agricultural commodities – march quarter...

Agricultural commodities

Department of Agricultureand Water Resources

2016

Research by the Australian Bureau of Agricultural and Resource Economics and Sciences

MARCH QUARTER 2016

© Commonwealth of Australia 2016

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ISBN No: 978-1-74323-282-5 (online) ISSN No: 1839-5627 (online) ISBN No: 978-1-74323-282-8 (printed) ISSN No: 1839-5619 (printed) ABARES project 43006

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1ABARESAgricultural commodities – vol. 6 no. 1 • March quarter 2016

ContentsEconomic overview 4

Crops

Wheat 29

Coarse grains 46

Oilseeds 57

Sugar 66

Cotton 76

Horticulture 86

Australian wine exports 96

Livestock

Beef and veal 103

Sheep meat and wool 112

Pig meat 125

Chicken meat 130

Dairy 134

Fisheries 148

Farm performance: broadacre and dairy farms, 2013–14 to 2015–16 168

Productivity in Australian broadacre and dairy industries 215

Disaggregating farm performance statistics by size 226

Boxes

Seasonal conditions in Australia 22

Recent developments in Argentina’s agricultural export policies 38

Outlook for Australian chickpeas 44

UK Waste & Resource Action Programme GlassRite Wine project 98

Consumer demand for wool 123

Statistical tables 237

Report extracts 279

ABARES contacts 283

The ABARES Regional Outlook conferences are an essential part of our delivery of commodity forecasts and research results directly to regional communities. Each conference is tailored to your region, and ABARES works with local organisations to develop the conference programs.

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 cover topics such as industry opportunities and challenges, natural resource management, labour and water issues, and case studies from regional business people who are taking innovative approaches.

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 farmers and other producers, bankers, consultants and other service providers, rural counsellors, local business owners, state and local government staff, regional development groups and many others with an interest in their region.

The Regional Outlook conferences follow from the national Outlook 2016 conference in Canberra in March with its theme of Investing in agriculture – growing our future.

2016 locations and dates

Tasmania Hobart 27 AprilSouth Australia Port Lincoln 18 MayNorthern Territory Darwin 6 JulyQueensland Townsville 27 JulyWestern Australia Bunbury 17 AugustVictoria Traralgon 5 OctoberNew South Wales Griffi th 26 October

Regional Outlook conferences 2016

For program inquiries contact

Peter CollinsPhone +61 2 6272 2017

To register your interest in upcoming conferences contact

ABARES Events team at [email protected]

agriculture.gov.au/abares/regional

2016Department of Agricultureand Water Resources

Join ABARES at a Regional Outlook conference in your area

Economic overview

4 ABARESAgricultural commodities – vol. 6 no. 1 • March quarter 2016

Economic overviewOutlook to 2020–21

Natasha Frawley

• World economic growth is assumed to increase from an estimated 3.1 per cent in 2015 to 3.2 per cent in 2016. Over the medium term (to 2021), world economic growth is projected to strengthen further before easing to around 3.5 per cent by 2021.

• Economic growth in China is assumed to continue to moderate over the short to medium term. The global economic outlook could be affected if the economic slowdown in China is sharper than expected.

• The pace of recovery in the United States, and to a lesser extent in Europe, is expected to continue in 2016 and 2017 but conditions in Japan remain fragile.

• In Australia, economic growth is expected to strengthen over the short term supported by historically low interest rates, a fall in the Australian dollar and lower oil prices. Growth is expected to moderate over the medium term.

• The value of Australian farm exports is forecast to be around $45 billion in 2015–16 and 2016–17, a rise of 3 per cent from just under $44 billion in 2014–15. By 2020–21 earnings from agricultural exports are projected to return to around $45 billion (in 2015–16 dollars).

Global economyEconomic growth in 2016 and 2017World economic growth is estimated to have fallen to 3.1 per cent in 2015, from 3.4 per cent in 2014, the lowest level of growth since 2009. Slowing growth in China weakened economic performance in many emerging markets in the Asian region.

Oil prices continued to fall through 2015 and reached 12-year lows in January 2016. The decline in prices partly reflected subdued world demand but ample supplies have been the main driver of falling prices. The Organization of the Petroleum Exporting Countries maintained production through 2015 despite falling prices. The removal of sanctions on Iranian exports is expected to add to the supply of oil on world markets.

The fall in oil prices has had mixed effects on global economic growth. Lower prices have supported household demand and lowered business costs, especially in advanced economies where price cuts are passed on to end users. However, lower oil prices have strained the fiscal positions of fuel exporters and lowered investment in oil and gas extraction.

Economic overview


World economic growth

%

a ABARES assumption.

1

2

3

4

5

6

2021a2018a201520122009200620032000

Economic growth in OECD countries, in aggregate, increased to about 1.8 per cent in 2015, the same as in 2014. In the United States, strengthening employment markets and growing consumer spending supported the ongoing economic recovery. In Western Europe, economic growth improved but remained slow. Economic conditions in Japan are fragile as the government prepares to launch further fiscal stimulus. For the OECD overall, economic growth is assumed to strengthen to 2.0 per cent in both 2016 and 2017.

In many non-OECD countries, economic growth weakened in 2015. In China, growth was 6.9 per cent in 2015, the lowest annual rate in 25 years. Moderation of growth in China has adversely affected other world economies.

Volatility in Chinese equity markets since mid 2015 has affected global confidence in the Chinese economy. If the economic slowdown is sharper than currently expected, this is likely to lead to falls in business and consumer confidence both inside and outside China. International implications, including possible falling trade and commodity price adjustments, pose a significant downside risk to the economic outlook. This is of particular concern to China and the rest of emerging Asia.

Economic activity in Latin America as a whole declined in 2015 and is expected to contract further in 2016. Brazil’s economy contracted by around 3.8 per cent in 2015 and is expected to decline further in 2016. The Brazilian recession reflected a fall in the price of exported commodities, including iron ore and crude oil, as well as a loss of consumer and investor confidence partly as a result of political uncertainty.

The economy of the Russian Federation contracted in 2015 as a result of falling oil prices, geopolitical tensions and extended trade sanctions. Assuming trade sanctions end from August 2016 as planned, the Russian economy is expected to slowly recover from 2017.

In contrast, the Indian economy has remained strong with estimated growth of 7.5 per cent in 2015. Increased investment and lower import prices of raw materials have aided the Indian economy despite slowing demand for manufactured goods.

Economic overview


For all non-OECD countries, economic growth is assumed to average 4.0 per cent in 2016 and increase to 4.5 per cent in 2017. This compares with estimated growth of 3.5 per cent in 2015.

In preparing this set of agricultural commodity projections, world economic growth is assumed to average 3.2 per cent in 2016 and 3.4 per cent in 2017.

Medium-term growth outlookLooking further ahead, global economic growth is assumed to recover to around 3.7 per cent in 2018 and 2019, driven by a recovery in emerging markets. This is assumed to be supported by economic recoveries in the United States and Europe during this period. Towards 2021 growth is assumed to average around 3.5 per cent a year.

Economic growth in OECD economies is assumed to average 2.0 per cent in 2018 and 2019 before falling to average 1.8 per cent in 2020 and 2021.

In China, economic growth is expected to moderate further in the medium term, falling from around 6 per cent in 2018 to 5.7 per cent by 2021. Despite this slower rate of growth, and assuming no major downside shocks to the economy, China is expected to continue to be a major driver of global economic growth.

For non-OECD countries, economic growth is assumed to average 4.9 per cent in 2018 and 5.0 per cent in 2019, before moderating to 4.8 per cent in 2020 and 4.7 per cent in 2021.

Regional economic growth

%world

Eastern Europe, Russian Federation

and Ukraine

Latin America

non-OECD Asia

OECD

20152016a

2017a

2018–21a


0

–2

2

4

6

8

Economic overview


Economic prospects in Australia’s major export markets

United StatesEconomic growth in the United States is estimated to have expanded by 2.4 per cent in 2015, the same as in 2014.

Unemployment continued to fall through 2015 and reached 5.0 per cent in the December quarter. Non-farm employment increased by 2.7 million employees in 2015, an increase of 1.9 per cent compared with 2014.

Consumer spending increased by 3.1 per cent in 2015. Expenditure growth was strongest in durable goods, which increased by 6.0 per cent over the year—up from 5.9 per cent in 2014. The improving labour market, stronger wage growth and low unemployment are expected to continue to support growth in consumer spending.

Key world macroeconomic assumptions

unit 2014 2015 2016 a 2017 a 2018 a 2019 a 2020 a 2021 a

OECD % 1.8 1.8 2.0 2.0 2.0 2.0 1.8 1.8United States % 2.4 2.4 2.7 2.5 2.5 2.5 2.2 2.2Japan % – 0.1 0.6 0.8 0.6 1.2 1.0 1.0 0.8Eurozone % 0.9 1.5 1.5 1.6 1.6 1.5 1.5 1.5– Germany % 1.6 1.5 1.7 1.7 1.4 1.3 1.3 1.3– France % 0.2 1.1 1.5 1.7 1.7 1.5 1.5 1.5– Italy % – 0.4 0.8 1.3 1.2 1.1 1.0 1.0 1.0United Kingdom % 3.0 2.2 2.3 2.1 2.1 2.1 2.0 2.0Korea, Rep. of % 3.3 2.6 2.9 3.0 3.0 2.8 2.5 2.5New Zealand % 3.3 2.2 2.3 2.6 2.8 2.8 2.5 2.5non‐OECD % 4.6 3.5 4.0 4.5 4.9 5.0 4.8 4.7– non‐OECD Asia % 6.8 6.4 6.3 6.1 6.2 6.2 5.9 5.9 South‐East Asia b % 4.6 4.6 4.8 5.0 5.4 5.4 5.0 5.0 China c % 7.3 6.9 6.5 6.0 6.0 6.0 5.8 5.7 Taiwan % 3.8 1.2 2.3 2.5 2.5 2.5 2.5 2.5 Singapore % 2.9 1.8 2.2 3.5 4.5 4.5 4.0 4.0 India % 7.1 7.5 7.8 7.8 8.0 8.0 7.5 7.5– Latin America % 1.3 – 0.3 – 0.3 2.0 2.5 3.0 3.0 2.7Russian Federation % 0.6 – 3.8 – 1.1 2.0 2.0 2.0 2.0 2.0Ukraine % – 6.8 – 12.0 0.0 1.0 2.5 3.0 3.0 3.0Eastern Europe % 2.8 3.4 3.0 3.0 3.5 3.5 3.3 3.3World d % 3.4 3.1 3.2 3.4 3.7 3.7 3.5 3.5

United States % 1.6 0.1 1.6 1.9 2.0 2.0 2.0 2.0

US prime rate e % pa 3.3 3.3 4.5 5.0 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 2014 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; Australian Bureau of Statistics; International Monetary Fund; Organisation for Economic Co‐operation and Development; Reserve Bank of Australia; United States Bureau of Labour Statistics; United States Federal Reserve

Economic growth

Inflation

Interest rates

Economic overview


Selected US housing market indicators

Housing starts (annual rate)

’000units

Home price index (Case-Shiller) year-on-year change(right axis)

%

Dec2015

Dec2014

Dec2013

Dec2012

Dec2011

Dec2010

Dec2009

Dec2008

Dec2007

Dec2006

300

600

900

1 200

1 500

1 800

2 100

2 400

–15

–10

–5

0

5

10

15

20

Housing prices rose throughout 2015, reaching an eight-year high in November 2015. Housing starts increased by 10.8 per cent in 2015 to 1.1 million units. Building permits increased by 12.0 per cent in 2015, after increasing by 5.6 per cent in 2014.

New manufacturing orders fell by 3.9 per cent in 2015 following an increase of 6.5 per cent in 2014. The strong US dollar has weakened demand for exports and consequently for manufacturing output. US exports are also constrained by weak demand in some trading partners, including China, the European Union and Japan. Merchandise exports fell by 7.3 per cent in 2015 following growth of 2.5 per cent in 2014.

Trade-weighted exchange rate and manufacturing demand, United States

index

Trade-weighted index (US$) March 1973 = 100Value of manufacturers' new orders for capital goods indexDecember 2014 = 100

Dec–15

Dec–14

Dec–13

Dec–12

Dec–11

Dec–10

Dec–09

Dec–08

Dec–07

70

75

80

85

90

95

100

105

Economic overview


The US Federal Reserve raised the official interest rate in December 2015. This was the first increase since June 2006. Inflation remained below the Federal Reserve’s 2 per cent objective in 2015, but it is expected to return to around 2 per cent with strengthening economic growth in the next few years.

In the short term, US economic growth is expected to increase. Exports and manufacturing activity are expected to remain relatively weak, partly reflecting the impact of the strong US dollar, but growth in consumer spending and investment in the housing and business sectors are expected to strengthen. In preparing this set of agricultural commodity projections, economic growth in the United States is assumed to strengthen to 2.7 per cent in 2016, before slowing to 2.5 per cent in 2017.

Over the medium term economic growth is assumed to ease to around 2.2 per cent in 2020 and 2021, which is more consistent with the estimated rate of potential growth of the US economy.

ChinaThe Chinese economy grew by 6.9 per cent in 2015, the slowest annual rate of growth since 1990.

Chinese export growth and Purchasing Managers’ Indexes

Exports quarterly,year-on-year growth

% index

Manufacturing PMI, quarterly average (right axis)

Non-manufacturing PMI, quarterly average (right axis)

0

10

20

30

50

55

60

65

Dec2015

Dec2014

Dec2013

Dec2012

Dec2011

Chinese economic growth is increasingly driven by the services sector. Growth in retail and financial service activity has been particularly robust. The value added by the services sector grew by about 12 per cent in 2015 compared with around 1 per cent for the industrial sector. The non-manufacturing Purchasing Managers’ Index (PMI) remained above 50 throughout 2015, indicating that the services sector has potential for further growth. Retail sales increased by 11 per cent in nominal terms in 2015, similar to 2014.

Growth in industrial production slowed through 2015. The manufacturing PMI fell below 50 for most of 2015, indicating weak activity in the manufacturing industry. Growth in fixed asset investment also slowed in 2015 to 10.0 per cent, down from 15.7 per cent in 2014. This reflected slowing investment for steel production and other manufacturing.

Economic overview


The value of Chinese exports fell by 3 per cent in 2015, following growth of 6 per cent in 2014. However, imports also decreased—falling by 14 per cent in 2015. This larger fall in imports relative to exports contributed to an increase in China’s trade surplus.

Shanghai stock market index

index

1 000

2 000

3 000

4 000

5 000

6 000 Shanghai compositeindex, adjustedclosing price

Jan2016

Sep2015

Jul2015

Mar2015

May2015

Jan2015

Nov2014

Sep2014

The increase in volatility in Chinese equity markets in mid 2015 and early 2016 increased the uncertainty of China’s economic outlook. Following volatility in 2015, the Chinese Government implemented several fiscal measures to stimulate the slowing economy. The new spending announced in the second half of 2015 is equal to 1.5 per cent of GDP and is largely financing additional infrastructure, particularly transport networks. This is expected to support the construction industry and raw material imports in the face of declining demand from the slowing real estate sector.

The volatility in Chinese equity markets in January 2016 prompted the Chinese Government to reiterate its intention to support economic growth and maintain financial market stability. However, fiscal stimulus measures have already added to the rising debt of the Chinese Government. Public sector debt is likely to increase further with continued government stimulus to support the slowing economy.

Throughout 2015 the Chinese yuan’s loose peg to the US dollar resulted in an appreciation of the yuan against several major currencies, which negatively affected Chinese exports. In December 2015 the People’s Bank of China (PBoC) revised the currency peg to take into account a basket of 13 currencies, including the euro, the yen and the US dollar. This has allowed the PBoC to further devalue the yuan against the US dollar.

The outlook for the value of the Chinese yuan is uncertain. Many market commentators expect the yuan to depreciate further in the short term. A devaluation of the yuan has the potential to fuel further volatility in financial markets in China and around the world as a result of weakening confidence. A weaker Chinese yuan will help to stimulate growth in China’s exports but will adversely affect China’s demand for imports. Lower import demand in China will affect the economic performance of China’s major trading partners, especially those in other parts of Asia. Movement in the value of the Chinese yuan and the associated financial market reaction in and outside China poses a downside risk to the current economic outlook.

Economic overview


Index of Chinese yuan against US dollar, euro and Japanese yen

indexJan 2015

= 100

CNY/EURCNY/JPYCNY/USD

Dec2015

Oct2015

Aug2015

Jun2015

Apr2015

Feb2015

95

100

105

110

In preparing this set of agricultural commodity projections, economic growth in China is assumed to ease further in the short term, averaging 6.5 per cent in 2016 and 6.0 per cent in 2017.

Over the medium term, China’s progress in implementing its reform agenda will be a key determinant of economic growth. The 13th five-year plan will not be finalised until March 2016, but the annual growth target is expected to be lowered from 7 per cent to 6.5 per cent for the next five years. The Chinese Government is expected to promote economic growth through the services industry and technological innovation over the traditional merchandise exports and manufacturing industries. The Chinese Government is also expected to continue to promote financial reforms, including opening up China’s financial sector.

Under the assumption of continued economic reforms, economic growth in China is assumed to ease further to the end of the projection period. By 2021 economic growth in China is assumed to be 5.7 per cent.

JapanEconomic growth in Japan was 0.6 per cent in 2015 following a fall in economic activity in 2014.

Weak domestic consumption limited growth in the Japanese economy in 2015. Private consumption, which makes up about 60 per cent of Japanese economic activity, stayed around the same level in 2015 as in 2014. Domestic consumption is expected to be subdued in the short term, especially if the consumption tax increase scheduled for April 2017 is implemented. Private residential investment and investment in non-residential construction also remained largely unchanged in 2015.

Economic overview


Unemployment was 3.3 per cent at the end of 2015. Despite the low and declining unemployment rate, real wages fell steadily between 2012 and mid 2015. This constrained growth in private consumption. In the first sustained rise since 2011, real wages rose by less than half a per cent in the second half of 2015. Much of the growth in employment has been in part-time positions. In 2015 the index of part-time employment increased by around 4 per cent, mostly in the wholesale and retail trade sectors. However, full-time employment increased by only 1 per cent because slow growth in the medical, health care and welfare sectors was largely offset by falls in full-time employment in the manufacturing, wholesale and retail trade sectors.

The value of exports grew by nearly 4 per cent in 2015 in real terms following a rise of 5 per cent in 2014 and an increase of 9 per cent in 2013. This is largely a result of the weaker yen, which has depreciated by nearly 20 per cent in trade-weighted terms since the beginning of 2013.

Japanese yen, real trade-weighted exchange rate

index

Real trade-weightedexchange rate, monthly

Dec2015

Jun2015

Dec2014

Jun2014

Dec2013

Jun2013

Dec2012

Jun2012

Dec2011

Jun2011

Dec2010

Jun2010

70

80

90

100

110

120

Despite growth in exports, industrial production fell by an estimated 1 per cent in 2015 following growth of 2.1 per cent in 2014. According to the Bank of Japan’s December 2015 TANKAN survey of Japanese enterprises, confidence in business conditions remained subdued among large enterprises.

Japan overwhelmingly relies on imported energy. The fall in oil prices since late 2014 has cut Japan’s import bill considerably. The value of Japan’s crude oil imports fell by more than 40 per cent in 2015. Low oil prices are expected to support consumer spending but have put considerable downward pressure on inflation.

The Japanese Government approved record expenditure in the budget for the fiscal year beginning 1 April 2016 to stimulate the economy. Improving participation rates and labour productivity will be targeted through increased spending on childcare centres and nursing care facilities. The government will also lower the corporate tax rate by at least 3.3 percentage points to encourage companies to increase capital investment and raise wages. Despite the planned stimulus, economic growth in Japan is expected to remain relatively weak in the next few years.

Economic growth in Japan is assumed to be 0.8 per cent in 2016 and 0.6 per cent in 2017. In response to recovering world economic growth and higher associated import demand from other countries over the medium term, Japanese economic growth is assumed to increase to an average of 1 per cent a year between 2018 and 2021.

Economic overview


EuropeFollowing growth of 0.9 per cent in 2014, economic activity in the eurozone is estimated to have increased by 1.5 per cent in 2015. In the United Kingdom, economic activity recovered in 2014 with growth of 3.0 per cent but slowed to an estimated 2.2 per cent in 2015.

In 2015 lower oil prices, together with supportive monetary and fiscal policies, strengthened domestic demand in the eurozone. Private consumption expenditure grew by about 2 per cent in 2015, up from less than 1 per cent in 2014. Domestic demand has been the main supporter of growth in Europe since mid 2014.

Private consumption and GDP year-on-year growth, eurozone

Private consumption

%

GDP growth

–2

–1

0

1

2

3

Sep2015

Mar2015

Sep2014

Mar2014

Sep2013

Mar2013

Sep2012

Mar2012

Sep2011

Mar2011

The trade-weighted real exchange rate of the euro fell by 9.7 per cent in 2015. The lower exchange rate supported eurozone exports, which increased by about 5 per cent in 2015 compared with 4.2 per cent in 2014. Export growth in the eurozone has been supported by economic recovery in the United Kingdom and the United States.

Since 2010 eurozone countries have agreed to significant fiscal tightening to contain budget deficits and reduce sovereign debt. Average debt in the eurozone is estimated to have risen to 92.3 per cent of GDP in 2015, up from 92.1 per cent in 2014. The European Commission expects that the debt-to-GDP ratio will fall from 2016 as a result of stronger economic growth and rising inflation. Nevertheless, high levels of government debt in the eurozone are expected to persist over the outlook period.

Unemployment in the eurozone was 10.4 per cent at the end of 2015, down from 11.4 per cent a year earlier. Despite this fall, unemployment remains above pre-2009 levels, reflecting both cyclical factors and the persistence of high structural unemployment. Youth unemployment has remained consistently high since peaking at 24.6 per cent in January 2013. Countries most affected by the European debt crisis—including Greece, Spain and Italy—continued to have particularly high levels of youth unemployment in 2015, averaging between 40 per cent and 50 per cent.

Economic overview


Unemployment rates, Europe

%

Greece aSpainEurozoneItalyUnited Kingdom aGermany

5

10

15

20

25

30

Dec2015

Dec2014

Dec2013

Dec2012

Dec2011

Dec2010

Dec2009

Dec2008

Dec2007

a Unemployment rate estimated for December quarter 2015.

Accommodating monetary policy, a weaker euro and lower oil prices are expected to assist European economic growth. Nevertheless, economic growth is assumed to be subdued given the structural issues faced by the European economies and the need for continued fiscal consolidation over the short to medium term.

Economic activity in the eurozone is assumed to expand by 1.5 per cent in 2016 and 1.6 per cent in 2017. Over the medium term, economic growth is assumed to average around 1.5 per cent a year.

Other non-OECD Asian countriesEconomic growth in other non-OECD Asian countries (Asia excluding China, Japan and the Republic of Korea) slowed in 2015. In India, economic growth strengthened in 2015 but this has been offset by slower growth in the ASEAN region.

The Indonesian economy slowed in 2015 as a result of sluggish export growth. In September 2015 the Indonesian Government responded by announcing two deregulation packages aimed at improving the overall business climate. In Malaysia, the introduction of a 6 per cent tax on goods and services in April 2015 resulted in a slowing of private consumption.

The Indian economy expanded strongly in 2015, at an estimated growth rate of 7.5 per cent. Increased investment and lower commodity prices supported growth in the economy. However, the introduction of planned structural reforms has stalled. These reforms include an overhaul of the domestic tax system and eased restrictions in land acquisition and labour. The Reserve Bank of India lowered interest rates four times in 2015 from 8 per cent to 6.75 per cent, a four-year low.

Slowing growth in China is expected to dampen growth in other non-OECD Asian countries over the outlook period. Export-oriented countries, including Taiwan and Singapore, will be affected by lower Chinese import demand. For larger commodity exporters, including Malaysia and Indonesia, the impact could be particularly significant. A sharper-than-expected slowdown in China poses significant downside risks to the economic outlook for the region. Sharp currency devaluations and capital outflows are particularly large risks for emerging Asian economies.

Economic overview


In South-East Asia, economic growth is assumed to increase from 4.8 per cent in 2016 to 5.0 per cent in 2017. Over the medium term, growth is expected to strengthen to 5.4 per cent in 2018 and 2019, before slowing to 5.0 per cent by 2021.

Economic growth in other non-OECD Asian countries

2017a

2016a

2015

2018–21a

%


1

2

3

4

5

6

7

8

Vietnam

Thailand

Taiwan

Singapore

Philippines

Malaysia

Indonesia

India

Economic prospects in AustraliaAfter expanding by 2.2 per cent in 2014–15, Australia’s real gross domestic product increased at a year-on-year rate of 2.7 per cent in the September quarter 2015.

Falling demand for Australia’s major commodity exports weakened mining profitability and reduced investment in the mining sector. The price of Australia’s largest export, iron ore, fell to less than US$40 a tonne in December 2015, a decline of 42 per cent from a year earlier. Coal is Australia’s second-largest export. In 2015 the prices of both metallurgical and thermal coal fell by nearly 20 per cent. Global oversupply and slowing demand from China is expected to continue to put downward pressure on prices, at least in the short term.

The fall in oil prices since mid 2014 has had mixed effects on the Australian economy. Lower energy prices have reduced costs in sectors such as manufacturing and agriculture and increased real incomes of households. However, lower oil and petroleum prices have also reduced revenue from energy exports, including liquefied natural gas, Australia’s third-largest export commodity. The price of natural gas fell by an average of 35 per cent in 2015.

The Reserve Bank of Australia reduced the cash rate to the historical low of 2 per cent in May 2015. Low interest rates are expected to support consumer spending and business investment in the short term.

In preparing this set of agricultural commodity projections, the Australian economy is assumed to expand by 2.5 per cent in 2015–16, increasing to 2.8 per cent by 2016–17. Over the medium term, Australian growth is expected to recover to around 3.0 per cent a year before moderating to the assumed potential growth of about 2.7 per cent a year towards 2020–21.

Economic overview


Economic indicators, Australia

%

Economic growth Inflation rate

Interest rate b

a ABARES assumption. b Large business weighted-average variable rate on credit outstanding.

1

2

3

4

5

2016–17a2015–16a2014–15

InflationInflation has remained below the Reserve Bank of Australia’s target band of 2 per cent to 3 per cent since the December quarter 2014. The consumer price index increased by 1.7 per cent year-on-year in the December quarter 2015, following an increase of 1.5 per cent in the September quarter.

The most significant quarter-on-quarter price rises in December were in tobacco (up 7.4 per cent) and domestic and international holiday travel and accommodation (up 5.9 per cent and 2.4 per cent, respectively). Partly offsetting these rises were falls in prices of automotive fuel (down 5.7 per cent), telecommunications equipment and services (down 2.4 per cent) and fruit (down 2.6 per cent).

The inflation rate in Australia is assumed to continue to increase in year-on-year terms in the next few quarters in response to gradually strengthening economic activity. For 2015–16 as a whole, the inflation rate is assumed to average 2.0 per cent. In 2016–17 inflation is assumed to rise slightly to 2.3 per cent. Towards 2020–21 inflation is expected to be around 2.5 per cent a year as the economy recovers and then returns to the assumed rate of potential growth.

Economic overview


Australian dollarThe Australian dollar averaged US84 cents in 2014–15, down from US92 cents in 2013–14. In the first six months of 2015–16 it averaged US72 cents. The Australian dollar was trading at around US71 cents in early February 2016.

Terms of trade and exchange rates, Australia, quarterly

index USc/A$

Terms of trade index2013–14=100Trade-weighted index (A$) May 1970=100Exchange rate, USc/A$ (right axis)

Dec2015

Dec2013

Dec2011

Dec2009

Dec2007

Dec2005

30

60

90

120

150

30

60

90

120

150

Australia’s terms of trade, the ratio of export prices to import prices, is an indicator of the fundamental value of the Australian dollar. The terms of trade declined by 33 per cent from the September quarter 2011 to the September quarter 2015, mainly reflecting continued weakening of prices for mineral resources on world markets. Over the same period, the Australian dollar declined by 31 per cent against the US dollar and by 19 per cent on a trade-weighted basis.

Differentials between interest rates in Australia and major world economies also influence demand for the Australian dollar. Despite record low official interest rates in Australia, commercial rates remain substantially higher than those in Europe, Japan and the United States. This encourages international investors to seek higher returns in Australia, thereby maintaining demand for the Australian dollar. Interest rate differentials between Australia and the United States narrowed in December 2015, when the US Federal Reserve increased official interest rates. The Federal Reserve is expected to continue to increase interest rates over the short term, narrowing the differential further. However, ongoing asset purchasing programmes in Japan and the eurozone are expected to help keep interest rates low in those economies over the outlook period.

Movements in the Australian dollar are also influenced by changes in financial market sentiment towards the Australian economy and the outlook for major world economies. The softening of the Australian economy and weaker global demand for mineral resources in response to the moderation of economic growth in China continue to place downward pressure on the Australian dollar.

Economic overview


A survey of major Australian commercial banks in early February 2016 indicated varying forecasts for the Australian dollar in the short term. These ranged mostly from around US65 cents to US70 cents for the remainder of 2015–16 and between US67 cents and US74 cents for the first half of 2016–17.

In preparing this set of agricultural commodity projections, the Australian dollar is assumed to remain relatively weak in the short term. For 2015–16 as a whole, the Australian dollar is assumed to average US71 cents and to have a trade-weighted index value of 61. In 2016–17 the Australian dollar is again assumed to average around US71 cents, with a trade-weighted index value of 61.

As world economic growth strengthens over the medium term, mineral and energy prices are expected to improve gradually from their current low levels as supply and demand factors adjust. This will provide support for the value of the Australian dollar. The assumed higher rate of growth in the Australian economy compared with the US economy towards 2021 is also expected to support a gradual appreciation of the Australian dollar against the US dollar by that time.

Taking these factors into account, the Australian dollar is assumed to appreciate gradually over the medium term. The Australian dollar is assumed to strengthen to around US72 cents in 2017–18 before strengthening further to about US74 cents by 2020–21.

A weaker Australian exchange rate against the US dollar will increase Australian farm sector incomes. Based on estimated Australian farm earnings in 2014–15, and assuming other factors are unchanged, a depreciation of the Australian dollar by US1 cent in 2014–15 as a whole would have increased farm sector incomes by around $350 million in that year. This is because export contracts are mostly denominated in US dollars. A depreciation of the Australian dollar against the US dollar will increase earnings from agricultural exports. This will more than offset any increase in farm costs resulting from higher prices of imported farm inputs, such as fertilisers and machinery.

Key macroeconomic assumptions for Australia

unit 2013–14 2014–15 2015–16 a 2016–17 a 2017–18 a 2018–19 a 2019–20 a 2020–21 aunit 2013 14 2014 15 2015 16 a 2016 17 a 2017 18 a 2018 19 a 2019 20 a 2020 21 aEconomic growth % 2 5 2 2 2 5 2 8 3 0 3 0 2 7 2 7Economic growth % 2.5 2.2 2.5 2.8 3.0 3.0 2.7 2.7flInflation % 2.7 1.7 2.0 2.3 2.5 2.5 2.5 2.5

Interest rates b % pa 4.6 4.3 4.0 4.2 5.5 6.0 6.0 6.0Interest rates b % pa 4.6 4.3 4.0 4.2 5.5 6.0 6.0 6.0Nominal exchange ratesNominal exchange rates– US$/A$ US$ 0.92 0.84 0.71 0.71 0.72 0.73 0.74 0.74 US$/A$ US$ 0.92 0.84 0.71 0.71 0.72 0.73 0.74 0.74Trade‐weighted index

f A$ i d 71 67 61 61 62 63 63 63Trade‐weighted index for A$ c index 71 67 61 61 62 63 63 63a ABARES assumption. b Large business weighted‐average variable rate on credit outstanding. c Base: May 1970 = 100.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 AustraliaSources: ABARES; Australian Bureau of Statistics; Reserve Bank of Australia

Economic overview


Outlook for Australian agricultural and fisheries exportsTotal volume of farm production is forecast to rise by 1.0 per cent in 2016–17, following a forecast decline of 1.8 per cent in 2015–16. The forecast decline in 2015–16 reflects an expected fall in the volume of livestock production from a record high in 2014–15 offsetting a forecast rise in the volume of crop production. Assuming favourable seasonal conditions, farm production is projected to rise further over the medium term, surpassing the high levels of 2013–14 and 2014–15.

The index of unit returns for Australian farm exports is forecast to increase by 1.3 per cent in 2016–17, following a forecast rise of 8.1 per cent in 2015–16. Export prices are forecast to increase in 2016–17 (in Australian dollar terms) for beef and veal, wool, dairy products, wine, sugar, lamb, live feeder/slaughter cattle, canola and mutton. This will more than offset the expected export price decline for wheat, barley and cotton. Towards 2020–21 unit returns for farm exports are projected to gradually decline, in real terms, as the value of the Australian dollar is assumed to strengthen and world prices of many agricultural products decline.

Earnings from farm exports are forecast to decrease slightly in 2016–17 to $45.0 billion, following a forecast rise of 3.0 per cent in 2015–16 to $45.2 billion. Export earnings in 2016–17 are expected to decrease for beef and veal (down 4 per cent), wheat (down 1 per cent), coarse grains (down 3 per cent), lamb (down 3 per cent) and mutton (down 11 per cent). However, these decreases are expected to be largely offset by increased export earnings for wool (up 7 per cent), dairy (up 4 per cent), sugar (up 7 per cent), live feeder/slaughter cattle (up 9 per cent), cotton (up 22 per cent) and canola (up 13 per cent).

Export earnings for crops are forecast to fall to around $22.4 billion in 2016–17, from a forecast $22.7 billion in 2015–16. This is expected as a result of falling world prices for crops because of plentiful supplies on world markets. Export earnings for livestock and livestock products are forecast to rise to a record of $22.6 billion in 2016–17 from a forecast $22.5 billion in 2015–16, with returns supported by firm international demand and the assumed relatively weak Australian dollar.

In 2020–21 the value of Australian farm exports is projected to be around $45.3 billion (in 2015–16 dollars), 11 per cent higher than the five-year average to 2014–15 of $40.7 billion (in 2015–16 dollars). This is expected to be partly driven by projected increases in the value of livestock exports as a result of increased beef and sheep meat production from gradual herd and flock rebuilding over the medium term.

For fisheries products, export earnings are forecast to be around $1.7 billion in 2016–17, similar to 2015–16. Export earnings in 2016–17 are forecast to rise for rock lobster (up 3 per cent) as a result of strengthening demand from China. However, export earnings for salmonids are forecast to fall by 9 per cent as prices respond to a recovery in world supply. Export earnings for tuna are expected to remain around the same as in 2015–16. The value of Australian fisheries exports is projected to be around $1.6 billion (in 2015–16 dollars) in 2020–21.

Economic overview


Major indicators of Australia’s agriculture and natural resources based sector

2013–14 2014–15 s 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 zExchange rate US$/A$ 0.92 0.84 0.71 0.71 0.72 0.73 0.74 0.74

Farm index 86.7 92.5 100.0 101.3 102.8 103.3 103.0 102.9– real b index 90.0 94.3 100.0 98.9 97.9 96.0 93.4 91.0

Farm A$m 41 162 43 924 45 222 45 021 47 177 48 504 49 806 51 214– real b A$m 42 700 44 798 45 222 43 951 44 932 45 070 45 150 45 294Crops A$m 22 825 22 015 22 722 22 413 23 682 24 183 24 795 25 518– real b A$m 23 678 22 453 22 722 21 881 22 555 22 471 22 477 22 569Livestock A$m 18 337 21 909 22 500 22 608 23 495 24 321 25 011 25 695– real b A$m 19 022 22 345 22 500 22 071 22 377 22 598 22 673 22 725Fisheries products A$m 1 304 1 440 1 665 1 661 1 677 1 694 1 711 1 762– real b A$m 1 353 1 468 1 665 1 621 1 597 1 574 1 551 1 558

Farm A$m 51 262 53 748 58 736 60 341 62 121 63 781 65 183 66 114– real b A$m 53 178 54 817 58 736 58 907 59 166 59 265 59 090 58 473Crops A$m 28 370 27 038 28 480 29 542 29 951 30 765 31 422 31 689– real b A$m 29 431 27 576 28 480 28 840 28 526 28 586 28 485 28 026Livestock A$m 22 891 26 710 30 256 30 799 32 170 33 016 33 760 34 425– real b A$m 23 747 27 241 30 256 30 067 30 640 30 678 30 605 30 446Fisheries products A$m 2 460 2 741 2 927 2 849 2 852 2 927 2 936 3 007– real b A$m 2 552 2 795 2 927 2 781 2 716 2 720 2 662 2 660Forestry products A$m 1 789 1 955 2 070 2 107 2 146 2 186 2 229 2 198– real b A$m 1 856 1 994 2 070 2 057 2 044 2 032 2 021 1 944

Farm index 122.1 122.0 119.8 121.0 122.0 124.2 126.6 128.4– crops index 131.5 124.5 127.2 133.5 133.5 135.6 137.2 137.4– livestock index 111.4 117.9 111.8 109.0 110.8 113.0 115.9 118.8Forestry index 119.6 129.5 130.2 131.2 132.3 133.4 134.6 132.2

grains and oilseeds ’000 ha 22 584 22 554 23 339 23 376 22 949 23 130 23 233 23 352Forestry plantation area ’000 ha 2 000 na na na na na na naSheep million 72.6 69.9 70.1 71.4 72.7 73.9 75.4 77.0Cattle million 29.1 27.2 26.5 25.9 26.2 27.0 28.0 29.2

Net cash income e A$m 18 794 20 892 25 187 25 802 24 727 24 157 23 726 22 974– real b A$m 19 496 21 307 25 187 25 189 23 551 22 446 21 508 20 319Net value of farm production g A$m 13 449 15 437 19 609 20 081 18 853 18 125 17 533 16 603– real b A$m 13 951 15 744 19 609 19 604 17 956 16 842 15 894 14 684Farmers’ terms of trade h index 98.3 102.8 112.7 113.3 109.3 106.4 104.1 101.6

MajorindicatorsofAustralia'sagricultureandnaturalresourcebasedsectors

Australian export unit returns a

Gross value of production c

Volume of production d

a Base: 2015–16 = 100. b In 2015–16 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 increase in assets held by marketing authorities and 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

Value of exports

Production area and livestock numbersCrop area

Farm sector

Economic overview


Major Australian agricultural commodity exports

Price aValue ValueVolume

2016–172015–16f

2016–17f

$b

a Wheat, sugar, barley, cotton, canola and cheese are world indicator prices in US$. Beef and veal, lamb and mutton are saleyardprices in A$. All other commodities are export unit returns in A$. f ABARES forecast.

Mutton

Skim milk powder

Rock lobster

Cheese

Canola

Cotton

Live feeder/slaughter cattle

Lamb

Barley

Sugar

Wine

Wool

Wheat

Beef and veal

–4%

–1%

7%

0%

7%

0%

–3%

9%

22%

13%

1%

3%

6%

–11%

–9%

2%

1%

–1%

4%

0%

–4%

4%

23%

8%

2%

3%

0%

–17%

5%

–2%

5%

1%

11%

–2%

9%

5%

–3%

3%

8%

0%

6%

10%

$9.17b

$5.60b

$3.44b

$2.21b

$1.77b

$1.87b

$1.61b

$1.37b

$1.18b

$1.25b

$0.89b

$0.79b

$0.58b

$0.69b

$8.78b

$5.57b

$3.67b

$2.22b

$1.88b

$1.88b

$1.57b

$1.50b

$1.44b

$1.42b

$0.89b

$0.82b

$0.61b

$0.61b

2 4 6 8 10

Economic overview


Seasonal conditions in Australia Matthew Miller and Dean Mansfield

Recent rainfall and cooler than normal seasonal conditions throughout much of central and western Australia and parts of eastern Australia have benefited pasture growth and crop production and replenished on-farm water supplies.

Rainfall in January 2016 was generally average to above average across much of Australia but below average across much of Australia’s tropical north and isolated areas of Victoria, central Queensland, South Australia and western Tasmania (Map 1). Severely deficient to below average rainfall was recorded across northern areas of Queensland, Western Australia and the Northern Territory and western Tasmania. Meanwhile, above average to extremely high rainfall was recorded across much of New South Wales, Victoria, southern and northern South Australia, Western Australia, eastern Tasmania and scattered areas of southern Queensland and the Northern Territory.

MAP 1 Rainfall deficiencies, 1 to 31 January 2016

Source: Bureau of Meteorology

90–100 Extremely high

Rainfall percentiles

70–80 Above average

80–90 Well above average

30–70 Average

Wheat–sheep zone

10–20 Well below average20–30 Below average

5–10 Extremely low0–5 Severe de�ciency

SouthAustralia

NorthernTerritory

Western Australia

Queensland

New SouthWales

Victoria

Australian Capital

Territory

Tasmania

Maps 2 and 3 show relative levels of modelled upper layer soil moisture (~0.1 metres) and lower layer soil moisture (~0.1 to ~1 metres) across Australia in January 2016. Most plant roots are in the top 0.2 metres of the soil profile. The level of soil moisture in the upper layer of the soil profile (0.1 metres) is therefore the best indicator of water availability, particularly for germinating plants. Upper layer soil moisture responds quickly to seasonal conditions and often shows a pattern that reflects rainfall and temperature events of the same month. The lower layer soil moisture is a larger, deeper store that is slower to respond to rainfall and tends to reflect accumulated events over longer periods. Crops and pastures once established can draw on this deeper soil moisture store throughout the growing season to support production.

continued ...

