
casein
skim milk powder
whole milk powder
other dairy products
total dairy products
Other livestock exports
Total livestock and livestock products
Total agricultural exports
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
$m
$m
$m
$m
$m
$m
311
14
144
0
45
3
516
454
4
457
1
116
4
1,036
494
98
357
6
344
1
1,300
1,080
215
484
0
627
1
2,407
1,464
410
323
0
317
17
2,531
834
350
426
1
14
20
1,645
$m
$m
$m
$m
551
31
178
760
1,812
21
209
2,041
1,849
2
241
2,093
1,520
42
202
1,764
851
126
269
1,246
636
120
416
1,172
$m
$m
$m
$m
$m
$m
$m
$m
8
6
2
1
3
20
8
1,305
10
11
3
1
4
29
22
3,128
28
36
3
0
4
71
30
3,493
37
37
3
0
4
82
31
4,284
64
39
4
1
5
113
46
3,936
187
63
4
1
8
263
23
3,103
$m
$m
$m
$m
$m
$m
52
102
76
26
0
358
59
133
85
30
0
441
408
125
120
123
1
902
787
180
217
229
5
1,598
758
149
191
168
17
1,433
867
221
144
86
8
1,546
$m
$m
$m
$m
1,864
21
351
2,235
1,925
24
369
2,319
1,844
18
337
2,200
1,713
18
378
2,109
1,986
32
336
2,354
2,017
15
385
2,417
$m
$m
$m
$m
$m
$m
$m
$m
$m
4
30
1
37
52
154
278
558
3,330
7
37
1
50
11
185
291
614
3,531
6
44
1
35
56
208
350
635
3,962
7
74
1
108
159
151
501
778
4,820
11
72
0
59
20
173
335
833
4,826
11
85
0
70
82
427
676
653
5,093
$m
4,635
6,660
7,455
9,104
8,762
8,196
a Includes malt. b Includes wheat flour. c Includes grains not separately listed. d Excludes cotton waste and linters. e Other
horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural
products. g Includes dairy cattle and buffalo. h Includes meat and other live animals not listed separately. i Excludes value of live
feeder slaughter for October 2015.
Note: Zero is used to denote nil or less than $0.5 million.
Sources: ABARES; Australian Bureau of Statistics
252
ABARES
Agricultural commodities – March quarter 2017
Agricultural exports
STATISTICS
TABLE
19 Agricultural
exportsto
toIndonesia
Indonesia (fob)
19 Agricultural
exports
(fob)Australia
Australia
Commodity
Farm
Crops
Grains
barley a
wheat b
other grains, oilseeds and pulses c
Total grains, oilseeds and pulses
Industrial crops
raw cotton d
sugar
wine
total industrial crops
Horticulture
fruit
tree nuts
vegetables
nursery
other horticulture e
total horticulture
Other crops and crop products
Total crops
Meat and live animals
beef and veal
live feeder/slaughter cattle g
live breeder cattle h
lamb
mutton
other meat and live animals i
total meat and live animals
Wool
Dairy products
butter
cheese
casein
skim milk powder
whole milk powder
other dairy products
total dairy products
Other livestock products
Total livestock and livestock products
Total agricultural exports
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
$m
$m
$m
9
1,144
15
1,169
10
1,156
14
1,180
7
1,395
12
1,414
6
1,194
28
1,228
5
1,403
14
1,423
5
1,127
18
1,150
$m
$m
$m
$m
247
296
4
547
282
302
4
588
220
316
5
540
174
467
3
644
136
519
4
659
130
476
4
610
$m
$m
$m
$m
$m
$m
$m
$m
29
0
14
0
2
45
8
33
2
11
0
3
49
8
49
1
12
0
2
65
10
53
1
11
0
3
68
14
62
2
6
0
4
75
16
91
5
10
0
2
108
35
1,769
1,825
2,029
1,955
2,172
1,903
$m
$m
$m
$m
$m
$m
$m
$m
178
287
3
6
1
0
478
168
252
2
9
1
0
436
137
165
9
8
2
0
332
258
452
9
4
1
0
734
247
595
5
7
4
0
867
315
578
7
8
6
0
928
1
0
0
1
1
0
$m
$m
$m
$m
$m
$m
$m
$m
9
19
5
80
40
34
187
4
19
7
72
34
39
174
5
18
9
68
18
28
148
7
18
10
126
37
39
237
5
18
0
164
8
56
251
3
18
0
120
3
51
195
101
113
146
147
142
122
$m
767
724
626
1,119
1,262
1,245
2,536
2,549
2,656
3,074
3,434
3,147
$m
a Includes malt. b Includes wheat flour. c Includes grains, oilseeds and pulses not separately listed. d Excludes cotton waste
and linters. e Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous
horticultural products. g Includes buffalo. h Includes dairy cattle and buffalo. i Includes meat and other live animals not listed
separately.
Note: Zero is used to denote nil or less than $0.5 million.
Sources: ABARES; Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
253
Agricultural exports
STATISTICS
20 Agricultural
exports
(fob) Australia
Australia
TABLE
20 Agricultural
exportsto
toJapan
Japan (fob)
Commodity
Farm
Grains
barley a
grain sorghum
wheat b
Oilseeds
canola
cottonseed
Other grains and oilseeds c
Pulses
Total grains, oilseeds and pulses
Industrial crops
raw cotton d
sugar
wine
total industrial crops
Horticulture
fruit
tree nuts
vegetables
nursery
other horticulture e
total horticulture
Other crops and crop products
Total crops
Meat and live animals
beef and veal
live feeder/slaughter cattle gh
lamb
mutton
other meat and live animals i
total meat and live animals
Wool
greasy
semi-processed
skins
total wool
Dairy products
butter
cheese
casein
skim milk powder
whole milk powder
other dairy products
total dairy products
Other livestock products
Total livestock and livestock products
Total agricultural exports
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
$m
$m
260
105
408
316
219
395
292
202
392
251
16
322
177
2
305
223
1
326
$m
$m
$m
$m
$m
41
24
4
10
853
47
31
9
12
1,030
72
36
17
10
1,021
113
31
10
11
754
175
23
6
8
697
63
27
5
15
659
$m
$m
$m
$m
48
194
44
286
63
211
45
319
28
198
42
268
32
245
41
318
25
164
44
234
27
233
46
306
$m
$m
$m
$m
$m
$m
$m
$m
70
16
46
4
7
142
54
1,335
59
20
41
3
6
129
47
1,524
63
23
41
3
4
133
50
1,472
61
19
39
2
9
130
40
1,242
59
23
38
2
8
130
45
1,106
89
35
44
2
9
180
36
1,180
$m
$m
$m
$m
$m
$m
1,689
16
61
26
3
1,795
1,580
20
63
25
3
1,690
1,466
15
56
17
3
1,558
1,439
15
76
29
4
1,562
1,858
14
86
27
5
1,990
1,813
15
72
35
11
1,946
$m
$m
$m
$m
9
23
1
33
12
26
2
39
8
21
1
30
1
10
2
12
0
14
2
16
0
20
2
22
$m
6
9
4
2
4
3
$m
356
423
415
343
407
410
$m
22
21
17
20
5
5
$m
2
2
5
17
30
5
$m
0
1
0
0
0
0
$m
38
46
68
39
33
39
$m
424
502
509
421
481
462
$m
337
302
293
276
293
359
$m
2,589
2,532
2,390
2,272
2,780
2,789
$m
3,924
4,056
3,862
3,514
3,886
3,969
a Includes malt. b Includes the grain equivalent of wheat flour. c Includes grains and oilseeds not separately listed. d Excludes
cotton waste and linters. e Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other
miscellaneous horticultural products. g Excludes breeding stock and includes buffalo for feeder/slaughter purposes. h Excludes
value of live feeder slaughter for October 2015. i Includes other meat and live animals not listed separately.
Note: Zero is used to denote nil or less than $0.5 million.
Sources: ABARES; Australian Bureau of Statistics
254
ABARES
Agricultural commodities – March quarter 2017
Agricultural exports
STATISTICS
TABLE
21 Agricultural
exportstotoRepublic
the Republic
of Korea
(fob)Australia
Australia
21 Agricultural
exports
of Korea
(fob)
Commodity
Farm
Crops
Grains
barley a
wheat b
corn (maize)
Oilseeds
cottonseed
Other grains and oilseeds c
Pulses
Total grains, oilseeds and pulses
Industrial crops
raw cotton d
sugar
wine
total industrial crops
Horticulture
fruit
tree nuts
vegetables
other horticulture e
total horticulture
Other crops and crop products
Total crops
Meat and live animals
beef and veal
lamb
mutton
other meat and live animals g
total meat and live animals
Wool
Dairy products
butter
cheese
casein
skim milk powder
whole milk powder
other dairy products
total dairy product
Other livestock products
Total livestock and livestock products
Total agricultural exports
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
$m
$m
75
368
4
94
628
12
87
449
20
116
310
23
116
354
22
96
410
13
$m
$m
$m
$m
16
1
51
514
26
0
36
797
37
2
74
668
30
6
57
541
15
2
68
577
19
4
25
567
$m
$m
$m
$m
58
424
7
490
120
521
9
650
119
475
10
605
130
309
8
446
82
525
10
617
24
648
13
685
$m
$m
$m
$m
$m
$m
$m
4
1
8
2
15
87
1,106
5
3
9
2
19
88
1,554
7
2
7
3
19
99
1,391
6
4
5
5
19
109
1,116
10
11
9
3
32
128
1,354
12
18
17
3
50
138
1,439
$m
$m
$m
$m
$m
$m
714
13
5
2
734
36
654
15
4
1
674
43
703
14
4
1
721
44
892
24
6
1
923
61
1,068
32
7
1
1,108
81
1,324
49
9
3
1,385
127
$m
16
9
7
6
10
14
$m
37
31
30
26
32
39
$m
2
2
2
1
0
0
$m
23
23
19
27
25
14
$m
6
7
2
3
2
2
$m
37
42
29
29
24
30
$m
121
116
88
92
93
99
$m
108
125
100
118
185
171
$m
999
957
954
1,193
1,467
1,781
$m
2,105
2,512
2,345
2,309
2,821
3,221
a Includes malt. b Includes wheat flour. c Includes grains and oilseeds not separately listed. d Excludes cotton waste and linters.
e Other horticulture includes mainly nursery, coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous
horticultural products. g Includes meat and other animals not listed separately.