Economic overview


Seasonal conditions in Australia continued

Relative upper layer soil moisture in January 2016 was generally average to well above average across much of Australia (Map 2). Above average to extremely high relative soil moisture was recorded across much of New South Wales, Victoria, southern and northern South Australia, Western Australia and parts of southern Queensland and the Northern Territory. In contrast, relative upper layer soil moisture was extremely low to below average over much of western Tasmania, Australia’s tropical north and scattered areas of South Australia and the east coast of Queensland.

In January 2016 relative upper layer soil moisture was generally average to extremely high across most cropping regions in Australia. This pattern of relative upper layer soil moisture reflected rainfall received to the end of January 2016.

MAP 2 Modelled upper layer soil moisture, January 2016

20–30

Relative soil moisture percentiles

70–8030–70

80–90

Wheat–sheep zone

90–100

SouthAustralia

NorthernTerritory

Western Australia

Queensland

New SouthWales

Victoria

Australian Capital

Territory

Tasmania

10–200–10

Below average

Above averageAverage

Well above averageExtremely high

Well below averageExtremely low

Note: Soil moisture estimates are relative to the long-term record and ranked in percentiles. Estimates are used to compare the upper layer soil moisture from January 2016 and are ranked according to percentilesfor each January in the 1910–2015 historical reference period. The extremely high band indicates where the estimated soil moisture level for January 2016 fell into the wettest 10 per cent of estimated soil moisturelevels for January during the 1910–2015 historical long-term average. The extremely low band indicates where the estimated soil moisture levels for January 2016 fell into the driest 10 per cent of estimated soil moisturelevels for January during the 1910–2015 historical long-term average. Source: Bureau of Meteorology (Australian Water Resources Assessment Landscape model)

Relative lower layer soil moisture in January 2016 was predominantly above average to extremely high across large areas of western, central and eastern Australia (Map 3). Areas modelled to have extremely low relative lower layer soil moisture levels decreased in size and intensity across large areas of New South Wales, northern Victoria, Queensland and southern South Australia compared with the previous month.

continued ...

Economic overview



In January 2016 relative lower layer soil moisture was variable across Queensland cropping regions ranging from below average in the north to above average in the south. NSW, SA and Victorian cropping regions had predominantly average relative lower layer soil moisture, while WA cropping regions had a general trend towards above average levels.

MAP 3 Modelled lower layer soil moisture, January 2016

20–30

Relative soil moisture percentiles

70–8030–70

80–90

Wheat–sheep zone

90–100

10–200–10

Below average

Above averageAverage

Well above averageExtremely high

Well below averageExtremely low

Note: Soil moisture estimates are relative to the long-term record and ranked in percentiles. Estimates are used to compare the upper layer soil moisture from January 2016 and are ranked according to percentilesfor each January in the 1910–2015 historical reference period. The extremely high band indicates where the estimated soil moisture level for January 2016 fell into the wettest 10 per cent of estimated soil moisturelevels for January during the 1910–2015 historical long-term average. The extremely low band indicates where the estimated soil moisture levels for January 2016 fell into the driest 10 per cent of estimated soil moisturelevels for January during the 1910–2015 historical long-term average. Source: Bureau of Meteorology (Australian Water Resources Assessment Landscape model)

SouthAustralia

NorthernTerritory

Western Australia

Queensland

New SouthWales

Victoria

Australian Capital

Territory

Tasmania

A strong El Niño persists, but ocean temperatures in the tropical Pacific are showing a gradual cooling signal. Climate models suggest El Niño will decay over the coming months, with a likely return to neutral conditions in the second quarter of 2016.

Based on the 26 El Niño events since 1900, around 50 per cent have been followed by a neutral year and 40 per cent have been followed by La Niña. Models also suggest that neutral and La Niña states are about equally likely for the second half of 2016 and that a repeat El Niño is the least likely outcome. Historically, the breakdown of strong El Niño events brings above average rainfall to parts of Australia in the first half of the year, which is reflected in the Bureau of Meteorology’s latest seasonal rainfall outlook.

continued ...

Economic overview



In its latest three-month rainfall outlook (February to April 2016), issued on 28 January 2016, the Bureau of Meteorology indicates that above average rainfall is more likely across much of the southern half of the country (Map 4). However, rainfall during this three-month period is more likely to be lower than average across much of Australia’s tropical north. Across the remainder of the country the forecast indicates no strong tendency towards either above or below average rainfall.

MAP 4 Australian rainfall outlook, February to April 2016

Chance of exceeding themedian rainfall (%)

Wheat–sheep zone

80%

75%

70%

65%

60%

55%

50%

45%

40%

35%

30%

25%

20%

Source: Bureau of Meteorology

SouthAustralia

NorthernTerritory

Western Australia

Queensland

New SouthWales

Victoria

Australian Capital

Territory

Tasmania

Agriculture

Crops


The world coarse grainindicator price is forecast

to decline, re�ecting large world production and stocks.

3%to US$160/tin 2016–17

b

CROPS

The world oilseed indicator price is forecastto average lower as a result of high carry-overstocks and higher soybean meal closing stocks.

The world wheat indicator priceis forecast to be the lowest in more than 10 years in real terms, re�ecting ample world wheat supplies.

2%to US$210/tin 2016–17

a

2% to US$355/tin 2016–17

c

The world sugar indicator price isforecast to increase as world

sugar consumption is forecast tooutpace production, resulting in asigni�cant decline in world stocks.

11%to USc 16/lbin 2016–17

d

The world indicator price forcotton is forecast to fall re�ecting relatively weak demand and higher world cotton supply despite a decline in world cotton stocks.

US no. 2 hard red winter, fob Gulf.a

Wheat

Oilseeds

Cotton

US no. 2 yellow corn, fob Gulf.bUS no. 2 soybeans, fob Gulf.cIntercontinental Exchange, nearby futures, no. 11 contract (Oct–Sep).dCotlook ‘A’ index.e

4%to USc 68/lbin 2016–17

e

Coarse grains

Sugar


WheatOutlook to 2020–21

Christopher Price

• Wheat prices are projected to remain relatively low over the short to medium term, reflecting plentiful supplies on world markets.

• World consumption of wheat is forecast to be lower in 2016–17, with continued growth in human consumption more than offset by a decline in the use of wheat for livestock feed.

• The importance of the Black Sea region in world trade is expected to increase over the medium term. World wheat prices are likely to be more sensitive to production and export changes in this region.

• Australian production and export volumes are expected to increase gradually over the medium term. The value of exports is expected to be affected by lower international wheat prices (in real US dollar terms) and an assumed gradual appreciation of the Australian dollar against the US dollar.

Wheat prices to remain relatively lowThe world wheat indicator price (US no. 2 hard red winter, fob Gulf) is forecast to average US$210 a tonne in 2016–17, compared with US$215 a tonne in 2015–16. If realised, it will be the lowest annual average price in real terms since 2004–05.

Following several years of rising production, world supplies of wheat have increased and world prices have declined. The world wheat indicator price has trended down from a high of around US$390 a tonne in early 2013. It traded in a range between US$207 and US$217 over the four weeks to early February 2016.

Several factors may put further downward pressure on the price during the remainder of 2015–16 and into 2016–17. Relatively plentiful supplies are likely to continue in some of the major exporting countries, including the United States. This is despite a forecast decline in world production in 2016–17. Exports from Argentina are expected to increase, following recent policy developments (see box), which will provide renewed regional competition for US milling wheat exports, particularly to Brazil. A strong US dollar will also continue to affect the competitiveness of US wheat on international markets and US wheat prices (including the world indicator price). A major risk to the price forecast is uncertainty about the Northern Hemisphere winter wheat crop, which will soon emerge from dormancy.

Wheat


World wheat indicator price, March 2015 to January 2016

US$/t

US no. 2 hard red winter, fob Gulf

Jan2016

Dec2015

Nov2015

Oct2015

Sep2015

Aug2015

Jul2015

Jun2015

May2015

Apr2015

Mar2015

210

220

230

240

250

260

270

The world wheat indicator price is projected to decline further in real terms over the medium term to 2020–21. This reflects assumed productivity gains, increasing exports from relatively low-cost producers in the Black Sea region and Argentina, and an assumed strong US dollar against other floating currencies. Price movements are likely to remain volatile over the medium term, particularly as a result of supply shocks in major producing and exporting countries.

World wheat production forecast to decline in 2016–17 but to increase in medium termWorld wheat production is forecast to fall by 3 per cent in 2016–17 to 710 million tonnes. Declines are expected in both area harvested and average world yield. Lower production is expected in the European Union and the Black Sea region, driven by declines in yield from above average levels in 2015–16. Production declines are also forecast in China, the Middle East and North Africa. In contrast, production is forecast to increase in other major exporting countries, particularly Argentina and Canada.

Total area planted to wheat is forecast to fall by 1 per cent in 2016–17. Significant declines are expected in the United States and the European Union in response to plentiful exportable supplies and expected lower returns. In many other producing countries, the relatively low wheat prices provide little incentive to expand the area planted to wheat in 2016–17.

Expectations of the area planted to wheat in 2016–17 have also been affected by unfavourable seasonal conditions in some regions. For example, area planted to wheat is estimated to have declined by around 5 per cent in India, where a warm and dry winter followed a poor monsoon season in 2015–16.

Wheat


Over the medium term to 2020–21, world wheat production is projected to increase by around 1 per cent a year. This mainly reflects assumed productivity growth from, for example, adoption of higher yielding varieties and improved farming practices. The area planted to wheat is expected to increase only gradually towards 2020–21 because of competition from production alternatives, including other crops and livestock production, which may have higher profitability.

Among the major exporters, much of the increase in production is expected to come from growth in the Black Sea region. Production in the region is projected to grow at an average annual rate of 2 per cent, with growth in both area planted to wheat and average yield. In contrast with some other major exporters, the Black Sea region has potential to significantly increase area planted to crops. This is supported by land availability, relatively low production costs, proximity to major markets in the Middle East and North Africa and continuing weakness in the value of local currencies against the US dollar that would support local currency denominated returns.

In Argentina, production is expected to increase in 2016–17 and over the medium term, reflecting the ongoing effects of recent policy developments. With the Argentine Government’s removal of the wheat export tax and quantitative export restrictions and devaluation of the Argentine peso, the area planted to wheat is forecast to increase by almost 40 per cent in 2016–17. Export taxes have also been eliminated or reduced on several other agricultural commodities. A significant expansion in corn production in Argentina is also expected in 2016–17. Policy changes favour the expansion of wheat and corn production in the short term, but progressive reductions in the export tax on soybeans will result in a rebalancing in the shares of production between crops in the medium term. However, total cropping area is expected to grow significantly and growth in wheat area and production is projected over the five years to 2020–21.

World wheat consumption to be lower in 2016–17, with reduced feed useWorld consumption of wheat is forecast to be lower in 2016–17 at 714 million tonnes, with continued growth in human consumption being more than offset by a decline in the use of wheat for livestock feed. Over the medium term to 2020–21, world wheat consumption is projected to grow at an average annual rate of around 1 per cent, with similar rates of growth in the use of wheat for food and livestock feed. Industrial use is also expected to increase slightly but will remain a relatively small proportion of total wheat consumption.

Human consumption accounts for around two-thirds of total wheat use and is expected to increase by around 1 per cent a year over the short to medium term. Human consumption typically increases in line with world population. However, changing patterns of consumption around the world will affect the pattern of trade in milling wheat and flour. In many developing countries, particularly in Asia and Africa, consumption of wheat-based foods is expected to rise. This reflects growing total dietary intake and the displacement of traditional staples such as rice and corn. In contrast, per person consumption of wheat is expected to either be steady or decline in most industrialised countries, including China.

Wheat


Change in human consumption of wheat, 2016–17 to 2020–21

Population growth

Changing per personconsumption

%

0

2

4

6

8

10

12

rest of worldAsia excludingChina

Sub-SaharanAfrica

The forecast lower use of wheat for livestock in 2016–17 largely reflects a rebalancing in some major feed-wheat consuming regions, particularly the European Union. This reflects reduced supplies of feed-quality wheat and increased availability of feed alternatives.

Towards 2020–21 world use of wheat for livestock feed is projected to rise, reflecting increased world livestock production. Globally, wheat will continue to compete with alternatives such as corn and other feed grains. Feed use of wheat is likely to continue to be a relatively minor source of livestock feed.

World wheat trade expected to riseWorld trade in wheat is forecast to increase by 1 per cent in 2016–17 to 154 million tonnes. This mainly reflects higher milling wheat imports into the Middle East and North Africa. Import demand from these regions has been limited in 2015–16 because of increased domestic supplies.

Exports from the Black Sea region are forecast to decline by 14 per cent in 2016–17 but would still be the second-largest annual exports on record. The expected decline in export volumes reflects reduced exportable supplies, particularly in Ukraine, following a fall in production in 2016–17. The decline in exports from the Black Sea region is expected to shift the balance of wheat supplies on world markets to other exporting countries, including the United States.

Wheat exports from Argentina are forecast to increase by around one-third in 2016–17, compared with 2015–16. This reflects increased production and the elimination of export restrictions. At around 8.7 million tonnes, forecast exports from Argentina would be the highest since 2011–12.

Wheat


Wheat exports, by origin

Rest of worldArgentinaAustraliaCanada

z ABARES projection.

Mt

United StatesEuropean UnionBlack Sea region

30

60

90

120

150

180

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

Over the medium term, world trade in wheat is projected to increase by almost 2 per cent a year to 164 million tonnes in 2020–21. Growth in trade is expected to be driven by demand for milling wheat and flour, particularly in many developing economies as populations and incomes rise. Growth in feed-wheat trade is expected to be more modest. Some countries without domestic wheat production to draw on will continue to import feed wheat along with other feedstocks. Other major feed-wheat consuming countries and regions are expected to increase domestic production towards 2020–21.

Growth in exports is expected to come mostly from the Black Sea region. Following a forecast fall in 2016–17, export volumes in the Black Sea region are projected to increase at 4 per cent a year to reach 45 million tonnes in 2020–21. Investment in export infrastructure will be required for the region to fully realise its export potential.

Wheat is expected to remain the most traded grain over the medium term, both in terms of the volume of world trade and as a share of world production. With world wheat trade expected to grow more quickly than production over the medium term, the share of world wheat production that is traded will continue its long-term upward trend. With an increasing share of exports from the Black Sea region, world wheat prices will be more sensitive to production and export changes in this region over the medium term.

Wheat


World wheat trade

%

Trade as a share ofworld productionBlack Sea region exports asa share of world trade


5

10

15

20

25

30

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

World wheat stocks to remain relatively highWorld wheat closing stocks are expected to remain relatively high in 2016–17 and over the medium term. The world stocks-to-use ratio is forecast to decline in 2016–17 to just over 29 per cent, compared with an average of 27 per cent over the past decade. Over the medium term, world production and consumption are projected to grow at broadly similar rates, with world closing stocks projected to decline only gradually.

Stocks in China are expected to continue increasing in 2016–17 and over the medium term, with closing stocks in China projected to account for around 60 per cent of the wheat held outside major exporting countries by 2020–21.

The combined stocks of the major exporting countries are forecast to decline by 6 per cent in 2016–17 and remain largely unchanged over the medium term. The expected decline in 2016–17 largely reflects the drawdown of exportable supplies in the United States and the European Union.

World wheat closing stocks

Rest of world

Mt %

Stocks-to-use ratio(right axis)

50

100

150

200

250

10

20

30

40

50

a Argentina, Australia, the Black Sea region, Canada, the European Union and the United States. b Disappearance de�ned as domestic consumption plus exports. z ABARES projection.

Major exporters a

Stocks-to-disappearance ratio for major exporters b(right axis)

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

1999–2000

1996–97

Wheat


Modest growth expected in Australian wheat productionThe area planted to wheat in Australia is forecast to be largely unchanged in 2016–17 but to have significant regional variation. Area planted to wheat in Queensland and New South Wales is expected to fall, partly reflecting increased chickpea plantings in those states (see box). Area planted to wheat in Western Australia is expected to increase, partly at the expense of lupins. Wheat area in Victoria is expected to increase, following two years of unfavourable seasonal conditions.

Winter crop planting expectations for 2016–17 are based on assumptions about relative returns and climatic conditions leading into and during the planting window. According to the Bureau of Meteorology, the seasonal outlook for February to April is favourable, with above average rainfall likely across Australia’s major cropping regions.

Australian wheat production is forecast to rise by 1 per cent in 2016–17 to 24.5 million tonnes. An increase is expected in Victoria, following poor seasonal conditions and significantly below average yields in 2015–16. In contrast, yields in Queensland and New South Wales are expected to decline from the above average yields realised in 2015–16.

Australian wheat production

QueenslandVictoriaSouth AustraliaNew South Wales

f ABARES forecast. z ABARES projection.

Mt

Western Australia

5

10

15

20

25

30

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

Beyond 2016–17 the area planted to wheat is expected to increase at an average annual rate of 0.5 per cent. Assuming average seasonal conditions and a gradual increase in yields, Australian wheat production is projected to be around 1 million tonnes higher in 2020–21 than in 2016–17 at 25.5 million tonnes.

Wheat


Higher Australian export shipments but values to declineThe volume of wheat exports from Australia is forecast to increase by 2 per cent in 2016–17, but the value of exports is expected to decline. The forecast increase in the volume of exports is supported by higher opening stocks and a forecast increase in production. The decline in the value of exports reflects lower international wheat prices. Over the medium term, rising production is projected to support growth in export shipments. However, the value of exports is expected to be affected by lower international wheat prices (in real US dollar terms) and an assumed gradual appreciation of the Australian dollar against the US dollar.

Australian wheat exports

Volume

Mt

Value (right axis)


5

10

15

20

25

2015–16$b

2

4

6

8

10

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

Growth in demand for milling wheat is expected to support Australian wheat exports to key markets in South-East Asia, including Indonesia. China is also expected to continue importing modest amounts of high-quality milling wheat despite rising domestic wheat production and stocks.

Australian exports of milling wheat to Asia typically face competition from US and Canadian wheat exports. Competition from these exporters is expected to be strong, with a large increase in the availability of US wheat supplies for export in 2016–17 and steady growth in US and Canadian production projected over the medium term.

Wheat


Outlook for wheat

unit 2013–14 2014–15 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 z

Area million ha 219 223 223 221 223 224 224 224Yield t/ha 3.26 3.24 3.26 3.22 3.23 3.25 3.28 3.30Production Mt 714 723 729 710 719 727 734 742Consumption Mt 696 710 718 714 721 728 735 741Closing stocks Mt 189 202 213 209 207 206 206 206Trade Mt 156 153 152 154 156 159 161 164Stocks‐to‐use ratio % 27.1 28.5 29.7 29.3 28.7 28.3 28.0 27.8

– nominal US$/t 317 266 215 210 211 213 216 220– real b US$/t 323 268 215 206 204 202 201 200

Area ’000 ha 12 613 12 155 12 728 12 733 12 796 12 860 12 925 12 989Yield t/ha 2.01 1.90 1.90 1.92 1.94 1.95 1.96 1.97Production kt 25 303 23 076 24 219 24 504 24 812 25 053 25 296 25 541Export volume c kt 18 336 16 571 16 933 17 267 17 744 17 984 18 177 18 369

– nominal A$m 6 103 5 547 5 604 5 571 5 645 5 729 5 793 5 905– real d A$m 6 331 5 658 5 604 5 439 5 376 5 324 5 252 5 223

– nominal A$/t 334 326 316 300 296 296 295 297– real d A$/t 346 333 316 293 282 275 268 263a US no. 2 hard red winter wheat, fob Gulf, July–June. b In 2015–16 US dollars. c July–June years. d In 2015–16 Australian dollars.f ABARES forecast. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; International Grains Council

World

Australia

Price a

Export value c

APW 10 net pool return


Wheat

Recent developments in Argentina’s agricultural export policies Lex Williamson

Argentina is the second-largest agricultural exporter in Latin America. However, until recently export restrictions and currency controls constrained the growth of Argentine agricultural production and exports. Following the presidential election in late 2015, these restrictions were either removed or reduced. This box discusses the history of Argentina’s restrictive trade policies and potential adjustments to its agricultural sector.

Argentina’s macroeconomic environment

In 2001 and 2002 Argentina faced a financial crisis triggered by a range of factors, including high foreign debt and currency overvaluation. The economy contracted, with gross domestic product (GDP) falling by 4.4 per cent in 2001 and by 10.9 per cent in 2002. In late 2001, the crisis resulted in Argentina’s sovereign default on foreign debt and a significant government budget deficit. To increase revenue, one measure taken by the Argentine Government was to impose export taxes on major agricultural commodities.

Economic indicators, Argentina, 2000 to 2014

%

Unemployment

InflationGDP growth

–10

0

10

20

30

40

2014201220102008200620042002

Source: World Bank 2015

In 2003 the government embarked on high government spending and interventionist policies. Key institutions were nationalised and export taxes were raised for many agricultural commodities. Increased public spending encouraged higher workforce participation and led to a period of strong economic growth. From 2003 to 2011 (except 2009) annual GDP growth averaged 8 per cent and unemployment fell steadily from its peak of around 18 per cent in 2002 to around 7 per cent in 2011. However, the high public spending fuelled inflation, which rose by an average of around 17 per cent a year over the same period.

Despite relatively high economic growth, the interaction of high inflation with currency controls hindered the Argentine economy. From 2002 the Central Bank of Argentina set the exchange rate of the Argentine peso against the US dollar, resulting in its overvaluation. Overvaluation of the peso lowered the comparative returns of businesses converting currency through the official channels. This and other factors contributed to the stagnation of foreign investment in Argentina.

continued ...

Wheat


Recent developments in Argentina’s agricultural export policies continued

Between 2012 and 2014, GDP growth slowed significantly to an average of 1.4 per cent a year, reflecting the economic costs of high inflation and rising public sector debt coupled with falling foreign reserves.

Argentina’s agricultural sector

Agriculture is an important component of the Argentine economy. It accounted for around 10 per cent of Argentina’s GDP in 2014, with agricultural exports of US$37.8 billion or 55 per cent of total Argentine exports.

Argentina’s major agricultural exports are soybeans and soybean products, corn, beef and wheat. In 2014 Argentina was the world’s largest exporter of soybean meal and soybean oil, the third-largest exporter of soybeans and the fourth-largest exporter of corn.

Argentine agricultural exports, 2014

Wheat 2%Other 35%

Beef 3%

Corn 9%

Soybeans and soybeanproducts 51%

US$37.8 billion

Source: United Nations Statistics Division 2015

Argentina’s largest agricultural export markets in 2014 were mainly in Asia (35 per cent), with China accounting for almost 11 per cent. Other significant markets included the European Union (18 per cent) and other South American countries (20 per cent), particularly Brazil (7 per cent).

In 2014 about 80 per cent of Argentina’s soybean exports were destined for China, while India accounted for 41 per cent of soybean oil exports. Soybean meal accounted for 62 per cent of the total value of soybean and soybean product exports in 2014. It is sold to several countries, mostly in Asia and the Middle East.

continued ...

Wheat



Agricultural export policy

Export taxes on major Argentine agricultural exports were first introduced in 2002 in response to decreased government revenue resulting from the financial crisis. As well as boosting revenue, this policy allowed the Argentine Government to address other domestic concerns such as maintaining low food prices for consumers by constraining exports and increasing domestic supply. Export taxes slowed export growth. However, the real value of grain and oilseed exports (in 2014 US dollars) continued to grow by an average of 25 per cent a year and beef exports by an average of 36 per cent a year between 2002 and 2007.

In 2007 the Argentine Government raised export taxes on major agricultural products. The government increased rates by between 10 and 15 percentage points, with the new rates ranging from 15 per cent for beef to 35 per cent for soybeans. Export growth remained positive in 2007, but another increase to the export tax rates in 2008 contributed to a 6 per cent decrease in the volume of grain and oilseed exports in that year. In 2009 the cropping sector contracted significantly, with total grain and oilseed production falling by 32 per cent and exports by 30 per cent. Beef production was not affected by the change to export taxes because around 90 per cent of production is consumed domestically. But the decline in crop production was significant enough for the Argentine Government to revert export tax rates to those of 2007.

Argentine major grain and oilseed exports and soybean export tax rate, 2001 to 2014

Wheat

Mt %

Soybean exporttax (right axis)

CornSoybeans

20

40

60

80

100

10

20

30

40

50

2014201220102008200620042002

Sources: Richardson 2008; United Nations Statistics Division 2015

continued ...

Wheat



In May 2008 an export permit system known as the Register of Export Operations (ROE) was introduced and coexisted with the export tax system. The ROE functioned as a quantitative restriction on agricultural exports, requiring exporters to obtain government approval before exports could take place. The aim of the ROE was to ensure a sufficient domestic supply of agricultural products and keep domestic prices below world prices. Commodities considered staples in the Argentine diet, including wheat and beef, were subject to more stringent quantitative export restrictions than goods such as soybeans and soybean products.

High export taxes and the increasingly tight restrictions imposed by the ROE resulted in agricultural production stagnating between 2010 and 2014. As a result, the total volume of grain and oilseed exports declined by 17 per cent between 2010 and 2014 and the volume of beef exports fell by 8 per cent, to roughly half of what it had been in 2007.

Presidential elections of 2015

In November 2015 President Macri was elected on a platform of economic liberalisation. His government removed or reduced most export taxes, export permits and currency controls affecting agricultural products. ROE export permits for grains and oilseeds were removed and replaced with a new reporting system of Affidavits of Foreign Sale that requires exporters to report only what they export rather than seeking approval to export. At time of publication, changes had not been made to the export permit requirements for beef.

Unlike other agricultural products, export taxes on soybeans and soybean products are subject to a phased removal, with planned annual reductions of 5 percentage points starting in 2015 and ending in 2021. In 2014 soybeans and soybean products accounted for almost 51 per cent of the value of Argentina’s total agricultural exports and 28 per cent of total exports.

Argentine agricultural export taxes

Commodity Pre-election rate(November 2015)

Post-election rate(January 2016)

% %

Soybeans 35 30a

Soybean oil 32 27a

Soybean meal 32 27a

Sunflower seeds 32 0

Peanuts 23.5 0

Wheat 23 0

Corn 20 0

Barley 20 0

Beef 15 0

a To be reduced by 5 percentage points a year until eliminated in 2021. Source: USDA–FAS 2015a

continued ...

Wheat



In December 2015 the new Argentine Government also introduced a floating exchange rate scheme. This allows both domestic and foreign firms to freely convert pesos to foreign currency. Following this change the peso depreciated by around 25 per cent by 1 January 2016, from 9.8 pesos to US$1 to around 13 pesos to US$1. A lower value of the peso against major world currencies is expected to increase farm sector incomes and improve the competitiveness of Argentine agricultural exports on the world market.

Implications

The removal or reduction of export restrictions and currency controls by the Argentine Government is expected to lead to both short-term and long-term changes to Argentina’s agricultural sector. In the short term, exports of grains and oilseeds are expected to increase because large stockpiles of soybeans, corn and wheat are likely to be made available for export. At the end of September 2015 the United States Department of Agriculture (USDA–FAS 2015b) estimated that a total of 36 million tonnes of soybeans, wheat and corn were held by producers in stocks, with the majority being soybeans. This was 44 per cent higher than average closing stock volumes between 2010 and 2014.

The continued use of export taxes on soybeans and related products is likely to discourage a significant increase in soybean production in the short term as corn and wheat become relatively more profitable and the areas planted to those crops increase at a greater rate. However, as the tax rates on soybeans decline in the longer term, Argentine grain production is expected to adjust. Production of major exported crops is expected to rise as farmers respond to the policy changes in future planting seasons.

Beef and livestock exports are also expected to gradually increase over the longer term as producers adjust to the removal of export taxes. However, the extent of any increase will depend on whether and when quantitative export restrictions are lifted. Because beef is an important staple food in Argentina, the government may be less likely to remove the quantitative restrictions quickly to prevent any significant domestic price increase for beef.

Domestic producers are expected to benefit significantly from the more liberal trading environment because they will be able to freely sell their stockpiled grains and any chosen volume of production on the world market for a greater return than previously. Export returns will also be supported by the devaluation of the peso.

continued ...

Wheat



References

Richardson, N 2008, ‘Export-oriented populism: commodities and coalitions in Argentina’, Studies in Comparative International Development, vol. 44, no. 3, available at DOI 10.1007/s12116-008-9037-5.

United Nations Statistics Division 2015, ‘United Nations Commodity Trade Statistics Database (UN Comtrade)’, New York, available at comtrade.un.org/data/, accessed 8 January 2016.

USDA–FAS 2015a, ‘Argentina: new government lifts currency controls and cuts export taxes’, United States Department of Agriculture, Foreign Agricultural Service, Washington, DC, available at fas.usda.gov/data/argentina-new-government-lifts-currency-controls-and-cuts-export-taxes.

——2015b, ‘Production, Supply, and Distribution Online’, Washington, DC, available at apps.fas.usda.gov/psdonline/psdhome.aspx, accessed 21 January 2016.

World Bank 2015, ‘World Development Indicators’, Washington, DC, available at data.worldbank.org/data-catalog/world-development-indicators, accessed 9 January 2016.


Outlook for Australian chickpeas David Mobsby and Kyann Zhang

Australian chickpea production and exports to remain high in 2016–17

Since 2012–13 chickpeas have been Australia’s single largest pulse crop. Australian chickpea production is estimated to have reached a record 1 million tonnes in 2015–16. This was the result of above average yields and a doubling in planted area as producers responded to rising world chickpea prices in early 2015.

During 2015 world chickpea prices rose from already elevated levels because of an anticipated fall in Indian pulse production resulting from below average rainfall. In response to forecast relatively high chickpea prices, Australian chickpea plantings are expected to increase in 2016–17, but production is forecast to be marginally lower, assuming a return to average yields.

Over recent months, Australian chickpea exports have reached record monthly levels, reflecting the large 2015–16 crop and strong import demand from India. Exports in the December quarter 2015 reached around 781 000 tonnes, compared with around 179 000 tonnes for the same quarter in 2014. Around 80 per cent of these exports were shipped to India, with the remainder largely exported to neighbouring Bangladesh and Pakistan. For 2015–16 as a whole, chickpea exports are forecast to be around 1 million tonnes ($878 million).

In 2016–17 export volumes are expected to remain relatively high, but export prices are forecast to fall, resulting in a forecast lower export value of $544 million.

Chickpea exports, Australia

kt

Volume

Value (right axis)

f ABARES forecast.

200

400

600

800

1 000

1 200

2015–16 $m

200

400

600

800

1 000

1 200

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

2004–05

2002–03

continued ...

Wheat


Outlook for Australian chickpeas continued

Indian pulse production expected to be below average in 2015–16

India is the world’s largest chickpea producer, accounting for around 68 per cent of world production. However, to meet domestic demand, India supplements its production with a large volume of chickpea imports.

Indian chickpea production was adversely affected by unfavourable seasonal conditions in 2014–15 and 2015–16. Early in the 2014–15 season, below average rainfall reduced area planted and untimely rainfall later in the season reduced crop yield. In 2015–16 the Indian Government announced support policies aimed at encouraging higher production of chickpeas and other pulses. However, chickpea plantings in 2015–16 have been below average because of unseasonably dry conditions. By late January 2016, an estimated 8.5 million hectares of chickpeas had been planted, 6 per cent below the average planted area of 9.1 million hectares in the five years to 2014–15.

Given the size of the Indian domestic chickpea market and its dominant position in world trade (around 23 per cent of world imports), a significant rise in Indian import demand can markedly affect world prices. Indian chickpea imports in the first six months of 2015–16 (April to September) reached 339 350 tonnes, compared with total imports in 2014–15 of 418 870 tonnes.

Indian production to rise and world prices to fall in 2016–17

A substantial supply response is expected for Indian pulse production in 2016–17, assuming an average monsoon season. More favourable planting and growing conditions are expected to result in higher average yields and planted area, compared with the current season. Total Indian pulse production in 2016–17 is expected to rise significantly. This forecast higher production would reduce import demand in 2016–17.

Australian chickpea export prices are expected to average $872 a tonne in 2015–16 but are forecast to decline over 2016–17 to an average of $574 a tonne.


Coarse grainsOutlook to 2020–21

Kyann Zhang

• The world indicator prices for corn and barley are forecast to fall in 2016–17.• Following consecutive years of strong production, world stocks of coarse grains

are at their highest level on record. This trend is expected to continue in 2016–17.• World coarse grain prices are projected to fall in real terms over the medium term.• Australian exports of coarse grains are forecast to fall in 2016–17.

World coarse grains outlook in 2016–17The world coarse grains indicator price (US no. 2 yellow corn, fob Gulf) is forecast to fall by 3 per cent in 2016–17 to US$160 a tonne. The world indicator price for barley (France feed barley, fob Rouen) is forecast to average 2 per cent lower in 2016–17 at US$177 a tonne. These falls reflect abundant world supply of coarse grains and relatively weak demand in some sectors of the market.

Following consecutive years of strong production, current world stocks of coarse grains are at their highest level on record. This trend is expected to continue in 2016–17, as returns from planting coarse grains in the major export regions of the United States and the European Union are expected to be more favourable than those from alternative crops such as soybeans. In China, the domestic reserve price for corn was lowered by 11 per cent in late 2015. However, the returns under this reserve price remain above those for other crops and the fall in the domestic price is expected to have only a limited effect on production decisions.

Coarse grains


World coarse grain indicator prices

2015–16US$/t

France feed barley,fob RouenUS no. 2 yellow corn,fob Gulf


50

100

150

200

250

300

350

400

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

In Argentina, the devaluation of the peso commenced in December 2015 when it was floated by the new Argentine Government. If the devaluation persists, it is expected to improve the competitiveness of Argentine corn on the world market. Around the same time, restrictions on Argentine grain exports in place since 2007 were lifted. This is expected to provide incentive for domestic producers to increase production of coarse grains, particularly corn, as exports from Argentina are forecast to increase. The combination of these factors is expected to place downward pressure on world corn prices.

The rate of growth in US coarse grain consumption is expected to slow from that achieved in the decade to 2014–15, particularly for corn in industrial use, because potential for further expansion in the US ethanol industry is bound by infrastructure limitations. Crude oil prices are expected to remain relatively low in the next few years, which is expected to put downward pressure on ethanol prices. This in turn will dampen the price of corn.

Demand for coarse grains for livestock feed has been on an upward trend 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 to 2020–21.

Over the medium term (to 2020–21), world coarse grain prices are forecast to recover in nominal terms as growth in production slows in response to changing market conditions. Demand for coarse grains is expected to increase over the outlook period to 2020–21, driven primarily by a growing demand for livestock feed and, to a lesser extent, by demand for grain in food as world population and incomes rise. World coarse grain stocks are projected to grow slightly in the near term but to start falling towards the end of the projection period. This will also provide some support for coarse grain prices. In real terms coarse grain prices are projected to decline gradually, with corn averaging US$154 and barley averaging US$166 in 2020–21.

Coarse grains


ProductionIn 2016–17 world production of coarse grains is forecast to rise by 1 per cent to 1.28 billion tonnes, with strong growth in world corn production more than offsetting a slight fall in world barley production.

World coarse grain production

OtherGrain sorghumBarleyCorn


200

Mt

400

600

800

1 000

1 200

1 400

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

World coarse grain production is forecast to remain largely unchanged in 2017–18 despite lower prices. This is because of a lack of suitable alternatives in some areas currently planted to coarse grains. In particular, production in the US Corn Belt is expected to remain high. Over the remainder of the projection period to 2020–21, world coarse grain production is projected to continue growth of around 0.5 per cent a year, reaching 1.3 billion tonnes in 2020–21.

CornWorld corn production is forecast to increase by 1 per cent in 2016–17 to 982 million tonnes. This partly reflects a return to average yields in the European Union after adverse seasonal conditions resulted in lower than anticipated production in 2015–16. Production in the European Union in 2016–17 is forecast to increase by 17 per cent to 66 million tonnes.

In Argentina, area planted to corn is forecast to increase by 16 per cent in 2016–17 to 3.7 million hectares, with producers seeking to take advantage of the Argentine Government decision to remove export restrictions and taxes on corn. World corn prices are quoted in US dollars, so the devaluation of the local currency is beneficial to Argentine producers because it provides incentives for expansion in corn production. Average yields in Argentina are expected to fall slightly from 2015–16, but overall production is expected to increase by around 3 million tonnes.

Corn production in Brazil is forecast to fall by around 1 per cent in 2016–17. In the past two years, the Brazilian corn crop has been boosted by record harvests of its safrinha (second-season) crop. In 2016–17 yields of this second crop are expected to return to average. At the same time, increased competition from Argentina and lower world prices are expected to lead to a reduction in area planted for both crops.

Coarse grains


In the United States, area planted to corn is expected to increase by 2 per cent, reflecting favourable returns relative to soybeans, which compete with corn for similar resources. Despite this increase, overall production is expected to remain largely unchanged because yields are assumed to return to the long-term average after particularly high levels in 2014–15 and 2015–16.

Production of corn in China is forecast to remain mostly unchanged in 2016–17. In September 2015 the Chinese Government lowered the reserve price of corn by 11 per cent and expressed its intention to lower this price further in the near future. Under this new reserve price, returns from growing corn remain favourable relative to other crops and as a result production is expected to increase.

World corn supply

Production

Mt2015–16USc/lb

US no. 2 yellow corn,fob Gulf (right axis)

Stocks

f ABARES forecast.

200

400

600

800

1 000

1 200

1 400

50

100

150

200

250

300

350

2016–17f

2013–14

2010–11

2007–08

2004–05

2001–02

World corn production is projected to decline in 2017–18, as lower prices are expected to lead to a contraction in area planted. A further reduction of the corn reserve price in China is expected, which will lower the relative returns of planting corn and is expected to lead to a fall in corn production in China. Corn production in Argentina in 2017–18 is expected to increase further in response to export deregulation. However, this will be more than offset by falls in production from other major producers, including the United States.

Over the medium term, corn production is projected to increase from 2018–19 onwards to around 1 billion tonnes in 2020–21 as a result of a projected increase in corn consumption in line with a growing world population, improved world income growth and an increased demand for meat (which will lead to higher grain use).

Coarse grains


BarleyWorld production of barley in 2016–17 is forecast to decline by 1 per cent following an expected return to average yields. Falls in production in the European Union are expected to more than offset increases in Australia, Canada and the Black Sea region.

In the European Union, production is forecast to fall by 2 per cent in 2016–17 as yields return to average after reaching an all-time high in 2015–16. Area planted to barley is forecast to remain largely unchanged from the previous year.

Barley production in the Black Sea Region is expected to increase by 4 per cent in 2016–17—following a poor season in 2015–16, when poor seasonal conditions led to lower yields and a fall in harvested area.

Barley production over the medium term is projected to increase, assuming favourable seasonal conditions and average yields. This is in response to rising demand for barley in both feed and food use. Feed barley consumption in the livestock sector is projected to grow as world livestock production expands. Increased world consumption of beer is expected to lead to growth in demand for malting barley.

ConsumptionWorld consumption of coarse grains is projected to fall by 1 per cent to 1 257 million tonnes in 2016–17, resulting from weaker demand for coarse grains in the industrial and livestock sectors. World consumption is projected to resume growth in 2017–18 and continue to increase through the remainder of the projection period. This mainly reflects increasing demand for feed grains in world livestock production. Food use of barley is also expected to grow but at a slower rate, largely reflecting the increase in demand for barley in the manufacture of malt in beer production.

CornWorld consumption of corn is forecast to increase by less than 1 million tonnes in 2016–17, the lowest year-on-year growth in more than 20 years. This is largely a result of the slowdown in corn consumption for industrial purposes, as growth in US ethanol production slows considerably compared with the previous decade. At the same time, demand in the European Union for corn as livestock feed is expected to be weak in 2016–17 because of the abundance and relative low price of feed wheat in the region.

In the United States, corn consumption is forecast to increase by less than 2 per cent to 306 million tonnes. Over the past decade, growth in US corn consumption has been strong. This is primarily a result of the US Government Renewable Fuel Standard (RFS) programme, which requires that a minimum volume of biofuels be blended into the US automotive fuel supply. Concerns have emerged recently that the specified volume exceeds the level that can be practically used for automotive fuel because most motor vehicles in the United States cannot accommodate fuel with more than 10 per cent ethanol content. The RFS programme ensures US consumption of ethanol will continue to increase, but the rate of growth in production of ethanol has noticeably slowed since 2010. It is expected to remain relatively low over the projection period.

Coarse grains


Ethanol production, United States

litres

10 000

20 000

30 000

40 000

50 000

60 000

201420112008200520021999

Consumption of corn as livestock feed in the United States is forecast to increase in 2016–17 because of expected increases in production of beef, pork and broiler meat. Growth in US corn consumption over the medium term is expected to be primarily driven by demand from the livestock sector.

Corn consumption, United States

FeedIndustrial

f ABARES forecast.

50

Mt

100

150

200

250

300

350

2016–17f

2013–14

2010–11

2007–08

2004–05

2001–02

Consumption of corn in the European Union is forecast to fall by around 1 per cent in 2016–17, mainly as a result of an expected fall in use of corn as livestock feed because of the abundance and relative low price of feed wheat.

Corn consumption in China is forecast to increase by 2 per cent to 218 million tonnes in 2016–17. This reflects an expected increase in use of corn in livestock feed following Chinese Government measures implemented in late 2015 to restrict imports of alternative feed grains such as barley and grain sorghum.

Coarse grains


Over the medium term, world consumption of corn is projected to increase by less than 1 per cent a year to 1 011 million tonnes by the end of the projection period. The main driver of this is growth in world livestock production in response to growing world population and evolving dietary demands resulting from higher incomes, especially in developing countries.

BarleyWorld consumption of barley is forecast to fall by around 1 per cent to 141 million tonnes in 2016–17. In the Black Sea region, consumption of barley as feed grain is expected to rise by 4 per cent in 2016–17 as domestic production of barley in the Russian Federation and Ukraine recovers from the poor season of 2015–16.

In China, consumption of barley is forecast to fall by 4 per cent to 8.4 million tonnes in 2016–17. This is primarily a result of lower use of imported barley as feed grain following the import restrictions implemented in November 2015. Demand for malting barley remains strong in China, and consumption is expected to increase in 2016–17.

Over the medium term, consumption of barley is projected to increase by less than 1 per cent a year to 144 million tonnes in 2020–21. This growth is expected to be driven mostly by demand for malting barley as a result of increasing world beer consumption. Demand for barley in livestock feed is expected to remain relatively unchanged during the projection period.

TradeWorld trade in coarse grains is forecast to fall by 1 per cent to 159 million tonnes in 2016–17. World trade of corn is forecast to remain largely unchanged in 2016–17 at 116 million tonnes. Supply of corn available for export is expected to increase in 2016–17 but demand for corn imports is not expected to follow the same trend. As a result world corn stocks are expected to rise.

In Argentina, the removal of the export quota system on corn and the devaluation of the peso at the end of 2015 are expected to lead to an increase in availability and competitiveness of Argentine corn on the world market in 2016–17. Exports from Brazil and the United States are forecast to fall slightly in 2016–17 as a result of increased competition from Argentina.

Demand for corn imports is expected to fall in 2016–17. In 2015–16 the European Union imported 16 million tonnes of corn—the highest volume on record—in response to a decline in domestic production. In 2016–17 yields are assumed to return to average and imports into the region are expected to fall. In contrast, imports into South Africa are expected to increase in 2016–17 as domestic production is forecast to fall short of consumption. However, expected falls in the rest of the world would outweigh this increase.

Coarse grains


Major world corn exporters

OtherUnited StatesBrazilArgentina

f ABARES forecast.

Mt2016–17f

2014–15

2012–13

2010–11

2008–09

20

40

60

80

100

120

140

160

Over the medium term, world trade in corn is projected to increase—primarily reflecting increased demand for livestock feed. Japan is expected to remain the world’s largest destination for corn exports, with projected imports of 16.2 million tonnes in 2020–21.

World trade in barley is forecast to fall by 1 per cent in 2016–17 to 27 million tonnes. This reflects a 13 per cent fall in expected demand for imported feed barley into China, assuming import restrictions implemented by the Chinese Government in November 2015 remain in place.

Over the medium term, world trade in barley is projected to grow at around 1 per cent a year to 29 million tonnes in 2020–21. This mainly reflects expected growth in world demand for barley in the manufacture of malt. Demand for barley for use in feed grains is also projected to grow but at a slower rate than that for use in malt production.

StocksWorld coarse grain closing stocks are forecast to increase by 6 per cent in 2016–17 to 261 million tonnes as production in coarse grains continues to outpace consumption. Stocks are expected to increase in China and the European Union, while a slight fall is expected in the United States as a result of strong demand for feed grain.

World corn closing stocks are forecast to increase by 4 per cent in 2016–17 to 217 million tonnes. Closing stocks in the European Union are expected to increase by 2 per cent in 2016–17 following a forecast significant fall in 2015–16. In China, corn stocks are also expected to grow as production remains high. However, expected higher use of domestic corn in livestock feed is expected to limit this increase.

World closing stocks of barley are forecast to increase by 10 per cent in 2016–17 to 27 million tonnes, partially reflecting the fall in demand for barley imports into China. In the Black Sea region, stocks are expected to increase slightly as domestic production recovers from a poor season in 2015–16.

Coarse grains


Over the medium term, world coarse grain stocks are expected to continue increasing but at a slower pace than in 2013–14 and 2014–15. Towards the end of the projection period, stocks are expected to fall slightly in response to projected consumption growth.

World coarse grain closing stocks

OtherBarleyCorn


Mt

50

100

150

200

250

300

2020–21z

2017–18z

2014–15

2011–12

2008–09

AustraliaProductionTotal area planted to coarse grains is forecast to decline by 4 per cent in 2016–17 to 5.6 million hectares. This is mainly a result of a fall in area planted to barley in favour of additional area planted to canola, reflecting anticipated better returns from canola over barley. Yields for barley are expected to return to the five-year average of 2.2 tonnes a hectare. This would be 2 per cent higher than in 2015–16 but leave overall barley production in 2016–17 largely unchanged from the year before.

Area planted to grain sorghum is forecast to fall in 2016–17, following a reduction in Chinese demand for Australian grain sorghum exports. More grain sorghum is expected to be consumed by the domestic livestock sector as feed in 2016–17 in response. However, this increase is not expected to offset the fall in overseas demand.

Over the medium term, area planted to coarse grains is projected to fall slightly in 2017–18, before recovering from 2018–19 to around 5.6 million hectares in 2020–21. Barley yields are projected to increase by around 1 per cent a year, but planted area is expected to remain relatively stable. This reflects productivity growth resulting from improved farming practices. Total barley production is projected to rise by 1 per cent a year and reach 8.7 million tonnes in 2020–21. However, area planted to grain sorghum is projected to fall by 4 per cent in 2017–18 in response to falling export demand and lower returns and to then remain relatively stable towards the end of the projection period.

Coarse grains


ExportsTotal coarse grain exports are forecast to fall by 3 per cent to 7 million tonnes in 2016–17, following a decline of 6 per cent in 2015–16. This is because of an expected fall in demand for barley from China and Saudi Arabia, two of Australia’s largest export destinations.

Since 2013 China has been the largest importer of Australian barley, taking around 59 per cent of Australian barley exports in 2014–15. In late 2015 the Chinese Government implemented import restrictions on feed grain, which is expected to lower imports.

Exports of barley to Saudi Arabia have been affected by the Saudi Government continuing to encourage livestock producers to use alternative feed to barley, citing concerns over nutritional value.

In 2014–15 around 97 per cent of all Australian grain sorghum exports went to China. This fell to around 60 per cent in November 2015 as a result of import restrictions. In 2015–16 as a whole, grain sorghum export shipments are forecast to decline by 20 per cent to 966 000 tonnes.

In 2016–17 exports of Australian grain sorghum to other regions—including Japan, the Middle East and South-East Asia—are expected to increase. Exports of grain sorghum are forecast to fall by around 14 per cent to 829 300 tonnes, which would be close to the average level of grain sorghum exports in the five years to 2013–14.

Australian coarse grain exports are projected to increase gradually over the projection period to 7.6 million tonnes in 2020–21, mainly reflecting growing world demand for feed grain in the livestock sector. Export destinations such as Japan, which was a major importer of Australian coarse grains but was largely priced out of the Australian export market by China from 2013–14, are expected to increase imports from Australia. Towards the end of the projection period, Japan is projected to become the largest importer of Australian barley and grain sorghum. Most of this will be consumed as livestock feed.

Exports of feed grain to China are projected to fall, but demand for barley in the manufacture of malt and for grain sorghum in the production of liquor is projected to remain strong over the projection period.

Coarse grains


Outlook for coarse grains

unit 2013–14 2014–15 s 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 zunit 2013 14 2014 15 s 2015 16 f 2016 17 f 2017 18 z 2018 19 z 2019 20 z 2020 21 z

WorldWorldArea million ha 323 321 321 320 322 324 326 323Yield t/ha 3.97 4.04 3.94 4.00 3.97 3.99 3.99 4.04Yield t/ha 3.97 4.04 3.94 4.00 3.97 3.99 3.99 4.04Production Mt 1 282 1 296 1 264 1 277 1 278 1 293 1 303 1 307Production Mt 1 282 1 296 1 264 1 277 1 278 1 293 1 303 1 307

corn Mt 991 1 007 968 982 984 996 1 002 1 003corn Mt 991 1 007 968 982 984 996 1 002 1 003barley Mt 145 141 146 144 144 147 150 153barley Mt 145 141 146 144 144 147 150 153

C ti Mt 1 230 1 267 1 264 1 257 1 269 1 285 1 298 1 307Consumption Mt 1 230 1 267 1 264 1 257 1 269 1 285 1 298 1 307corn Mt 946 976 974 975 977 991 1 003 1 011corn Mt 946 976 974 975 977 991 1 003 1 011barley Mt 141 142 143 141 142 143 143 144barley Mt 141 142 143 141 142 143 143 144

Cl i kClosing stocks Mt 211 243 245 261 269 271 269 261gTrade Mt 164 182 161 159 160 162 162 161Trade Mt 164 182 161 159 160 162 162 161Stocks to use ratio % 17 2 19 2 19 4 20 7 21 2 21 1 20 7 20 0Stocks‐to‐use ratio % 17.2 19.2 19.4 20.7 21.2 21.1 20.7 20.0Corn price aCorn price a– nominal US$/t 219 174 165 160 163 165 167 170– nominal US$/t 219 174 165 160 163 165 167 170real b US$/t 223 176 165 157 157 156 155 154– real b US$/t 223 176 165 157 157 156 155 154

Barley price cBarley price c– nominal US$/t 242 204 180 177 179 180 181 183– nominal US$/t 242 204 180 177 179 180 181 183real b S$/ 2 6 206 80 3 0 68 66– real b US$/t 246 206 180 174 173 170 168 166

AustraliaAustraliaAreaArea

barley ’000 ha 3 814 3 912 4 100 3 911 3 751 3 775 3 850 3 900yoats ’000 ha 715 869 863 755 762 770 788 792oats 000 ha 715 869 863 755 762 770 788 792triticale ’000 h 80 126 117 165 160 152 155 157triticale ’000 ha 80 126 117 165 160 152 155 157grain sorghum ’000 ha 532 730 712 698 670 673 677 680grain sorghum 000 ha 532 730 712 698 670 673 677 680corn ’000 ha 52 67 66 66 67 68 68 69corn ’000 ha 52 67 66 66 67 68 68 69t t l ’000 h 5 193 5 704 5 857 5 595 5 410 5 438 5 538 5 598total ’000 ha 5 193 5 704 5 857 5 595 5 410 5 438 5 538 5 598

Productionbarley kt 9 174 8 173 8 490 8 604 8 335 8 472 8 613 8 699

Productionbarley kt 9 174 8 173 8 490 8 604 8 335 8 472 8 613 8 699oats kt 1 255 1 184 1 249 1 169 1 191 1 216 1 257 1 261triticale kt 126 225 191 213 207 209 211 209triticale kt 126 225 191 213 207 209 211 209grain sorghum kt 1 282 2 178 2 029 2 009 1 948 1 977 2 007 2 037grain sorghum kt 1 282 2 178 2 029 2 009 1 948 1 977 2 007 2 037corn kt 390 401 414 429 436 443 429 430corn kt 390 401 414 429 436 443 429 430total kt 12 226 12 161 12 372 12 424 12 116 12 316 12 517 12 636total kt 12 226 12 161 12 372 12 424 12 116 12 316 12 517 12 636

Export volume kt 8 127 7 743 7 282 7 034 7 259 7 415 7 542 7 628Export volume kt 8 127 7 743 7 282 7 034 7 259 7 415 7 542 7 628Export value

– nominal A$m 2 573 2 693 2 372 2 303 2 389 2 463 2 476 2 494Export value

– nominal A$m 2 573 2 693 2 372 2 303 2 389 2 463 2 476 2 494l d $– real d A$m 2 669 2 746 2 372 2 248 2 275 2 288 2 245 2 206

Price – nominalfeed barley e A$/t 233 252 247 257 268 273 276 277

Price nominalfeed barley e A$/t 233 252 247 257 268 273 276 277malting barley g A$/t 250 282 282 294 297 298 300 303malting barley g $/grain sorghum h A$/t 300 301 289 316 323 312 296 281grain sorghum h A$/t 300 301 289 316 323 312 296 281

P i l dPrice – real dfeed barley e A$/t 241 257 247 251 255 254 250 245feed barley e A$/t 241 257 247 251 255 254 250 245malting barley g A$/t 259 287 282 287 282 276 272 268malting barley g A$/t 259 287 282 287 282 276 272 268

i h $/grain sorghum h A$/t 311 307 289 308 308 290 269 249g ga US no. 2 yellow corn, fob Gulf, July–June. b In 2015–16 US dollars. c France feed barley, fob Rouen, July–June. d In 2015–16 Australian a US no. 2 yellow corn, fob Gulf, July June. b In 2015 16 US dollars. c France feed barley, fob Rouen, July June. d In 2015 16 Australian dollars e Feed 1 delivered Geelong f ABARES forecast g Gairdner Malt 1 delivered Geelong h Gross unit value of production s ABARESdollars. 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 projectionforecast. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; United Nations Commodity Trade Statistics Database (UN Comtrade); United States ; ; y ( );Department of AgricultureDepartment of Agriculture


• The world oilseed indicator price is forecast to average lower in 2016–17 as a result of high carry-over stocks and higher soybean meal closing stocks.

• World vegetable oil stocks are forecast to decline in 2016–17 but then rise.• World oilseed prices are projected to decline in real terms over the medium term.

Soybean prices projected to decline, but canola to rise in 2016–17The world oilseed indicator price (US no. 2 soybeans, fob Gulf) is forecast to fall by 2 per cent in 2016–17 to average US$355 a tonne. Despite a forecast second year of lower production, soybean prices are expected to average lower because of record high carry-over stocks from 2015–16 and an anticipated increase in world soybean meal stocks. This in turn is expected to weigh on the price of soybeans because soybeans are a relatively high meal-bearing oilseed.

World oilseed indicator price, US no. 2 soybeans, fob Gulf

Mt


Soybean closing stocks

2015–16US$/t

Oilseed indicator price(right axis)

20

40

60

80

100

120

140

100

200

300

400

500

600

700

Soybean meal stocks

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

OilseedsOutlook to 2020–21

David Mobsby

Oilseeds


Expected abundant supplies of protein meals and assumed productivity growth (for example, from the adoption of higher yielding varieties and improved farm practices) will result in the world oilseed indicator price declining in real terms over the projection period to 2020–21. Despite world closing stocks falling, world supply is expected to grow by an average of 1.5 per cent a year. However, the stocks-to-use ratio is expected to fall given projected rates of consumption growth. A forecast increase in vegetable oil prices is expected to encourage crushing of oilseeds for vegetable oil in the short term. At projected rates of oilseed crush, a surplus of protein meal will lead to increasing protein meal stocks. This is expected to place downward pressure on world protein meal prices and, consequently, soybean prices.

The world canola indicator price (Europe rapeseed, fob Hamburg) is forecast to rise by 3 per cent in 2016–17 to average US$430 a tonne. A forecast consecutive year of production decline is expected to result in closing stocks falling to their lowest level since 2012–13. Canola has relatively high oil content, so its prices are expected to be supported by forecast higher vegetable oil prices in 2016–17. Over the medium term, palm oil production is projected to increase and an increased supply in world vegetable oil markets is expected to lead to lower world canola prices in real terms.

World vegetable oil prices are forecast to rise in the short term, reflecting forecast relatively low world vegetable oil production growth in 2016–17. This is because of lower forecast South-East Asian palm oil production as a result of El Niño. Growth in world vegetable oil production is forecast to be 3 per cent in 2016–17, compared with the average of 4 per cent over the five years to 2014–15. World vegetable oil stocks are expected to fall to meet the forecast 4 per cent increase in consumption.

Oilseed production to fall in the short term but then riseWorld oilseed production is forecast to fall marginally in 2016–17 but still be the third-largest on record at 527 million tonnes. World soybean production and world canola production are both forecast to fall by 2 per cent. In contrast, world production of cottonseed and sunflower seed are forecast to increase because of expected higher plantings.

World oilseed production

Other

Mt

Sun�ower seed Rapeseed (including canola) Soybeans

f ABARES forecast.

100

200

300

400

500

600

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

2004–05

2002–03

Oilseeds


World soybean production is forecast to fall in 2016–17 to 311 million tonnes, largely reflecting a decline in world soybean plantings. Total plantings are forecast to decline in the short term, partly reflecting producers in the United States and Argentina switching area to grain production because of relatively higher returns for those crops. Over the medium term, soybean production is projected to increase by around 2 per cent a year to reach 342 million tonnes by 2020–21.

US soybean production in 2016–17 is forecast to fall because of an expectation of higher returns from producing corn. Over the medium term, area planted to soybeans is expected to remain constrained by a slight decline in total cropping area and competition for land from corn.

In Argentina, area planted to soybeans is forecast to decline marginally in 2016–17. This is in response to the removal of export taxes and quantitative restrictions on cereals, which are expected to make grain production more profitable in the short term (see box). However, soybean export taxes will be reduced annually by 5 percentage points from the current rate of 30 per cent. This is expected to lead to area planted to soybeans rising by more than 2 million hectares by the end of the projection period.

World rapeseed (including canola) production is forecast to fall in 2016–17 to a four-year low of 67 million tonnes, with production in Canada and Ukraine expected to decline.

World canola production

Mt

Other

European Union Canada

5

10

15

20

25

30

f ABARES forecast.

Australia

Ukraine

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

2004–05

2002–03

2000–01

Over the medium term, world oilseed production is projected to rise by 2.3 per cent a year to reach 577 million tonnes in 2020–21. Growth is largely the result of higher soybean production, which is expected to increase by 31 million tonnes between 2016–17 and 2020–21.

The outlook for higher soybean production largely reflects a significant increase in soybean production in Latin America. This region is expected to account for around two-thirds of the increase in world soybean production over the medium term. Soybean production in Argentina, in particular, is expected to rise strongly following recent policy changes liberalising exchange rates and removal or reduction of agricultural export taxes.

Oilseeds


Production of other oilseeds, such as rapeseed (including canola) and sunflower seed, is expected to increase by a combined 19 million tonnes towards 2020–21. This forecast increase mainly reflects higher yields because strong competition for land from cereal crops will limit planting area. Canola production is expected to increase by 1.7 per cent a year to reach 72 million tonnes in 2020–21. Production increases are expected to come largely from Canada and India.

World oilseed projections

Mt

other

Sun�ower seed

Rapeseed(including canola)

Soybeans

100 200 300 400


2020–21z

2016–17f

Oilseed consumptionWorld oilseed consumption (mainly for crush) is forecast to rise by 3 per cent in 2016–17 to 532 million tonnes. Forecast higher soybean crush in Latin America, the United States and China is expected to drive total consumption in 2016–17.

Soybean crush in China is forecast to rise again in 2016–17 to reach 90 million tonnes. Over the projection period, a shift to larger-scale livestock production should encourage higher rates of soybean meal use and ensure continued growth of soybean meal consumption in China over the projection period. Soybean oil produced from projected crush is expected to be consumed domestically to meet forecast growing demand for human consumption of vegetable oil.

Oilseed crush is also projected to rise significantly in Latin America, particularly in Argentina. Soybean crush in Argentina is forecast to rise in 2016–17 to 45 million tonnes. The recent sharp devaluation of the Argentine peso and a 5 percentage points reduction in export taxes on soybean oil and soybean meal in 2016 are expected to encourage higher crush and export of these products.

Over the projection period, a scheduled reduction in export taxes of 5 percentage points a year across soybeans and soybean products (which in January 2016 were 30 per cent and 27 per cent, respectively) should continue to favour soybean crush and export of soybean products to 2020–21.

Oilseeds


Soybean disposal, Argentina

Exports

Mt

Crush


2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

1999–2000

1996–97

10

20

30

40

50

60

70

World rapeseed (including canola) crush is expected to rise moderately over the projection period. This will be largely driven by increased crush in Canada and India, while limited growth is expected in the European Union. Canola crush in Canada is expected to be supported by demand for canola oil and meal from the United States. Crush in the European Union is projected to remain largely unchanged at around 24 million tonnes a year, with limited upside potential for further vegetable oil consumption.

Oilseed trade growth to slow over medium termWorld oilseed exports are forecast to increase by 3 per cent in 2016–17, largely on account of higher soybean exports. Over the medium term, soybean exports are expected to continue to rise largely to meet rising Chinese import demand. Exports of other oilseeds—for example, rapeseed (including canola) and sunflower seed—are projected to rise gradually over the projection period but are expected to remain small compared with soybean exports.

World oilseed trade

Other

Mt

Sun�ower seed Rapeseed (including canola)Soybeans


2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

1999–2000

1996–97

30

60

90

120

150

180

Oilseeds


Despite a large forecast increase in production in major oilseed exporting countries, an expected rise in crush demand in these countries is expected to limit oilseed supplies for export. World oilseed trade is projected to grow annually by 1.5 per cent over the medium term, compared with 9 per cent for the five years to 2015–16. Higher domestic consumption in the United States and Argentina will result in Brazil becoming the major exporter of soybeans over the medium term.

Brazilian soybean exports are expected to fall in 2016–17 because of increased competition on world markets and higher domestic consumption. Over the projection period, exports are projected to rise. Export growth is projected at a lower rate than the previous decade, with Brazil’s large and growing domestic crushing industry expected to limit the supply for export. Despite this, Brazilian soybean exports are projected to rise by around 3 per cent annually towards 2020–21.

China is expected to increase imports over the projection period but at a much lower rate than the previous decade. China is expected to remain the world’s largest soybean (and oilseed) importer over the projection period, accounting for around 65 per cent of world soybean imports.

Oilseed stocks to decline over projection periodWorld closing stocks of oilseeds are expected to fall in 2016–17, reflecting both a decline in world production and an increase in crush. World oilseed stocks are projected to decline over much of the projection period, falling from the forecast record level of 108 million tonnes in 2015–16 to 98 million tonnes in 2020–21.

World oilseed closing stocks

Closing stocks

Mt


2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

1999–2000

1996–97

Stocks-to-use ratio(right axis)

%

20

40

60

80

100

120

4

8

12

16

20

24

Oilseeds


Outlook for Australian oilseeds to 2020–21Higher canola plantings in 2016–17Area planted to canola is forecast to recover in 2016–17 following a contraction in plantings in 2015–16—the lowest level in five years. High barley prices and less than favourable planting conditions resulted in reduced area planted in 2015–16. For the 2016–17 season (planting to begin in April), canola prices are expected to remain favourable compared with barley prices. The Bureau of Meteorology seasonal outlook (issued 28 January 2016) suggests generally above average rainfall leading up to the planting window for Australian winter crops. Assuming an average yield of 1.3 tonnes a hectare, Australian canola production is forecast to increase by 11 per cent to 3.3 million tonnes.

Area planted to canola over the medium term is expected to increase but at a rate of only 0.4 per cent a year. Without significant price incentive to expand canola at the expense of competing winter crops, canola area is projected to account for 12 per cent of total Australian winter cropping area. Production is projected to rise by around 1 per cent a year to 3.4 million tonnes in 2020–21.

Australian canola production

Mt


1

2

3

4

5

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

1999–2000

1996–97

Canola exports expected to rise in 2016–17Australian canola exports are forecast to rise by 8 per cent in 2016–17 to 2.3 million tonnes, reflecting higher expected production. For 2016–17 exports to the European Union are forecast to increase to 1.8 million tonnes because of lower canola production from Ukraine (Australia’s main competitor for canola exports to the European Union) and steady import demand from the European Union.

EU demand for canola imports is expected to remain strong over the medium term. Exports from Ukraine are projected to remain constant, limiting competition pressure for Australia’s largest export market. Growing exports from Canada are expected to limit Australia’s market share in China and Japan.

Oilseeds


Volume of Australian canola exports, by destination

Mt


0.5

1.0

1.5

2.0

2.5

3.0

3.5

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

OtherEuropean Union

The value of Australian canola exports is forecast to rise by 13 per cent in 2016–17 to $1.4 billion. Export prices are expected to be supported by a rise in world prices and forecast continued import demand from the European Union. The value of Australian canola exports in 2020–21 is projected to be $1.2 billion (in 2015–16 dollars), with small increases in export volumes being largely offset by falling export prices.

Oilseeds


Outlook for oilseeds

unit 2013–14 2014–15 s 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 z

Production Mt 505 536 529 527 541 553 565 577Consumption Mt 494 516 517 532 543 555 566 577Exports Mt 133 147 148 152 155 157 159 162Closing stocks Mt 78 96 108 103 101 99 98 98Indicator price a US$/t 547 418 362 355 360 364 365 365– real b US$/t 556 422 362 349 347 344 338 332Canola indicator price c US$/t 521 424 420 430 418 405 402 401– real b US$/t 529 428 418 423 403 383 372 365

Production Mt 282 294 301 312 319 327 334 341Consumption Mt 277 293 299 309 317 327 334 341Exports Mt 82 85 88 94 97 100 102 104Closing stocks Mt 13 15 17 21 23 24 25 25Indicator price d US$/t 555 427 343 321 312 310 312 314– real b US$/t 564 431 343 316 301 293 289 285

Production Mt 171 175 178 183 190 196 201 206Consumption Mt 166 172 178 184 189 194 199 205Exports Mt 70 72 74 76 79 82 85 88Closing stocks Mt 19 19 18 17 17 19 20 22Indicator price e US$/t 985 808 742 840 820 822 824 826– real b US$/t 1 002 816 742 825 790 777 763 750

Production kt 5 160 4 305 3 849 4 553 4 662 4 761 4 800 4 805Exports kt 3 672 2 617 2 269 2 444 2 766 2 870 2 906 2 929

Area ’000 ha 2 721 2 824 2 357 2 527 2 552 2 565 2 565 2 565Production kt 3 832 3 447 2 945 3 271 3 319 3 360 3 384 3 408Export volume g kt 3 194 2 445 2 146 2 308 2 429 2 466 2 487 2 506

– nominal A$m 1 929 1 349 1 252 1 420 1 455 1 407 1 398 1 401– real h A$m 2 001 1 376 1 252 1 386 1 386 1 307 1 268 1 239Price i 529 482 547 589 571 542 533 532– real h A$/t 549 492 547 575 543 504 484 471a US no.2 soybeans, fob Gulf. b In 2015–16 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 2015–16 Australian dollars.i Delivered Melbourne, July–June. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; United States Department of Agriculture

WorldOilseeds

Australia

Canola

Protein meals

Vegetables oils

Export value g


SugarOutlook to 2020–21

Benjamin K Agbenyegah

• The world indicator price for raw sugar (Intercontinental Exchange, nearby futures, no. 11 contract) is forecast to increase in the short term. This reflects a decline in world stocks from record levels as world sugar consumption is forecast to exceed production.

• Over the medium term, world sugar consumption is projected to grow at a faster rate than production, further reducing world stocks. By 2020–21 the world stocks-to-use ratio for sugar is projected to be around 28 per cent, compared with 43 per cent in 2014–15.

• The world indicator price for sugar is projected to average around US16 cents a pound (in 2015–16 dollars) in 2020–21. This is based on an expectation that world sugar consumption will continue to exceed production and lead to reduced world stocks.

• Reflecting expected higher world sugar prices over the medium term, the return to Australian growers is projected to reach $44 a tonne (in 2015–16 dollars) in 2020–21, compared with an expected $37 a tonne in 2015–16.

Short-term outlookHigher sugar prices to 2016–17The world indicator price for raw sugar (Intercontinental Exchange, nearby futures, no. 11 contract) is forecast to increase by around 5 per cent in 2015–16 (October to September) to average US14 cents a pound. World sugar consumption is forecast to exceed production in 2015–16, reducing world stocks and putting upward pressure on prices. If realised, world sugar stocks will decline for the first time in six years, having increased significantly between 2010–11 and 2014–15 to reach a record 77.8 million tonnes.

In 2016–17 the world sugar indicator price is forecast to increase by 11 per cent to average around US16 cents a pound. Growth in world sugar consumption is forecast to again outpace the rise in world production, resulting in a further decline in world stocks.

Sugar


World sugar indicators a

Consumption

Mt2015–16USc/lb

Price (right axis)

ProductionClosing stocks

a Production, consumption and stocks in raw value equivalent and years from October to September. f ABARES forecast. z ABARES projection.

7

14

21

28

35

40

80

120

160

200

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

World sugar production to recover in 2016–17World sugar production is forecast to be 177 million tonnes in 2015–16, 3 per cent lower than in 2014–15. Lower production in China, the European Union and India is expected to be partially offset by increases in Australia, Brazil, Thailand and the United States. Forecast lower production in China and the European Union reflects an estimated reduction in cane and beet plantings and assumed lower cane and beet yields. Growers in these countries responded to relatively low sugar prices by reducing plantings. Yields are assumed to be lower because of unfavourable seasonal conditions.

In India, sugar production is forecast to fall by 3 per cent to around 30 million tonnes in 2015–16, despite a forecast 2 per cent increase in cane production. The forecast decline largely reflects a 2 per cent rise in the share of cane allocated to gur production (jaggery or crude, non-centrifugal lump sugar). This follows a shortage of cane supply to local jaggery manufacturers in 2014, which resulted in a sharp rise in domestic gur prices between October 2014 and September 2015.

Sugar production in China is forecast to decline by 10 per cent in 2015–16 to 10.3 million tonnes, reflecting a significant fall in cane and beet production. Cane production is forecast to fall by 21 per cent to 86 million tonnes and beet production by 14 per cent to around 8 million tonnes. Growers reduced plantings in response to relatively low sugar prices, compared with alternatives, and dry seasonal conditions negatively affected yields in some major producing regions.

In Europe, sugar production is forecast to be 23.5 million tonnes in 2015–16, down from around 28 million tonnes in 2014–15. This forecast decline largely reflects an estimated 23 per cent reduction in sugar production in the European Union to around 15 million tonnes. Relatively low sugar prices during planting resulted in growers reducing area. Average yield is estimated to decline because of dry seasonal conditions in many EU countries. Partially offsetting this decline is an estimated 3 per cent rise in sugar production in Eastern Europe, driven by record production in the Russian Federation. Sugar production in the Russian Federation is forecast to be 5.3 million tonnes in 2015–16, 8 per cent higher than in 2014–15. Relatively high domestic prices resulted in an estimated 12 per cent increase in planted area to around 1 million hectares. Average beet yield is expected to reach a record 38 tonnes a hectare.

Sugar


Sugarcane production in Brazil is forecast to increase by 5 per cent to 662 million tonnes in 2015–16. This forecast is based on an estimated 5 per cent increase in average cane yield to 72 tonnes a hectare, reflecting improved seasonal conditions in Brazil’s central south region, which produces around 90 per cent of Brazilian cane. Brazil’s sugar production is forecast to increase by 1 per cent in 2015–16 to 37.8 million tonnes. Despite the forecast increase in cane crush, the share of cane allocated to ethanol production is expected to rise, constraining growth in sugar production.

The expected rise in the share of cane allocated to ethanol production in Brazil reflects the lifting of the mandatory blending ratio of anhydrous ethanol with gasoline by the Brazilian Government to 27 per cent in February 2015. In the first 10 months of the 2015–16 season (April to March), the share of cane allocated to ethanol production rose to 59 per cent, compared with around 56 per cent in 2014–15.

Sugarcane production and allocation, Brazil a

Cane production

Mt %

Ethanol share (right axis)Sugar production

a Production in raw value equivalent. z ABARES projection.

20

40

60

80

200

400

600

800

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

In Thailand, cane production is forecast to rise by 3 per cent to a record 108 million tonnes in 2015–16, reflecting an estimated 5 per cent increase in planted area more than offsetting the effect of an assumed 2 per cent decline in average yield. The rise in planted area is being driven by the introduction of government incentives that are encouraging Thai farmers to move away from rice to sugarcane production. Despite the forecast of a record cane crush in 2015–16, sugar production is forecast to increase by only 1 per cent to 11.6 million tonnes. This reflects higher returns to ethanol production, which have led to sugar mills diverting sugar cane and raw sugar to ethanol production. In September 2015 the domestic price of ethanol was around US63 cents a litre, compared with the world sugar export price of US12 cents a pound.

Sugar production in the United States is forecast to increase by 2 per cent in 2015–16 to 8 million tonnes. Area planted to cane and beet is estimated to increase by 1 per cent to 825 000 hectare. Favourable seasonal conditions are expected to support a slight improvement in average cane and beet yields.

In 2016–17 world sugar production is forecast to recover by 3 per cent to around 183 million tonnes. This largely reflects production increases in the European Union, China, Brazil and India.

Sugar


EU sugar production is forecast to recover by 29 per cent in 2016–17 to 19 million tonnes. An assumed return to average seasonal conditions, following dry weather in 2015–16, is expected to encourage higher planting and improved beet and sugar yields.

Sugar production in China is forecast to rise from 10.3 million tonnes in 2015–16 to 12 million tonnes in 2016–17. This forecast reflects increased cane and beet planting as a result of an expected improvement in returns to sugar production.

Sugar production in Brazil is forecast to be around 40 million tonnes in 2016–17, 5 per cent higher than in 2015–16. This increase is largely based on an expected rise in cane planting as growers respond to improving returns to sugar production. Relatively low oil prices are expected to constrain growth in ethanol consumption despite the Brazilian Government’s policy to support ethanol demand. The share of cane allocated to ethanol production is expected to decline from its current high of 59 per cent to 52 per cent in 2016–17.

Forecast changes in world sugar production, by country a

Mt

2015–162016–17

–4

–2

0

2

4

6

world

other

Australia

EasternEurope

EuropeanUnion

Mexico

UnitedStates

Thailand

China

India

Brazil

a Production in raw value equivalent.

Higher world sugar consumption to 2016–17World sugar consumption is forecast to increase from 181 million tonnes in 2014–15 to around 184 million tonnes in 2015–16. This forecast is driven by an increase in demand for sugar from food processing industries in developing Asian countries, particularly China, India and Indonesia, and Brazil. If realised, forecast world sugar consumption will exceed world production for the first time in six years.

In 2016–17 world sugar consumption is forecast to grow by a further 1 per cent to around 187 million tonnes, supported by income and population growth in non-OECD countries. China, India and Brazil are expected to account for around 95 per cent of forecast world consumption growth.

Sugar


World sugar consumption, by country a

Mt

a Consumption in raw value equivalent. f ABARES forecast.

Other

European Union

BrazilChina

50

100

150

200

India

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

2004–05

Lower world sugar stocks in 2016–17World closing stocks of sugar are forecast to fall from a record 77.8 million tonnes in 2014–15 to around 71 million tonnes in 2015–16. This decline reflects forecast world consumption exceeding production. At this forecast level, the world stocks-to-use ratio is expected to decline by 2 percentage points to around 39 per cent in 2015–16.

In 2016–17 continued growth in sugar consumption is forecast to result in a further 6 per cent fall in world stocks to around 67 million tonnes. The world stocks-to-use ratio is expected to decline to around 36 per cent.

World sugar stocks-to-use ratio

%


2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

10

20

30

40

50

Sugar


World sugar exports to grow in 2016–17World sugar exports are forecast to be 66 million tonnes in 2015–16, up from 64 million tonnes in 2014–15. This forecast reflects increased sugar supplies in major exporting countries and strong import demand from China, the European Union and Indonesia. Sugar supplies available for export are forecast to be higher in Brazil, Thailand, India and Australia. Although India’s sugar production is forecast to be lower in 2015–16, the continuation of government export subsidies and large carry-over stocks from 2014–15 are expected to support an increase in exports.

In 2016–17 world sugar exports are forecast to increase by a further 10 per cent to around 72 million tonnes, reflecting forecast increases in sugar production and continued growth in import demand.

Australian sugar returns to increase in 2016–17The average mill-gate return to Australian cane growers is forecast to increase by 3 per cent in 2015–16 to $37 a tonne. This mainly reflects the combined effects of higher world sugar prices and an assumed depreciation of the Australian dollar. In 2016–17 the mill-gate return is forecast to increase by a further 8 per cent to $40 a tonne, largely reflecting the forecast rise in the world sugar price.

Modest growth in Australian sugar production to 2016–17Australian sugar production is forecast to increase in 2015–16 by 5 per cent to 4.8 million tonnes. This increase is mainly based on an estimated 3 per cent increase in sugarcane production to 33.1 million tonnes, largely reflecting an estimated rise in harvested area. Average yield is expected to decline slightly because of dry seasonal conditions and the spread of canopy syndrome in some growing regions.

Australian sugar production is forecast to increase by 6 per cent in 2016–17 to 5.1 million tonnes, reflecting forecast higher cane production as a result of an expected increase in cane plantings and an improvement in yields.

Australian sugar production, exports and returns to cane growers a

Production

Mt2015–16$/t

Return to cane growers (right axis)

Exports

a Production and exports in raw value equivalent. z ABARES projection.

10

20

30

40

50

60

1

2

3

4

5

6

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

Sugar


Reflecting the increase in sugar production, Australian exports are forecast to rise in 2015–16 by 5 per cent to around 3.8 million tonnes. In 2016–17 Australian sugar exports are forecast to increase by a further 4 per cent to 4 million tonnes. The value of Australian sugar exports is forecast to increase by 8 per cent in 2015–16 to around $1.8 billion and in 2016–17 by 7 per cent to $1.9 billion, reflecting the combined effects of increased export volumes, higher world sugar prices and an assumed depreciation of the Australian dollar.

Medium–term outlook to 2020–21Strong sugar demand to support world pricesThe world indicator price for sugar is projected to rise slightly in 2017–18, before easing towards the end of the projection period. By 2020–21 the world indicator price is projected to average around US16 cents a pound (in 2015–16 dollars). This projected higher price in 2020–21 is largely based on an expectation that world sugar consumption will continue to exceed production and reduce world stocks over the medium term.

World sugar consumption is projected to increase by an average of 2.5 million tonnes a year over the medium term, to reach a record of around 197 million tonnes in 2020–21. This projection is based largely on rising world population and continued income growth in non-OECD countries, particularly in India, China, Brazil and Indonesia. The food processing industries in these countries are expanding rapidly and expected to increase sugar consumption accordingly.

World sugar production is projected to grow at an average annual rate of around 2 per cent over the medium term to reach 196 million tonnes in 2020–21, compared with 177 million tonnes forecast for 2015–16. This largely reflects increased production in Brazil, but production is also projected to rise in other major sugar producing countries, including India, China, Thailand, Mexico, Australia and Pakistan. Production growth is expected to be largely driven by increased planted area, as producers respond to higher sugar prices. Some improvement in yields is also expected, under the assumption of average seasonal conditions.

World production of cane-based ethanol is expected to grow over the medium term but at a slower pace than recent years. The recent significant decline in world crude oil prices is expected to have a limited effect on ethanol production in Brazil, the world’s largest cane-based ethanol producer. This is because the Brazilian Government mandates ethanol blending in automotive fuel. For smaller ethanol producers, such as Thailand and India, sharply lower oil prices are likely to adversely affect ethanol consumption but this is likely to be muted because of government incentives and support for ethanol production.

Production prospects for major producersIn Brazil, sugar production is projected to reach 47 million tonnes in 2020–21, 15 per cent higher than the record of around 41 million tonnes in 2009–10. This projection largely reflects the Brazilian Government’s move to significantly expand cane plantings and support sugarcane production. For example, in 2012 the government announced a loan package of US$2.2 billion to bring new land into production and replace ageing cane plantings.

Sugar


Sugarcane demand for ethanol production in Brazil is also projected to rise over the medium term, reflecting the mandatory blending ratio of anhydrous ethanol in gasoline. However, the share of cane for ethanol production is expected to decline from its current high of 59 per cent to 42 per cent in 2020–21. This reflects improved returns to sugar production and constrained ethanol consumption growth beyond the mandated level resulting from relatively low world crude oil prices.

Sugar production in India is projected to rise to around 34 million tonnes in 2020–21, compared with 30 million tonnes forecast in 2015–16. Sugarcane production in India largely depends on rainfall during the Indian monsoon, with production volumes fluctuating widely from season to season. Over the medium term, India is expected to invest in the construction of more irrigation dams to reduce the reliance on monsoon rainfall for cane production. The Indian Government is also expected to continue policy measures supporting domestic sugar production, such as minimum support prices for raw and refined sugar, export subsidies and loan facilities.

Thai sugar production is projected to reach 14 million tonnes in 2020–21, up from around 12 million tonnes forecast in 2015–16. The Thai Government is expected to continue current support policies to increase sugar production, including setting domestic sugar prices, investing in new mills, making direct payments to cane growers and supporting ethanol production.