Note: Zero is used to denote nil or less than $0.5 million.
Sources: ABARES; Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
255
Agricultural exports
STATISTICS
TABLE
22 Agriculturalexports
exports to
to the
States
(fob)(fob)
Australia
22 Agricultural
Australia
theUnited
United
States
unit
Commodity
Farm
Crops
$m
Grains
$m
Oilseeds
$m
Pulses
$m
Total grains, oilseeds and pulses
Industrial crops
$m
sugar
$m
wine
$m
total industrial crops
Horticulture
fruit
$m
tree nuts
$m
vegetables
$m
nursery
$m
other horticulture a
$m
total horticulture
$m
Other crops and crop products
$m
Total crops
$m
Meat and live animals
beef and veal
$m
lamb
$m
mutton
$m
other meat and live animals b
$m
total meat and live animals
$m
Wool
greasy
$m
semi-processed
$m
skins
$m
total wool
$m
Dairy products
$m
butter
$m
cheese
$m
casein
$m
whole milk powder
$m
other dairy products
$m
total dairy products
$m
Other livestock products
Total livestock and livestock products $m
Total agricultural exports
$m
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
0
0
1
2
0
0
0
4
4
20
5
25
50
4
55
66
5
73
22
4
26
1
5
6
92
524
616
135
493
628
66
483
549
43
472
515
60
463
522
87
477
564
33
12
6
2
16
69
168
857
33
15
5
2
15
69
142
864
25
28
5
2
19
79
191
873
31
48
6
2
28
115
258
962
24
65
8
2
37
136
246
931
34
82
9
2
44
171
258
1,000
709
333
41
0
1,083
894
304
24
0
1,223
970
303
34
0
1,307
1,360
398
51
0
1,808
3,233
532
78
1
3,844
2,488
617
94
0
3,200
11
3
0
14
8
3
0
11
7
2
0
9
4
2
0
7
7
3
0
9
7
4
na
12
3
7
13
1
13
10
12
3
11
9
27
32
13
7
9
4
1
1
4
4
5
0
1
4
18
17
22
16
17
20
51
38
60
30
59
67
125
115
136
176
289
301
1,272
1,386
1,511
2,021
4,201
3,579
2,129
2,251
2,384
2,983
5,132
4,579
a Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural
products. b Includes meat and live animals not listed separately.
Note: Zero is used to denote nil or less than $0.5 million.
Sources: ABARES; Australian Bureau of Statistics
256
ABARES
Agricultural commodities – March quarter 2017
Fisheries exports
STATISTICS
TABLE
23 Volume of fisheries products exports Australia
23Volumeoffisheriesproductsexports
Australia
Commodity
Edible a
Fish
Live Tuna
Salmonids
Swordfish
Whiting
Other fish
Total fish Crustaceans and molluscs
Rock lobster
Prawns
Abalone Scallops
Crabs
Other crustaceans and molluscs
Total crustaceans and molluscs
Total edible fisheries products
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
kt
kt
kt
kt
kt
kt
kt
0.9
7.8
6.4
0.4
1.8
5.5
22.7
0.9
8.9
5.8
0.5
0.9
5.1
22.0
0.8
8.9
2.6
0.5
0.4
4.7
17.8
0.9
11.0
1.8
0.4
0.1
4.4
18.6
0.8
12.1
5.0
0.5
0.0
5.3
23.6
0.8
13.8
8.0
0.6
0.0
19.2
42.4
kt
kt
kt
kt
kt
kt
kt
kt
7.0
6.4
3.4
0.6
1.0
1.2
19.6
42.4
6.9
5.4
3.1
0.4
0.8
1.7
18.4
40.5
7.8
3.9
2.8
0.4
0.4
2.1
17.5
35.3
8.0
7.1
2.7
0.5
0.4
1.6
20.3
38.9
8.2
6.5
2.6
0.3
0.6
1.6
19.7
43.3
8.0
6.7
2.6
0.4
0.6
1.5
19.7
62.1
a Includes prepared and preserved.
Note: Zero is used to denote nil or less than 50 tonnes.