In the European Union, sugar production is projected to grow to 21 million tonnes in 2020–21, compared with around 15 million tonnes estimated in 2015–16. The removal of the EU quota system in October 2017 is expected to encourage higher sugar beet planting—particularly in France and Germany, which have more efficient production systems. The EU quota system restricts the amount of sugar produced by each member state in support of a minimum sugar beet price. The quota for the 2015–16 season is 13.5 million tonnes and any production in excess of this can only be used for export, sold for biofuel or other industrial non-food uses, or counted against the following year’s quota.

Sugar production in the Russian Federation is projected to reach 6.5 million tonnes in 2020–21, 1.2 million tonnes higher than estimated in 2015–16. This projected increase largely reflects continued efforts by the government of the Russian Federation to achieve more than 90 per cent self-sufficiency in meeting increasing domestic demand.

US sugar production is projected to reach just over 9 million tonnes in 2020–21, up from 8 million tonnes forecast in 2015–16. The US Government is expected to continue supporting sugar production through subsidised loans to producers and tariff-rate quotas, which have the effect of raising domestic sugar prices above world prices. This support provides loans to sugarcane and sugar beet producers and processors that guarantee a minimum price regardless of the prevailing market price. The loan term is generally nine months, with sugar processors and producers either giving the government the sugar they produced as payment for the loan or selling their sugar on the market if the prevailing market price is higher than the loan amount. For the 2015–16 season, the loan rate is US18.75 cents per pound for raw cane sugar and US24.09 cents per pound for refined beet sugar.

Sugar


Sugar production in Mexico is projected to reach a record 7.7 million tonnes in 2020–21, driven by favourable returns from exporting sugar to the United States. US sugar prices are maintained well above world levels and Mexico benefits from this because of access to the US market through the North American Free Trade Agreement.

World sugar exports to increase over the medium termWorld sugar exports are projected to increase at an average annual rate of around 3 per cent over the medium term to reach a record 79.8 million tonnes in 2020–21. This mainly reflects expected increases in sugar available for export, particularly in Brazil, Thailand, Australia, Mexico and India.

World sugar closing stocks to declineWorld sugar stocks are projected to decline by an average of 2.7 million tonnes a year to reach around 55 million tonnes in 2020–21, reflecting higher growth in world consumption than production over the medium term. If realised, projected world stocks would be at the lowest level since 1997–98, when 47 million tonnes was recorded. By 2020–21 the world stocks-to-use ratio for sugar is expected to decline by 15 percentage points to around 28 per cent. At this level, the projected stocks-to-use ratio would be the lowest on record.

Return to Australian cane growers and sugar production to growReflecting higher world sugar prices, the average mill-gate return to Australian cane growers is projected to increase over the medium term to average around $44 a tonne (in 2015–16 dollars) in 2020–21. This compares with $37 a tonne (in 2015–16 dollars) expected in 2015–16.

The area of sugar cane harvested in Australia is projected to expand to 413 000 hectares in 2020–21. This is 5 per cent higher than the 393 000 hectares estimated in 2015–16 but well below the record 448 000 hectares harvested in 2003–04. The expansion of cane area is expected to be constrained by limited suitable land close to existing sugar mills and the conversion of some former cane land to other uses, including forest plantation.

Combined with an assumed 4 per cent rise in average yield, the projected increase in area is expected to result in sugarcane production reaching 36 million tonnes in 2020–21, up from an estimated 33 million tonnes in 2015–16. Reflecting higher cane crush, Australian sugar production is projected to grow at an annual rate of 1 per cent to around 5.4 million tonnes in 2020–21. This projection is above the estimated 4.8 million tonnes in 2015–16 but below the record 5.6 million tonnes produced in 1997–98.

Sugar exports from Australia are projected to be 4.4 million tonnes in 2020–21, 14 per cent higher than forecast in 2015–16. This compares with a record 4.7 million tonnes shipped in 1997–98. The value of exports is projected to reach $2.2 billion (in 2015–16 dollars) in 2020–21, up from $1.8 billion expected in 2015–16.

Sugar


Area of sugar cane harvested and average cane yield, Australia

Area harvested

’000 ha t/ha

Cane yield (right axis)

100

200

300

400

500

20

40

60

80

100


2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

Outlook for sugar a

unit 2013–14 2014–15 s 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 z

Production Mt 182.1 182.4 177.0 182.9 185.0 189.8 192.8 196.0– Brazil Mt 39.6 37.0 37.8 39.7 42.5 43.9 45.3 47.0Consumption Mt 179.0 181.0 183.5 187.5 189.3 193.6 196.5 196.9Exports Mt 64.3 64.0 66.0 72.4 73.5 75.5 77.2 79.8Closing stocks Mt 76.4 77.8 71.4 67.0 62.6 59.1 55.6 55.0Stocks‐to‐use ratio % 42.7 43.0 38.9 35.7 33.1 30.5 28.3 28.0

– nominal USc/lb 16.8 13.4 14.0 15.5 17.0 17.5 17.7 17.5– real d USc/lb 17.1 13.5 14.0 15.2 16.4 16.5 16.4 15.9

Production g kt 4 364 4 572 4 800 5 081 5 179 5 222 5 266 5 387Export volume kt 3 052 3 675 3 846 4 004 4 068 4 105 4 226 4 382

– nominal A$m 1 384 1 643 1 766 1 883 2 095 2 202 2 338 2 440– real h A$m 1 436 1 676 1 766 1 838 1 995 2 046 2 120 2 158a Volumes in raw value equivalent. b October–September years. c Nearby futures price, Intercontinental Exchange, New York, no. 11 contract. d In 2015–16 US dollars. e July–June years. f ABARES forecast. g Raw tonnes actual. h In 2015–16 Australian dollars. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; Intercontinental Exchange; International Sugar Organization

World b

Australia e

Price c

Export value


CottonOutlook to 2020–21

Benjamin K Agbenyegah

• World cotton prices are forecast to decline in the short term, reflecting large world carry-over stocks and sluggish world demand for raw cotton.

• Over the medium term world cotton prices are projected to recover gradually in real terms, reflecting expected higher consumption and declining world stocks.

• The returns to Australian cotton growers are projected to improve in real terms, reflecting higher world prices over the medium term.

• Australian cotton exports are projected to increase to 898 000 tonnes in 2020–21. This compares with forecast shipments of 509 000 tonnes in 2015–16.

Short-term outlookWorld cotton prices to decline in 2016–17The world indicator price for cotton (Cotlook ‘A’ index) is forecast to decline by 1 per cent to average US70 cents a pound in 2015–16 (August to July). World production is forecast to decline significantly but record world carry-over stocks from 2014–15 and sluggish world demand for raw cotton are expected to put downward pressure on world prices.

World cotton stocks rose rapidly in the four years to 2013–14, reaching a record 24.4 million tonnes in 2014–15. This growth largely resulted from China’s strategic stockpiling policy from 2011–12 to 2013–14, which consisted of state procurement of domestic cotton at prices well above the world market and the importation of significant volumes of raw cotton. In 2014–15 this policy was replaced with direct payments to domestic growers and significantly reduced imports. Despite these changes, China is still expected to hold around 62 per cent of world stocks by the end of 2015–16.

In 2016–17 the world cotton indicator price is forecast to fall by a further 3 per cent to average US68 cents a pound. This forecast decline reflects relatively weak demand and higher world cotton supply in 2016–17, despite a decline in world carry-over stocks. A downside risk to this forecast is the large amount of cotton stocks China holds in its state reserve. Should the Chinese Government decide to release its cotton stocks onto the world market, world cotton prices would be significantly lower than currently forecast.

Cotton


World cotton supply and indicator price

Opening stocks

Mt2015–16USc/lb

Indicator price (right axis)Production

30

60

90

120

150

180

f ABARES forecast.

10

20

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40

50

60

2016–17f

2014–15

2012–13

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2008–09

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2004–05

World cotton production to recover in 2016–17World cotton production is forecast to fall by 14 per cent in 2015–16 to around 22.3 million tonnes, with declines forecast in all major producing countries except Australia. This forecast reflects an estimated 8 per cent decline in planted area and an assumed 6 per cent fall in average lint yield. The reduction in area was the result of relatively low world cotton prices at the time of planting in major producing countries, while the decline in yield reflects the adverse effect of an El Niño weather pattern.

Cotton production in India is forecast to be 6.2 million tonnes in 2015–16, 4 per cent lower than in 2014–15. This forecast largely reflects an estimated 8 per cent decline in planted area because of relatively low domestic cotton prices during planting, which encouraged growers to sow alternative crops such as rice and grain sorghum. The decline in planting is expected to be partially offset by an assumed 4 per cent rise in average lint yield. This improvement in yield reflects the timely arrival of rainfall in major cotton producing regions during the 2015 monsoon.

In China, cotton production is forecast to fall by 20 per cent in 2015–16 to 5.2 million tonnes, largely based on an estimated 19 per cent decline in planted area to around 3.6 million hectares. The significant reduction in cotton plantings by Chinese farmers follows a change in government support policies for cotton. In 2014–15 the State Purchase of Domestic Cotton Program, which guaranteed the purchase of domestic cotton at a minimum price, was replaced with direct payments to growers. This change resulted in a fall in grower returns, encouraging production of alternative crops. Average lint yield is estimated to have declined by 1 per cent to around 1.5 tonnes a hectare, following well above average yields in 2014–15.

Cotton production in the United States is forecast to decline by 21 per cent in 2015–16 to 2.8 million tonnes. Area planted to cotton is estimated to decline by 18 per cent to 3.6 million hectares and average lint yield is assumed to fall by 3 per cent. The fall in area reflects relatively low returns to cotton production at the time of planting compared with alternative crops, such as maize and wheat. Lint yields are estimated to average 0.86 tonnes a hectare because of adverse seasonal conditions in some major producing regions. If realised, average lint yield will be the lowest since 2003–04, when yield averaged 0.82 tonnes a hectare.

Cotton


Cotton production in Pakistan is forecast to be 1.6 million tonnes in 2015–16, down from 2.3 million tonnes in 2014–15. The significant fall in production largely reflects an assumed 28 per cent decline in average lint yield because of unfavourable seasonal conditions resulting from an El Niño weather pattern. Planted area is also estimated to decline by 5 per cent to 2.8 million hectares as a result of relatively low domestic cotton prices at the time of planting.

In 2016–17 world cotton production is forecast to recover by 7 per cent to around 24 million tonnes, reflecting a 2 per cent increase in area and a 5 per cent rise in average yield. A return to average seasonal conditions, from the El Niño–affected 2015–16 season, is expected to support improved yields in major producing countries.

Forecast changes in world cotton production, by country

2015–16

2016–17

Mt

world

other

Turkey

Australia

Brazil

Pakistan

UnitedStates

India

China

–3

–2

–1

0

1

2

Weak growth in world cotton consumption to 2016–17World consumption of raw cotton is forecast to be around 24.3 million tonnes in 2015–16, 1 per cent higher than in 2014–15. This forecast reflects increased demand for raw cotton by textile and garment manufacturers in India, Vietnam and Bangladesh more than offsetting a forecast decline in China.

Consumption of raw cotton in China is forecast to decline by 2 per cent in 2015–16 to around 7 million tonnes, compared with the record of 11.1 million tonnes in 2007–08. Chinese cotton consumption has declined for the past six years, largely reflecting relatively high domestic cotton prices and the rising cost of domestic yarn production. The rising cost of yarn production in China has led to a shift in production to other Asian countries with relatively low labour costs, including India, Pakistan, Vietnam and Bangladesh, and increased China’s demand for imported cotton yarn. In 2014–15 (August to July) China imported a record 2.3 million tonnes of cotton yarn (minimum 85 per cent cotton, by weight), 10 per cent higher than in 2013–14. Almost 80 per cent of these imports were from India, Pakistan and Vietnam.

World cotton consumption growth is expected to be constrained by strong competition from synthetic fibres in the short term because of relatively low world crude oil prices.

Cotton


World monthly apparel fibre and crude oil prices

USc/lb

World crude oil(right axis)

Cotlook ‘A’ indexPolyester staple, China(cotton equivalent)

20

40

60

80

100

120

US$/barrel

20

40

60

80

100

120

Dec2016

Jun2016

Dec2015

Jun2015

Dec2014

Jun2014

Dec2013

In 2016–17 world cotton consumption is forecast to increase by 3 per cent to around 25 million tonnes, with increases forecast in India, Pakistan, Vietnam and Bangladesh. Consumption in China is expected to remain largely unchanged at 7 million tonnes in 2016–17. If realised, China’s share of world cotton consumption is expected to be around 28 per cent in 2016–17, down from a high of 42 per cent in 2009–10.

Share of world cotton consumption, by country

Other

%

VietnamBangladeshPakistanIndiaChina

20

40

60

80

100

f ABARES forecast.

2016–17f

2013–14

2010–11

2007–08

2004–05

2001–02

Cotton


World cotton stocks to remain high in 2016–17World cotton stocks are forecast to decline by 7 per cent in 2015–16 to 22.7 million tonnes, reflecting forecast world consumption exceeding production. If realised, this would be the first decline in world stocks since 2009–10, following several years of large increases resulting from the Chinese Government’s stockpiling policy. The world stocks-to-use ratio is expected to fall from a record of around 102 per cent in 2014–15 to 94 per cent in 2015–16.

In 2016–17 world cotton stocks are forecast to fall by a further 6 per cent to 21.3 million tonnes, with the world cotton stocks-to-use ratio declining to 85 per cent. Despite the decline, forecast world stocks will be well above the average for the 10 years to 2013–14 of around 15 million tonnes.

World cotton stocks-to-use ratio

%


20

40

60

80

100

120

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

World cotton exports to recover in 2016–17World cotton exports are forecast to decline by 3 per cent in 2015–16 to 7.7 million tonnes, reflecting a combination of weaker import demand from China and reduced supplies in some major exporting countries, including the United States, Australia and Uzbekistan.

In 2016–17 world exports of raw cotton are forecast to recover by 3 per cent to around 8 million tonnes. Increased production is expected to support higher shipments from the United States, India, Australia, Brazil and Uzbekistan.

Cotton


Australian cotton production to recover in short termAustralian cotton production is forecast to recover by 6 per cent in 2015–16 to 546 000 tonnes, largely driven by an estimated 37 per cent rise in planted area to 270 000 hectares. The significant rise in cotton planting mainly reflects above average rainfall in November 2015, which improved water storage levels in dams serving Australia’s cotton growing regions and supported an estimated 60 000 hectares of dryland cotton plantings. Irrigated cotton plantings are estimated to have increased by around 7 per cent to 210 000 hectares. Despite the forecast increase in area, the average lint yield is assumed to fall by 23 per cent to 2 tonnes a hectare. This expected decline mainly reflects the effect of increased dryland cotton planting on average yield. Dryland cotton generally yields around 70 per cent less lint than irrigated crops.

Storage levels of main irrigation dams, at 27 January

2015

%

2016

20

40

60

80

100

120

othe

r Qld

Bear

dmor

e (S

t Geo

rge)

Fairb

airn

(Em

eral

d)

Lesl

ie (D

arlin

g D

owns

)

othe

r NSW

Burr

endo

ng (M

acqu

arie

)

Pind

ari (

Mac

inty

re)

Keep

it (N

amoi

)

Gle

nlyo

n (M

acin

tyre

)

Cope

ton

(Gw

ydir)

Australian cotton production is forecast to increase further by 49 per cent in 2016–17 to 816 000 tonnes. Cotton planting is expected to rise by 48 per cent to 400 000 hectares and lint yield is assumed to be around the long-term average of 2.04 tonnes a hectare. This forecast assumes favourable seasonal run-off between March 2016 and the start of the next planting window, in September 2016, to enable an increase in the level of irrigation water in dams and support increased plantings.

Cotton


Lower returns to Australian cotton growers in 2016–17The return to Australian cotton growers at the gin-gate is forecast to increase by 3 per cent in 2015–16 to average $513 a bale (227 kilograms) of lint (including the value of cottonseed and net of ginning costs). This forecast increase largely reflects the effect of an assumed depreciation of the Australian dollar. In 2016–17 the return to growers is forecast to fall by 1 per cent to $508 a bale, because of lower world cotton prices.

Australian cotton exports to recover in 2016–17Cotton exports from Australia are forecast to be 509 000 tonnes in 2015–16, compared with 681 000 tonnes shipped in 2014–15. This forecast decline reflects relatively low cotton production in 2014–15. Australia’s typical March to June harvest period means that cotton produced in one financial year is exported across two financial years. In 2016–17 Australian cotton exports are forecast to recover by 23 per cent to 624 000 tonnes, reflecting expected higher cotton production in 2015–16 and 2016–17.

Australian cotton production, exports and gin-gate returns

Production

kt2015–16$/bale

Gin-gate return a(right axis)

Exports

200

400

600

800

1 000

1 200

1 400

100

200

300

400

500

600

700

a Value of lint and cottonseed, less ginning costs. f ABARES forecast. z ABARES projection.

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

Medium-term outlookWorld cotton prices to recover over medium termWorld cotton prices are projected to recover gradually over the medium term to average around US73 cents a pound (in 2015–16 dollars) in 2020–21. This projection largely reflects expected higher growth in world cotton consumption relative to production, reducing world stocks significantly over the medium term. Higher growth in consumption is supported by strong demand for raw cotton by Asian textile and garment manufacturing countries and a recovery in Chinese demand for raw cotton.

Cotton


The major downside risk to the current cotton outlook over the medium term remains the large cotton stocks China holds in its state reserve. It is assumed that the Chinese Government will only gradually release the cotton stockpiles into the world market. Should the Chinese Government release a significant amount of cotton stocks onto the world market, it could put significant downward pressure on and cause volatility in world cotton prices.

World cotton indicators

Production

Mt2015–16USc/lb

Price (right axis)

Consumption


5

10

15

20

25

30

30

60

90

120

150

180

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

World cotton production is projected to grow at an annual rate of 1.6 per cent a year over the medium term to around 27 million tonnes in 2020–21. The increase in production is expected to be largely driven by an expansion of world cotton area, with smaller improvements in average lint yield. World cotton area is projected to rise at an annual rate of 1.4 per cent to reach 34.6 million hectares in 2020–21, as producers respond to relatively favourable cotton prices compared with those for alternative crops, particularly grain sorghum, soybeans and corn. Yields are assumed to improve only slightly over the medium term because of the almost complete uptake of the current generation of genetically modified varieties. Under the assumption of average seasonal conditions, world average cotton lint yield is projected to rise to 0.79 tonnes a hectare in 2020–21.

Cotton production in China is projected to recover to 8 million tonnes over the medium term, from the forecast low of 5.3 million tonnes in 2015–16. The Chinese Government is expected to continue its support policy for cotton and invest in productivity improvements, such as managing water effectively, encouraging rural entrepreneurship in cotton communities and training growers in the use of machinery and chemicals.

Cotton production in India is projected to reach almost 8 million tonnes in 2020–21, based on the assumption that India will invest in productivity enhancements and improve lint yields and quality. The Indian Government is also expected to encourage cotton production by continuing its minimum support price policy and investing in the construction of irrigation dams and electricity infrastructure to reduce reliance on the monsoon for crop performance.

Cotton


In the United States, cotton production is expected to increase from a forecast low of 2.8 million tonnes in 2015–16 to around 5 million tonnes in 2020–21. This compares with the record of 5.2 million tonnes in 2005–06. This projection is based on an assumed return to average seasonal conditions in the US major upland cotton growing regions, following five consecutive years of relatively dry conditions.

Cotton production in Pakistan is projected to reach a record 3 million tonnes in 2020–21, compared with the recent high of 2.3 million tonnes in 2014–15. This increase largely reflects the effect of investments by the Pakistani Government in productivity, including irrigation and pest control programmes and the training of cotton farmers in the use of farm chemicals.

Cotton production in Brazil is projected to grow from its current low of 1.4 million tonnes in 2015–16 to 2.5 million tonnes in 2020–21. Brazil has a large amount of suitable land to expand cotton production, with the potential to significantly contribute to global production over the projection period. To achieve this Brazil would need to invest in irrigation and productivity enhancements, which would support an expansion of area planted to cotton and improve lint yields and quality.

Growth in world cotton consumption over medium termWorld cotton consumption is projected to grow at an annual rate of 1.8 per cent over the medium term to reach around 27 million tonnes in 2020–21. This projection reflects strong demand for raw cotton by textile and garment manufacturers in non-OECD countries, particularly India, Vietnam, Pakistan, Bangladesh, Brazil and Turkey, and a recovery in Chinese consumption.

World cotton stocks are projected to decline at an average rate of around 3 per cent a year to around 19 million tonnes in 2020–21, compared with 24.4 million tonnes in 2014–15. The projected decline in world stocks reflects the expectation that world consumption growth will exceed production. As a result, the world cotton stocks-to-use ratio is projected to decline to around 71 per cent in 2020–21, down from the record of 102 per cent in 2014–15.

Higher returns projected for Australian cotton Returns to Australian cotton growers are projected to average $545 a bale (in 2015–16 dollars) in 2020–21, 6 per cent higher than in 2015–16. The projected increase reflects the expected gradual rise of world cotton prices over the medium term.

Australian cotton production is projected to increase at an annual rate of around 1.4 per cent over the medium term to reach 893 000 tonnes in 2020–21. This would be well above the 10-year average to 2010–11 of 476 000 tonnes but below the record 1.2 million tonnes in 2011–12. This projection assumes favourable seasonal conditions over the medium term, leading to sufficient irrigation water in dams for cotton production.

Cotton


Production increases are projected to occur largely through an expansion in area as increased irrigation water availability and improved soil moisture profiles support higher sowings. Cotton lint yields in Australia are projected to remain largely unchanged over the medium term as the uptake of the current generation of genetically-modified cotton varieties is largely complete. Around 95 per cent of Australian cotton production is irrigated in an average season, and genetically-modified varieties account for more than 98 per cent of total planting.

Australian cotton planted area and average lint yield

Area

’000 ha t/ha

Lint yield (right axis)


100

200

300

400

500

600

700

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

Cotton exports from Australia are projected to increase to 898 000 tonnes in 2020–21. This compares with 509 000 tonnes forecast in 2015–16. The value of Australian exports is projected to rise to around $2 billion in real terms in 2020–21, 68 per cent higher than forecast in 2015–16.

Outlook for cotton


World ad

World aProduction Mt 26.2 25.9 22.3 23.9 25.3 25.8 26.4 26.8Consumption Mt 23.7 24.0 24.3 25.0 25.8 26.4 26.9 27.2Consumption Mt 23.7 24.0 24.3 25.0 25.8 26.4 26.9 27.2Exports Mt 8 9 7 9 7 7 7 9 8 4 8 7 8 9 9 1Exports Mt 8.9 7.9 7.7 7.9 8.4 8.7 8.9 9.1Closing stocks Mt 22.4 24.4 22.7 21.3 20.8 20.2 19.7 19.2Closing stocks Mt 22.4 24.4 22.7 21.3 20.8 20.2 19.7 19.2Stocks‐to‐use ratio % 94 5 101 5 93 7 85 3 80 5 76 6 73 2 70 7Stocks‐to‐use ratio % 94.5 101.5 93.7 85.3 80.5 76.6 73.2 70.7C tl k ’A’ i dCotlook ’A’ index – nominal USc/lb 90.6 70.8 70.0 68.0 71.0 73.0 76.0 80.0 nominal USc/lb 90.6 70.8 70.0 68.0 71.0 73.0 76.0 80.0– real b USc/lb 92 1 71 4 70 0 66 8 68 4 69 0 70 4 72 7– real b USc/lb 92.1 71.4 70.0 66.8 68.4 69.0 70.4 72.7

liAustralia cArea harvested ’000 ha 392.0 197.0 270.0 400.0 420.0 440.0 445.0 438.0Area harvested 000 ha 392.0 197.0 270.0 400.0 420.0 440.0 445.0 438.0Lint production kt 885 1 516 5 546 0 816 0 856 0 897 0 907 0 893 0Lint production kt 885.1 516.5 546.0 816.0 856.0 897.0 907.0 893.0Export volume kt 1 036.5 681.2 508.8 624.4 819.9 861.8 892.6 898.3Export volumeExport value

i l A$ 2 355 4 1 546 1 1 179 9 1 438 6 1 937 6 2 045 1 2 157 9 2 242 4Export value– nominal A$m 2 355.4 1 546.1 1 179.9 1 438.6 1 937.6 2 045.1 2 157.9 2 242.4– real d A$m 2 443.4 1 576.9 1 179.9 1 404.4 1 845.4 1 900.3 1 956.2 1 983.2ea d A$m 2 443.4 1 576.9 1 179.9 1 404.4 1 845.4 1 900.3 1 956.2 1 983.2a August–July years b In 2015–16 US dollars c July–June years d In 2015–16 Australian dollars f ABARES forecast s ABARES estimate z ABARES projectiona August–July years. b In 2015–16 US dollars. c July–June years. d In 2015–16 Australian dollars. f ABARES forecast. s ABARES estimate. z ABARES projection.Sources ABARES Australian Bureau of Statistics United States Department of AgricultureSources: ABARES; Australian Bureau of Statistics; United States Department of Agriculture


HorticultureOutlook to 2020–21

Brian Moir

• The gross value of horticultural production is expected to increase from $9.3 billion in 2014–15 to $10.2 billion in 2020–21 (in 2015–16 dollars).

• Exports of horticultural products are expected to expand from $2.1 billion in 2014–15 to $2.2 billion in 2020–21 (in 2015–16 dollars).

• Exports and imports of fresh horticultural produce are expected to grow in the medium term, with the value of exports exceeding the value of imports.

The Australian dollar weakened in the three years to 2015–16 and is assumed to remain relatively weak in the next few years, before gradually appreciating towards 2020–21. The assumed low value of the Australian dollar is expected to support a projected rise in the value of horticultural exports over the medium term (to 2020–21).

New trade agreements with China, Japan and the Republic of Korea have resulted in reduced import tariffs on several Australian horticultural products, and further reductions are scheduled over the coming years. The Trans-Pacific Partnership Agreement, once it comes into effect, is expected to provide further trade benefits to Australian horticultural exports.

Water storage in the Murray–Darling Basin in late January 2016 was around 37 per cent of capacity, the lowest in five years. However, this is still higher than levels over much of the period from 2002 to 2009. The Bureau of Meteorology’s current outlook for the next few months is for average to above average rainfall in much of eastern Australia, so horticultural production in the remainder of 2015–16 is not likely to be constrained. Water availability will continue to be a major factor affecting horticultural production over the years to come.

The gross value of Australia’s horticultural production is projected to increase to around $10.2 billion in 2020–21 from $9.3 billion in 2014–15 (in 2015–16 dollars).

The real value of exports of horticultural products is expected to expand from $2.1 billion in 2014–15 to $2.2 billion in 2020–21 (in 2015–16 dollars). Horticultural imports are also expected to increase.

Horticulture


Since 2003–04 the total value of imports of horticultural products has exceeded the value of exports, and the gap has widened over time. In 2014–15 total fruit, nut and vegetable imports were valued at $2.7 billion (in 2015–16 dollars), $834 million more than the value of exports. However, the value of fresh horticultural exports continues to exceed the value of fresh imports. Fresh horticultural exports were valued at $1.1 billion (in 2015–16 dollars), twice the value of fresh imports.

In recent years around 30 per cent of horticultural imports by value have been fresh produce, with the remaining 70 per cent processed. However, around 80 per cent of Australia’s horticultural exports are fresh produce.

Trade of some fresh 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 for many fresh fruits and vegetables as year-round consumer demand can be met by imports when fresh local produce is not available.

Gross value of production, Australia

2015–16$b

Fruit and nuts(excluding wine grapes)VegetablesNursery, �owers and turf


1

2

3

4

5

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

Outlook for fruit and nutsThe gross value of Australian fruit and nut production, excluding wine grapes, is forecast at around $3.7 billion in 2015–16. This follows a rise from the low of $3.2 billion in 2013–14 to $3.5 billion in 2014–15. Over the medium term, the gross value of fruit and nut production is projected to reach $3.9 billion (in 2015–16 dollars) in 2020–21.

Horticulture


Outlook for fruitBetween 2010–11 and 2014–15 the total value of fruit exports grew by $262 million to $770 million (in 2015–16 dollars) following a decade of contraction. The weaker Australian dollar, coupled with improved export opportunities to Asia following the implementation of trade agreements with China, Japan and the Republic of Korea, is expected to continue to stimulate exports of fruit and encourage production. Fruit exports are expected to increase from $821 million in 2015–16 to around $900 million (in 2015–16 dollars) by 2020–21.

Hong Kong has been the largest market for Australian fruit since 1996–97, and in 2014–15 it accounted for a quarter of total exports (by value). New Zealand, China and other Asian markets were also major export destinations. Exports to China grew sevenfold in real terms in the four years to 2014–15 but from a relatively low base. Exports to Hong Kong, Malaysia, the Philippines and the Republic of Korea more than doubled in the same period. Some Middle Eastern markets, including the United Arab Emirates and Saudi Arabia, also showed strong growth between 2010–11 and 2014–15.

The United States accounted for only 3 per cent of Australian fruit exports in 2014–15, down from 13 per cent in 2005–06 when it was Australia’s second-largest market for fruit. This reflects a diversion of Australian fruit exports to meet the increasing demand in China and other Asian markets, coupled with strengthened competition from Brazil and other Latin American countries in the US market.

Fresh grapes were Australia’s highest value fruit export in 2014–15, having grown to $240 million from $79 million in 2010–11 (in 2015–16 dollars). Grape exports grew in 2014–15, despite the loss of trade to Vietnam resulting from biosecurity restrictions. Vietnam was Australia’s third-largest market in 2013–14. Exports to China and Japan increased markedly in 2014–15, with Japan becoming an important importer of Australian grapes for the first time. Fresh oranges, mandarins, cherries and mangoes were other major fruit exports. Cherry exports in particular have shown strong growth, increasing from $15 million in 2010–11 to almost $50 million in 2014–15 (in 2015–16 dollars). More than 80 per cent of the value of fruit exports in 2014–15 was fresh.

The value of fruit imports to Australia first exceeded exports in 2006–07 and has continued to increase more strongly than exports. In 2014–15 the total value of fruit imports was $1.2 billion, exceeding exports by $477 million. This increase in imports was dominated by imports of processed products as Australian processors faced higher costs than major competitors. In contrast, fresh fruit exports grew strongly in the four years to 2014–15 to reach $640 million (in 2015–16 dollars) and exceed the value of fresh fruit imports by $246 million.

Major fruit imports in 2014–15 included fresh avocados ($86 million in 2014–15), grapes ($72 million) and kiwifruit ($50 million), and fruit juices and other processed products. The largest sources of imported fruit in 2014–15 were the United States (mostly grapes and oranges), New Zealand (avocados and kiwifruit) and China (fruit juices and frozen berries). Fresh fruit constituted 30 per cent of the total value of fruit imports, with the remainder being processed products.

Horticulture


CitrusProduction of oranges varies significantly from year to year but declined from 600 000 tonnes in 2002–03 to 350 000 tonnes in 2013–14. In particular, production of valencia oranges, which are used primarily for juicing, has declined and now amounts to well under half total orange production. Mandarin production grew strongly in the mid 2000s to meet strengthening demand and was around 100 000 tonnes (20 per cent of total citrus production) in 2013–14.

Production of oranges is expected to continue to decline, while mandarin production continues to rise. In total, production of oranges and mandarins is expected to decline only slightly from 450 000 tonnes in 2013–14 to around 443 000 in 2020–21.

Citrus exports are forecast to reach 200 000 tonnes in 2015–16, 20 per cent higher than in 2014–15, because of increased production of export quality fruit. In 2016–17 exports are expected to decline as production returns to average. Over the period to 2020–21, exports are forecast to increase in response to growing demand from Asian countries and the assumed level of the Australian dollar.

Hong Kong, Japan and China were Australia’s largest export markets for citrus in 2014–15. Exports to Asian markets, particularly China, have grown strongly in recent years, while exports to the United States have declined to one-quarter of the levels of the previous decade.

Orange, mandarin, apple and banana production, Australia

kt

Oranges ApplesBananasMandarins


2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

100

200

300

400

500

600

700

ApplesApple production in Australia has fluctuated at just below 300 000 tonnes for the past decade. It is expected to remain at around 300 000 tonnes over the period to 2020–21.

Apple exports have declined markedly over the past decade, from 48 000 tonnes in 2000–01 to around 5 000 tonnes in each of 2013–14 and 2014–15. The weakened Australian dollar has supported the increase in apple exports in the first half of 2015–16, and exports are projected to increase to 10 000 tonnes a year by 2020–21.

Horticulture


China and New Zealand meet Australia’s biosecurity requirements for the import of fresh apples. However, apple imports remain low, at 750 tonnes in 2014–15. This was the highest since 2007, when imports were again permitted after a ban imposed in 1921.

BananasAustralian banana production reached a peak of 330 000 tonnes in 2012–13, before returning to 255 000 tonnes in 2013–14. Production is expected to continue to fluctuate around the 10-year average of 260 000 tonnes in the period to 2020–21.

Banana production is subject to extreme weather and disease. In 2011 Cyclone Yasi significantly affected banana production. Cyclone Olwyn caused major damage to bananas in Western Australia in 2015, and the NT programme to eradicate banana freckle is having a major impact on production. However, neither is significant nationally. Panama disease tropical race 4 poses a downside risk to production in Queensland.

Australian bananas are sold almost exclusively in the domestic market. Exports are minimal, at 18 tonnes in 2014–15, and no country meets Australia’s biosecurity requirements for fresh banana imports.

Outlook for tree nuts

Tree nut production, Australia

Other

kt

WalnutsMacadamiasAlmonds

30

60

90

120

150


2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

Production of Australian tree nuts, particularly almonds, has grown strongly in recent years. In the three years to 2013–14 almond production grew by 60 per cent and macadamia production by 10 per cent.

The gross value of production of tree nuts (almonds, chestnuts, hazelnuts, macadamias, pecans, pistachios and walnuts) is estimated to have reached $818 million in 2014–15.

Horticulture


Over the medium term, tree nut production is forecast to increase slowly as tree plantings from the 2000s reach full maturity. Additional recent plantings will start to become productive only at the end of the period. With projected lower prices for almonds, the value of tree nut production in 2020–21 is expected to be around $825 million (in 2015–16 dollars).

The value of tree nut exports doubled from $370 million in 2012–13 to $748 million in 2014–15 and is expected to increase further to $838 million in 2015–16. It is forecast to moderate over the medium term as almond prices weaken, to around $690 million in 2020–21 (all in 2015–16 dollars).

AlmondsBetween 5 000 and 7 000 almond trees were planted in both 2006 and 2007. Plantings subsequently tailed off, with virtually none between 2012 and 2014. Consequently, the rapid expansion of almond production over the five years to 2014–15 (as trees came to maturity) has largely reached capacity. Almond production was around 70 000 tonnes of kernel in 2014–15. It is expected to reach 77 000 tonnes by 2020–21.

The Australian almond industry is largely export oriented. Australia is now the second-largest almond exporter in the world. However, its exports amounted to only 10 per cent, by volume, of US exports in 2014–15. Almond exports were around 43 000 tonnes of kernel in 2014–15. India and Spain were Australia’s largest export markets in that year, and both are continuing to grow strongly.

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 US production increases. Global almond consumption doubled between 2001–02 and 2014–15. Growth is expected to continue, supporting Australia’s exports in the medium term. Exports are projected to increase to around 57 000 tonnes by 2020–21, with a value of $487 million (in 2015–16 dollars).

Other tree nutsProduction of macadamias expanded strongly through the two decades to the mid 2000s, when expansion largely ceased and production fluctuated at around 30 000 tonnes a year. A good season for macadamias in 2014–15 resulted in production estimated at 38 000 tonnes. Recent tree plantings are expected to result in production reaching around 40 000 tonnes by 2020–21. The gross value of production is projected to increase, from around $124 million in 2014–15 to $130 million by 2020–21 (in 2015–16 dollars).

In the four years to 2014–15, the value of walnut exports increased fourfold in real terms to $26 million. Tree plantings in recent years will lead to some growth in the medium term. Walnuts accounted for only 3 per cent of the total value of tree nut exports in 2014–15.

Horticulture


Outlook for vegetablesThe gross value of vegetable production increased from $3.2 billion in 2000–01 to $3.6 billion in 2013–14 (in 2015–16 dollars). Capsicum, mushroom, sweet corn and zucchini production contributed most to this increase, while the real value of carrot, potato, cabbage and lettuce production declined. Vegetable production is projected to continue to expand to meet domestic market requirements, and some increase in export demand, to reach $4.2 billion by 2020–21.

Gross value of vegetable production, Australia

Other

2015–16$m

MushroomsTomatoesCarrots

1 000

2 000

3 000

4 000

5 000


2020–21z

OnionsPotatoes

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

Vegetable exports contracted from $478 million in 2000–01 to $278 million in 2012–13 (in 2015–16 dollars) because fresh and processed products faced strong competition from other countries. Exports increased to $299 million in 2014–15. They continued to increase in the first half of 2015–16 relative to the same period a year earlier as exporters benefited from the weaker Australian dollar and improved access to Asian markets.

The Australian dollar is assumed to remain relatively weak over the medium term, so the value of vegetable exports is projected to increase by 10 per cent to $325 million in 2015–16 and to increase steadily to around $350 million in 2020–21.

Almost 60 per cent of Australia’s vegetable exports in 2014–15 were fresh. Carrots, potatoes, onions, asparagus and vegetable seeds contributed most to the value of vegetable exports in 2014–15. New Zealand, Japan, Singapore and the United Arab Emirates were the major destinations.

Vegetable imports increased to $962 million (in 2015–16 dollars) in 2014–15, 80 per cent more than in 2000–01. New Zealand provided 20 per cent of Australia’s vegetable imports in 2014–15. Other major sources were Italy, China and the United States. Processed potatoes and other processed products dominate Australia’s vegetable imports, with processed products accounting for more than 90 per cent of total vegetable imports between 2012–13 and 2014–15.

The value of fresh vegetable exports in 2014–15 was $173 million, more than twice that of fresh vegetable imports. In 2014–15 asparagus was Australia’s largest fresh vegetable import and the second-largest fresh vegetable export.

Horticulture


Asparagus exports and imports by month

Imports

kt

Exports

1

2

3

4

5

Note: Average over four years, 2011–12 to 2014–15.

DecNovOctSepAugJulJunMayAprMarFebJan

PotatoesAustralian potato production, by volume, declined slowly from 1.3 million tonnes in 2000–01 to 1.2 million tonnes in 2013–14. Domestic demand for fresh potatoes has grown, but demand for processing potatoes has declined because of strong competition from imports. The gross value of potato production, in real terms, grew slightly over this period as the proportion of more highly priced fresh potatoes rose. Potatoes accounted for around 18 per cent of the gross value of vegetable production in 2013–14. Potato production is expected to continue to decline slowly to around 1.16 million tonnes in 2020–21 as the processing sector continues to contract.

Potato exports declined in volume and value over the five years to 2014–15 and have not shown any recovery in response to the weakening of the Australian dollar. In 2014–15 exports amounted to less than 1 per cent of production, at around 10 000 tonnes, and were valued at $34 million. More than one-third (by value) went to New Zealand. Potato exports are expected to remain at around these levels in the medium term.

TomatoesThe volume of Australian tomato production declined by an average of 1.8 per cent a year between 2000–01 and 2013–14 but this varied considerably year-to-year. In 2013–14 production was 326 000 tonnes.

Over the same period the gross value of tomato production increased by an average of 2.2 per cent a year in real terms to reach $481 million (in 2015–16 dollars) in 2014–15. This reflects a decline in the proportion of tomatoes used for processing. The production system for processing tomatoes is quite different from that for fresh tomatoes, and the return on processing tomatoes is much lower. In 2013–14 the average unit gross value of tomatoes produced for processing was 13 cents a kilogram; for fresh tomatoes it was a little over $2 a kilogram.

Horticulture


Tomato production, volume and value, Australia

kt

Volume

Value (right axis)


2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

100

200

300

400

500

600

2015–16$m

100

200

300

400

500

600

The value of tomato exports increased by almost 60 per cent in real terms in 2014–15, following an increase of 40 per cent in the previous year. However, these increases were from a record low in 2012–13 and exports remain well below those of the years before 2009–10. Tomato exports are predominantly processed. Fresh tomato exports accounted for 11 per cent of the total value in 2014–15. New Zealand, Japan and Thailand were Australia’s largest markets for tomatoes in 2014–15. New Zealand and Singapore together accounted for half of Australia’s fresh tomato exports.

Horticulture


Outlook for horticulture


Gross valuei l $

Gross value– nominal $m 8 274 9 123 9 759 10 069 10 408 10 758 11 120 11 492$– real a $m 8 584 9 305 9 759 9 829 9 913 9 997 10 080 10 164 real a $m 8 584 9 305 9 759 9 829 9 913 9 997 10 080 10 164Fruit and tree nuts (excl grapes)Fruit and tree nuts (excl. grapes) – nominal $m 3 187 3 543 3 691 3 813 3 947 4 084 4 226 4 373$m 3 187 3 543 3 691 3 813 3 947 4 084 4 226 4 373– real a $m 3 306 3 613 3 691 3 723 3 759 3 795 3 831 3 868– real a $m 3 306 3 613 3 691 3 723 3 759 3 795 3 831 3 868V t blVegetables– nominal $m 3 510 3 809 3 983 4 126 4 282 4 443 4 610 4 782 nominal $m 3 510 3 809 3 983 4 126 4 282 4 443 4 610 4 782– real a $m 3 641 3 885 3 983 4 028 4 078 4 129 4 179 4 230– real a $m 3 641 3 885 3 983 4 028 4 078 4 129 4 179 4 230T bl d d i dTable and dried grapes– nominal $m 331 351 370 385 402 420 438 457

g p nominal $m 331 351 370 385 402 420 438 457– real a $m 343 358 370 376 383 390 397 404– real a $m 343 358 370 376 383 390 397 404Nursery, cut flowers and turfNursery, cut flowers and turf– nominal $m 1 247 1 420 1 715 1 744 1 777 1 811 1 845 1 880– nominal $m 1 247 1 420 1 715 1 744 1 777 1 811 1 845 1 880real a $ 1 293 1 449 1 715 1 703 1 693 1 683 1 672 1 662– real a $m 1 293 1 449 1 715 1 703 1 693 1 683 1 672 1 662

Exports– nominal $m 1 865 2 060 2 398 2 173 2 278 2 328 2 412 2 514Exports– nominal $m 1 865 2 060 2 398 2 173 2 278 2 328 2 412 2 514real $ 93 2 0 2 398 2 2 2 69 2 63 2 8 2 22– real a $m 1 935 2 101 2 398 2 121 2 169 2 163 2 187 2 224

Fruits– nominal $m 724 755 821 832 876 921 968 1 016Fruits– nominal $m 724 755 821 832 876 921 968 1 016

l– real a $m 751 770 821 812 834 856 877 899$Vegetablesnominal $ 270 293 325 338 351 365 380 396

Vegetables – nominal $m 270 293 325 338 351 365 380 396– real a $m 280 299 325 330 335 340 345 350$m 280 299 325 330 335 340 345 350Tree nuts

i l $ 610 734 949 735 753 735 750 780Tree nuts– nominal $m 610 734 949 735 753 735 750 780– real a $m 633 748 949 718 717 683 680 689 real a $m 633 748 949 718 717 683 680 689Nursery

i l $Nursery– nominal $m 11 12 12 10 10 9 8 8$– real a $m 12 12 12 10 9 8 7 7 real a $m 12 12 12 10 9 8 7 7Other horticulture bOther horticulture b– nominal $m 250 266 291 258 288 297 307 315$m 250 266 291 258 288 297 307 315– real a $m 260 271 291 252 275 276 278 279– real a $m 260 271 291 252 275 276 278 279I 2015 16 A t li d ll b Oth h ti lt i l d i l ff t i ti l il d th i ll h ti lt l d ta In 2015–16 Australian dollars. b Other horticulture includes mainly coffee, tea, spices, essential oils and other miscellaneous horticultural products.

f ABARES forecast. s ABARES estimate. z ABARES projection.p jSources: ABARES; Australian Bureau of StatisticsSources: ABARES; Australian Bureau of Statistics


Australian wine exportsOutlook to 2020–21

Neil Thompson

• Strong demand for Australian wine in China and Hong Kong has led to an increase in Australian wine exports.

• Over the medium term, the value of Australian wine exports is projected to decline in real terms because of increased competition from South Africa and South America.

More than 60 per cent of Australia’s annual wine production is exported. In 2014–15 the value of wine exports rose by 7 per cent to just under $2 billion, the first year-on-year increase since 2006–07. Driving this increase was a 4 per cent rise in wine export shipments, to almost 745 million litres, and a 3 per cent increase in average unit export value. The increase in export shipments largely reflected growth in consumer demand in Asian markets, particularly China and Hong Kong. Australia’s major export destinations for wine include Canada, China, Hong Kong, New Zealand, the United Kingdom and the United States. In 2014–15 these six markets accounted for around three-quarters of Australia’s wine exports, in both value and volume terms. The two largest markets, the United States and the United Kingdom, together accounted for 57 per cent of total export volume and 42 per cent of export value.

Changes in Australian wine exports to major markets, 2014–15

%

ValueVolume

–10

0

10

20

30

40

Totalexports

United States

UnitedKingdom

New Zealand

HongKong

China

Canada

Australian wine exports


United StatesThe United States was the largest export market for Australian wine in 2014–15, valued at $463 million. In volume terms, bottled red wine accounted for just over 40 per cent of exports to the United States, with bottled white wine and bulk white wine accounting for around 25 per cent each. Most wine exports to the United States are bottled, but shipments are primarily directed to the lower end of the market. The average unit export value of bottled wine exported to the United States was $3.57 a litre in 2014–15, well below the average for Australian exports to all markets of $4.74 a litre.

Over the past 10 years the value of Australian wine exports to the United States has fallen by almost 60 per cent in real terms, largely reflecting a decline in unit export values. This decline resulted from increased competition from low-cost producers; growth in the proportion of Australian exports shipped in bulk; and the relatively high value of the Australian dollar over that period, which reduced the competitiveness of Australian wine in the US market.

Australia competes in the US market with Italy, France, Chile and Argentina, and significant US domestic production. The United States imports Italian and French wine primarily for high-end markets. Average import unit values were US$5.74 and US$12.65 a litre, respectively, in 2013—the latest year for which data are available. Imports from Australia tend to compete for the lower end of the bottled wine market with US domestic production and, increasingly, Chile and Argentina.

Wine imports by source, United States

2013US$m

France

Italy

Australia

Chile

Argentina

1 000

500

2 000

1 500

20132011200920072005

United KingdomThe United Kingdom is Australia’s second-largest market by value. In 2014–15 the value of Australian wine exports to the United Kingdom was around $374 million. This was a decrease of 3 per cent from the previous year, despite a 3 per cent increase in volume exported. Shipments to the United Kingdom are primarily of bulk wine, with an average unit export value of $1 a litre in 2014–15.



The value of Australian exports to the United Kingdom declined significantly over the 10 years to 2014–15, largely reflecting a shift from shipping wine in bottles to bulk tanks. Over the decade, the value of Australian wine exports to the United Kingdom fell by almost 70 per cent in real terms, despite a relatively small decline in export volumes. Several influences led to the shift to bulk exports. These included increased competition from low-cost producers, increased volumes of in-house brands sold in large UK retail chains and UK Government funding of the Waste & Resource Action Programme (see box).

Australian wine exports to the United Kingdom, by packaging

Bulk

ML

Bottled

2014–15

2012–13

2010–11

2008–09

2006–07

2004–05

50

100

150

200

250

300

UK Waste & Resource Action Programme GlassRite Wine projectThe UK Government launched the four-year GlassRite Wine project in 2006 as part of wider efforts to prevent waste through the Water & Resource Action Programme (WRAP). The project aimed to reduce glass waste through introducing lightweight bottles, supporting the UK’s recycled glass market and reducing the wine industry carbon footprint. WRAP partnered with the UK glass industry to facilitate collaboration between glass makers, fillers and retailers to develop lightweight bottles. It then worked with the supply chain to encourage the import of bulk wine and the filling of lightweight bottles in the United Kingdom.

Over the four years of the project the number of bottles filled in the United Kingdom from bulk imports rose from 120 million to 199 million. WRAP reports that the increase in filling from bulk imports, the reduction in glass usage per bottle and the increased use of recycled glass per bottle saved more than 28 300 tonnes of CO

2 emissions

each year.



The United Kingdom imports wines from other EU member countries, including France, Italy and Spain. Australian wine exports also face strong competition from Chile, South Africa and the United States. The United Kingdom sources smaller volumes from Argentina, New Zealand and other European countries outside the European Union, including Macedonia and Moldova.

China and Hong KongChina and Hong Kong are becoming increasingly important markets for Australian wine exports. In 2014–15 exports to China rose by 33 per cent to $269 million and to Hong Kong by 35 per cent to $136 million, the third-largest and fifth-largest export markets by value, respectively. Bottled red wine makes up more than 90 per cent of the value of Australian wine exports to these markets. In 2014–15 the average unit value of bottled red wine exports was $5.49 a litre to China and $15.38 a litre to Hong Kong, compared with the average to all markets of $5.33 a litre.

Australian wine exports to China and Hong Kong, by value

2014–15$m

China

Hong Kong

50

100

150

200

250

300

2014–15

2012–13

2010–11

2008–09

2006–07

The emergence of China as a major destination for Australian wine exports largely reflects the rising Chinese middle class. Rapid income growth has resulted in increased discretionary spending on consumer goods, including higher quality food and beverages. As a result, Australian exports of wine to China have grown in both value and volume. Rising incomes and increased tourism are also leading to stronger demand for wine in Hong Kong. In Hong Kong, high value premium wine is imported by well-established, high-end food service and entertainment industries.

Australia’s major competitor at the upper end of the Chinese and Hong Kong markets is France, and the United States also maintains a relatively large market share in Hong Kong. China and Hong Kong import significant quantities of wine from Chile and Spain, but relatively low average import unit values suggest these imports do not compete directly with most Australian wine exports.



Outlook for Australian wine exportsThe value of Australian wine exports is forecast to increase by 9 per cent in 2015–16 to just under $2.17 billion, reflecting a 13 per cent rise in average unit export value more than offsetting a 3 per cent decline in export volume.

In 2016–17 wine exports are forecast to grow by a further 2 per cent to $2.22 billion. Continued growth in exports to China and Hong Kong—although at a slower rate than in recent years—and a slow recovery in demand from the more traditional markets of the United States and the United Kingdom and other EU countries are expected to support small increases in volume and unit export value.

Over the medium term Australian wine exports are projected to decline in real terms to $1.77 billion in 2020–21, compared with $2 billion in 2014–15. Unit export values are projected to fall largely as a result of increased competition, particularly from countries with low production costs, including Chile, Argentina and South Africa. Export volumes are also projected to decline, but production is expected to be directed more to the domestic market to meet rising domestic demand.

Agriculture

Livestock


LIVESTOCK

9%

5%to 530 c/kgin 2016–17

a

5% to 1 300 c/kgin 2016–17

c

Australian weighted average saleyard price of beef cattle.a

Australian weighted average saleyard price of lamb.b

Beef and veal

Wool

Sheep meat

Dairy

to 600 c/kgin 2016–17

b

Eastern Market Indicator price, clean equivalent.c

Farmgate milk price.d

3%to 49 c/Lin 2016–17

d

Restocker demand is expected to support higher saleyard prices under the assumption of favourable seasonal conditions. Export demand is forecast to remain robust.

Flock rebuilding is expected to continue if seasonal

conditions permit. Prices are forecast to rise supported by

export demand.

The Australian farmgate milk price is forecast to rise,

re ecting rmer demand for dairy products from major

importing countries.

The Australian Eastern Market Indicatoris forecast to increase, re ecting limited growth in wool production.


Beef and vealOutlook to 2020–21

Jack Mullumby

• The combination of strong domestic restocker demand, an assumed relatively low Australian dollar and robust international demand for Australian beef and veal is expected to increase cattle prices in the short term.

• In 2015–16 the weighted average saleyard price of cattle is forecast to be the highest in real terms since 1980–81.

• Over the medium term to 2020–21, herd rebuilding is projected to support domestic cattle prices. However, increased competition is likely in key export markets, particularly from South America.

• Demand for Australian live cattle exports is projected to remain strong in Indonesia and Vietnam over the short to medium term.

Restocker demand to increase with improved seasonal conditionsThe weighted average saleyard price of beef cattle is forecast to increase by 41 per cent in 2015–16 to 505 cents a kilogram (dressed weight). In the first half of the year the weighted average saleyard price of cattle increased by 54 per cent year-on-year to average 495 cents a kilogram. In December saleyard prices averaged 481 cents a kilogram. Prices were driven by strong domestic restocker demand following rainfall events late in the year across eastern Australia. If the 2015–16 forecast is achieved, it would be the highest annual average price in real terms since 1980–81.

In the short term, a return to more favourable seasonal conditions is expected to continue to support cattle prices as herd rebuilding activities intensify. Combined with strong international demand for Australian beef and live cattle exports, this is expected to place upward pressure on cattle prices. In 2016–17 the weighted average saleyard price of beef cattle is forecast to increase further to average 530 cents a kilogram.

Beef and veal


Over the medium term, the weighted average saleyard price of cattle, in real terms, is projected to decline gradually to average 442 cents a kilogram in 2020–21 (in 2015–16 dollars). Increased competition in major export markets is expected to lead to a softening in beef export prices in later years, which in turn will place downward pressure on domestic saleyard prices. Continued herd rebuilding, if seasonal conditions permit, is also expected to lead to increased slaughter in the latter part of the outlook period. This will put additional downward pressure on domestic cattle prices towards the end of the projection period.

Weighted average saleyard price of cattle, nominal and real

c/kg 2015–16c/kg

NominalReal (right axis)


2020–21z

2015–16f

2010–11

2005–06

2000–01

1995–96

1990–91

1985–86

1980–81

1975–76

1970–71

100

200

300

400

500

600

700

800

100

200

300

400

500

600

700

800

Rebuilding of cattle herd likely to be gradualFollowing relatively high turn-off over the past two years, Australian cattle and calf slaughter is forecast to fall by 11 per cent in 2015–16 to 9 million head. The majority of the forecast decline is expected to be from lower female cattle slaughter, which declined by 13 per cent in the first half of the year. Under the assumption of favourable seasonal conditions in the second half of the year, female cattle slaughter is expected to decline markedly as producers increase herd rebuilding activity.

Even with this forecast decline in slaughter, the national beef cattle herd is still expected to fall by 2 per cent to 23.7 million head by the end of 2015–16. The number of female cattle at the end of 2015–16 is estimated to be at its lowest in more than a decade following relatively high slaughter between 2011–12 and 2014–15.

In 2016–17 Australian cattle and calf slaughter is forecast to fall by a further 7 per cent to 8.4 million head, as rebuilding of the cattle herd continues under the assumption of favourable seasonal conditions. Branding rates are also assumed to increase. However, the rate of herd rebuilding is expected to be relatively slow because low female cattle numbers will limit the number of calves born. Favourable saleyard prices and strong international demand will continue to encourage producers to turn off mainly male cattle. Reflecting this, the national herd is forecast to continue to decline by 3 per cent in 2016–17 to 23.1 million head.

Beef and veal


Over the remainder of the projection period (to 2020–21) female cattle numbers are projected to increase gradually under the assumption of favourable seasonal conditions. This is expected to result in an increasing number of additions to the national herd towards the end of the projection period despite gradual increasing slaughter. By the end of 2020–21 the national beef cattle herd is projected to reach 26.4 million head. This compares with an average 25.7 million head in the five years ending 2014–15.

Closing beef cattle numbers and annual slaughter

Slaughter

Closing beef cattle numbers

millionhead


5

10

15

20

25

30

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

The outlook for herd rebuilding over the medium term is uncertain. The pace of herd rebuilding will depend on seasonal conditions over the projection period. The outlook is favourable for international demand for beef and live cattle towards 2020–21, so producers could markedly increase turn-off more than currently forecast if seasonal conditions become less than favourable in any particular year. This would result in higher slaughter during that period and prolong the process of herd rebuilding.

Beef and veal production to decrease in short termIn 2015–16 Australian beef and veal production is forecast to fall to 2.4 million tonnes (carcase weight), 9 per cent lower than the record 2.7 million tonnes in 2014–15. The forecast decline in beef production mainly reflects the lower supply of cattle for slaughter being partially offset by increased slaughter weights. In 2016–17 beef production is forecast to decline by a further 7 per cent to 2.3 million tonnes.

Over the outlook period to 2020–21, average slaughter weights are expected to continue to increase, driven by relatively high feedlot turn-off and lower female cattle slaughter. Combined with a gradual increase in the number of cattle slaughtered, this is projected to result in higher beef production. In 2020–21 beef and veal production is projected to reach 2.5 million tonnes, which would be 8 per cent above the average production of 2.3 million tonnes in the five years ending 2014–15.

Beef and veal


Exports to be constrained by suppliesAustralian exports of beef and veal are forecast to fall by 12 per cent in 2015–16 to 1.2 million tonnes (shipped weight), in response to the forecast reduction in domestic beef production. A further decline in beef exports is forecast in 2016–17, to around 1.1 million tonnes. At this level, beef exports in 2016–17 would be 20 per cent lower than the record volume of 1.35 million tonnes in 2014–15.

Over the latter part of the outlook period, beef production is projected to rise gradually in response to increasing beef cattle numbers and higher slaughter. Australian beef and veal exports are projected to reach close to 1.3 million tonnes in 2020–21.

In 2015–16 the value of Australian beef and veal exports is forecast to increase by 4 per cent to $9.2 billion. This is followed by a 4 per cent decline in 2016–17 to $8.8 billion as the forecast decline in export shipments more than offsets rising export prices. By 2020–21 the value of Australian beef exports is projected to reach $8.5 billion in real terms, with declining export unit values offsetting a recovery in beef export volumes. This compares with the average value of $6.1 billion for the five years ending 2014–15.

US import demand for beef to declineIn 2015–16 Australian beef and veal exports to the United States are forecast to reach 350 000 tonnes, with strong demand for imported manufacturing beef in the United States supporting prices for Australian exports. This would represent a 26 per cent decline from the record 471 000 tonnes shipped in 2014–15, but if achieved forecast exports to the United States in 2015–16 would remain 67 per cent above the average in the five years ending 2013–14.

The increase in demand for imported manufacturing beef has been the result of successive years of relatively low US domestic production. Since 2011–12 US cow slaughter has declined year-on-year by an average of 8 per cent, with producers retaining female cattle for herd expansion. Cow slaughter is the primary source of domestically produced manufacturing beef in the United States, so the reduction in supply has generated strong demand for manufacturing beef imports.

US cow slaughter is likely to remain relatively low in the short term, with US herd rebuilding continuing. The US dollar is assumed to remain strong in the short term, restricting the competitiveness of US beef exports and making imports comparatively cheaper. Nevertheless, the forecast reduction in Australian beef supplies as a result of herd rebuilding is expected to constrain growth in exports of Australian beef to the United States. Reflecting this, the volume of Australian beef exports to the United States is forecast decline to around 325 000 tonnes in 2016–17. Over the medium term US manufacturing beef production is projected to increase, placing downward pressure on demand for imported beef. Australian beef shipments to the United States are projected to decline to 280 000 tonnes by 2020–21, around 60 per cent of the volume shipped in 2014–15.

Beef and veal


The US market currently is not accessible to most South American beef (fresh, chilled and frozen). The main exception is aged raw beef from Uruguay, which the United States has accepted since the mid 1990s under a safe trade status. The United States also provides a tariff rate quota for Argentina but trade ceased in 2001 following a foot-and-mouth disease (FMD) outbreak in Argentina. In August 2014 the US Department of Agriculture’s (USDA) import regulatory body, the Animal and Plant Health Inspection Service (APHIS), formally recognised the Patagonia zone in southern Argentina as having status of ‘FMD free where vaccination is not practised’. USDA subsequently approved the zone as eligible to export beef to the United States. However, imports of fresh, chilled and frozen beef from Argentina to date have been negligible.

Since 2010 the US and Brazilian governments have engaged in bilateral discussion about access to the US market for Brazilian beef. In 2013 APHIS proposed opening the US market to 14 Brazilian states. However, USDA has not issued a final ruling on the proposed removal of these import bans. Australia’s primary beef export to the US market is grass-fed lean manufacturing beef, which is comparable with the majority of beef produced in Brazil. A marked rise in beef imports from South America, particularly Brazil, over the medium term would lead to increased competition with Australian beef in the US market.

US cow slaughter and Australian beef exports to the United States

Australian beef exports

kt (sw)millionhead

US cow slaughter(right axis)

1.5

3.0

4.5

6.0

7.5

100

200

300

400

500

2014–15

2012–13

2010–11

2008–09

2006–07

2004–05

Growth in exports to Japan to remain lowIn 2015–16 Australian beef exports to Japan are forecast to fall by 8 per cent to 280 000 tonnes, reflecting lower import demand in the face of high import prices. In the first half of 2015–16 Japanese import prices for chilled Australian beef averaged 6 per cent higher than in the same period in the previous year. Australian beef exports to Japan were 11 per cent lower than in the first half of 2014–15.

Beef and veal


Prices for imported beef in Japan are forecast to remain relatively high in 2016–17, which is expected to place downward pressure on Japanese demand for imported beef. The share of Australian beef in total Japanese imports is expected to increase under the assumption of a relatively weak Australian dollar against the US dollar, which is increasing the competitiveness of Australian beef. Tariff cuts delivered to Australia through the Japan–Australia Economic Partnership Agreement (JAEPA) are also expected to benefit Australian beef exports to Japan. From 1 April 2016 tariffs on Australian chilled and frozen beef will be 30.5 per cent and 27.5 per cent, respectively. This compares with a tariff rate of 38.5 per cent for beef imports from the United States. Australian beef and veal exports to Japan in 2016–17 are forecast to increase by 2 per cent to 285 000 tonnes.

Over the medium term, growth in Japanese demand for beef is expected to remain weak, restricted by a declining and ageing population and low income growth. Australia’s share of total Japanese beef imports is projected to be supported further by JAEPA tariff rate cuts and an assumed relatively weak Australian dollar. The Australian dollar has depreciated more than 30 per cent against the US dollar over the past two years and is assumed to average around US74 cents at the end of the projection period. By 2020–21 Australian beef and veal exports to Japan are projected to reach 300 000 tonnes, an increase of around 1 per cent a year.

The current outlook for beef does not include the possible impacts of the Trans-Pacific Partnership Agreement (TPP) on Australian beef exports to Japan because of uncertainty about when it will enter into force. On entry into force the TPP will lower Japanese import tariffs on beef and veal to 27.5 per cent for all signatories. However, if at that time the JAEPA tariff is lower than the TPP tariff, all signatories will be able to export beef at the JAEPA tariff rate.

Australian beef exports to Japan and Australian chilled grass-fed beef indicator price

Export volume

kt (sw)2015–16c/kg

Australian chilled grass-fed price(right axis)

100

200

300

400

250

500

750

1 000

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11


Beef and veal


Korean demand to remain strongAustralian beef and veal exports to the Republic of Korea are forecast to increase by 11 per cent in 2015–16 to 175 000 tonnes. Strong beef consumption growth in the Republic of Korea, in combination with limited domestic supply, is expected to support an increase in import demand. This is assumed to continue supporting demand for Australian beef exports in 2016–17, with volumes forecast to rise by 3 per cent to 180 000 tonnes.

Over the medium term, exports are projected to increase annually by 3 per cent a year to 200 000 tonnes in 2020–21. Korean demand for imported beef will continue to be supported by tariff rate reductions delivered through free trade agreements signed with Korea’s two largest imported beef sources, Australia and the United States. The earlier entry into force of the US free trade agreement gives US beef exports a 5.3 percentage point tariff rate advantage over Australian exports, which will remain in place until 2026. However, an assumed relatively weak Australian dollar over the medium term is expected to more than offset this.

Australian beef exports to Republic of Korea and Korea–Australia Free Trade Agreement import tariff rate

Export volume

kt (sw) %

Tari rate (right axis)

10

20

30

40

50

50

100

150

200

250

2020–21z

2018–19z

2016–17f

2014–15

2012–13


Exports to China face increased competition The volume of Australian beef exports to China in 2015–16 is forecast to increase by 20 per cent to 150 000 tonnes. Following two years of high growth, Australian beef export volumes to China declined in 2014–15 after China began testing beef imports from Australia for hormone residues. Australian producers have since implemented protocols to satisfy the additional Chinese testing requirements and exports have again increased. In the second half of 2015 export volumes were 41 per cent higher than in the same period in 2014.

Chinese import demand for beef continues to be strong, as growth in consumption outpaces increases in domestic production. In 2016–17 Australian beef exports are forecast to increase by 7 per cent to 160 000 tonnes.

Beef and veal


Over the medium term, Australian beef exports are projected to increase on average by 3 per cent a year to 180 000 tonnes by 2020–21. Demand for Australian beef will be supported by the China–Australia Free Trade Agreement (ChAFTA), which came into force on 1 December 2015. ChAFTA brought immediate reductions to beef tariffs, which previously ranged from 12 per cent to 25 per cent. These will be reduced gradually until they are removed completely by 2024.

Future growth in Australian beef exports to China is expected to be limited by increased competition, particularly from South America. In 2015 Australia’s share of total Chinese beef imports fell to 33 per cent, compared with 45 per cent in 2014. In contrast, South America’s share rose to 47 per cent—with imports from Uruguay increasing by 38 per cent to 123 000 tonnes and from Argentina by 151 per cent to 43 000 tonnes.

South America’s largest beef producer, Brazil, regained access to the Chinese beef market in July 2015 following the removal of China’s bovine spongiform encephalopathy related import bans. Chinese beef imports from Brazil have increased rapidly. In the last quarter of 2015 imports from Brazil reached 41 481 tonnes, to make it the second-largest source after Australia (41 828 tonnes). In December 2015 Brazil was the largest single source of imported beef.

Beef imports by source, China

Other

kt (sw)

South AmericaAustralia

100

200

300

400

500

2015201420132012

Demand for live exports remains robustIn 2015–16 Australian live feeder and slaughter cattle exports are forecast to decline by 9 per cent to 1.18 million head. This largely reflects the effect of the reduction in permits allocated by the Indonesian Government for the first quarter of 2015–16 and the supply constraints that restricted Australian exporters from filling allocated quotas in the second quarter.

Demand for Australian live cattle continues to be strong, particularly in Indonesia and Vietnam, where beef consumption continues to exceed domestic production. This is expected to accelerate live cattle exports in 2016–17, with the number of feeder and slaughter cattle exported forecast to increase by 4 per cent to 1.23 million head.

Beef and veal


Over the medium term, feeder and slaughter cattle exports are projected to increase annually by an average of 2 per cent to reach close to 1.33 million head in 2020–21. Indonesia is expected to remain the primary market for Australian live cattle exports, while growth in exports to Vietnam is expected to slow gradually. Live cattle exports to China are also expected to increase over the medium term as supply chains improve and import protocols are met. However, cattle sent to China are expected to be sourced primarily from southern Australia and loaded at southern Australian ports so this trade will not compete directly with the northern Australian cattle trade.

Live cattle export volume and average unit value

Live exports

millionhead

2015–16c/kg

Unit value (right axis)

0.2

0.4

0.6

0.8

1.0

1.2

1.4

200

400

600

800

1 000

1 200

1 400

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11


Outlook for beef and veal

unit 2013–14 2014–15 s 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 zunit 2013–14 2014–15 s 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 z

Saleyard price aSaleyard price a– nominal c/kg 287 358 505 530 530 520 510 500– nominal c/kg 287 358 505 530 530 520 510 500

l– real b c/kg 298 365 505 517 505 483 462 442 real b c/kg 298 365 505 517 505 483 462 442Cattle numbers cd million 29.1 27.2 26.5 25.9 26.2 27.0 28.0 29.2Cattle numbers cd million 29.1 27.2 26.5 25.9 26.2 27.0 28.0 29.2– beef cattle c million 26.3 24.3 23.7 23.1 23.4 24.2 25.2 26.4– beef cattle c million 26.3 24.3 23.7 23.1 23.4 24.2 25.2 26.4l hSlaughterings ’000 9 473 10 103 9 000 8 400 8 400 8 500 8 750 9 000Slaughterings 000 9 473 10 103 9 000 8 400 8 400 8 500 8 750 9 000d i kProduction e kt 2 464 2 662 2 420 2 260 2 280 2 330 2 425 2 515Production e kt 2 464 2 662 2 420 2 260 2 280 2 330 2 425 2 515

C ti k 31 7 29 3 28 0 27 2 26 7 26 3 26 0 25 7Consumption per person kg 31.7 29.3 28.0 27.2 26.7 26.3 26.0 25.7Consumption per person kg 31.7 29.3 28.0 27.2 26.7 26.3 26.0 25.7E t l kt 1 184 1 349 1 185 1 080 1 095 1 130 1 190 1 250Export volume g kt 1 184 1 349 1 185 1 080 1 095 1 130 1 190 1 250Export volume g kt 1 184 1 349 1 185 1 080 1 095 1 130 1 190 1 250t Chi kt 160 125 150 160 165 170 175 180– to China kt 160 125 150 160 165 170 175 180 to China kt 160 125 150 160 165 170 175 180to Japan kt 280 304 280 285 289 294 298 300– to Japan kt 280 304 280 285 289 294 298 300 to Japanto Korea Rep of kt 156 157 175 180 185 190 195 200– to Korea, Rep. of kt 156 157 175 180 185 190 195 200, pto United States kt 266 471 350 325 310 300 290 280– to United States kt 266 471 350 325 310 300 290 280

Export valueExport value– nominal $m 6 265 8 858 9 175 8 775 8 895 9 005 9 300 9 580– nominal $m 6 265 8 858 9 175 8 775 8 895 9 005 9 300 9 580– real b $m 6 499 9 035 9 175 8 566 8 472 8 367 8 431 8 473– real b $m 6 499 9 035 9 175 8 566 8 472 8 367 8 431 8 473Live feeder/slaughter cattle exports ’000 1 006 1 295 1 175 1 225 1 250 1 275 1 300 1 325Live feeder/slaughter cattle exports ’000 1 006 1 295 1 175 1 225 1 250 1 275 1 300 1 325– nominal $m 795 1 163 1 370 1 500 1 605 1 720 1 840 1 970– nominal $m 795 1 163 1 370 1 500 1 605 1 720 1 840 1 970

l– real b $m 824 1 186 1 370 1 464 1 529 1 598 1 668 1 742 real b $m 824 1 186 1 370 1 464 1 529 1 598 1 668 1 742a Dressed weight. b In 2015–16 Australian dollars. c At 30 June. d Includes dairy cattle. e Carcase weight. f ABARES forecast. g Fresh, chilled and frozen, shipped a Dressed weight. b In 2015 16 Australian dollars. c At 30 June. d Includes dairy cattle. e Carcase weight. f ABARES forecast. g Fresh, chilled and frozen, shipped

i ht ABARES ti t ABARES j tiweight. s ABARES estimate. z ABARES projection.weight. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources Canberra; Meat & Livestock AustraliaSources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra; Meat & Livestock Australia; ; p g , ;


Sheep meat and woolOutlook to 2020–21

Peter Berry

• Saleyard lamb and sheep prices are forecast to rise in 2016–17 as a result of continued strong export demand and lower supplies.

• The Australian Eastern Market Indicator price of wool is forecast to average around 1 300 cents a kilogram in 2016–17. It is projected to average higher to 2018–19 (in 2015–16 dollars), before easing gradually over the period to 2020–21.

• The national sheep flock is forecast to increase marginally by June 2016, before gradually rebuilding to reach around 77 million head by the end of 2020–21.

Lamb prices to rise in the short termAustralian lamb prices are forecast to increase by 6 per cent to average 550 cents a kilogram in 2015–16, driven by a fall in the supply of lambs. Export demand, particularly from the Middle East and the United States, and an assumed lower Australian dollar are expected to provide support for lamb prices.

In 2016–17 lamb prices are forecast to rise by a further 9 per cent to an average of 600 cents a kilogram. Assuming favourable seasonal conditions, an increase in restocker demand for flock rebuilding is expected to provide further support to domestic saleyard lamb prices.

Lamb saleyard price and slaughter, Australia

Lamb slaughter

millionhead

2015–16c/kg

Lamb saleyard price (right axis)

150

300

450

600

750

5

10

15

20

25

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06


Sheep meat and wool


Domestic lamb prices are projected to continue to rise in 2017–18 in real terms, before declining gradually towards 2020–21 in response to a projected increase in supplies as a result of an expected larger flock.

Sheep prices to rise in the short termIn the short term, sheep prices are forecast to increase by 5 per cent to 350 cents a kilogram in 2015–16 and by a further 10 per cent to 385 cents a kilogram in 2016–17. This reflects an expected reduction in adult sheep turn-off and greater restocker demand as producers rebuild their flocks under the assumption of favourable seasonal conditions. Flock rebuilding is expected to drive higher sheep prices, particularly the price of breeding ewes.

Over the medium term, saleyard prices are projected to increase further in 2017–18, before declining gradually, as sheep numbers increase and turn-off starts to rise again. In 2020–21 sheep prices are projected to average 354 cents a kilogram (in 2015–16 dollars).

Sheep saleyard price and slaughter, Australia

Sheep slaughter

millionhead

2015–16c/kg

Sheep saleyard price (right axis)

100

200

300

400

500

3

6

9

12

15

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06


Wool prices to rise in the short termThe Australian Eastern Market Indicator (EMI) wool price is forecast to be 13 per cent higher in 2015–16 at around 1 240 cents a kilogram, supported by an assumed lower value of the Australian dollar and a forecast fall in wool production.

In 2016–17 the EMI is forecast to rise by a further 5 per cent to average 1 300 cents a kilogram, supported by forecast moderate growth in export demand. Recovering economic activity in major consuming economies, including the eurozone, is expected to result in a modest increase in consumer demand for woollen garments and apparel.

Sheep meat and wool


Australian Eastern Market Indicator wool price, weekly

c/kg clean

EMI

EMI (USD)Bales o�ered (right axis)

300

600

900

1 200

1 500

’000 bales

10

20

30

40

50

Jan2016

Aug2015

Aug2012

Mar2015

Sep2014

Apr2014

Nov2013

May2013

Dec2012

Over the medium term, the EMI is projected to remain at around 1 300 cents a kilogram in 2018–19 (in 2015–16 dollars), before easing gradually towards 2020–21. The EMI is projected to average around 1 212 cents a kilogram in 2020–21 (in 2015–16 dollars), reflecting an increase in wool production in Australia and other major producing countries and an assumed gradual appreciation of the Australian dollar.

Flock rebuilding continues at a gradual paceIn the first half of 2015–16 turn-off through saleyards, particularly for lambs, increased in regions adversely affected by seasonal conditions. However, significant rainfall in eastern Australia in late January and early February 2016 has led to increased restocker demand and, as a result, sheep numbers are forecast to increase slightly in 2015–16 to around 70 million head.

If seasonal conditions are favourable in 2016–17, graziers are expected to continue to increase sheep numbers. However, forecast higher saleyard prices will encourage lamb and older sheep slaughter to meet strong demand, especially for export. On balance, by the end of 2016–17 sheep numbers are forecast to rise by 2 per cent to around 71.4 million head.

Over the medium term, assuming average seasonal conditions, sheep numbers are projected to increase slowly to around 77 million head by 2020–21. With producers looking to increase sheep numbers and an ongoing trend towards sheep meat production, both the proportion of breeding ewes in the flock and lambing rates are expected to rise. The number of wethers (non-breeding sheep kept for wool production) in the flock is forecast to rise slightly over the outlook period, reflecting higher wool prices.

Sheep meat and wool


Sheep flock, Australia

Lambs

Non-breeding adultsheep (wethers)Ewes

%

Share of ewes in adult �ock (right axis)

millionhead

25

50

75

100

125

20

40

60

80

100

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06


Lamb slaughter and production to fallOver the past two decades, the sheep industry has been shifting focus from wool to prime lamb production. As a result, lamb slaughter as a proportion of the total sheep flock has risen. Over the past few years, strong export demand for lamb and relatively poor seasonal conditions have led to markedly higher lamb slaughter.

Average carcase weights in the first half of 2015–16 were largely unchanged from the same period a year earlier as a result of mixed seasonal conditions across major producing regions. Assuming favourable seasonal conditions across major producing regions, lamb slaughter and production are forecast to fall in the short term. Production is expected to be 4 per cent lower at 485 000 tonnes in 2015–16. In 2016–17 production is forecast to fall by a further 2 per cent to 473 000 tonnes.

Lamb slaughter is projected to increase in the latter part of the projection period, reflecting increasing numbers of ewes and a consequent increase in lamb numbers. By 2020–21 lamb slaughter is projected to increase to around 22.8 million head, with production of 514 000 tonnes.

Mutton production to fallAdult sheep slaughter is forecast to fall by 15 per cent in 2015–16 to around 7.7 million head. Flock rebuilding is expected to result in the retention of more breeding ewes and this will reduce the availability of sheep for slaughter. As a result, mutton production is forecast to fall by 15 per cent to 182 000 tonnes in 2015–16 and by a further 16 per cent in 2016–17 to 153 000 tonnes.

Over the medium term, adult sheep slaughter is projected to remain relatively low as producers continue increasing sheep numbers. However, the projected increase in sheep numbers is expected to drive a slow recovery in adult sheep slaughter, from 6.5 million head in 2017–18 to around 7.1 million head in 2020–21. Mutton production in 2020–21 is projected to increase to around 169 000 tonnes.

Sheep meat and wool


Shorn wool production to fall, before growing over medium termShorn wool production is forecast to fall by around 7 per cent to 322 000 tonnes greasy in 2015–16, reflecting a forecast fall in the number of sheep shorn and a 2 per cent fall in the average fleece weight to 4.4 kilograms a head. The decline in the average fleece weight is a result of adverse seasonal conditions—particularly in the sheep producing regions of Victoria, Tasmania and Queensland—during the first half of the year, together with a smaller proportion of wethers in the national flock.

Shorn wool production is forecast to increase by 3 per cent in 2016–17 to 332 000 tonnes greasy, reflecting an expected rise in cut per head (to around 4.49 kilograms) and a forecast increase in the number of sheep shorn as a result of flock rebuilding activity.

Shorn wool production and price, Australia

Shorn wool production

kt2015–16c/kg clean

EMI (right axis)

300

600

900

1 200

1 500

200

400

600

800

1 000


2020–21z

2016–17f

2012–13

2008–09

2004–05

2000–01

1996–97

Over the remainder of the outlook period, shorn wool production is projected to increase slowly to 360 000 tonnes in 2020–21, largely reflecting the expected increase in the number of sheep shorn as the national flock increases. However, the average cut per head is forecast to fall slightly to around 4.46 kilograms by 2020–21 as a result of an expected increase in the share of meat breeds in the Australian sheep flock. This compares with an average cut per head of 4.8 kilograms in 1989–90, when merinos represented a greater proportion of the national flock.

Domestic sheep meat consumption to remain at current levelsAustralian domestic per person sheep meat consumption has been in long-term decline. Average per person consumption of lamb and mutton fell from 17.5 kilograms and 7.7 kilograms a year, respectively, in 1974–75 to an estimated 9.2 kilograms and 0.5 kilograms a year, respectively, in 2014–15. These trends have been largely driven by lower prices of substitute meats, particularly chicken.

Sheep meat and wool


Over the outlook period, domestic per person lamb consumption is expected to remain around current levels. As a result, total domestic lamb consumption is forecast to increase slowly over the medium term in line with increases in Australia’s population.

Lamb production, exports and domestic consumption, Australia

Exports

Domestic consumption

kg/person

Consumption per person(right axis)

kt cwe

f ABARES forecast.

2015–16f

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

100

200

300

400

500

600

3

6

9

12

15

18

Lamb exports to fall in 2015–16, before slowly recoveringAustralian lamb exports are forecast to fall by 7 per cent to 224 000 tonnes (shipped weight) in 2015–16. The fall in exports reflects the expected fall in lamb slaughter and production. Lamb export earnings are forecast to fall by 5 per cent to $1.61 billion in 2015–16, reflecting support from a lower Australian dollar.

In 2016–17 the volume of lamb exports is forecast to fall by 4 per cent to around 215 000 tonnes. Supply for export is expected to fall as producers retain more stock to increase flock sizes. Lamb export earnings are forecast to fall by almost 3 per cent to $1.57 billion in 2016–17.

The largest fall in sheep meat exports in the short term is expected to be shipments to China. Australian lamb exports to China are forecast to fall by 22 per cent in 2015–16 to 28 000 tonnes as a result of lower Australian production and increased competition from New Zealand, which has entered the Chinese market tariff-free from 1 January 2016. In 2016–17 Australian lamb exports to China are forecast to fall by a further 3 per cent to 27 000 tonnes.

Over the medium term to 2020–21, the projected expansion of the sheep flock is expected to increase the supply of lambs for slaughter and lamb exports are forecast to grow to around 233 000 tonnes by the end of the outlook period.

Sheep meat and wool


Australian lamb exports, by major destination

kt swe


2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

Other

United States

Middle East

China

50

100

150

200

250

300

United StatesThe United States is Australia’s largest market for lamb by value. Export earnings from this market have grown strongly in recent years and reached a record $504 million in 2014–15. Lamb remains a niche product in the United States. However, stronger economic growth together with a higher US dollar relative to the Australian dollar will contribute to increased export demand for Australian lamb in this market over the short to medium term.

In the first half of 2015–16, exports of lamb to the United States increased by more than 7 per cent year-on-year to 25 500 tonnes, largely reflecting a lower Australian dollar. For the year as a whole, export volumes of Australian lamb to the United States are forecast to increase by 4 per cent to 50 000 tonnes, while export values are forecast to rise by 7 per cent to $540 million.

In 2016–17 exports are forecast to increase by 1 per cent to 50 500 tonnes as a result of forecast growth in Australian lamb supplies. Over the remainder of the outlook period, Australian exports of lamb to the United States are projected to grow slowly to 52 000 tonnes in 2020–21.

Middle EastThe Middle East has a tradition of sheep meat consumption and 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. A lower Australian dollar compared with the currencies of some major markets in the Middle East will drive further growth in export demand to the region in the short to medium term.