Source: Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
257
Fisheries exports
STATISTICS
24 Value
of of
fisheries
products
exports
TABLE
24 Value
fisheries products
exports
(fob) (fob)
AustraliaAustralia
Commodity
Edible
Fish
Live
Tuna
Salmonids
Swordfish
Whiting
Other fish
Total fish
Crustaceans and molluscs
Rock lobster
Prawns
Abalone
Scallops
Crabs
Other crustaceans and molluscs
Total crustaceans and molluscs
Total edible fisheries products
Non-edible
Marine fats and oils
Fish meal
Pearls a
Ornamental fish
Other non-edible
Total non-edible fisheries products
Total fisheries products
258
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
$m
$m
$m
$m
$m
$m
33.4
131.4
54.4
4.5
5.0
58.1
286.8
32.0
162.7
41.8
4.2
2.5
46.2
289.4
30.7
162.6
25.4
3.9
1.4
34.2
258.2
34.2
135.5
17.4
3.9
0.2
34.2
225.4
29.9
151.0
48.1
4.4
0.1
37.7
271.2
30.2
163.3
79.9
6.9
0.0
74.3
354.6
$m
$m
$m
$m
$m
$m
$m
$m
369.3
77.1
212.0
15.4
13.4
16.3
703.6
990.3
386.7
66.7
197.3
15.3
11.0
34.4
711.3
1,000.7
447.3
51.8
186.0
10.8
8.2
40.2
744.2
1,002.3
590.3
101.0
170.0
13.6
5.5
32.5
912.9
1,138.3
691.2
94.2
173.8
10.7
7.9
43.7
1,021.5
1,292.7
693.2
114.4
182.0
11.7
7.6
54.8
1,063.7
1,418.3
$m
5.4
$m
1.6
$m
241.3
$m
2.3
$m
7.3
$m
257.9
$m
1,248.2
a Includes items temporarily exported and re-imported.
Source: Australian Bureau of Statistics
7.3
0.4
206.6
2.3
9.4
226.1
1,226.8
10.0
1.0
151.5
3.8
6.5
172.8
1,175.2
9.1
0.7
144.4
2.0
9.7
165.9
1,304.3
20.9
1.0
110.8
1.9
12.3
147.0
1,439.6
11.2
0.5
95.9
2.1
13.8
123.5
1,541.8
ABARES
Agricultural commodities – March quarter 2017
Fisheries imports
STATISTICS
TABLE
25 Volume
of fisheriesproducts
products imports
Australia
25 Volume
of fisheries
imports
Australia
Commodity
Edible a
Fish
Tuna
Salmonids
Hake
Swordfish
Toothfish
Herrings
Shark
Other fish
Total fish b
Crustaceans and molluscs
Prawns
Lobster
Crabs
Mussels
Scallops
Squid and octopus
Other crustaceans and molluscs
Total crustaceans and molluscs
Total edible fisheries products abc
unit
kt
kt
kt
kt
kt
kt
kt
kt
kt
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
45.6
9.9
6.7
0.2
0.1
1.0
0.5
83.1
147.1
40.8
10.2
5.3
0.2
0.1
0.9
0.5
86.6
144.4
46.9
11.9
6.1
0.2
0.2
1.8
0.5
92.8
160.5
50.1
14.2
4.5
0.2
0.2
0.9
0.7
90.0
160.8
49.2
16.1
4.9
0.2
0.1
1.1
0.6
87.6
159.8
44.9
15.1
5.1
0.2
0.2
2.2
0.4
86.4
154.5
kt
32.6
37.5
34.8
38.7
32.4
kt
0.9
0.9
0.8
1.0
1.1
kt
1.4
1.5
1.5
2.1
2.0
kt
2.6
2.8
3.7
3.6
3.1
kt
2.6
3.0
3.1
3.5
2.9
kt
15.2
17.0
19.9
23.2
22.3
kt
9.4
7.3
4.1
4.8
4.0
kt
64.7
69.8
67.9
76.7
67.8
kt
211.8
214.2
228.4
237.5
227.6
a Includes prepared and preserved. b Excludes live tonnage. c Includes other fisheries products not classified into fish or
crustaceans and molluscs.
Source: Australian Bureau of Statistics
31.9
0.9
1.9
3.3
2.6
23.4
4.2
68.3
222.8
ABARES
Agricultural commodities – March quarter 2017
259
Fisheries imports
STATISTICS
TABLE
26 Value
of fisheriesproducts
products imports
26 Value
of fisheries
importsAustralia
Australia
Commodity
Edible a
Fish
Tuna
Salmonids
Hake
Swordfish
Toothfish
Herrings
Shark
Other fish
Total fish b
Crustaceans and molluscs
Prawns
Lobster
Crabs
Mussels
Scallops
Squid and octopus
Other crustaceans and molluscs
Total crustaceans and molluscs
Total edible fisheries products abc
Non-edible
Pearls d
Fish meal
Ornamental fish
Marine fats and oils
Other marine products
Total non-edible fisheries products
Total fisheries products
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
$m
$m
$m
$m
$m
$m
$m
$m
200.8
84.4
27.2
1.5
1.4
4.3
4.4
443.7
769.1
205.5
91.8
20.9
1.2
1.3
4.2
4.0
459.6
788.6
258.2
118.8
23.4
1.7
2.2
5.1
4.6
480.0
866.5
296.1
167.5
19.5
1.4
3.0
4.5
5.5
507.5
1,004.9
283.9
190.7
21.8
1.7
3.5
3.9
4.9
544.2
1,054.6
274.8
184.7
23.6
1.6
8.2
5.7
3.9
570.3
1,072.7
$m
$m
$m
$m
$m
$m
$m
$m
$m
291.0
15.0
13.3
10.2
34.5
74.3
65.3
503.5
1,271.3
350.9
16.0
15.5
11.7
43.6
90.4
57.0
585.1
1,373.8
304.8
15.3
16.8
17.1
41.1
97.7
40.7
533.4
1,427.7
495.1
22.4
28.3
19.1
52.9
114.5
44.0
776.3
1,781.3
431.2
28.3
31.1
17.9
49.6
111.6
42.9
712.5
1,767.3
400.9
29.9
28.7
20.0
55.0
134.8
50.7
720.0
1,792.9
$m
166.9
138.2
105.4
102.1
97.2
144.4
$m
46.7
34.2
43.3
43.2
64.3
61.7
$m
3.9
3.7
4.0
4.5
4.4
4.9
$m
31.0
39.5
39.1
40.1
52.7
61.1
$m
9.9
17.1
29.0
30.4
22.2
21.3
$m
258.4
232.8
220.7
220.3
240.8
293.5
$m
1,529.7
1,606.6
1,648.4
2,001.6
2,008.1
2,086.4
a Includes prepared and preserved. b Includes live value. c Includes other fisheries products not classified into fish or crustaceans and
molluscs. d Mainly re-imports.
Source: Australian Bureau of Statistics
260 ABARES
Agricultural commodities – March quarter 2017
Fisheries trade
STATISTICS
TABLE
27 Value
of Australianfisheries
fisheries products
trade,
by selected
countries
Australia
27 Value
of Australian
products
trade,
by selected
countries
Australia
Trade
Exports
Edible (including live)
Hong Kong
Vietnam
Japan
China
Singapore
United States
Taiwan
Thailand
New Zealand
Malaysia
Indonesia
Non-edible
Hong Kong
Japan
United States
Imports
Edible (excluding live)
Thailand
New Zealand
China
Vietnam
Malaysia
United States
Indonesia
Taiwan
South Africa
Denmark
Norway
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
425.9
8.4
225.9
143.2
41.2
35.7
29.6
16.0
9.6
12.9
8.7
479.1
60.5
254.6
58.5
42.5
23.1
17.5
18.1
10.1
7.7
6.1
317.0
293.2
236.0
45.2
31.0
17.9
9.8
9.3
9.1
7.8
7.4
208.9
565.6
192.1
36.6
34.2
22.1
13.7
8.0
14.5
9.9
9.9
192.3
715.6
192.1
48.7
35.0
28.0
15.1
10.0
13.9
11.2
9.3
223.7
681.7
205.3
104.6
35.3
44.8
20.9
9.4
19.9
7.5
10.0
$m
$m
$m
145.1
43.3
8.1
96.6
44.4
22.2
54.3
33.0
21.0
74.6
26.9
19.2
55.9
23.4
16.6
53.2
24.0
21.6
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
340.2
210.0
185.6
161.7
71.2
39.9
27.9
39.5
28.2
18.8
24.7
362.1
197.3
231.5
174.5
73.2
45.1
36.3
38.9
31.3
25.3
27.1
399.8
206.3
196.5
163.1
81.0
52.2
50.9
48.1
35.1
32.2
29.9
417.0
206.8
341.5
231.7
97.9
56.0
73.5
44.5
31.6
44.8
45.4
422.1
189.6
284.7
233.1
94.7
53.0
85.6
58.3
27.5
58.2
68.1
416.1
199.8
292.2
243.0
88.9
54.9
89.5
60.3
27.7
47.7
66.8
Source: Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
261
Forest exports
STATISTICS
TABLE
28 Volume
of forest
productsexports
exports Australia
Australia
28 Volume
of forest
products
Commodity
Volume
Roundwood
Sawnwood a
softwood roughsawn
softwood dressed
hardwood roughsawn
hardwood dressed
total sawnwood
Railway sleepers
Wood-based panels
veneers
plywood
particleboard
hardboard
medium-density fibreboard
softboard and other fibreboards
total wood-based panels
Paper and paperboard
newsprint
printing and writing
household and sanitary
packaging and industrial
total paper and paperboard
Recovered paper
Pulp
Woodchips bcd
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
’000 m3
1,638
1,806
1,516
2,363
2,616
3,685
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
265
9
39
30
344
8
198
13
26
15
252
8
207
3
20
7
237
8
268
5
73
25
371
17
299
25
117
73
514
14
247
11
19
23
300
7
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
119
7
6
2
115
5
254
106
18
4
2
79
5
214
52
36
2
2
52
1
146
64
36
6
3
75
1
184
50
14
11
11
78
21
185
45
31
11
21
85
4
197
kt
19
30
72
85
56
50
kt
84
132
139
153
141
139
kt
39
26
12
20
23
17
kt
887
933
906
950
948
924
kt
1,029
1,121
1,127
1,207
1,168
1,130
kt
1,323
1,403
1,506
1,449
1,397
1,420
kt
31
1
0
0
0
0
kt
5,064
4,150
3,806
4,776
5,707
6,082
a Excludes railway sleepers. b Includes particles. c Bone dry tonnes. d Softwood woodchips are subject to ABS confidentiality restriction from
March 2016 and are not included in these figures.