Sheep meat and wool


In the first half of 2015–16 total Australian lamb exports to the Middle East fell by 3 per cent year-on-year to around 33 600 tonnes. However, exports to individual countries varied considerably. During the period, exports to the United Arab Emirates increased by almost 9 per cent to 9 700 tonnes, making that country Australia’s largest export destination in the region. Exports to Qatar, the second-largest export destination, increased by 20 per cent to 7 100 tonnes. Exports to Jordan fell by 16 per cent to 7 600 tonnes.

Saudi Arabia, Oman and the United Arab Emirates were the largest destinations for Australian mutton exports in the first half of 2015–16. However, significant falls in export volumes to these markets reflect a sharp decline in Australian mutton production and exports over the period.

In 2015–16 lamb exports to the Middle East as a whole are forecast to fall by 2 per cent to 68 000 tonnes, reflecting the reduced availability of Australian lamb. In 2016–17 exports to the region are forecast to grow by 1 per cent to 69 000 tonnes. Over the remainder of the outlook period, lamb exports to the Middle East are forecast to grow slowly, with exports reaching around 73 000 tonnes in 2020–21.

ChinaChina has become a major destination for Australian sheep meat exports over the past decade, reflecting the scale of this market and steady growth in consumer demand. More recently, Australian exports to China have faced increased competition from growing domestic sheep meat supplies and from New Zealand lamb, which has been subject to lower import tariffs. As a consequence, Australian lamb exports to China peaked at 41 000 tonnes in 2013–14, before falling by 13 per cent to 35 700 tonnes in 2014–15.

In 2015–16 Australian lamb exports to China are forecast to fall by 22 per cent to 28 000 tonnes as a result of lower Australian production and increased competition from New Zealand lamb, which enters the Chinese market tariff-free from 2016.

In 2016–17 Australian lamb exports to China are forecast to fall by a further 3 per cent to 27 000 tonnes. Over the medium term, growing Chinese demand and slower growth in New Zealand lamb production are expected to result in slow growth in Australian exports to China, which are forecast to be around 30 000 tonnes by 2020–21.

New Zealand lamb maintains an advantage in market accessNew Zealand is Australia’s major competitor in the world market for sheep meat. Compared with Australia, New Zealand maintains a significant advantage in market access in the major export markets of China and the European Union. This is largely a result of the New Zealand–China Free Trade Agreement, which entered into effect in 2008. It has provided New Zealand exports to China with a strong price advantage.

Under the China–Australia Free Trade Agreement, which entered into effect in December 2015, tariffs on Australian sheep meat exports to China—ranging from 12 per cent to 23 per cent—will be phased out by 1 January 2023. In the case of the European Union, New Zealand’s exports are subject to a quota of 228 254 tonnes (carcase weight equivalent), while the quota for Australian sheep meat is 19 186 tonnes.

Sheep meat and wool


Beef + Lamb New Zealand forecasts that NZ total lamb exports will fall by 6.3 per cent to 293 000 tonnes in 2015–16, largely reflecting a declining sheep flock and reduced export supplies. Over the medium term, New Zealand lamb exports are forecast to grow slowly, reflecting an expected recovery in New Zealand sheep numbers as flocks begin to rebuild after some years of decline. This will be aided by forecast slower growth in New Zealand’s dairy industry, which competes for land with sheep enterprises, particularly on the South Island.

Mutton exports to fall sharplyAustralian mutton exports are forecast to decline by 17 per cent in 2015–16 to around 141 000 tonnes (shipped weight), reflecting an expected fall in sheep slaughter. In 2016–17 mutton exports are forecast to fall by a further 16 per cent to around 118 000 tonnes as flock rebuilding gathers pace and sheep slaughter continues to fall. From 2018–19 mutton exports are projected to grow slowly to around 130 000 tonnes in 2020–21 as sheep numbers increase.

Australian mutton exports, by destination, quarterly

kt swe

Other

Asia (excluding China)

China

Middle East

10

20

30

40

50

60

Dec2015

Mar2015

Jun2014

Sep2013

Dec2012

Live sheep exports to fallAustralia’s exports of live sheep are forecast to fall by 15 per cent to 1.9 million head in 2015–16, largely as a result of lower sheep numbers and flock rebuilding activity, particularly in Western Australia, which accounts for the bulk of Australia’s live exports.

In 2016–17 live sheep exports are forecast to increase by 8 per cent to around 2 million head as flock rebuilding yields an increased supply of sheep available for export. Over the medium term, live sheep exports are projected to increase steadily, to around 2.4 million head in 2020–21, as the supply of live sheep available for export grows. The Middle East is expected to remain the main destination for Australian live sheep exports, with Bahrain, Kuwait, Jordan and Qatar expected to account for the bulk of this trade.

Sheep meat and wool


Australian live sheep exports

Other

Qatar

Bahrain

Jordan

Saudi Arabia

Kuwait

millionhead

1

2

3

4

5

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06


Australian raw wool exports to rise slowly over medium termAustralia is the world’s largest producer and exporter of wool. China—the world’s largest importer of raw wool—is the largest export destination for Australian wool, accounting for around 77 per cent of Australian exports of wool by volume.

Australian wool exports are forecast to fall by 5 per cent in 2015–16 to 438 000 tonnes (greasy equivalent), reflecting the forecast fall in sheep numbers and a consequent fall in production. Over the same period, the value of Australian wool exports is forecast to increase by 9 per cent to around $3.4 billion, with forecast higher wool prices expected to more than offset lower export volumes.

Wool exports are forecast to rise by 1 per cent in 2016–17 to 443 000 tonnes as flock rebuilding results in an increase in the number of sheep shorn. Over the remainder of the outlook period exports are projected to increase slowly to around 472 000 tonnes in 2020–21, reflecting rebuilding of the national flock.

Australian wool exports, by destination

Other

Taiwan

India

Czech Republic

Italy

China

ktgreasy

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06


100

200

300

400

500

600

700

Sheep meat and wool


Price competitiveness of alternative fibres to increaseSharp falls in the world price of crude oil have changed the relative price competitiveness of wool to synthetic fibres, which are manufactured from petroleum products. For example, over the 12 months to December 2015, the ratio of the 21 micron wool price to the price of polyester staple fibre increased by 17 per cent to 9:43.

Cotton is the other major fibre competing with wool. Over the 12 months to December 2015, the ratio of the 21 micron wool price to Cotlook ‘A’ price finished the year relatively unchanged at 6:21, suggesting no significant change in relative price competitiveness.

Should they continue, these price trends indicate that a higher degree of substitution of synthetic fibres for wool is likely in global textile and clothing manufacturing. If world oil prices remain low over the short to medium term, this substitution is likely to place downward pressure on wool prices. This will especially be the case for the prices of wool ranging between 20 micron and 24 micron, for which the substitution with synthetic fibres is the highest.

Price ratios of wool and alternative fibres

ratio

21 micron to China Polyester21 micron to Cotlook ‘A’Cotlook ‘A’ to China Polyester

Dec2015

Dec2014

Dec2013

Dec2012

Dec2011

Dec2010

Dec2009

2

4

6

8

10

Sheep meat and wool


Consumer demand for woolDemand for Australian wool is driven by global consumer demand for woollen textiles and apparel, particularly in the wealthier countries of the OECD. In the major wool consuming countries of the European Union and the United States, recent trade data indicate that consumer demand has weakened. However, over the medium term a forecast improvement in world economic growth supports expectations of moderate growth in global consumer demand for woollen products.

The United States is the world’s largest importer of woollen textiles and apparel. Trade data released by the US Office of Textiles and Apparel indicate that US imports of wool products (including apparel and carpets) declined in 2015 despite rising economic growth and a higher US dollar. In the 12 months to December 2015, total US imports fell by 3 per cent to 595 million square metre equivalents year-on-year. The value of these imports fell by 6 per cent to US$9.7 billion, reflecting the greater purchasing power of the higher US dollar. Despite this, US clothing retail sales (of all fibres, not only wool) for the 12 months to December were up 2 per cent in value terms on the same period in 2014.

In the European Union, imports of woollen products fell year-on-year by almost 9 per cent to 92 000 tonnes in the 10 months to October 2015 but increased by more than 6 per cent in value terms to 2.5 billion euros. A significant depreciation of the euro, together with weak economic growth, has adversely affected domestic demand and resulted in higher import prices and lower import volumes. Over the period to 2020–21, an assumed strengthening of economic growth in the European Union is expected to drive improved consumer demand for woollen products.

The European Union is also a major manufacturer and exporter of high-end and luxury woollen products and apparel. In the 10 months to October 2015, EU export volumes increased year-on-year by 1 per cent to 70 800 tonnes, while export values increased by 8 per cent to 3.5 billion euros. This was largely as a result of a lower euro exchange rate. Assuming modest economic growth in the major OECD countries (the main export destinations for EU woollen products), EU exports are expected to increase moderately over the medium term, and this is likely to be reflected in growing raw wool imports.

Global demand for woollen products is also reflected in imports of raw wool by China, the world’s largest wool processor and the destination for the bulk of Australian wool exports. In 2015 China’s need to replenish wool stocks amid strong growth in the manufacture of double-faced woollen fabrics for coats for the northern autumn–winter of 2015–16 pushed processing demand for raw wool higher.

The increase in Chinese demand drove Australian wool prices higher in the 12 months to December 2015. China’s volume of Australian wool imports increased by 3 per cent to 335 000 tonnes and its value by 22 per cent to $2.5 billion. However, Australian exports to China slowed markedly in the latter months of 2015, which may reflect slowing demand for woollen products in China’s major export markets.

China is also a major consumer of woollen products, with domestic consumption estimated to account for around 50 per cent to 60 per cent of China’s total raw wool imports. Slowing economic growth in China has the potential to dampen domestic demand. Any decline in China’s domestic consumption, set against slowing exports of woollen products, could lead to a build-up of stocks. This could result in slower growth in raw wool imports in the short term. However, over the medium term, China’s demand for raw wool is expected to grow more strongly, in line with policies that encourage greater domestic consumption in China and assumed stronger economic growth in other major consuming countries.

Sheep meat and wool


Outlook for sheep meat and wool

unit 2013–14 2014–15 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 z

– nominal c/kg 476 518 550 600 650 640 630 620– real b c/kg 494 529 550 586 619 595 571 548

– nominal c/kg 262 332 350 385 430 420 410 400– real b c/kg 271 338 350 376 410 390 372 354

– nominal c/kg 1 070 1 102 1 240 1 300 1 350 1 390 1 380 1 370– real b c/kg 1 110 1 123 1 240 1 269 1 286 1 292 1 251 1 212

Total sheep d million 72.6 69.9 70.1 71.4 72.7 73.9 75.4 77.0Sheep shorn million 78.0 76.9 73.3 73.9 75.4 76.9 78.7 80.8Cut per head kg 4.37 4.50 4.40 4.49 4.49 4.48 4.47 4.46

Lambs ’000 21 899 22 867 21 900 21 400 21 800 22 200 22 300 22 800Sheep ’000 10 066 9 022 7 700 6 500 6 500 6 800 7 000 7 100

Lamb kt 474 507 485 473 483 493 504 514Mutton kt 228 214 182 153 154 161 167 169

– shorn kt 341 346 322 332 339 345 352 360– other g kt 79 81 75 71 72 74 75 77– total kt 420 427 397 403 411 419 427 437

Lamb kg 8.9 9.4 9.2 9.0 9.1 9.1 9.1 9.2Mutton kg 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Lamb exports h kt 226 242 224 215 219 223 228 233

– nominal $m 1 468 1 695 1 613 1 572 1 607 1 641 1 674 1 710– real b $m 1 523 1 729 1 613 1 535 1 530 1 525 1 517 1 512Mutton exports h kt 183 169 141 118 118 124 128 130

– nominal $m 758 778 693 613 614 619 641 650– real b $m 787 793 693 599 585 575 581 575Live sheep exports ’000 2 020 2 180 1 852 2 000 2 100 2 200 2 300 2 400Wool exports (gr. equiv.) kt 428 459 438 443 448 454 463 472

– nominal i $m 2 877 3 154 3 440 3 669 3 853 4 020 4 071 4 120– real b $m 2 985 3 217 3 440 3 582 3 669 3 735 3 690 3 644

Sheep a

Eastern Market Indicator c

Wool production (greasy)

Lamb export value

Mutton export value

Wool export value

Sheep numbers

a Saleyard prices, dressed weight. b In 2015–16 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; Department of Agriculture and Water Resources, Canberra

PricesLambs a

Slaughterings

Production e

Consumption per person

Exports


• Over-the-hooks pig prices are forecast to increase in 2016–17 in response to higher consumer demand for pig meat partly in response to forecast higher retail prices for beef and lamb.

• Australian pig meat production is projected to rise over the short and medium term (to 2020–21) through herd expansion.

• Pig meat imports are projected to rise over the short term, with US pig meat supplies recovering from disease issues and higher shipments from the European Union because of the Russian Federation’s ongoing ban on EU pig meat.

The Australian weighted average over-the-hooks pig price is forecast to rise by 10 per cent in 2015–16 to 356 cents a kilogram (dressed weight) and is forecast to rise by a further 3 per cent in 2016–17 to 367 cents a kilogram. This primarily reflects increased demand for locally produced fresh pork resulting from consumers facing rising retail prices for red meats.

Over the medium term, over-the-hooks pig prices are projected to remain high, reaching 363 cents a kilogram by 2020–21 (in 2015–16 dollars). Demand for locally produced pork is expected to remain firm over the remaining outlook period as prices for competing red meats are projected to remain relatively high.

Pig meat production and over-the-hooks prices, Australia

Production

2015–16c/kg

Real price (right axis)

kt

100

200

300

400

500

100

200

300

400

500


2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

Pig meatOutlook to 2020–21

Karen Dutra

Pig meat


Production to rise over medium termAustralian pig meat production is forecast to increase by 3 per cent in 2015–16 to 382 000 tonnes and by a further 3 per cent in 2016–17 to 393 000 tonnes. Production has increased consistently over the past five years as a result of herd expansion. Slaughter weights have increased by 4 per cent over the same period. A 10 per cent increase in birth rates and increased piglet survival rates resulted in the number of slaughtered pigs per sow increasing by 11 per cent over the five years to 2014–15.

Around 40 per cent of domestic production is channelled towards the fresh pig meat market. The remainder goes to the processed sector, which faces strong competition from imports. Competition from imports in the processed sector is expected to continue but domestic feed grain prices are forecast to remain relatively low in the outlook period, which will support producer margins. Feed grains historically account for around 55 per cent of producers’ costs. In 2014–15 the pig-to-wheat and pig-to-barley average price ratios both increased by 13 per cent, indicating an improvement in margins.

Continuous productivity improvements and relatively low feed costs are also expected to support production over the medium term, with pig meat production projected to rise gradually to around 412 000 tonnes in 2020–21. Over this period, approximately 40 per cent of domestic production is expected to continue to be sold in the domestic fresh market. Biosecurity considerations have prevented imports of pig meat being sold in the fresh market, which has led to the sector being insulated from international competition. Australia accepts deboned pig meat imports from approved countries only, subject to specific import conditions, and it must be appropriately cooked before sale. Pig meat imports are only used in the processed sector.

Pig-to-feed price ratios, ended January 2016, Australia

ratio

Pig-to-barley ratio

Pig-to-wheat ratio

0.4

0.8

1.2

1.6

2.0

Jan2016

Jul2015

Jan2015

Jul2014

Jan2014

Jul2013

Jan2013

Jul2012

Pig meat


Australian pig meat consumption to riseAustralia’s pig meat consumption has grown more rapidly than domestic production, averaging 3 per cent a year over the past five years to reach 27.7 kilograms a person in 2015–16. This compares with production growth of 2 per cent a year over the same period. Pig meat imports as a share of domestic pig meat consumption grew from 31 per cent in 2005–06 to 49 per cent in 2014–15. Overall, processed pig meat (both imported and domestically produced) accounted for about two-thirds of total pig meat consumption and fresh pork for the remaining third.

Over the medium term, Australian consumption of pig meat is projected to reach 28.3 kilograms a person in 2020–21 because retail prices of beef and lamb are projected to remain high relative to pig meat prices.

Imports continue to growAustralian pig meat imports have more than doubled over the past 10 years from 75 000 tonnes in 2005–06 to 160 000 tonnes in 2014–15 (shipped weight). In 2015–16 imports are forecast to increase by 3 per cent to 165 000 tonnes after rising 16 per cent in the previous year.

Imports in the first five months of 2015–16 were 15 per cent lower than in the same period in 2014–15 because of lower US pig meat supply resulting from the porcine epidemic diarrhoea virus (PEDV) in the United States in the first half of 2014. Imports from the United States are expected to rise in the second half of 2015–16 as US pig production recovers after the PEDV outbreak. Higher shipments from the European Union are also expected, reflecting the ongoing ban on EU pig meat imports by the Russian Federation.

Over the medium term, Australian pig meat imports are projected to increase, reaching 190 000 tonnes in 2020–21. A substantial share of the projected increase in consumption is expected to be met by imports.

Pig meat imports, Australia

kt


OtherNetherlandsCanada DenmarkUnited States

50

100

150

200

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

Pig meat


Exports to rise marginally to 2020–21Australian pig meat exports are forecast to increase by 3 per cent in 2015–16 to around 28 000 tonnes (shipped weight). Value of exports in 2015–16 is forecast to increase by 19 per cent to $122 million, with the assumed lower Australian dollar supporting export values.

Singapore, New Zealand and Papua New Guinea are Australia’s largest export markets for pig meat, together accounting for 76 per cent of exports in 2014–15. A lower Australian dollar against the Singapore dollar contributed to a rise in exports to Singapore by 4 per cent in the first five months of 2015–16.

New Zealand has allowed the import of fresh pork from the United States and some EU member states since February 2014. As a result of increased exports from these countries to New Zealand, Australian exports to New Zealand fell by 13 per cent to 4 100 tonnes in 2014–15. Australia may continue to lose some market share for fresh pork exports in the New Zealand market over the medium term.

Australian pig meat exports are projected to reach 30 000 tonnes in 2020–21. However, exports will continue to account for a relatively small share of Australia’s pig meat production—at around 12 per cent in 2020–21. This compares with 11.6 per cent in 2014–15.

Pig meat exports, Australia

kt


OtherHong KongPapua New GuineaNew ZealandOther ASEAN

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

10

20

30

40

50

Singapore

Pig meat


Outlook for pig meat

unit 2013–14 2014–15 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 zunit 2013 14 2014 15 2015 16 f 2016 17 f 2017 18 z 2018 19 z 2019 20 z 2020 21 z

Over the hooks price al /

Over‐the‐hooks price a– nominal c/kg 306 317 356 376 388 395 403 411/ g– real b c/kg 318 324 356 367 370 367 365 363 real b c/kg 318 324 356 367 370 367 365 363Slaughterings ’000 4 778 4 924 5 071 5 215 5 256 5 304 5 364 5 430Slaughterings ’000 4 778 4 924 5 071 5 215 5 256 5 304 5 364 5 430Production c kt 360 371 382 393 398 402 407 412Production c kt 360 371 382 393 398 402 407 412Consumption per person kg 25 1 26 1 27 7 27 9 28 0 28 1 28 2 28 3Consumption per person kg 25.1 26.1 27.7 27.9 28.0 28.1 28.2 28.3I t l d kt 136 160 165 170 175 180 185 190Import volume d kt 136 160 165 170 175 180 185 190Export volume de kt 26.8 27.5 28.2 28.8 29.1 29.4 29.5 29.9Export volume de kt 26.8 27.5 28.2 28.8 29.1 29.4 29.5 29.9Export value

i l $Export value– nominal $m 85 102 122 125 127 124 123 124– real b $m 88 104 122 122 121 115 111 110 real b $m 88 104 122 122 121 115 111 110a Dressed weight b In 2015 16 Australian dollars c Carcase weight d Shipped weight e Excludes preserved pig meata Dressed weight. b In 2015–16 Australian dollars. c Carcase weight. d Shipped weight. e Excludes preserved pig meat.f ABARES f ABARES j if ABARES forecast. z ABARES projection.Sources: ABARES; Australian Bureau of StatisticsSources: ABARES; Australian Bureau of Statistics


• Australian chicken meat production is forecast to increase by 3 per cent to 1.16 million tonnes in 2015–16 and is projected to reach 1.36 million tonnes by 2020–21.

• Retail prices of chicken meat are expected to remain lower than those of alternative meats, resulting in increasing per person consumption in the short to medium term.

• Over the medium term, exports are projected to increase by 3 per cent a year to 41 000 tonnes in 2020–21.

The Australian chicken meat industry is dominated by a small number of large, vertically integrated enterprises, which have increased production consistently over the past decades. Productivity growth in the industry has resulted from an increasing number of birds slaughtered and an increase in slaughter weights. The large scale of these enterprises has enabled investment in processing improvements and a focus on breeding to improve conversion ratios and reduce the time between birth and bird maturity.

The number of birds slaughtered increased by an average of 5 per cent a year over the five years to 2014–15 and slaughter weights increased by 1 per cent a year over the same period to average 1.91 kilograms. This growth is expected to continue over the medium term. Australian chicken meat production is forecast to increase by 3 per cent in 2015–16 to 1.16 million tonnes (carcase weight) and by a further 4 per cent in 2016–17 to 1.20 million tonnes. Over the medium term, chicken meat production is projected to increase by around 3 per cent a year to 1.36 million tonnes in 2020–21.

By 2020–21 the share of chicken meat in total meat production is expected to reach 29.5 per cent on a carcase weight basis, compared with 23.3 per cent in 2014–15. The share of red meat is expected to decline.

Chicken meatOutlook to 2020–21

Karen Dutra

Chicken meat


Chicken slaughter and meat production, Australia

Production

million head

Slaughter (right axis)

kt

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11


200

400

600

800

1 000

1 200

1 400

1 600

100

200

300

400

500

600

700

800

Domestic consumption to continue to riseGrowth in chicken meat consumption is primarily a response to retail prices remaining well below those of beef, lamb and pork. Population growth has also contributed to growing domestic demand. Total chicken meat consumption has increased by an average of 4 per cent a year over the past 10 years, while the rise in per person consumption has averaged around 2.4 per cent a year over the same period. High retail prices are forecast for alternative meats, particularly beef and lamb, so per person consumption of chicken meat is forecast to increase by 2 per cent in 2015–16 to 46.2 kilograms and by a further 2 per cent in 2016–17 to 47.0 kilograms.

Chicken meat consumption is forecast to continue rising over the medium term but at a slower rate. By 2020–21 consumption of chicken meat is forecast to reach 49 kilograms a person, 8 per cent higher than in 2014–15. This compares with 25.7 kilograms of beef (12 per cent lower than in 2014–15), 9.2 kilograms of lamb (2 per cent lower) and 28.3 kilograms of pig meat (7 per cent higher).

Chicken meat retail price and per person consumption, Australia

Consumption per person

2015–16c/kg

Retail price (right axis)

10

20

30

40

50

60

kg/person

30

60

90

120

150

180

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11


Chicken meat


Meat consumption per person comparison, Australia

kg/person

Chicken

BeefPigLamb


10

20

30

40

50

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

Chicken meat trade to increaseAustralian trade in chicken meat remains a relatively small component of the industry. Unlike the red meat industries, the chicken meat industry is almost entirely focused on the domestic market—with exports historically accounting for less than 5 per cent of production.

Total chicken meat exports were 34 200 tonnes in 2014–15, with Papua New Guinea and the Philippines the major destinations. Australia exported 650 tonnes of chicken meat to Japan in 2014–15, after that country imposed bans on imports from some regions in the United States because of outbreaks of highly pathogenic avian influenza (H7N8).

In 2015–16 Australian exports of chicken meat are forecast to increase by 1 per cent to 34 500 tonnes, with outbreaks of strains of avian influenza affecting poultry industries in the United States (H7N8), China (H7N9) and the European Union. The relatively low Australian dollar is expected to assist the competitiveness of Australian exports.

Over the medium term, exports are forecast to remain a small component of total chicken meat production, with domestic consumption continuing to account for 96 per cent of total production. Australian chicken meat exports are expected to increase by an average of 3 per cent a year to 41 000 tonnes (shipped weight) in 2020–21.

Chicken meat


Outlook for chicken meat

unit 2013–14 2014–15 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 zunit 2013 14 2014 15 2015 16 f 2016 17 f 2017 18 z 2018 19 z 2019 20 z 2020 21 z

Production a kt 1 084 1 116 1 155 1 200 1 240 1 275 1 310 1 360Production a kt 1 084 1 116 1 155 1 200 1 240 1 275 1 310 1 360Consumption per person kg 44.7 45.3 46.2 47.0 47.7 48.3 48.8 49.0p p p gExport volume b kt 35.4 34.2 34.5 36.5 37.6 38.7 39.9 41.0Export volume b kt 35.4 34.2 34.5 36.5 37.6 38.7 39.9 41.0Export value $m 48 0 53 7 60 1 63 9 65 8 67 8 69 8 67 3Export value $m 48.0 53.7 60.1 63.9 65.8 67.8 69.8 67.3a Carcase weight. b Shipped weight. f ABARES forecast. z ABARES projection.g pp g p jSources: ABARES; Australian Bureau of StatisticsSources: ABARES; Australian Bureau of Statistics

Chicken meat exports, Australia

Other

kt

Solomon IslandsPhilippines

10

20

30

40

50

Papua New GuineaHong Kong

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07



• World dairy product prices are forecast to rise in 2016–17 and 2017–18 in response to firmer demand from China and other developing countries.

• Prices are projected to decline in real terms after 2018–19 as growth in world production outpaces growth in world consumption.

• Australian milk production is projected to grow moderately over the outlook period to 2020–21, as a result of increased cow numbers and growth in milk yields.

World dairy prices to rise in 2016–17 and 2017–18World dairy prices are forecast to average higher in the short term (2016–17 and 2017–18), driven by firmer demand for dairy imports from China and continued strong demand from other developing countries in Asia, the Middle East and North Africa. However, increases in world dairy prices are expected to be constrained by a forecast increase in world milk production, largely resulting from rising production in the European Union.

World prices of cheese and skim milk powder are forecast to increase by 8 per cent and 6 per cent in 2016–17 to US$3 663 a tonne and US$2 340 a tonne, respectively. World butter and whole milk powder prices are forecast to increase by 4 per cent and 5 per cent to US$3 510 a tonne and US$2 620 a tonne, respectively. These forecast increases in world prices follow falls in 2015–16 averaging between 3 per cent and 15 per cent because of subdued global import demand and growth in global milk production.

Reflecting the improved outlook for world income growth and resulting higher demand for dairy products in 2017–18, world dairy prices are forecast to recover further during the outlook period. For skim milk powder and cheese, world prices are forecast to rise by a further 13 per cent and 10 per cent, respectively. World whole milk powder and butter prices are forecast to rise in 2017–18 by 10 per cent and 8 per cent, respectively.

DairyOutlook to 2020–21

Owen McCarthy

Dairy


World dairy prices to ease late in medium termWorld demand for dairy products is expected to increase over the period to 2020–21, with the strongest growth expected for cheese. This largely reflects rising incomes, changing diets and population growth in developing countries in Asia, the Middle East and North Africa. World dairy prices are projected to rise further in 2018–19 in response to rising demand, with cheese and skim milk powder prices projected to grow faster than other dairy product prices. However, with world milk production projected to rise, world dairy prices are projected to decline in real terms after 2018–19. Nevertheless, world dairy prices in 2020–21 are projected to average between 10 per cent and 21 per cent higher in real terms than average prices in 2015–16.

World dairy price projections

2015–16US$/t

Cheese

Skim milk powderWhole milk powderButter

1 000

2 000

3 000

4 000

5 000

6 000


2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

2002–03

Global milk supplies continue to riseGlobal milk production is forecast to rise moderately in 2016–17, supported by relatively low feed costs. Over the medium term, world milk production is projected to continue increasing as milk yields improve in the main exporting regions. Milk production in the emerging economies of India, China and Brazil is also expected to rise in response to dairy herd expansion, increased domestic demand, and improvement in farm management practices and production technologies.

European UnionEU milk production is forecast to rise by 1 per cent in the 2016–17 marketing year (April to March), mainly in response to higher milk yields. This follows a forecast 2 per cent increase in 2015–16, with the removal of milk quotas encouraging herd expansion in some EU member countries.

EU exports of dairy products, particularly skim milk powder and butter, are forecast to rise in 2016–17. This reflects relatively large supplies available for export and strong demand from major trading partners in Asia, the Middle East and North Africa. The Russian Federation’s trade embargo is set to expire in August 2016.

Dairy


Over the remainder of the projection period, EU milk production is projected to increase by around 1 per cent a year to 2020–21. Milk production increases over the medium term are expected to be driven largely by milk yield increases resulting from farm management advances such as improved herd genetics, wider use of robotic technology, better pasture management and greater use of concentrate feeds. The largest increases in milk production are expected in northern and western member states, where production is more efficient as a result of continued investment in farms and processing capacity. These member states include Belgium, Denmark, Ireland, the Netherlands and Poland.

EU cheese production is projected to rise at a faster rate than production of other dairy products over the outlook period. This is mainly in response to growing domestic demand, particularly in the EU-N13 (the 13 member states that have joined the European Union since 2004). EU exports of cheese, butter and milk powders are projected to rise over the medium term in response to strong demand from major export destinations.

New ZealandNew Zealand milk production is forecast to decline by 6 per cent in 2015–16 because significant reductions in farmgate milk prices have encouraged producers to reduce supplementary feed use and stocking rates. New Zealand farmgate milk prices are more sensitive to movements in world dairy prices than many other countries because around 95 per cent of New Zealand milk production is used in the manufacture of dairy products for export. This compares with around 35 per cent for Australia. Pasture growth was also adversely affected early in the season because of unfavourable seasonal conditions in winter and early spring. In 2016–17 farmgate milk prices are expected to increase but remain relatively low.

Milk production, year-on-year monthly change, New Zealand

kt

–500–400–300–200–100

0100200300400

Nov2015

Jul2015

Mar2015

Nov2014

Jul2014

Mar2014

Nov2013

Jul2013

Mar2013

The size of the New Zealand dairy herd is estimated to have declined by around 2 per cent in 2015 as producers responded to low farmgate milk prices and high beef prices by culling a greater proportion of less productive cows. Dairy cow numbers are expected to decline further in 2016 as farmgate milk prices remain relatively low and beef prices remain high.

Dairy


With world dairy product prices projected to recover over the next few years, New Zealand milk production is expected to increase over the medium term in response to an expansion of the national dairy herd and improvements in milk yields. However, the rate of growth is expected to be slower than that of the past decade, when the main driver of increases in milk production was the conversion of land from irrigated cropping or beef and sheep farming to dairy. Fewer opportunities for land conversion are expected over the projection period as a result of environmental restrictions and higher development costs.

New Zealand is projected to remain the world’s largest exporter of both whole milk powder and butter over the medium term. New Zealand’s exports of these products to China and other developing countries are expected to increase as demand for dairy imports rises.

United StatesUS milk production is forecast to rise by 2 per cent in 2016 in response to forecast higher milk yields and lower feed prices. This follows a 1 per cent increase in milk production in 2015. Dairy cow numbers are expected to remain largely unchanged in 2016 as relatively low farmgate milk prices discourage dairy herd expansion.

US exports of butter and cheese declined in 2015 by an estimated 70 per cent and 14 per cent, respectively. This was a result of strong domestic demand for these products and reduced competitiveness on world markets because of the strong US dollar. In 2016 increased butter production is forecast to result in exports of butter increasing by 36 per cent to 30 000 tonnes. Cheese exports are forecast to remain largely unchanged at 315 000 tonnes over the same period.

Over the medium term, US milk production is projected to rise largely in response to increases in milk yields. Milk yields are expected to increase as a result of genetic improvements in the national dairy herd, better pasture management and continued technological advances in production. While part of the projected growth in milk production is expected to be consumed domestically, increased quantities of dairy products are also expected to be exported. US exports of dairy products are projected to increase over the medium term.

Milk production and dairy cows, United States

Milk production

Mtmillionhead

Dairy cows (right axis)

2

4

6

8

10

f ABARES forecast.

20

40

60

80

100

2016f20142012201020082006

Dairy


ArgentinaMilk production in Argentina rose by an estimated 2 per cent in 2015 and is forecast to rise by a further 1 per cent in 2016, supported by expected low feed costs. Farmgate milk prices are expected to decline slightly in 2016, reflecting a build-up of milk powder stocks and subdued domestic demand.

Over the medium term, milk production in Argentina is projected to rise as farm consolidation continues in the dairy sector. Investment in medium-scale to large-scale dairy farms is expected to increase, resulting in higher milk yields through more intensive production systems. Some smaller producers are expected to leave the industry as a result of increased competition from larger, more efficient producers. Milk production is expected to rise at a faster rate than domestic consumption of dairy products over the projection period. As a result, dairy exports are expected to increase to major trading partners, including Algeria, Brazil, China, the Russian Federation and Venezuela.

BrazilMilk production in Brazil is forecast to remain largely unchanged in 2016 after rising by an estimated 2 per cent in 2015. Milk production growth began to slow in the second half of 2015 in response to falling farmgate milk prices and higher costs of imported inputs resulting from a depreciated Brazilian real. Farmgate milk prices are expected to remain low in 2016 as slow economic growth negatively affects domestic demand for dairy products.

Despite being the world’s fifth-largest milk producer, Brazil is a relatively small exporter of dairy products. This is expected to continue over the medium term, with milk production increasing in line with domestic demand. Milk production is projected to increase by around 3 per cent each year over the medium term as the national dairy herd expands and milk yields improve. Domestic consumption of dairy products is expected to increase in response to rising incomes and population growth.

IndiaMilk production in India increased by an estimated 5 per cent in 2015 to 147 million tonnes and is forecast to rise by a further 5 per cent in 2016. This growth largely reflects an expansion of the national dairy herd in response to rising domestic demand. India is the world’s second-largest milk producer. However, its milk is mostly produced by smallholder producers with low productivity. Despite rising domestic demand encouraging increased milk production, growth is constrained by several factors, including poor farm management, insufficient feed supplies, herd genetics, animal diseases, declining groundwater resources and reduced agricultural land area. Unlike other major milk producing countries, more than 56 per cent of India’s milk production is produced by water buffalos. Water buffalo milk has a higher fat content than cow milk but yields are lower.

The main dairy products produced in India are butter, ghee and skim milk powder. India is only a minor exporter of dairy products, with most milk produced for domestic consumption. India exports small quantities of dairy products to nearby countries, including Bangladesh, Pakistan, Nepal and those in the Middle East, with the largest export being skim milk powder. Exports of skim milk powder and butter in 2015 are estimated at 30 000 tonnes and 10 000 tonnes, respectively, and are forecast to remain similar in 2016.

Dairy


Over the medium term, India is projected to surpass the European Union as the world’s largest milk producer. Milk production is expected to increase in response to further expansion of the national dairy herd and increases in milk yields driven by improved farm management practices and investment in the dairy sector. The Indian Government is implementing support measures for the dairy sector aimed at increasing productivity. These include subsidies and other programmes to improve herd genetics, feed production and farm infrastructure. India’s domestic demand is projected to increase significantly over the medium term as consumer incomes rise and population growth continues. India is expected to remain a minor exporter of dairy products over the projection period as increases in milk production are met by strong growth in domestic demand.

Milk production, India

Mt

f ABARES forecast.

2016f20142012201020082006

20

40

60

80

100

120

140

160

Global demand to strengthen over medium termIn 2016–17 world demand for dairy imports is expected to strengthen, with a modest recovery in demand from China and continued strong demand in other developing countries. Over the medium term, world trade in dairy products is projected to continue rising, largely driven by strong import demand from developing countries in Asia, the Middle East and North Africa.

ChinaChina’s demand for dairy imports is expected to remain subdued in the first half of 2016 as stocks of milk powders continue to be drawn down and domestic milk production grows. In the second half of 2016, import demand is expected to recover as milk powder stocks decrease and low farmgate milk prices constrain growth in domestic milk production. In 2016 China’s imports of whole milk powder are forecast to rise by around 14 per cent to 400 000 tonnes and skim milk powder by around 5 per cent to 210 000 tonnes.

Dairy


Milk powder imports, China

Skim milk powder

Whole milk powder

kt

f ABARES forecast.

100

200

300

400

500

600

700

800

2016f20142012201020082006

Over the medium term, the rate of growth in import demand is expected to be slower than that of the past five years. Domestic milk production is expected to increase as improved herd genetics, better pasture management and investment in larger farms result in higher milk yields.

Imports of infant formula are expected to grow strongly over the projection period, with consumers favouring high-quality infant formula products manufactured abroad over domestic products. Demand for other dairy imports is also expected to grow over the outlook period, including cheese, butter, milk powders and fluid milk.

Russian FederationThe Russian Federation’s demand for dairy imports is expected to remain relatively weak in 2016 after imports fell in 2015. Cheese and butter imports are estimated to have declined in 2015 by 41 per cent and 38 per cent, respectively. This is in response to a depreciation of the Russian ruble against the US dollar, a contraction of the Russian economy and the ongoing trade embargo with key trading partners. Growth in imports will be constrained in 2016 because the ruble is expected to remain weak and economic growth is assumed to be slow. The Russian Federation has also extended its trade embargo until at least August 2016.

The Russian Federation is expected to remain a significant importer of cheese and butter over the medium term because domestic consumption is projected to increase at a faster rate than domestic production. Many producers in the Russian Federation are smallholder producers. Their milk yields are low as a result of limited farming infrastructure and poor dairy herd genetics. Domestic milk production has declined since 2009 as many smallholder farms have left the industry because of high operational costs and low milk prices. The government of the Russian Federation has provided a range of subsidies for the dairy industry with the aim of increasing investment in large-scale commercial dairies to offset falling production from smallholder producers. Subsidies are expected to continue over the outlook period. However, milk production growth is expected to be slow.

Dairy


ASEANASEAN is a large importer of milk powders, particularly skim milk powder. Imports of skim milk powder into the region accounted for around one-quarter of world trade in 2015, with the largest importers being Indonesia and Malaysia. Import demand from the region is forecast to rise in 2016 as a result of assumed economic growth and the ongoing expansion of food-processing sectors in many countries.

Over the medium term, import demand for dairy products in the region is projected to increase further, largely in response to higher per person consumption of milk and dairy products. Increases in domestic milk production in the region are expected to be limited over the projection period, resulting in higher demand for dairy imports.

Australia and New Zealand are among the four largest suppliers of dairy products to the region, together supplying around 55 per cent of milk powder imports in 2014. Competition from the European Union and the United States is expected to strengthen over the outlook period. However, Australia and New Zealand are expected to remain important suppliers in part because of their proximity to the region.

Value of milk powder imports, ASEAN, 2014

Australia 13%Other 4%

European Union 20%

United States 21%

New Zealand 42%

US$3.6 billion

Note: Excludes intra-ASEAN trade.

Middle East and North AfricaThe Middle East and North Africa region imports large quantities of dairy products to meet domestic demand because domestic milk production remains small relative to domestic consumption. Dairy imports into the region are forecast to rise in 2016 because domestic demand is expected to grow. However, growth in dairy imports will be constrained by a build-up of stocks accumulated during 2015.

Dairy


Over the medium term, the Middle East and North Africa region is expected to continue to meet growing demand for dairy products through higher imports because growth in domestic milk production is expected to remain limited. However, Algeria (the region’s largest importer of milk powders) is projected to increase milk production over the outlook period. Algerian Government development programmes aimed at increasing the size of the national dairy herd are being implemented to expand domestic milk production and reduce reliance on imports. These include subsidies for the import of dairy cattle and tariff exemptions on imported dairy farming equipment. Despite these programmes, Algeria is 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.

JapanJapan (the world’s second-largest cheese importer), is expected to increase cheese imports by 2 per cent in 2016 to 250 000 tonnes, following an estimated 6 per cent increase in 2015. This increase reflects rising domestic cheese consumption and largely unchanged domestic production.

Over the medium term, Japan is expected to remain a large market for cheese exports as a result of continued strong domestic demand for cheese and limited increases in domestic cheese production.

Prospects for the Australian dairy industryThe Australian farmgate price of milk is forecast to average 48.7 cents a litre in 2016–17, 3 per cent higher than the 2015–16 forecast of 47.5 cents a litre. This reflects a forecast small rise in world dairy prices, resulting in higher export returns for dairy exporters.

Over the medium term, the Australian farmgate milk price is projected to increase in real terms, reaching as high as 51.1 cents a litre (in 2015–16 dollars) in 2018–19. In the latter half of the projection period, the farmgate milk price is projected to ease in response to a decline in world dairy prices. Nevertheless, farmgate milk prices are projected to average around 6 per cent higher in real terms in 2020–21 than in 2015–16.

Milk production and farmgate price, Australia

Manufacturing milk

ML2015–16c/L

Farmgate milk price (right axis)

Market milk


2 000

4 000

6 000

8 000

10 000

12 000

10

20

30

40

50

60

2020–21z

2018–19z

2016–17f

2014–15

2012–13

2010–11

2008–09

2006–07

Dairy


Australian milk productionAustralian milk production is forecast to increase by 2 per cent to 9.8 billion litres in 2016–17 after a forecast 1 per cent decline in 2015–16. Assuming average seasonal conditions, higher production in 2016–17 would largely reflect improved milk yields and further expansion of dairy herds in the southern export-oriented regions. Milk production in late 2015 was adversely affected by dry seasonal conditions in Tasmania, Victoria and South Australia, with national production declining year-on-year in October and November. Fodder prices rose substantially in Tasmania as demand for hay rose.

Over the medium term, milk production is projected to rise to around 10.2 billion litres. The growth in production is expected to mainly reflect improved milk yields. Major drivers of milk yield increases are expected to be improved herd genetics, pasture management and farm technology, as well as increased grain and concentrate feed use, particularly in Victoria and Tasmania.

The size of the Australian dairy cow herd is projected to rise over the outlook period to around 1.79 million head by 2020–21. Expansion of dairy herds in the southern export-oriented regions is expected to continue because farmgate milk prices are expected to remain relatively favourable. Over the same period, dairy herds in the domestic market focused regions of Western Australia and Queensland are expected to remain largely unchanged.

Australian exportsThe total value of Australian dairy exports is forecast to rise by 4 per cent in 2016–17 to $2.4 billion, reflecting forecast higher world dairy prices and higher export volumes of most dairy products. This follows a forecast 7 per cent decline in the value of Australian dairy exports in 2015–16 to around $2.3 billion.

Earnings from dairy exports are projected to increase to around $2.7 billion (in 2015–16 dollars) by 2018–19, before easing in the latter half of the projection period as world dairy prices decline in real terms. South-East Asia and North Asia together accounted for around 75 per cent of the total value of Australian dairy exports in 2014–15. Over the outlook period Australia is expected to remain a significant exporter of dairy products to the Asian region, particularly to South-East Asia and North Asia, because of its proximity to these regions. However, Australian exporters are also expected to face increased competition from the European Union and the United States because these markets will have larger supplies of dairy products available for export.

Dairy


Dairy exports, Australia, 2014–15

Rest of world

kt

Other AsiaMiddle EastNorth AsiaSouth-East Asia

ButterWhole milkpowder

CheeseSkim milkpowder

50

100

150

200

Note: South-East Asia includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,Thailand, Timor-Leste and Vietnam. North Asia includes China, Democratic People’s Republic of Korea, Hong Kong, Japan, Macau, Mongolia, Republic of Korea and Taiwan. Middle East includes Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Palestinian Territories, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen.

Dairy


Outlook for dairy


WorldWorldI di i iIndicative priceButter

p

nominal US$/t 4 498 3 483 3 375 3 510 3 786 4 021 4 074 4 073Butter– nominal US$/t 4 498 3 483 3 375 3 510 3 786 4 021 4 074 4 073

l– real a US$/t 4 573 3 516 3 375 3 450 3 650 3 800 3 775 3 700US$/t 4 573 3 516 3 375 3 450 3 650 3 800 3 775 3 700Skim milk powderSkim milk powder

i l US$/t 4 513 2 592 2 200 2 340 2 645 2 963 2 968 2 917– nominal US$/t 4 513 2 592 2 200 2 340 2 645 2 963 2 968 2 917– real a US$/t 4 588 2 616 2 200 2 300 2 550 2 800 2 750 2 650 real a US$/t 4 588 2 616 2 200 2 300 2 550 2 800 2 750 2 650Cheese

i l $/Cheese– nominal US$/t 4 817 3 921 3 400 3 663 4 046 4 391 4 479 4 513– real a US$/t 4 897 3 957 3 400 3 600 3 900 4 150 4 150 4 100 real a US$/t 4 897 3 957 3 400 3 600 3 900 4 150 4 150 4 100AustraliaC bAustraliaCow numbers b ’000 1 647 1 740 1 725 1 740 1 760 1 775 1 780 1 785Milk yields L/cow 5 692 5 593 5 583 5 644 5 670 5 673 5 688 5 700Milk yields L/cow 5 692 5 593 5 583 5 644 5 670 5 673 5 688 5 700ProductionProductionTotal milk ML 9 372 9 732 9 630 9 820 9 980 10 070 10 125 10 175Total milk ML 9 372 9 732 9 630 9 820 9 980 10 070 10 125 10 175– Market sales ML 2 464 2 485 2 495 2 540 2 580 2 625 2 660 2 700– Market sales ML 2 464 2 485 2 495 2 540 2 580 2 625 2 660 2 700M f i 6 908 2 3 280 00 6– Manufacturing ML 6 908 7 247 7 135 7 280 7 400 7 445 7 465 7 475g

Butter c kt 116 119 121 123 124 125 126 126Butter c kt 116 119 121 123 124 125 126 126Cheese kt 311 344 352 360 365 370 373 375Cheese kt 311 344 352 360 365 370 373 375Skim milk powder kt 211 242 255 260 263 266 268 270pWhole milk powder kt 126 97 90 90 90 89 88 88Whole milk powder kt 126 97 90 90 90 89 88 88Farmgate milk priceFarmgate milk price– nominal Ac/L 51.2 48.5 47.5 48.7 52.0 55.0 56.2 56.8 nominal Ac/L 51.2 48.5 47.5 48.7 52.0 55.0 56.2 56.8– real d Ac/L 53 1 49 5 47 5 47 5 49 5 51 1 50 9 50 2– real d Ac/L 53.1 49.5 47.5 47.5 49.5 51.1 50.9 50.2E t lExport volumeButter c kt 49 44 37 39 42 44 47 50Butter c kt 49 44 37 39 42 44 47 50Cheese kt 151 159 170 173 177 179 180 182Cheese kt 151 159 170 173 177 179 180 182k lk dSkim milk powder kt 143 186 190 190 191 193 194 195pWhole milk powder kt 94 69 55 52 51 51 50 50Whole milk powder kt 94 69 55 52 51 51 50 50Export valueExport value– nominal A$m 2 725 2 473 2 302 2 391 2 664 2 929 2 950 2 947 nominal A$m 2 725 2 473 2 302 2 391 2 664 2 929 2 950 2 947– real d A$m 2 827 2 522 2 302 2 334 2 537 2 721 2 674 2 607– real d A$m 2 827 2 522 2 302 2 334 2 537 2 721 2 674 2 607I 2015 16 US d ll b At 30 J I l d th b tt i l t f b tt il b tt t t h d d b tt f ta In 2015–16 US dollars. b At 30 June. c Includes the butter equivalent of butter oil, butter concentrate, ghee and dry butterfat.

d In 2015–16 Australian dollars. f ABARES forecast. s ABARES estimate. z ABARES projection.p jSources: ABARES; Australian Bureau of Statistics; Dairy Australia, MelbourneSources: ABARES; Australian Bureau of Statistics; Dairy Australia, Melbourne

Fisheries


FisheriesOutlook to 2020–21

Jacob Savage, Andrea Bath, Richard Green, Robert Curtotti and Kasia Mazur

• Following strong increases in recent years Australia’s fisheries and aquaculture production earnings are forecast to decline by 2.7 per cent in 2016–17 to $2.8 billion. This reflects lower forecast prices for salmonids in 2016–17 and lower production volume of prawns.

• The real value of Australian fisheries and aquaculture production is projected to decline by a further 4.4 per cent over the medium term to 2020–21, largely as a result of lower value of rock lobster, prawn and salmonid production.

• Over the medium term, the value of export earnings is projected to decline by 3.9 per cent to $1.6 billion (in real terms).

World fisheries consumption, production and trade

ConsumptionGlobal seafood consumption quadrupled between 1961 and 2012, from 28 million tonnes in whole weight terms to 136 million tonnes (FAO 2014a, FAO 2014b). This increased the contribution of seafood-derived protein supply for human consumption from 14 per cent to 17 per cent. The growth in global seafood consumption was faster than the growth of global population over this period, resulting in per person consumption of seafood rising from 9 kilograms per person in 1961 to 19.2 kilograms per person by 2012. This was driven by rising disposable income levels, increasing levels of urbanisation, an ageing demographic trend, liberalisation of trade and the increasing affordability of seafood options for consumers as a result of growth in the global aquaculture sector.

Growth in per person consumption of seafood varied across regions. Growth was greatest in China, increasing almost eightfold from 4.3 kilograms a person in 1961 to 33.5 kilograms in 2011. Per person seafood consumption more than doubled in other developing countries (excluding China) over the same period, from 5.6 kilograms in 1961 to 16 kilograms in 2011. In developed countries per person consumption of seafood rose by 35 per cent, from 17 kilograms to 23 kilograms. Developing country consumers source most of their seafood as fresh product from wet markets (55 per cent), but a trend towards greater consumption of frozen product in line with the shift to urban living is emerging. In contrast, developed countries have a higher proportion of frozen product (55 per cent) and canned product (20 per cent).

Fisheries


Seafood consumption, by product type and region, 2001 and 2012

Canned

%

Prepared and preservedFrozenFresh

Source: FAO 2014a

Developing2012

Developing2001

Developed2012

Developed2001

20

40

60

80

100

Seafood production, trade and consumption by region, 2011

Countries ProductionNon-food

uses Imports ExportsFood

supply Population

Annual per person

supply

million tonnes in live weight million kg/person

World 156.0 25.4 45.3 44.5 132.1 6 998.0 18.9

Developed countries 29.0 5.7 27.4 19.2 31.8 1 383.8 23.0

Developing countries 126.9 19.6 17.8 25.3 100.2 5 614.2 17.8

Canada 1.1 0.1 0.6 0.9 0.8 34.5 22.3

United States 5.6 1.4 4.9 2.2 6.8 314.9 21.7

Australia 0.2 0.1 0.5 0.1 0.6 22.7 26.2 a

New Zealand 0.5 0.1 0.1 0.5 0.1 4.4 25.8

Japan 4.3 1.1 3.9 0.5 6.6 127.3 51.7

China 54.4 4.0 3.6 8.3 45.9 1 368.4 33.5

a ABARES estimates Australia’s apparent consumption of seafood at 15 kilograms per person (edible weight equivalent) in 2013–14 (Savage & Hobsbawn 2015). The discrepancy between this and the Food and Agriculture Organization of the United Nations (FAO) consumption estimate arises because the FAO estimates per person consumption on a live weight equivalent basis. Source: FAO 2014a

Fisheries


Organisation for Economic Cooperation and Development (OECD) and Food and Agriculture Organization of the United Nations (FAO) projections indicate that seafood consumption is expected to continue to grow over the next decade, increasing to around 172 199 kilo tonnes in total (21.5 kilograms per person) by 2024 (OECD–FAO 2015). As in recent decades, most of the increase in seafood consumption will be in the Asian region, particularly China.

ProductionWorld fisheries production (edible and non-edible) increased by 3 per cent in 2013 to 163 million tonnes, with most of this increase attributable to increased aquaculture production. The increase in aquaculture production in 2013 continued the trend since the late 1980s of increased contribution to global seafood production from aquaculture and stable global wild-catch production at around 90 million tonnes since the late 1980s. The share of aquaculture in global production increased in 2013 to 43 per cent, contributing 70 million tonnes in that year (FAO 2014a). OECD–FAO (2015) estimates that by 2024 world fisheries production will rise to 191 million tonnes, with aquaculture production contributing almost half (49 per cent) of global production in that year.

Fisheries production from wild-catch and aquaculture, 1950 to 2013

Aquaculture

Mt

Wild-catch

Source: FAO 2014a

20

4060

80

100

120

140

160

180

2013200319931983197319631953

Around 88 per cent of world edible aquaculture production is supplied from the Asian region, with China being the single largest aquaculture producer. In 2012 China produced 41 million tonnes (US$66 billion) of aquaculture products, accounting for 62 per cent of global aquaculture production in volume terms and 48 per cent in value terms (FAO 2014b). Other large aquaculture producers include India, Indonesia and Vietnam.

Most (87 per cent) wild-catch production comes from marine waters, with seven countries catching 50 per cent of total marine catch. In 2012 China produced 16.2 million tonnes of wild-catch products, accounting for 18 per cent of world marine catch fisheries. Indonesia, the United States, India and Peru produced around 5 million tonnes each of fisheries products in the same year, followed by the Russian Federation and Japan, which produced around 4 million tonnes each.

Fisheries


TradeGlobal trade in fisheries products has increased steadily since 1998 and was valued at US$129.3 billion in 2012. This represents about 10 per cent of total agricultural product trade and 1 per cent of world merchandise trade (FAO 2014b). Much of this increase is attributed to growth in low-value, high-volume fisheries products from developing countries. Exports from these countries have risen as a result of expansion of World Trade Organization membership and establishment of bilateral and multilateral trade agreements. From around 2002 developing countries have contributed almost half of fisheries products exports by volume (FAO 2014a). Developed countries mainly trade between themselves, with 80 per cent of fisheries and aquaculture exports from these countries destined for other developed countries (FAO 2014a). In 2012 developed countries accounted for around 73 per cent of global fisheries product imports in value terms and about 55 per cent in volume terms (FAO 2014b). Their share of world imports in value terms is steadily declining because of a significant increase in imports by developing countries.

World fisheries production and trade, 1998 to 2012

World production

International exports

Mt

Source: FAO 2014a

20

40

60

80

100

120

140

160

20122009200620032000

China is the world’s largest exporter of fisheries commodities, accounting for 14 per cent (US$18.2 billion) of world exports in 2012. Norway is the second-largest exporter of fisheries products, accounting for 7 per cent of global trade, followed by Thailand and Vietnam at 6 per cent and 5 per cent, respectively (FAO 2014a).

Japan was the world’s largest single importer of fisheries and aquaculture products in 2012, followed by the United States. Japan accounted for 14 per cent (US$18.0 billion) of world imports and the United States 14 per cent (US$17.6 billion) (FAO 2014b). These two countries sourced more than half of their domestic fish consumption from imports. China, Hong Kong, Taiwan and Vietnam became the third-largest group of importing countries in 2012, accounting for 10 per cent of world imports (US$7.4 billion). China’s imports of fisheries and aquaculture products are required to meet rising domestic seafood consumption and raw material for reprocessing, re-export and as a feed input for aquaculture production. OECD Western Europe is the largest single market for imported fisheries and aquaculture products, accounting for 36 per cent ($US47 billion) of total world imports, but most of this trade is between the countries of Western Europe (FAO 2014b). The most traded fisheries and aquaculture commodity (by value) in 2012 was shrimp, accounting for 15 per cent of the total value of internationally traded fisheries products (FAO 2014b).

Fisheries


Key importing regions, 2004 to 2012

OECD Western Europe 39%Other 18%

United States 16%

China, Hong Kong, Taiwanand Vietnam 8%

Japan 19%

2004

OECD Western Europe 35%Other 27%

United States 14%


Japan 14%

2012

Source: FAO 2014aNote: OECD Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

PricesGlobally, the price of fisheries and aquaculture products has increased in real terms since 2002. The FAO Fish Price Index indicates a strong increase, from 90 in early 2002 to 156 by 2014. This increase was a result of a rise in prices for farmed species, particularly shrimp, and some wild species groups, including cod and some pelagic species (FAO 2014b). OECD–FAO (2015) forecasts a slight decline in prices in real terms from 2014 to 2023.

Fisheries


Food and Agriculture Organization Fish Price Index, 1990 to 2014

2002–2004=100

Source: FAO 2014a

20

4060

80

100

120

140

160

180

201420112008200520021999199619931990

Australian fisheries consumption, production and trade

ConsumptionAustralia’s apparent consumption of seafood increased by 1.2 per cent annually from 2004–05 to 2014–15, to 343 000 tonnes. Most of the increase in consumption was met by higher levels of imports, which increased by 2 per cent annually. Imported seafood is mainly prepared and preserved fish—mostly canned tuna, frozen fish products, and prepared and preserved prawns. In 2014–15 imports are estimated to have contributed around 66 per cent of Australia’s total apparent consumption of seafood, up from 61 per cent in 2004–05. Apparent consumption of seafood per person (edible equivalent) increased from 14 kilograms in 2004–05 to 15 kilograms in 2014–15.

Apparent seafood consumption by source, 2004–05 to 2014–15, Australia

Domestic supplied

Imported

kt

s ABARES estimate.Source: Savage & Hobsbawn 2015

100

200

300

400

2014–15s

2012–13

2010–11

2008–09

2006–07

2004–05

Fisheries


ProductionThe gross value of Australia’s fisheries and aquaculture production was similar in 2014–15 to 2004–05, following declines between 2004–05 and 2010–11. The decline in earnings from the wild-catch sector over the entire period was offset by significant growth in salmonid aquaculture production, predominantly Atlantic salmon from Tasmania. Annual growth in production earnings for salmon averaged 11 per cent in real terms over the decade, following the significant expansion in annual production volume. Driving the decline in wild-catch earnings in the period to 2010–11 were an appreciation of the Australian dollar exchange rate, a fall in production volume resulting from more conservative management settings, particularly for rock lobster and tuna, and increased competition from a rise in world aquaculture production. The strong appreciation of the Australian dollar during this period increased competition for Australian producers in export markets and improved the competitiveness of imported product in the domestic market. A significant increase in global supply of aquaculture product increased competition in overseas markets and the Australian domestic market for many of Australia’s wild-caught species.

Since 2010–11 higher international prices for Australia’s rock lobster exports, coupled with a lower Australian dollar exchange rate, and higher production volumes and prices for prawns have boosted earnings from the wild-catch sector. At the same time aquaculture salmonid production has continued to grow. As a result, the gross value of Australia’s fisheries and aquaculture production has grown steadily since 2010–11.

In 2014–15 the gross value of Australian fisheries and aquaculture production grew by 11 per cent, with earnings reaching $2.7 billion. Contributing to the increase in GVP in 2014–15 was an increase in the value of rock lobster production (rising by 11 per cent), prawn production (6 per cent), salmonid production (15 per cent), abalone production (11 per cent) and tuna production (10 per cent).

From 2004–05 to 2014–15 the volume of fisheries and aquaculture production declined by 15 per cent to 236 864 tonnes. Wild-catch production declined from 236 151 tonnes in 2004–05 to 152 210 tonnes in 2013–14. Offsetting this decline was an expansion of aquaculture production volume, which increased by 56 per cent. As a result, aquaculture’s share of production grew from 17 per cent in 2004–05 to 34 per cent in 2013–14. The growth of the aquaculture sector in Australia has been driven by a strong increase in production of salmonids. Since 2004–05 the volume of production of salmonids almost tripled. In 2013–14 salmonids accounted for 56 per cent in volume terms of the total Australian aquaculture production, at $518 million. The second most valuable aquaculture species is southern bluefin tuna. In 2013–14, 7 544 tonnes of this species was produced with a production value of $122 million.

Fisheries


Real gross value of production by sector, 2004–05 to 2014–15

Aquaculture

2015–16$m

Commonwealth wild-catchState wild-catch

s ABARES estimate. Note: Aquaculture total has been adjusted to exclude southern blue�n tuna caught in the Commonwealth Southern Blue�n Tuna Fishery and introduced into farms in South Australia. This avoids double counting.Source: Savage & Hobsbawn 2015

500

1 000

1 500

2 000

2 500

3 000

2014–15s

2012–13

2010–11

2008–09

2006–07

2004–05

Real gross value of production of key species, 2004–05 to 2014–15

Other

2015–16$m

TunaAbalonePrawnsRock lobsterSalmonids


500

1 000

1 500

2 000

2 500

3 000

2014–15s

2012–13

2010–11

2008–09

2006–07

2004–05

Fisheries


Average prices of key Australian species

2015–16$/kg

Abalone Rock lobsterPrawnsTuna Salmonids


10

20

30

40

50

60

70

80

2014–15s

2012–13

2010–11

2008–09

2006–07

2004–05

TradeAustralia produces only about 0.2 per cent of global seafood. However, exports are significant to the fisheries and aquaculture industry—with export earnings estimated to account for 53 per cent of total Australian production value in 2014–15. Australia also imports a large proportion of its domestic consumption requirements (69 per cent) and is a net importer of fisheries and aquaculture products in value terms. In 2014–15 the trade gap between fisheries and aquaculture imports and exports narrowed, as a lower exchange rate boosted export earnings and dampened demand for imported product.

The value of Australian exports declined in real terms, from $2 billion in 2004–05 to $1.4 billion in 2014–15. Most of the decline in export earnings occurred between 2004–05 and 2009–10 following the strong appreciation of the Australian dollar against the Japanese yen and the US dollar. This led to a decline in unit prices (particularly for prawns, tuna and abalone) and declines in the production volume of rock lobster, prawns and abalone. In 2014–15 export earnings from fisheries products rose by 10 per cent ($135 million) to $1.4 billion. From 2004–05 to 2014–15 export earnings from fisheries and aquaculture products have been increasingly dominated by rock lobster, which by 2014–15 accounted for almost half of annual export earnings from these products.

Fisheries


Export and import values of fish products, 2004–05 to 2014–15

Exports

2015–16$m

Imports

Source: Savage & Hobsbawn 2015

2014–15

2012–13

2010–11

2008–09

2006–07

2004–05

500

1 000

1 500

2 000

2 500

Main export products, 2004–05 ($2 013 million) and ($1 440 million) in 2014–15, Australia

Pearls 19%

Abalone 17%

Prawns 11%

Rock lobster 28%

2004–05

2014–15


Other 14%

Tuna 11%

Pearls 8%

Abalone 12%

Prawns 7%

Rock lobster 48%

Other 15%

Tuna 10%

Fisheries


Main import products, 2004–05 ($1 529 million) and ($2 008 million) in 2014–15, Australia

Prepared or preserved prawns 5%

Other 38%

Frozen prawns 17%

Frozen �sh 19%

Prepared or preserved �sh 21%

Prepared or preserved prawns 8%

Other 35%

Frozen prawns 14%

Frozen �sh 18%

Prepared or preserved �sh 25%

2004–05

2014–15


In 2014–15 the main destinations of Australian fisheries exports in value terms were Vietnam, Hong Kong, Japan, China and the United States. These countries accounted for 89 per cent of total Australian seafood exports.

Over the decade to 2014–15 China, Hong Kong, Taiwan and Vietnam emerged as a key group of markets for Australia’s seafood exports. These countries accounted for 71 per cent of total Australian seafood exports in 2014–15. Japan was the largest market for Australian seafood exports in 2004–05, but since then exports to Japan have declined by almost 71 per cent in value terms. Japan remains the largest market for tuna, importing more than 94 per cent of all tuna exported from Australia.

Over the decade to 2014–15 the real value of Australian imports ranged between $1.5 billion and $2 billion. Australia imports a range of fish and fisheries products, mainly from Thailand, New Zealand, China and Vietnam. These countries together accounted for 58 per cent of total fisheries product imports in 2014–15. A large proportion of imported fisheries and aquaculture product from Thailand is canned tuna. Key commodities imported from New Zealand are frozen and fresh fish and from China farmed prawns and frozen squid. The largest commodity product imported from Vietnam is frozen fish and prepared and preserved prawns.

Fisheries


Major destinations for Australian fisheries products exports, 2004–05 ($2 113 million in 2014–15 dollars) and 2014–15 ($1 440 million)

Other 15%

United States 10%


Japan 29%

Other 10%

United States 3%


Japan 15%

2004–05

2014–15


Australian fisheries medium-term outlook (major products)The gross value of Australia’s fisheries production is forecast to decline by 2.7 per cent ($78 million) in 2016–17, to $2.8 billion. This decline follows a forecast increase of 7 per cent in 2015–16. In 2016–17 export earnings from fisheries products are forecast to decrease by 0.03 per cent ($5 million) to $1.6 billion.

Given the export focus of Australia’s seafood sector, GVP and export earnings are affected by exchange rate movements. Australia’s exchange rate is assumed to depreciate in 2015–16, by 15 per cent against the US dollar and 9 per cent on a trade-weighted basis. This will support growth in GVP and export earnings in that year. Exchange rates are assumed to remain more stable for the remainder of the period to 2020–21.

Over the medium term, the value of production is projected to decline by 4.4 per cent to reach $2.6 billion (in real terms) by 2020–21. Export earnings are projected to also decline, by 3.9 per cent, to around $1.6 billion (in real terms) over the period. The key contributor to the projected decline is the stabilisation of the Australian dollar ending the consistent increases in prices received for production and exports.

Fisheries


Real value of fisheries production, export and the Australian–US dollar exchange rate

2015–16A$b

A$/US$

Gross value of production

Export valueExchange rate (right axis)


0.3

0.6

0.9

1.2

1.5

1.8

2.1

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2020–21z

2017–18z

2014–15

2011–12

2008–09

2005–06

PrawnsIn 2016–17 the value of Australian prawn production is forecast to decline by 8.5 per cent to $347 million. Exports of prawn products are also forecast to fall, by 12.3 per cent to $96 million in the same year, in line with lower production volumes and stabilising international prices. Production of tiger prawns in the Commonwealth Northern Prawn Fishery escalated to around 3 500 tonnes in 2014–15, more than double the previous year’s production and a level not seen since 1995. Strong prices across prawn species in 2014 and 2015 contributed to the increase in Australia’s gross value of production from prawns to $357 million in 2014–15. In 2016–17 tiger prawn production in the Commonwealth Northern Prawn Fishery is projected to return to a more average level. International prices are expected to be lower than in the previous two years. This results from abatement of international supply disruptions—particularly in the aquaculture sector in Thailand, which was affected by disease (Jittapong & Manuphattr 2014).

Over the medium term to 2020–21 the real value of production of prawns and export earnings is projected to decline by 8.9 per cent and 7.5 per cent, to $309 million and $87 million, respectively, as export prices stabilise and production volumes begin to fall.

SalmonidsAustralian salmonid production is forecast to expand to 52 762 tonnes in 2016–17. Tasmania accounted for around 96 per cent of total salmonid production in the decade to 2014–15 and the sector is expanding further. Total volumes produced in Australia increased from 17 063 tonnes in 2004–05 to 48 426 tonnes in 2014–15.

Fisheries


From 2004–05 to 2014–15, the value of production tripled. In 2016–17 the value of salmonid production is forecast to be $592.1 million, decreasing by 9 per cent from the previous year in response to higher international supply and resulting in lower prices. Most salmonid production is for the domestic market, with only 10 per cent exported during 2014–15. During 2014–15 and 2015–16 China imported increased volumes from Australia, as the expanding domestic production and lower exchange rate made the export market more attractive for domestic producers. In 2016–17 the volume of salmonids exported is expected to grow by 5 per cent from 2015–16. Most of this growth is expected to come from China.

Over the medium term, salmonid production is expected to continue to grow, as a result of the industry expansion underway for Tasmanian salmon aquaculture. Total salmonid production is expected to reach 64 700 tonnes by 2020–21, at a value of $626.5 million. Export volumes are forecast to increase steadily, to reach 8 819 tonnes by 2020–21. However, lower assumed international prices over the medium term are projected to reduce the real value of exports from 2016–17, by 13 per cent to $61.0 million by 2020–21.

Rock lobsterIn 2016–17 Australia is forecast to produce 10 419 tonnes of rock lobster with a value of $772 million. Rock lobster is forecast to contribute approximately 28 per cent to the total value of fisheries production, representing the highest value for wild-catch species. Market prices have been high recently, with export unit values in 2016–17 forecast to average around $97 a kilogram, around 74 per cent higher than the average unit export value recorded in 2011–12. Most rock lobster from Australia is exported to China, Hong Kong, Taiwan and Vietnam, where prices have been increasing as a result of rising incomes and demand. Higher prices in the export market have flowed through to domestic producers, where average beach prices have risen in line with export prices.

From 2004–05 to 2014–15, total rock lobster production volume fell by 50 per cent. In contrast, the value of rock lobster production is estimated to have increased by 57 per cent over the same period, with most of this increase being achieved since 2011–12. Over 2011–12 to 2014–15 rock lobster production value increased by $258 million, to reach $653 million. Almost 60 per cent of Australia’s rock lobster production is in Western Australia. The other main rock lobster fisheries are in South Australia (estimated at 15 per cent of total catch in 2014–15) and Tasmania (10 per cent).

The decline in production volume of rock lobster from 2004–05 to 2014–15 was driven by a halving of catch from the West Coast Rock Lobster Fishery. For much of this period more conservative total allowable catch settings prevailed to allow the rebuilding of depleted stocks after environmental changes caused a low level of annual recruitment in the fishery since 2005 (de Lestang et al. 2015). Catch is forecast to remain stable over the medium term at around 6 100 tonnes.

The real value of production and exports is projected to decline by 2020–21 to $652 million and $691 million, respectively, as the Australian dollar stabilises. This will lead to more stable prices in rock lobster markets.

Fisheries


AbaloneIn 2016–17 abalone production is expected to recover, by 4 per cent to 5 301 tonnes and around $219 million. This is expected to be driven by improvements in wild-caught abalone landings in Tasmania and growing aquaculture production in Victoria and South Australia. Establishment of abalone farms in Western Australia is also expected to contribute to this growth.

The abalone industry in Australia is predominantly export oriented, with exports constituting on average 63 per cent of production, in volume terms, between 2004–05 and 2014–15. This fell to a little above 50 per cent in the few years before 2014–15. Most of Australia’s abalone production has historically been harvested from wild-catch fisheries in Tasmania, Victoria and South Australia. However, over the decade to 2014–15, aquaculture production in these states has expanded, with an estimated 20 per cent of total abalone production in 2014–15 sourced from aquaculture farms.

In the medium term, production is projected to increase to around 6 518 tonnes ($249 million, in real terms) by 2020–21, with farmed abalone driving the growth and making up almost one-third of this production.

ScallopsIn 2016–17 scallop production is forecast to fall by 21 per cent to 4 392 tonnes (value $11 million). Much of the fall in total scallop production is attributed to a forecast fall in catch from the Commonwealth Bass Strait Central Zone Scallop Fishery, following the high-catch years of 2014–15 and 2015–16.

Over the medium term, the real value of Australian scallop production is projected to increase by 67 per cent (to $19 million) by 2020–21. Australian scallops are predominantly domestically consumed, with only 11 per cent of scallops exported, on average, between 2004–05 and 2014–15. However, with higher scallop production, real export earnings are projected to increase by 48 per cent from $16 million in 2016–17 to $23 million in 2020–21.

TunaTuna production is expected to decline by 2 per cent to 11 758 tonnes in 2016–17, to a value of $140.2 million. The forecast value of production in 2016–17 represents a 3 per cent decline on 2015–16, resulting from an assumed strengthening of the Japanese yen and slowing demand. Exports are forecast to remain steady at 11 376 tonnes, at a value of $138 million. Most Australian tuna production and value is from southern bluefin tuna caught in the Commonwealth fishery using purse seine methods and then fattened in farms near Port Lincoln. Over the decade to 2014–15, 90 per cent of total tuna production was exported—mostly to the Japanese sashimi market. In 2013–14 tuna prices in the Japanese market declined significantly as a result of low demand, with yen-denominated prices for southern bluefin tuna falling by 20 per cent in that year. Since then prices have remained stable. Higher economic growth in Japan over the medium term is assumed to lead to higher demand for tuna and to support higher prices.

Fisheries


Over the medium term, total production is expected to remain steady at around 12 000 tonnes. However, assumed recovery in demand and tuna prices in Japan’s tuna market is projected to increase the real value of tuna production by 14 per cent to $156 million by 2020–21. Real tuna export earnings are projected to increase in line with production earnings over the medium term, rising by 10 per cent to $148 million.

Trade agreements improve market access for Australian seafood and address overfishingIn the past two years, a number of free trade agreements have improved access to key markets for Australian seafood. These include: the China–Australia Free Trade Agreement (ChAFTA), which will significantly reduce tariffs on rock lobster and salmon, amongst other commodities; the Japan–Australia Economic Partnership Agreement (JAEPA), which has eliminated tariffs on prawns, lobster and abalone and will progressively eliminate tariffs on finfish, including tuna and Atlantic salmon; and the Korea–Australia Free Trade Agreement (KAFTA), which will progressively eliminate most tariffs on Australian seafood exports to the Republic of Korea. Exports of frozen prawns to Japan between January and November 2015 increased 59 per cent on the previous year to exceed $25 million, providing evidence that these agreements have increased trade.

Negotiations between 12 countries in the Asia–Pacific region for the Trans-Pacific Partnership Agreement (TPP) concluded in October 2015. The TPP is expected to boost trade between members and make Australia’s traded fisheries and aquaculture commodities more competitive by further lowering tariff barriers. This could lead to higher demand or increased margins in the different markets. Tariff reductions will vary between markets but will be completely eliminated over the next 15 years. Many will be removed when the agreement enters into force.

The TPP makes significant progress on addressing harmful subsidies granted to fishers in participating countries. Subsidisation of fishing activities can lead to overcapitalisation in fishing fleets and have a detrimental effect on fishery sustainability. The agreement includes provisions to prohibit ‘subsidies for fishing that negatively affect fish stocks that are in an overfished condition’. The competitiveness of sustainably harvested fisheries is expected to improve, as subsidies that contribute to overfishing and overcapacity are progressively reduced and global supply of unsustainable subsidised fish product is tightened. This is likely to benefit wild-caught seafood exports from Australia and may lead to increased demand for aquaculture exports.

Regional agreements liberalise market access for all signatories but can expose Australian producers to greater competition in target markets. For example, the TPP will extend the market access gained by Australia for aquaculture salmon in the JAEPA agreement to other major exporters such as Canada. To remain competitive, Australian seafood exporters should continue to promote their product on the basis of quality, provenance and price.

Fisheries


Referencesde Lestang, S, Rossbach, M, Kennedy, J & Trinnie, F 2015, ‘West Coast Rock Lobster Fishery status report’, in WJ Fletcher & K Santoro (eds) Status reports of the fisheries and aquatic resources of Western Australia 2014–15: the state of the fisheries, Department of Fisheries, Western Australia.

FAO 2014a, Fishery and aquaculture statistics 2012, Food and Agriculture Organization of the United Nations, Rome, available at ftp://ftp.fao.org/FI/CDrom/CD_yearbook_2012/navigation/index_content_aquaculture_e.htm.

—— 2014b, The state of world fisheries and aquaculture 2014, Food and Agriculture Organization of the United Nations, Rome, available at fao.org/3/a–i3720e.pdf.

Jittapong, K & Manuphattr, D 2014, ‘Thailand’s shrimp output seen recovering from disease woes in 2015’, Reuters, 18 December, available at reuters.com/article/thailand-shrimp-exports-idUSL3N0U22KB20141218.

OECD–FAO 2015, Agricultural Outlook 2015, OECD Publishing, Paris, available at dx.doi.org/10.1787/agr_outlook-2015-en.

Savage, J & Hobsbawn, P 2015, Australian fisheries and aquaculture statistics 2014, Fisheries Research and Development Corporation project 2010/208, ABARES, Canberra, December.

Fisheries


Outlook for fisheries

2013–14 2014–15 s 2015–16 f 2016–17 f 2017–18 z 2018–19 z 2019–20 z 2020–21 z

$m $m $m $m $m $m $m $m

Tuna a 147 161 145 140 148 158 167 176– real b 152 164 145 137 141 147 151 156Salmonids 543 623 653 592 549 597 589 627– real b 563 635 653 578 523 554 534 554Other fish 401 438 437 445 448 445 443 424– real b 416 447 437 435 427 414 402 375Prawns 337 357 379 347 347 348 349 349– real b 350 364 379 339 330 324 316 309Rock lobster c 586 653 766 772 767 749 738 737– real b 608 666 766 753 730 696 669 652Abalone 165 182 211 219 244 252 269 282– real b 171 186 211 214 233 234 244 249Scallops 9 12 13 11 14 18 20 21– real b 10 13 13 11 13 17 18 19Other 272 314 323 322 336 360 362 391– real b 282 321 323 314 320 334 328 345Total 2 460 2 741 2 927 2 849 2 852 2 927 2 936 3 007– real b 2 552 2 795 2 927 2 781 2 716 2 720 2 662 2 660

Tuna b 136 151 138 138 143 153 160 168– real b 141 154 138 135 136 142 145 148Salmonids 17 48 79 72 59 66 64 68– real b 18 49 79 70 56 61 58 61Other fish 72 72 72 72 72 72 72 72– real b 75 73 72 70 68 67 65 64

frozen 99 93 110 96 97 98 98 99– real b 103 95 110 94 92 91 89 87

fresh chilled frozen or cooked 590 691 792 817 812 793 782 781– real b 612 705 792 798 774 737 708 691

live, fresh or chilled 74 77 105 103 110 108 109 111– real b 76 79 105 101 104 100 99 98 frozen or cooked 56 60 71 73 77 77 81 83– real b 58 62 71 71 73 71 73 73 prepared or preserved 41 36 55 65 68 73 77 79– real b 42 37 55 64 65 68 70 70Scallops 14 11 25 16 23 21 26 27– real b 14 11 25 16 22 20 23 23Other fisheries products 61 89 100 75 84 106 116 148– real b 63 91 100 73 80 98 105 131Total (excluding pearls) 1 160 1 329 1 546 1 528 1 545 1 565 1 584 1 635– real b 1 203 1 355 1 546 1 492 1 471 1 454 1 436 1 446Pearls 144 111 119 132 132 129 127 127– real b 150 113 119 129 126 120 115 112Total (including pearls) 1 304 1 440 1 665 1 661 1 677 1 694 1 711 1 762– real b 1 353 1 468 1 665 1 621 1 597 1 574 1 551 1 558

Fisheriesproductsoutlook

Gross value of fisheries production

Export value

Rock lobster

Abalone

a Exports of tuna landed in Australia. Excludes tuna transhipped at sea or captured under joint venture or bilateral agreements. b In 2015–16 Australian dollars. c Includes Queensland bugs. d Includes headless and whole prawns only. f ABARES forecast. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics

Prawns d

Farm performance


Farm performance: broadacre and dairy farms, 2013–14 to 2015–16Peter Martin

OverviewABARES Australian Agricultural and Grazing Industries Survey (AAGIS) projects a strong increase in overall average incomes of Australian broadacre farms (Box 1) in 2015–16. Nationally, average farm cash income (Box 2) of broadacre farms is projected to be the highest recorded in the past 20 years in real terms. Broadacre farm cash income increased from an average of $124 460 in 2013–14 to $152 000 in 2014–15. Farm cash income is projected to increase further to average $179 000 a farm in 2015–16.

In 2015–16 farm cash income is projected to increase in most regions of Australia, with the exception of some regions subject to dry seasonal conditions during 2015.

The expected increase in farm cash incomes in 2015–16 follows a rise in farm cash income in many regions in 2014–15 and is predominately the result of higher prices for beef cattle. Beef cattle production is by far the most common and widely dispersed agricultural activity in Australia (around 57 per cent of all Australian farms carry beef cattle)(ABS 2015), and higher beef cattle prices result in increased farm cash incomes for a large proportion of Australian farms. Expected higher incomes in 2015–16 are also the result of an increase in winter grain production and higher prices for lambs and wool.

Higher farm cash income is projected for broadacre farms in New South Wales, Queensland, South Australia, Western Australia and the Northern Territory. However, dry seasonal conditions in Victoria and Tasmania have reduced crop and livestock production resulting in a reduction in projected farm cash incomes.

Financial pressure on farm businesses in several regions increased during 2013–14 as a result of a combination of low beef cattle prices, dry seasonal conditions, high farm debt and the erosion of farm equity through reductions in land values and livestock numbers. Those most affected included the beef industry in northern Australia and grain producers in Queensland and northern New South Wales.

Much higher farm incomes in 2014–15, particularly for beef cattle producers, reduced some of this pressure. Pressure was also reduced more broadly by a reduction in broadacre farm debt and a decline in interest rates. However, financial pressure increased in some regions in Queensland, northern New South Wales, central western Victoria and south-eastern South Australia subject to prolonged drought conditions.

Farm performance: broadacre and dairy farms, 2013–14 to 2015–16


In 2015–16 incomes are projected to increase for beef industry farms in all states as a result of higher cattle prices and despite reduced beef cattle turn-off. Nationally, farm cash income for beef industry farms increased to average $96 200 in 2014–15 and is projected to increase to average $130 000 a farm in 2015–16. The increase in income will reduce financial pressure in many regions but have only a small effect in regions constrained by the reduced availability of saleable cattle after three years of high turn-off. Broadacre farm incomes are also projected to decline in Tasmania, western Victoria, and parts of South Australia and Western Australia subject to dry conditions well into 2015–16.

Farm receipts

2014–15Average total cash receipts for broadacre farms increased by around 8 per cent in 2014–15 compared with 2013–14 (Figure 1).

Much higher average prices for beef cattle, compared with 2013–14, and increased cattle turn-off resulted in an increase of 25 per cent in receipts from beef cattle.

Higher prices for sheep and lambs together with increased sales of lambs resulted in an increase of around 18 per cent in average sheep and lamb receipts a farm, despite a small decrease in the number of sheep sold. Wool receipts also increased for broadacre farms resulting from a small increase in wool production combined with higher wool prices.

In 2014–15 average crop receipts decreased by 2 per cent as a result of reduced winter grain production in all states resulting from lower grain yields and lower prices for wheat, oilseeds and pulses.

At the national level, dairy farm receipts increased by around 3 per cent on average compared with 2013–14, as higher milk production more than offset a small reduction in milk prices in southern dairying regions.

Box 1 Broadacre sector of Australian agricultureThe 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 broadacre crops such as wheat, 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–crop 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.