Note: Components may not add to totals due to rounding. Zero is used to denote nil or less than 500 tonnes.
Sources: ABARES; Australian Bureau of Statistics
262
ABARES
Agricultural commodities – March quarter 2017
Forest exports
STATISTICS
TABLE
29 Value
of forest
productsexports
exports (fob)
29 Value
of forest
products
(fob)Australia
Australia
Commodity
Value
Roundwood
Sawnwood
softwood roughsawn
softwoods dressed
hardwood roughsawn
hardwood dressed
total sawnwood
Railway sleepers
Miscellaneous forest products a
Wood-based panels
veneers
plywood
particleboard
hardboard
medium-density fibreboard
softboard and other fibreboards
total wood-based panels
Paper and paperboard
newsprint
printing and writing
household and sanitary
packaging and industrial
total paper and paperboard
Paper manufactures b
Recovered paper
Pulp
Woodchips c
Total wood products
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
198
175
155
292
313
438
$m
$m
$m
$m
$m
$m
$m
67
5
34
10
115
3
60
55
3
23
7
88
3
59
61
2
20
6
90
3
61
75
3
22
7
108
3
71
74
11
20
5
110
2
75
68
7
17
11
103
2
110
$m
$m
$m
$m
$m
$m
$m
52
2
2
2
39
1
98
51
2
1
2
26
1
83
24
4
1
2
19
0
51
29
3
1
2
26
0
62
27
3
2
2
27
6
67
24
4
2
7
28
1
66
$m
13
15
36
59
39
33
$m
88
120
117
139
146
128
$m
94
64
33
49
60
53
$m
552
518
526
605
657
683
$m
747
717
712
853
901
898
$m
112
134
132
132
109
102
$m
240
240
230
241
241
249
$m
11
1
0
0
0
0
$m
884
729
611
768
954
1,096
$m
2,469
2,229
2,044
2,529
2,772
3,063
a Includes such items as wooden doors, mouldings, packing cases, parquetry flooring, builders carpentry, cork, gums, resins,
eucalyptus and tea tree oils, and other miscellaneous wood articles. Excludes wooden furniture. b Includes other paper articles that
have had some further processing. c Softwood woodchips are subject to ABS confidentiality restriction from March 2016 and are not
included in these figures.
Note: Components may not add to totals due to rounding. Zero is used to denote nil or less than $0.5 million.
Sources: ABARES; Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
263
Forest imports
STATISTICS
TABLE
30 Volume
forestproducts
products imports
30 Volume
of of
forest
importsAustralia
Australia
Commodity
Volume
Roundwood
Sawnwood a
softwood roughsawn
softwood dressed
hardwood roughsawn
hardwood dressed
total sawnwood
Wood-based panels
veneers
plywood
particleboard
hardboard
medium-density fibreboard
softboard and other fibreboards
total wood-based panels
Paper and paperboard
newsprint
printing and writing
household and sanitary
packaging and industrial
total paper and paperboard
Recovered paper
Pulp
Woodchips b
a Excludes railway sleepers. b Bone dry tonnes.
Sources: ABARES; Australian Bureau of Statistics
264 ABARES
Agricultural commodities – March quarter 2017
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
’000 m3
1
1
1
1
1
2
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
290
468
43
45
846
239
470
46
36
791
247
443
41
28
759
271
449
41
25
786
291
608
43
26
968
241
540
39
22
841
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
’000 m3
17
278
72
49
58
7
480
15
293
67
69
91
7
542
13
278
72
60
77
6
505
9
287
95
86
65
5
548
12
341
95
82
85
7
622
14
357
89
91
89
7
648
222
1,237
114
314
1,886
2
233
1
121
1,174
118
333
1,746
3
256
1
85
1,155
159
385
1,783
4
263
1
75
1,172
123
357
1,727
5
297
2
76
1,040
142
392
1,651
4
302
2
69
960
155
410
1,595
1
281
2
kt
kt
kt
kt
kt
kt
kt
kt
Forest imports
STATISTICS
TABLE
31 Value
forestproducts
products imports
31 Value
ofof
forest
importsAustralia
Australia
Commodity
Value
Roundwood
Sawnwood
softwood roughsawn
softwood dressed
hardwood roughsawn
hardwood dressed
total sawnwood
Miscellaneous forest products a
Wood-based panels
veneers
plywood
particleboard
hardboard
medium-density fibreboard
softboard and other fibreboards
total wood-based panels
Paper and paperboard
newsprint
printing and writing
household and sanitary
packaging and industrial
total paper and paperboard
Paper manufactures b
Recovered paper
Pulp
Woodchips
Total wood products
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
1
1
1
1
1
2
$m
$m
$m
$m
$m
$m
135
248
40
50
473
707
105
248
44
51
448
756
100
246
41
35
423
769
111
281
46
31
468
946
128
382
57
34
601
1,102
112
361
55
28
555
1,304
$m
$m
$m
$m
$m
$m
$m
21
170
21
40
34
3
289
21
183
26
54
36
3
323
19
184
27
48
32
2
311
15
210
35
72
35
3
370
22
264
38
67
45
3
439
24
300
41
69
51
4
489
$m
176
91
58
49
48
44
$m
1,347
1,217
1,151
1,194
1,123
1,036
$m
185
187
244
208
254
305
$m
515
543
590
654
728
845
$m
2,223
2,037
2,043
2,105
2,153
2,230
$m
557
486
446
537
582
662
$m
0
1
1
2
1
0
$m
180
164
154
203
217
222
$m
2
2
3
3
3
4
$m
4,431
4,217
4,151
4,636
5,099
5,468
a Includes such items as wooden doors, mouldings, packing cases, parquetry flooring, builders carpentry, cork, gums, resins,
eucalyptus oils and other miscellaneous wood articles. Excludes wooden furniture. b Includes other paper articles that have had
some further processing.
Note: Components may not add to totals due to rounding. Zero used to denote nil or less than $0.5 million.
Sources: ABARES; Australian Bureau of Statistics
ABARES
Agricultural commodities – March quarter 2017
265
Forestry trade
STATISTICS
TABLE
32 Value
Australian forest
products
trade, by
selected
a countries a
32 Value
ofofAustralian
forest
products
trade,
bycountries
selected
Trade
Exports
China
Hong Kong
Japan
Korea, Rep. of
Malaysia
New Zealand
Taiwan
Imports
China
Finland
Germany
Indonesia
Malaysia
New Zealand
United States
unit
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
$m
$m
$m
$m
$m
$m
$m
544
42
745
40
106
314
79
534
39
579
40
112
305
68
474
16
394
33
73
269
68
542
10
21
45
87
290
57
816
12
316
38
70
296
73
1,331
11
427
37
71
317
110
$m
690
800
913
1,110
1,321
1,497
$m
143
120
205
221
184
160
$m
183
148
135
163
150
156
$m
332
342
313
348
427
495
$m
228
236
227
249
270
306
$m
715
634
557
605
646
673
$m
285
298
304
339
361
347
a Value of wood products trade to selected countries may exclude data where ABS confidentiality restrictions apply.
Sources: ABARES; Australian Bureau of Statistics
266
ABARES
Agricultural commodities – March quarter 2017
Report extracts
This section provides an overview of ABARES reports released since publication
of Agricultural commodities: December quarter 2016.
Full reports can be downloaded from agriculture.gov.au/abares/publications.
For more information contact [email protected].
Research reports
South America: an emerging competitor for Australia’s
beef industry
Research report 16.14
Publication date: 16 December 2016
The beef sectors of Brazil, Argentina, Uruguay and Paraguay have grown significantly
over the past two decades. This report profiles the beef industries of these exporting
nations and that of Australia, evaluating trends and key factors behind the growth in
real export values since 2000. ABARES modelled actual and hypothetical changes to
policies and operating environments to assess the potential effects of competition on
Australia’s beef exports.
The ABARES bilateral trade decomposition model: technical
annex to ABARES report ‘South America: an emerging
competitor for Australia’s beef industry’
Research report 16.15
Publication date: 16 December 2016
This publication describes the quantitative economic model used in the report
South America: an emerging competitor for Australia’s beef industry.
ABARES
Agricultural commodities – March quarter 2017
267
Report extracts
Australian honey bee industry: 2014–15 survey results
Research report 16.18
Publication date: 8 December 2016
This report draws on data from the ABARES Australian Honey Bee Industry Survey
conducted in 2016, 2008 and 2002. The data enable government and industry
stakeholders to evaluate changes in the status of Australian beekeeping businesses.
Australian vegetable-growing farms: an economic survey,
2014–15 and 2015–16
Research report 17.1
Publication date: 8 February 2017
Since 2007 ABARES has conducted an annual survey of vegetable-growing farms to
provide industry and government with information about farm-level production and
the financial situation of vegetable growers. This report presents results from the
ABARES survey of vegetable-growing farms, conducted from March to June 2016.
Other reports
Australia’s plantation log supply 2015–2059
Publication date: 15 December 2016
This report presents forecasts of sawlog and pulplog volumes based on data provided
by softwood and hardwood plantations. Changes in log availability have implications
for Australia’s rural economies; the size, type and geographical location of wood and
paper product manufacturing industries; the national supply of wood products; and
Australia’s trade balance and export income.
Australian grains: outlook for 2016–17 and industry
productivity
Publication date: 20 December 2016
This publication summarises forecasts and data from the December 2016 issues
of ABARES Australian crop report and Agricultural commodities and the
2016 report Australian grains: financial performance of grain farms, 2013–14 to
2015–16. The 2016–17 outlook was commissioned by the Grains Research and
Development Corporation.
268
ABARES
Agricultural commodities – March quarter 2017
Report extracts
Australian fisheries and aquaculture statistics 2015
Publication date: 20 December 2016
This report analyses fisheries product consumption, production and trade from
2004–05 to 2014–15. It includes 2014–15 data on the volume and value of production
and trade (by destination, source and product) for state, territory and Commonwealth
wild-catch and aquaculture fisheries. The report also provides data on key species,
fishing methods, number of licence holders for 2013–14 and 2014–15, the recreational
sector and customary fishing by Indigenous Australians.
Agricultural commodity statistics 2016
Publication date: 20 December 2016
This compendium provides historical statistics for the agriculture, forestry and
fisheries sectors. The comprehensive statistical tables on Australian and world prices,
production, consumption and stocks and trade cover 19 commodities, including
grains and oilseeds, livestock, livestock products, wool, horticulture, and forestry and
fisheries products. The report also presents statistics on agricultural water use and
macroeconomic indicators such as economic growth, employment, balance of trade,
and exchange and interest rates.
Australian fisheries economic indicators report 2015:
financial and economic performance of the Northern
Prawn Fishery
Publication date: 21 December 2016
This report presents results from the 2015 Northern Prawn Fishery survey.
It includes survey-based estimates of the fishery’s financial and economic
performance in 2012–13 and 2013–14 and non-survey-based estimates of its
economic performance in 2014–15. The report also presents other indicators,
including the total factor productivity index, input costs and output prices, and
management costs.
Australian crop report: February 2017
Publication date: 14 February 2017
This quarterly report provides primary producers with comprehensive and timely
information that helps support higher farmgate returns.
ABARES
Agricultural commodities – March quarter 2017
269
ABARES contacts
Executive Director (A/g)
Peter Gooday
Agricultural Commodities and Trade
Assistant Secretary and
Chief Commodity Analyst (A/g) Trish Gleeson
Agricultural Trade
Caroline Gunning-Trant
Agricultural Commodities
Lisa McKelvie
Regional Outlook Programmes
and Stakeholder Engagement Peter Collins
Climate Impact Sciences
Matthew Miller
(02) 6272 2138
[email protected]
(02) 6272 2030
[email protected] (02) 6272 2123
[email protected]
(02) 6272 3009
[email protected]
[email protected]
(02) 6272 2017
(02) 6272 3527
Agricultural Productivity and Farm Analysis
Assistant Secretary (A/g)
David Galeano
Productivity
Shiji Zhao
Water and Climate
Neal Hughes
Farm Surveys and Analysis
Johanna ten Have
Invasives and Social Sciences
Sandra Parsons
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
(02) 6271 6579
(02) 6272 2455
(02) 6272 2066
(02) 6272 5326
(02) 6272 4828
Fisheries, Forestry and Quantitative Sciences
Assistant Secretary (A/g)
Bertie Hennecke
Domestic Fisheries and Marine Simon Nicol
International Fisheries and Data James Larcombe
Fisheries Economics
Robert Curtotti
Quantitative Sciences
Tony Arthur
Forest Sciences
Steve Read
Forestry Economics Beau Hug
Land Use and Management
Jane Stewart
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
(02) 6272 4277
(02) 6272 4638
(02) 6272 3388
(02) 6272 2014
(02) 6272 2277
(02) 6272 5582
(02) 6272 3929
(02) 6272 3541
[email protected]
(02) 6272 2091
[email protected]
[email protected]
(02) 6272 4627
(02) 6272 3381
Julie Gaglia
[email protected]
(02) 6272 4277
John Sims
[email protected]
(02) 6272 5732
Strategic Policy and Biosecurity
Assistant Secretary (A/g)
Alistair Davidson
Regulatory Reform Unit
and Corporate Performance
Donna Hawkes
Biosecurity Economics
Jay Gomboso
Public Data Taskforce
Assistant Secretary
Agricultural Intelligence
Transformation Project
270
[email protected]
ABARES
Agricultural commodities – March quarter 2017
ABARES contacts
Executive Support and Events
Amelia Haddock
[email protected]
(02) 6272 5329
Editing, Production,
Online and Design
John Wilson
[email protected]
(02) 6272 3811
Library Resources
Karen Kidd
[email protected]
(02) 6272 4270
Media
[email protected]
(02) 6272 3232
Publication inquiries
(02) 6272 3933
[email protected]
Agricultural commodities March quarter 2017
was designed and produced by the Department of Agriculture and Water Resources and the Agricultural Commodities team of ABARES.
Editors: Jane Wiles, Julia Church and Emma Rossiter
ABARES
Agricultural commodities – March quarter 2017
271
The ‘Biosphere’ Graphic Element
The biosphere is a key part of the department’s visual identity.
Individual biospheres are used to visually describe the diverse nature
of the work we do as a department, in Australia and internationally.
Australian Bureau of Agricultural and Resource
Economics and Sciences (ABARES)
GPO Box 858 Canberra ACT 2601
Switchboard
+61 2 6272 2010
Email
[email protected]
Web
agriculture.gov.au/abares
agriculture.gov.au/abares
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Postal address