FIGURE 1 Farm cash receipts, broadacre industries average per farm

Other

2015–16$’000

Sheep and lamb receipts

y ABARES provisional estimate.Source: ABARES Australian Agricultural and Grazing Industries Survey

Wool

Beef cattle

Crops

100

200

300

400

600

500

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

2015–16Average total cash receipts of broadacre farms are projected to increase again by around 8 per cent in 2015–16 compared with 2014–15.

Further increases in average prices for beef cattle are expected to result in a rise in overall receipts for beef cattle of around 14 per cent. This is despite a sharp reduction in numbers of beef cattle sold in 2015–16.

In 2015–16 average crop receipts are projected to increase by around 8 per cent mainly as a result of increased winter grain production in all states except Victoria and Tasmania resulting from increased crop areas, higher grain yields and higher prices for oilseeds and pulses.

Higher average prices for sheep and lambs sold are projected to result in an increase of around 4 per cent in average sheep and lamb receipts per farm, despite a small decrease in the number of sheep and lambs sold. A small increase is expected in receipts from wool for broadacre farms, with higher wool prices offsetting a small reduction in wool production.

At the national level, dairy farm receipts are projected to decrease by around 3 per cent on average compared with 2014–15, with lower milk prices expected in southern regions and a small reduction in milk production. Reductions in milk receipts are expected to be partially offset by increased receipts from the sale of beef and dairy cattle, as a result of higher cattle prices.



Farm costs

2014–15For broadacre farms, average total cash costs increased by only 2 per cent in 2014–15, with small increases across several farm inputs. The largest increases in expenditure were on fertiliser, repairs and maintenance (particularly for beef industry farms) and purchases of beef cattle. Reductions were recorded in expenditure on fodder (from a relatively high level in 2013–14) and on fuel and interest payments (Figure 2).

For dairy industry farms, total farm cash costs increased by 9 per cent, mainly reflecting increased input use to boost milk production. Expenditure on purchased fodder increased by around 11 per cent, with smaller increases recorded in most other categories of farm cash costs. Lower fuel prices and reduced interest rates resulted in reduced expenditure on fuel and interest payments in 2014–15.

2015–16At the national level, average total cash costs per broadacre farm are projected to increase by around 4 per cent compared with 2014–15. Increases are expected in expenditure on beef cattle, as a result of higher cattle prices, and on repairs and maintenance by beef cattle producing farms in response to increased farm receipts. Lower interest rates are projected to be partly offset by a small increase in borrowing. Lower fuel prices are projected to result in reduced fuel expenditure, and reduced fertiliser prices will contribute to some reduction in fertiliser expenditure to plant the 2016 winter crop.

Box 2 Major financial performance indicatorsTotal cash receipts: total revenues received by the business during the financial year

Total cash costs: payments made by the business for materials and services 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: efficiency of businesses in generating profit from capital invested by owners ( farm business profit/farm business equity) x 100



For dairy industry farms, total farm cash costs increased by 3 per cent in 2015–16, mainly reflecting higher fodder prices and increased use of purchased fodder in response to dry seasonal conditions in Victoria, Tasmania, South Australia and Western Australia and in an attempt to boost milk production. Increased fodder expenditure is projected to be partly offset by reduced expenditure on fuel and fertiliser in 2015–16 as a result of lower prices for these inputs, together with decreased interest payments because of lower interest rates.

FIGURE 2 Farm cash costs average per farm

2013–14

2014–15p

2015–16y

2013–14

2014–15p

2015–16y

$’000 10 20 30 40

Broadacre farms

Dairy farms

$’000 250150 20010050

p ABARES preliminary estimate. y ABARES provisional estimate.Source: ABARES Australian Agricultural and Grazing Industries Survey

Fodder

Livestock purchases

Crop and pasture chemicals

Repairs and maintenance

Fuel

Fertiliser

Interest paid

Hired labour cost

Repairs and maintenance

Fuel

Fertiliser

Fodder

Interest paid

Electricity



Box 3 Farm survey methodologyBroadacre and dairy farms accounted for 73 per cent of commercial-scale Australian farm businesses and for an estimated 60 per cent of the total gross value of Australian agricultural production in 2014–15. These farms are also responsible for managing more than 90 per cent of the total area of agricultural land in Australia and account for the majority of Australia’s family owned and operated farms. These farms are located in all regions across Australia and are vital to rural communities and local economies.

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 2014–15, including projected farm financial performance in 2015–16.

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 2013–14 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 2014–15 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 2015–16 projections are based on data collected through on-farm interviews and telephone interviews between September 2015 and December 2015. 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 2015–16 where prices have changed significantly since the interview.



Farm income and profitNationally, average farm cash income of broadacre farms in recent years has been high compared with incomes recorded historically. Farm cash income increased from $124 460 in 2013–14 to $152 000 in 2014–15. In 2015–16 farm cash income is projected to increase further to average $179 000 a farm (Table 1). This is around 75 per cent above the 10-year average to 2014–15 of $102 000 in real terms. If achieved, it would be the highest average farm cash income for broadacre farms in the past 20 years (Figure 3). However, major differences exist in average farm cash incomes across industries, states and regions.

TABLE 1 Financial performance, all broadacre industries average per farm

2013–14 2014–15p 2015–16y

Total cash receipts $ 445 980 479 900 (3) 519 000

Total cash costs $ 321 530 327 900 (3) 339 000

Farm cash income $ 124 460 152 000 (4) 179 000

Farms with negative farm cash income % 23 14 (10) 16

Farm business profit $ 14 030 21 000 (25) 63 000

Profit at full equity

– excluding capital appreciation $ 55 880 59 400 (9) 101 000

– including capital appreciation $ 58 000 146 300 (12) na

Farm capital at 30 June a $ 3 995 730 4 231 900 (2) na

Net capital additions $ 39 330 59 200 (32) na

Farm debt at 30 June b $ 513 380 506 900 (5) 516 000

Change in debt – 1 July to 30 June b % 1 4 (45) 0

Equity at 30 June bc $ 3 337 440 3 504 700 (3) na

Equity ratio bd % 87 87 (1) na

Farm liquid assets at 30 June b $ 169 310 188 200 (6) na

Farm management deposits (FMDs) at 30 June b $ 41 740 48 300 (8) na

Share of farms with FMDs at 30 June b % 24 25 (7) na

Rate of return e

– excluding capital appreciation % 1.4 1.4 (9) 2.4

– including capital appreciation % 1.5 3.6 (12) na

Off-farm income of owner–manager and spouse b $ 31 520 34 900 (7) na

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



For the dairy industry, farm financial performance is projected to decline in 2015–16. Nationally, average farm cash income of dairy farms was $164 370 a farm in 2013–14. This decreased to $156 300 a farm in 2014–15 and is projected to decline further to average $113 000 a farm in 2015–16 (Table 2). Farm cash income projected for dairy farms in 2015–16 is around 4 per cent below the 10-year average to 2014–15 of $117 000 in real terms.

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 2015–16 further reductions in beef cattle numbers in most states will reduce farm inventory values and result in a smaller increase in farm business profit compared with the increase in farm cash income. However, farm business profit of Australian broadacre farms is expected to average $63 000 a farm in 2015–16. If achieved, this would be the equal highest recorded in the past 20 years, similar to the average farm business profit recorded for broadacre farms in 2001–02 and 2010–11.

FIGURE 3 Financial performance, all broadacre industries average per farm

2015–16$’000

Farm cash incomeFarm business profit


–50

0

50

100

150

200

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98



Rates of returnThe 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 4). Strong demand for rural land during most of the 2000s resulted in a sharp increase in land values in most agricultural regions, which 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.

In 2014–15 a slight rise in land values in some high rainfall regions together with an increase in the value of beef and dairy cattle resulted in an increase in average farm capital value and added around 2.1 per cent to the average rate of return including capital appreciation for broadacre farms (Table 2). This is the first significant appreciation in farm capital recorded for broadacre farms since 2007–08.

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 4 Return on capital, all broadacre industries average per farm

%

Rate of return includingcapital appreciation

Rate of return excluding capital appreciation

2

0

4

6

8

10

12


2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98



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TABLE 3 Rate of return to total capital (excluding capital appreciation) by industry, farm size and performance rank average per farm

All farms Top 25 per cent farms a

IndustryBusiness size

Five years ending

2013–14 2014–15p 2015–16y

Five years ending

2013–14 2014–15p 2015–16y

% % % % % %

Wheat and other crops Small –0.8 –0.1 (108) 1.7 5.1 5.1 5.1

Medium 2.9 2.9 (23) 5.0 6.5 5.5 6.3

Large 5.2 4.7 (7) 7.3 7.3 6.0 7.5

Mixed livestock–crops Small –0.5 –0.8 (51) –0.4 4.3 2.7 0.8

Medium 2.4 3.1 (13) 3.6 4.8 4.9 4.7

Large 4.3 4.6 (8) 5.7 6.6 5.9 6.5

Sheep Small –0.4 –0.3 (126) 0.4 3.2 3.9 2.9

Medium 2.9 2.1 (19) 3.2 4.9 3.4 3.9

Large 5.0 5.0 (14) 6.5 6.0 6.8 8.4

Beef Small –0.8 –1.2 (18) –0.2 3.3 4.7 6.6

Medium 1.6 1.7 (22) 4.0 3.8 5.9 8.2

Large 2.3 1.0 (40) 3.7 4.5 3.9 7.4

Sheep–beef Small –0.2 –0.5 (71) 0.9 3.6 3.9 5.4

Medium 2.0 1.9 (19) 3.9 4.6 3.6 4.7

Large 3.2 2.8 (17) 3.8 4.4 4.4 5.7

All broadacre farms 1.6 1.4 (7) 3.0 5.7 5.3 6.5

Dairy Small 0.5 –0.1 (125) –0.5 4.0 4.4 4.3

Medium 2.8 2.8 (21) 1.9 4.7 5.4 4.9

Large 4.4 4.9 (8) 4.2 6.1 6.0 5.3

All dairy farms 3.7 3.2 (11) 1.8 5.4 5.8 4.7

a Farms in top 25 per cent of farms nationally ranked by three-year moving average rate of return to total capital used. p Preliminary estimates. 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 1.4 per cent in 2014–15, similar to the rate of return in 2013–14. The rate of return is expected to increase in 2015–16 to average 2.4 per cent, as profit increases for many farms. This is above the 10-year average to 2014–15 of 1.1 per cent.

In 2015–16 rates of return excluding capital appreciation are expected to be positive across all states. However, it is projected to be low in Victoria and Tasmania at 0.3 per cent and 0.7 per cent, respectively. The highest average rate of return excluding capital appreciation is projected in the Northern Territory, at 5.8 per cent.

Among the surveyed industries, the projected average rate of return excluding capital appreciation is highest, at 4.8 per cent, in the wheat and other crops industry. The beef industry is the lowest ranked for 2015–16, with a projected average rate of return excluding capital appreciation of 1.2 per cent, despite the large increase in projected farm cash income.

In the dairy industry, the rate of return excluding capital appreciation is projected to decline from an average of 3.2 per cent in 2014–15 to an average of 1.5 per cent in 2015–16. In 2015–16 the average rate of return excluding capital appreciation is expected to be highest in Tasmania and Western Australia, at 2.2 per cent for both, and lowest in South Australia, at 0.7 per cent. Tasmania also had the highest average rate of return in the previous three years.

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).

Box 4 Farm sizesSmall 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 for 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.



Large wheat and other crops industry farms (Box 4) generated an average rate of return excluding capital appreciation of 5.2 per cent over the five years ending 2013–14, compared with 2.9 per cent for medium sized wheat and other crops industry farms and –0.8 per cent for small farms (Table 3). In 2014–15 the average rate of return for large wheat and other crops industry farms decreased to 4.7 per cent, but it is expected to increase to 7.3 per cent in 2015–16. Similarly, large sheep industry farms generated an average rate of return of 5 per cent over the five years ending 2013–14 and 5 per cent in 2014–15. It is expected to increase to 6.5 per cent in 2015–16.

Top performing farms Farm cash income and rates of return vary year to year for all farms, but the best performing farms generate higher average farm cash income and rates of return over time. The top performing 25 per cent of broadacre farms (Box 5) recorded average rates of return excluding capital appreciation of 5.7 per cent over the five years ending 2013–14 and 5.3 per cent in 2014–15 (Table 3). They are expected to average 6.5 per cent in 2015–16. This compares with average rates of return of less than 5.3 per cent for large farms in all broadacre industries over the five years ending 2012–13 and is much higher than the 1.6 per cent recorded for all broadacre farms.

Farms classified in the top performing category are predominantly large farms, but as Table 3 indicates top performing farms exist among all industry and farm size categories.

The gap between top performing farms and other farms has increased over time as farm cash incomes of the top performing 25 per cent of broadacre farms have trended upward, while those of middle and bottom performing farms have remained relatively flat. Top performing farms have recorded average farm cash incomes exceeding $200 000 (in real terms) in 19 of the past 20 years (Figure 5).

Box 5 Top performing farmsTop 25 per cent of farms: farms are classified in the top performing 25 per cent of farms nationally by rate of return to total capital.

Rate of return to total capital is business profit before interest and tax (profit at full equity) expressed as a percentage of the total value of land, livestock, machinery and other assets used by the farm business. It is a complete measure of farm financial performance, valuing all farm inputs including unpaid family and partner labour. Rate of return to total capital represents the ability of the business to generate a return to all resources used by the business including that which is borrowed or leased regardless of the financing arrangements in place.

To reduce the effect of changes in commodity prices, seasonal conditions and other year-specific effects on farm performance, three-year moving average rates of return have been calculated for each sample farm in the ABARES farm survey database.



FIGURE 5 Farm cash income, all broadacre farms average per farm

Top 25%Middle 50%Bottom 25%

2015–16$’000


100

0

200

300

400

500

600

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

Top performing farms account for a large share of the total value of agricultural production. For example, they accounted for 60 per cent of the value of output of all broadacre farms in 2014–15. In contrast, the bottom performing 25 per cent of farms accounted for just 6 per cent.

Top performing farms also account for most new investment. Over the three years to 2014–15, high performing farms accounted for 70 per cent of net capital additions on broadacre farms. In contrast, the bottom performing 25 per cent of farms accounted for just 2 per cent. Relatively high rates of new investment for high performing farms are likely to support significant productivity gains to improve farm cash incomes in real terms over the longer term and increases in aggregate farm production.

Top performing farms dominate land purchases and account for a high proportion of aggregate broadacre sector debt (60 per cent in 2014–15). Despite accounting for a high proportion of debt, high performing farms have less difficulty servicing debt than the average for the sector. In the three years ending 2014–15, the proportion of farm receipts consumed to service interest payments averaged 8 per cent for high performing broadacre farms compared with 11 per cent for all other broadacre farms.



TABLE 4 Financial performance of broadacre farms, by region average per farm

ABARES region Farm cash income

Percent of farms with negative farm

cash income

2013–14 2014–15p 2015–16y 2014–15p 2015–16y

$ $ $ % %

New South Wales

111: NSW Far West 134 900 154 000 (19) 222 000 20 9

121: NSW North West Slopes and Plains 103 200 100 000 (22) 213 000 22 12

122: NSW Central West 115 700 171 000 (9) 174 000 5 11

123: NSW Riverina 190 100 208 000 (9) 246 000 9 19

131: NSW Tablelands 56 600 73 000 (21) 116 000 11 10

132: NSW Coastal 7 100 28 000 (25) 46 000 31 16

Victoria

221: VIC Mallee 182 100 138 000 (21) 155 000 42 27

222: VIC Wimmera 207 200 63 000 (24) 20 000 32 51

223: VIC Central North 89 000 105 000 (16) 86 000 8 15

231: VIC Southern and Eastern Victoria 47 600 96 000 (9) 100 000 11 9

Queensland

311: QLD Cape York and the Gulf 28 800 331 000 (26) 633 000 28 12

312: QLD West and South West 167 300 133 000 (47) 176 000 34 33

313: QLD Central North 91 700 140 000 (31) 169 000 39 21

314: QLD Charleville – Longreach 80 400 188 000 (17) 263 000 18 15

321: QLD Eastern Darling Downs 61 100 97 000 (18) 97 000 19 24

322: QLD Darling Downs and Central Highlands 84 600 162 000 (12) 223 000 17 17

331: QLD South Queensland Coastal 42 600 58 000 (21) 106 000 20 18

332: QLD North Queensland Coastal 21 100 96 000 (15) 84 000 7 10

South Australia

411: SA North Pastoral 184 100 243 000 (30) 479 000 11 0

421: SA Eyre Peninsula 227 900 230 000 (37) 260 000 10 2

422: SA Murray Lands and Yorke Peninsula 163 300 241 000 (18) 242 000 2 16

431: SA South East 116 400 122 000 (21) 132 000 11 22

Western Australia

511: WA Kimberley 222 200 901 000 (26) 1 402 000 21 20

512: WA Pilbara and Southern Rangelands 160 000 467 000 (161) 831 000 5 3

521: WA Central and South Wheat Belt 332 500 346 000 (10) 288 000 6 12

522: WA North and East Wheat Belt 356 900 343 000 (16) 382 000 24 14

531: WA South West 25 900 69 000 (19) 119 000 9 2

Tasmania 69 100 129 000 (10) 96 000 10 12

Northern Territory

711: NT Alice Springs District 148 200 414 000 (27) 614 000 0 0

712: NT Barkly Tablelands 2 213 500 2 987 000 (30) 4 718 000 20 12

713: NT Victoria River District – Katherine –25 200 402 000 (37) 705 000 18 4

714: NT Top End Darwin and the Gulf 28 400 199 000 (72) 342 000 28 0p ABARES preliminary estimates. y ABARES provisional estimates. Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided. Source: ABARES Australian Agricultural and Grazing Industries Survey



MAP 1 Australian broadacre zones and regions

311

313 332

314312

322331

321

132

131

121111

122123221

222 223231

631

431

422421

411

711

712

713511

714

512

522

521531

Pastoral zone

Wheat–sheep zone

High rainfall zone

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

Performance, by stateProjected farm financial performance in 2015–16, and its rank in historical terms, varies markedly across states and regions (Table 4 and Table 5).

New South WalesAverage farm cash incomes are projected to increase in all regions of New South Wales in 2015–16, driven by increased receipts from beef cattle, crops, lambs and wool resulting from increased prices and higher production.

Relatively low farm cash incomes were recorded in the Far West and the North West Slopes and Plains in 2014–15, with most farms subject to dry seasonal conditions. Farm cash incomes are projected to increase in these regions in 2015–16 as a result of higher prices for beef cattle and improved seasonal conditions, which would result in increased winter crop production.

Average broadacre farm cash income in New South Wales is projected to increase strongly to average $176 000 a farm in 2015–16. If achieved, this would be more than double the 10-year average to 2014–15 of $78 000 and the highest average farm cash income recorded in New South Wales in the past 20 years (Figure 6).



TABLE 5 Financial performance, by state, all broadacre industries

New South Wales Victoria

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y

Total cash receipts $ 403 270 440 200 (4) 500 000 289 990 303 000 (4) 298 000

Total cash costs $ 292 700 308 600 (4) 324 000 198 730 206 400 (4) 207 000

Farm cash income $ 110 570 131 600 (6) 176 000 91 270 96 600 (7) 91 000

Farms with negative farm cash income % 23 13 (20) 14 20 17 (21) 19

Farm business profit $ 10 140 22 300 (33) 78 000 4 990 –12 900 (50) –13 000


– excluding cap. appreciation $ 44 850 55 600 (14) 112 000 28 600 10 300 (63) 10 000

– including cap. appreciation $ 68 320 110 000 (28) na 52 390 151 500 (15) na

Farm capital at 30 June a $ 3 567 370 3 824 400 (5) na 2 763 240 3 153 100 (4) na

Net capital additions $ 28 180 71 700 (48) na 4 390 76 000 (48) na

Farm debt at 30 June b $ 456 040 474 400 (9) 504 000 239 460 267 600 (9) 281 000

Change in debt – 1 July to 30 June b % 3 6 (61) 3 –1 9 (48) 3

Equity at 30 June bc $ 3 093 280 3 209 300 (5) na 2 494 100 2 820 000 (4) na

Equity ratio bd % 87 87 (1) na 91 91 (1) na

Farm liquid assets at 30 June b $ 137 870 166 500 (14) na 154 790 153 400 (12) na

Farm management deposits (FMDs) at 30 June b $ 37 190 37 700 (15) na 37 380 43 600 (15) na

Share of farms with FMDs at 30 June b % 22 22 (14) na 20 21 (17) na

Rate of return e

– excluding cap. appreciation % 1.3 1.5 (12) 2.9 1.0 0.3 (63) 0.3

– including cap. appreciation % 1.9 3.0 (30) na 1.9 5.1 (14) na

Off-farm income of owner–manager and spouse b $ 35 570 41 300 (10) na 33 500 35 000 (14) na

continued ...




Queensland Western Australia

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y

Total cash receipts $ 372 830 416 100 (5) 480 000 932 080 952 700 (6) 1 003 000

Total cash costs $ 301 620 294 500 (6) 314 000 657 870 652 600 (7) 676 000

Farm cash income $ 71 200 121 600 (8) 166 000 274 210 300 100 (10) 326 000


Farm business profit $ –84 100 –47 400 (27) 34 000 161 850 126 800 (21) 172 000


– excluding cap. appreciation $ –34 720 –1 000 (1301) 77 000 250 340 197 500 (14) 243 000

– including cap. appreciation $ –110 940 35 300 (111) na 262 840 213 100 (15) na



Farm debt at 30 June b $ 691 350 722 000 (10) 704 000 1 011 060 843 000 (12) 876 000

Change in debt – 1 July to 30 June b % 1 2 (177) 0 –3 3 (90) –3






Rate of return e

– excluding cap. appreciation % –0.6 0.0 (1302) 1.4 4.8 3.6 (14) 4.3

– including cap. appreciation % –2.0 0.7 (110) na 5.0 3.9 (15) na


continued ...

continued




South Australia Tasmania

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y


Total cash costs $ 324 860 331 300 (13) 331 000 234 800 259 600 (10) 262 000

Farm cash income $ 159 270 199 300 (13) 220 000 69 140 128 500 (10) 96 000


Farm business profit $ 28 560 64 600 (29) 95 000 8 800 26 700 (39) –3 000







Change in debt – 1 July to 30 June b % 1 1 (641) –6 1 4 (167) 3






Rate of return e




continued ...

continued




Northern Territory Australia

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y

Total cash receipts $ 1 610 570 2 199 400 (13) 2 720 000 446 200 480 100 (3) 519 000

Total cash costs $ 1 252 700 1 431 800 (11) 1 482 000 321 670 328 300 (3) 340 000

Farm cash income $ 357 870 767 600 (20) 1 238 000 124 520 151 800 (4) 179 000


Farm business profit $ 463 190 472 100 (38) 956 000 14 110 20 900 (25) 63 000


– excluding cap. appreciation $ 541 590 589 100 (29) 1 078 000 56 000 59 300 (9) 101 000




Farm debt at 30 June b $ 1 249 020 1 391 900 (22) 1 372 000 510 660 506 900 (5) 517 000

Change in debt – 1 July to 30 June b % 8 –19 (65) –2 0 4 (43) 0






Rate of return e





continued



FIGURE 6 Farm cash income, all broadacre farms, New South Wales and Queensland average per farm

2015–16$’000

New South WalesQueensland


50

100

150

200

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

VictoriaVictorian broadacre crop receipts are projected to decline by around 7 per cent in 2015–16, driven by reduced winter grain, oilseeds and pulse yields resulting from prolonged dry seasonal conditions. This follows a reduction of almost 20 per cent in average crop receipts in 2014–15 compared with 2013–14. Reduction in crop receipts in 2014–15 and 2015–16 is estimated to have been largest in the Wimmera region, resulting in average broadacre farm cash income in this region declining from $207 200 a farm in 2013–14 to just $20 000 in 2015–16.

Increased receipts from beef cattle and wool are projected for Victorian broadacre farms in 2015–16. However, sheep and lamb receipts are projected to decline slightly as a result of reduced turn-off.

Average farm cash incomes are projected to decline in the Central North but to increase in Southern and Eastern Victoria, mainly driven by increased receipts from beef cattle resulting from higher beef cattle prices, high beef cattle turn-off and higher wool prices.

On average, farm cash income of broadacre farms in Victoria is projected to decline to $91 000 a farm in 2015–16. Despite this being lower than 2014–15 farm cash income, this would still be around 14 per cent more than the 10-year average to 2014–15 (Figure 7).

QueenslandFarm cash incomes increased in all Queensland regions in 2014–15 except the West and South West. The increase was partly achieved through a reduction in cattle herds as cattle turn-off increased in response to dry seasonal conditions and higher cattle prices in 2014–15.



Further increases in average farm cash income are projected for all Queensland regions in 2015–16 except North Queensland Coastal. This is driven by further increases in beef cattle prices (despite reductions in cattle turn-off), together with increased crop receipts resulting mainly from above average winter grain yields and increased grain legume production in southern Queensland.

Much of northern and western Queensland remained subject to dry conditions during the 12 months to December 2015 and turn-off of beef cattle was high. Average farm cash incomes are projected to increase in 2015–16, but the proportion of broadacre farms recording negative farm cash incomes is expected to remain relatively high in the West and South West.

For Queensland broadacre farms average receipts from beef cattle are projected to increase by around 14 per cent in 2015–16 and crop receipts by around 30 per cent, resulting in total farm receipts increasing by 15 per cent. Average total cash costs are projected to increase by around 7 per cent in 2014–15, mainly as a result of a projected increase in beef cattle purchase expenditure in some regions and increased expenditure on repairs and maintenance.

Average broadacre farm cash income in Queensland is projected to increase to average $166 000 a farm in 2015–16. This would be around 80 per cent above the 10-year average to 2014–15 and the highest average farm cash income recorded for Queensland since 2001–02 (Figure 6).

Part of the increase in farm cash income has been achieved through reduced cattle herds because cattle turn-off increased in 2013–14 and 2014–15. After adjustment for change in value of beef cattle inventories, the average farm business profit projected for Queensland broadacre farms in 2015–16 is $34 000 a farm. This would be similar to that recorded in 2010–11 and the third-highest farm business profit recorded for Queensland broadacre farms in the past 20 years.

South AustraliaBroadacre farm cash incomes are projected to increase to average $220 000 a farm in 2015–16. If achieved, this would be around 65 per cent above the 10-year average to 2014–15.

Increased winter crop production resulting mainly from increased winter crop plantings, together with a small increase in beef cattle receipts and sheep, lamb and wool receipts, is projected to result in average farm cash income increasing in all regions in 2015–16.

Slightly lower winter crop yields in the South East, Murray Lands and Yorke Peninsula regions resulting from dry seasonal conditions are projected to result in only a small increase in average farm cash income in these regions in 2015–16. Crop yields increased in the Eyre Peninsula and the increase in projected farm cash income is larger. In the North Pastoral region, higher beef cattle, sheep and wool prices together with increased turn-off of beef cattle are projected to result in a larger increase in average farm cash income.



Western AustraliaA decline in wheat and barley yields and lower grain quality driven by variable seasonal conditions is projected to result in a decrease in average broadacre crop receipts in 2015–16 in Western Australia, particularly in the Central and South Wheat Belt. The impact of lower quality grain on farm cash receipts is expected to be partly offset by pool payments received in 2015–16 for grain delivered in 2014–15 and by increased wool receipts resulting from higher wool prices in 2015–16.

In the northern pastoral regions of the Kimberley, the Pilbara and the South West regions, increased sales of beef cattle and higher beef cattle prices are projected to increase farm receipts and raise average farm cash income.

Overall, broadacre farm cash income in Western Australia is projected to increase from an average $300 100 a farm in 2014–15 to $326 000 a farm in 2015–16. If achieved, this would be around 80 per cent above the 10-year average to 2014–15.

FIGURE 7 Farm cash income, all broadacre farms, Victoria and Tasmania average per farm

2015–16$’000

VictoriaTasmania


2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

20

40

60

80

100

120

140

TasmaniaTasmanian broadacre crop receipts are projected to decline by 13 per cent in 2015–16 because of reduced production resulting from dry seasonal conditions. Receipts for beef cattle are projected to decrease from the historical high recorded in 2014–15. Receipts from sheep, lambs and wool are projected to decrease despite increased prices for beef cattle and wool resulting from reduced livestock turn-off and lower wool production.

Overall receipts are expected to decrease for broadacre farms, but average total cash costs are expected to increase driven by higher expenditure on fodder resulting from dry seasonal conditions and small increases in most other farm costs except livestock purchases.

On average, farm cash income of broadacre farms in Tasmania is projected to decline to $96 000 a farm in 2015–16 (Figure 7). This average would be much lower than the relatively high farm cash income recorded in 2014–15 but still around 36 per cent above the 10-year average to 2014–15.



Northern TerritoryMany 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. Numbers of cattle sold for live export declined between 2009–10 and 2012–13, before rebounding strongly in 2013–14 and 2014–15. The expansion of the live export trade since 2013–14 has driven demand and cattle for this market are now being sourced from a much expanded area of northern Australia.

In 2014–15 beef cattle receipts increased by 54 per cent, as a result of a 19 per cent increase in average price received for beef cattle and a 29 per cent increase in number of beef cattle sold. Average total cash costs increased by 16 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 prices of beef cattle and a small increase in beef cattle turn-off are projected to result in further increases in average farm cash income in all regions in 2015–16.

Overall farm cash incomes in the Northern Territory are projected to increase to average $1 238 000 a farm in 2015–16, compared with the 10-year average to 2014–15 of $395 000 a farm and the highest farm cash income recorded for the Northern Territory in the past 20 years in real terms.

Performance, by industryFarm financial performance in 2014–15 and projected performance in 2015–16, and how it ranks in historical terms, also vary markedly across industries (Table 6 and Table 7).

Wheat and other crops industryAverage farm cash income of the wheat and other crops industry decreased slightly in 2014–15 to average $316 200 a farm. This was driven by lower receipts from winter grain, oilseeds and pulse crops and lower rice receipts more than offsetting a small reduction in average farm cash costs resulting from lower fuel and interest payments.

In 2015–16 farm cash income of the wheat and other crops industry is projected to increase to average $381 000 a farm. This is mainly a result of increased winter crop production in all the major grain producing states except Victoria, reflecting increased crop planting and slightly higher yields in 2015–16 combined with higher prices for pulses and oilseeds. If realised, farm cash income will be around 75 per cent higher than the 10-year average to 2014–15 and the highest recorded in the past 20 years (Figure 8).

In 2015–16 crop receipts are projected to increase by 9 per cent and total cash costs by around 4 per cent, mainly as a result of the increased cost of planting, harvesting and marketing larger winter crop areas together with reduced expenditure on fuel and interest.

Wheat and other crops industry farms are projected to record the highest average rate of return excluding capital appreciation (4.8 per cent) of industries surveyed in 2015–16. However, rates vary across the states and territories. Wheat and other crops industry farms surveyed recorded the highest average rate of return among broadacre industries in 19 of the past 20 years.



FIGURE 8 Farm cash income, grains industries average per farm

2015–16$’000

Wheat and other cropsMixed–livestock crops


50

100

150

200

250

300

350

400

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

TABLE 6 Financial performance of broadacre farms, by industry average per farm

Farm cash income Farm business profit p

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y

$ $ $ $ $ $

Wheat and other crops 360 210 316 200 381 000 204 260 122 400 202 000

Mixed livestock–crops 137 460 165 800 159 000 35 970 36 000 43 000

Beef industry 51 750 96 200 130 000 –58 510 –29 300 25 000

Sheep 63 490 103 300 116 000 –22 140 14 200 31 000

Sheep–beef 65 100 120 600 147 000 –27 620 9 500 55 000

All broadacre industries 124 460 152 000 179 000 14 030 21 000 63 000

Dairy 164 370 156 300 113 000 65 610 64 400 –2 000

Rate of return – excluding capital appreciation a

Rate of return – including capital appreciation a

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y

% % % % % %

Wheat and other crops 5.4 3.7 4.8 5.8 7.2 na

Mixed livestock–crops 2.3 2.1 2.2 3.0 5.9 na

Beef industry –0.8 –0.1 1.2 –1.5 0.3 na

Sheep –0.1 1.2 1.7 0.3 2.9 na

Sheep–beef –0.2 0.8 2.0 0.3 3.4 na

All broadacre industries 1.4 1.4 2.4 1.5 3.6 na

Dairy 3.7 3.2 1.5 4.1 6.6 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



Mixed livestock–crops industryAverage farm cash income of the mixed livestock–crops industry increased in 2014–15 to average $165 800 a farm, as a result of increases in lamb and wool receipts and despite a small reduction in total crop receipts. Total cash costs decreased, driven by reductions in expenditure on crop planting and harvesting resulting from reduced area planted to crops. Expenditure reduced on interest payments, fuel and sheep and beef cattle purchases.

In 2015–16 crop receipts are projected to increase only slightly as a result of increased winter crop production. Receipts from beef cattle, lambs and wool are expected to increase by much more, resulting in an overall increase in total farm cash receipts of around 1 per cent.

Total cash costs are projected to increase by around 3 per cent, mainly because of projected increases in expenditure on livestock purchases, repairs and maintenance and despite reduced interest and fuel payments. Crop handling and marketing costs will be higher because the crop is larger.

Average farm cash income of mixed livestock–crops industry farms is projected to decrease slightly to an average of $159 000 a farm in 2015–16, still around 50 per cent above the 10-year average to 2014–15.

Sheep industryIn 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 sheep industry farms to $103 300 a farm (Figure 9). This was despite an increase in farm cash costs resulting mainly from increased expenditure on sheep purchases, fodder, fertiliser, repairs and maintenance.

In 2015–16 farm cash income of sheep industry farms is projected to increase further to average $116 000 a farm, mainly as a result of higher lamb and wool prices. Total farm cash costs are projected to remain largely unchanged because reductions in expenditure on interest payments, fuel and fertiliser mostly offset small increases in expenditure on other cost items. If achieved, farm cash income of sheep industry farms would be around 69 per cent above the 10-year average to 2014–15 of $69 000 a farm in real terms.

FIGURE 9 Farm cash income, sheep industries average per farm

2015–16$’000

Sheep–beefSheep


30

60

90

120

150

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98



Sheep–beef industryIn 2014–15 a large increase in receipts from the sale of beef cattle, together with small increases in receipts from the sale of sheep, lambs and wool, resulted from higher prices for beef cattle, lambs, adult sheep and wool and higher turn-off of beef cattle. Turn-off of beef cattle increased, particularly in regions with drier seasonal conditions in Queensland, northern New South Wales, Victoria and South Australia. Farm cash income for sheep–beef industry farms increased to average $120 200 a farm compared with just $65 100 in 2013–14.

In 2015–16 farm cash income of sheep–beef industry farms is projected to increase further to average $147 000 a farm as a result of higher beef cattle, lamb and wool prices and despite a sharp reduction in beef cattle turn-off. If achieved, this would be around 80 per cent above the 10-year average to 2014–15 and the highest average farm cash income of sheep–beef farms in the past 20 years.

Beef industryBeef 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. High cattle turn-off from mid 2013 continued in eastern Australia through 2014‒15, partly as a result of dry seasonal conditions. Depreciation of the Australian dollar and strong export demand for Australian beef and live cattle resulted in a 24 per cent increase in beef cattle prices and further encouraged turn-off. Average farm cash income of beef industry farms is estimated to have increased from an average of $51 750 a farm in 2013‒14 to an average of $96 200 in 2014‒15 (Figure 10).

FIGURE 10 Farm cash income, beef industry average per farm


20

40

60

80

100

120

140

2015–16$’000

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98



continued ...

TABLE 7 Financial performance, by industry, broadacre and dairy industries average per farm

Wheat and other crops industry Mixed livestock–crops industry

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y

Total cash receipts $ 1 117 280 1 050 300 (5) 1 142 000 489 710 499 000 (5) 502 000

Total cash costs $ 757 070 734 100 (5) 761 000 352 250 333 300 (6) 343 000

Farm cash income $ 360 210 316 200 (7) 381 000 137 460 165 800 (7) 159 000


Farm business profit $ 204 260 122 400 (14) 202 000 35 970 36 000 (32) 43 000






Farm debt at 30 June b $ 1 201 760 1 160 900 (7) 1 124 000 543 130 503 900 (12) 528 000

Change in debt – 1 July to 30 June b % 1 6 (37) –2 0 3 (112) 0






Rate of return e






continued ...


Sheep industry Beef industry

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y


Total cash costs $ 182 520 208 400 (8) 208 000 198 730 213 300 (7) 219 000

Farm cash income $ 63 490 103 300 (11) 116 000 51 750 96 200 (9) 130 000


Farm business profit $ –22 140 14 200 (54) 31 000 –58 510 –29 300 (31) 25 000


– excluding cap. appreciation $ –2 960 33 800 (25) 51 000 –32 210 –4 000 (225) 50 000

– including cap. appreciation $ 8 740 81 800 (24) na –62 590 13 600 (233) na


Net capital additions $ –12 400 71 000 (46) na 17 260 11 700 (361) na


Change in debt – 1 July to 30 June b % 2 4 (107) 3 0 2 (209) 1






Rate of return e

– excluding cap. appreciation % –0.1 1.2 (22) 1.7 –0.8 –0.1 (226) 1.2

– including cap. appreciation % 0.3 2.9 (22) na –1.5 0.3 (234) na


continued




Sheep–beef industry Dairy industry

2013–14 2014–15p 2015–16y 2013–14 2014–15p 2015–16y


Total cash costs $ 193 990 221 500 (10) 238 000 580 100 630 600 (4) 648 000

Farm cash income $ 65 100 120 600 (13) 147 000 164 370 156 300 (10) 113 000


Farm business profit $ –27 620 9 500 (130) 55 000 65 610 64 400 (21) –2 000


– excluding cap. appreciation $ –6 170 31 400 (45) 77 000 136 950 133 700 (12) 64 000





Change in debt – 1 July to 30 June b % 2 0 (400) 5 0 2 (163) 3






Rate of return e

– excluding cap. appreciation % –0.2 0.8 (42) 2.0 3.7 3.2 (11) 1.5




continued



Beef cattle turn-off is projected to decline sharply in 2015–16 as a result of reduced numbers of saleable cattle and as farmers commence herd rebuilding in response to improved seasonal conditions across several regions previously affected by dry seasonal conditions. Despite reduced turn-off, further increases in saleyard prices for beef cattle are projected to result in an increase in beef cattle receipts and total farm receipts of around 14 per cent.

This increase is projected to more than offset a small increase in average total cash costs, resulting in average farm cash income of beef industry farms increasing to $130 000 a farm in 2015–16. If achieved, this would be around double the 10-year average to 2014–15 of $65 000 and the highest average farm cash income of beef industry farms in the past 20 years.

The increase in farm cash incomes has been achieved partly through increased cattle turn-off and reduced herds. Despite the reduction in value of beef cattle inventories, farm business profit is estimated to have increased from an average loss of $29 300 a farm in 2014‒15 to a profit of $25 000 in 2015‒16. If achieved, this will be the highest farm business profit for the beef industry since 2004‒05.

Dairy industryIn 2014–15 average farm cash incomes declined in Victoria, Tasmania and South Australia despite increased milk production, driven by reduced farmgate milk prices and an increase in farm cash costs. In Queensland, higher milk prices resulted in a small increase in average farm cash income despite a reduction in production and higher farm cash costs. In New South Wales and Western Australia, average farm cash income increased as a result of both increased milk prices and increased milk production. Nationally, average farm cash income declined from $164 368 in 2013–14 to $156 270 in 2014–15 (Figure 11).

In 2015–16 average farm cash incomes are projected to decline in all states except Western Australia, driven by a decline in average farmgate milk prices in most regions except those in Queensland, northern New South Wales and Western Australia and a small reduction in milk production in most states except Western Australia. Cash costs of production are also projected to increase because of increased expenditure on purchased fodder as a result of drier seasonal conditions in Victoria, South Australia and Tasmania, together with reduced irrigation water availability and higher fodder prices. Farm cash costs are expected to increase despite reduced expenditure on fertiliser and fuel and lower interest rates on borrowings.



FIGURE 11 Farm cash income, dairy industry average per farm


30

60

90

120

150

180

2015–16$’000

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

Average farm cash income is projected to decline from $152 130 a farm in Victoria in 2014–15 to $103 000 a farm in 2015–16 (Table 8). In South Australia, average farm cash income is projected to decline from $133 500 a farm in 2014–15 to $86 500 in 2015–16 and, in Tasmania, from $221 810 in 2014–15 to $132 500 in 2015–16. The reduction in farm cash income is expected to be smaller in New South Wales because of milk prices being maintained in the northern regions. NSW farm cash income is projected to decline from $179 660 a farm in 2014–15 to $158 600 a farm in 2015–16. In Queensland, farm cash income is expected to decline only slightly to an average of $90 600 a farm, mainly as a result of increased cash costs. In contrast, average farm cash income in Western Australia is projected to increase from an average of $234 940 a farm in 2014–15 to an average of $253 900 in 2015–16, driven by higher average milk prices received and increased milk production.

When variations to projected farm cash incomes of dairy farms across Australia are taken into account, the overall average farm cash income of Australian dairy farms is projected to decrease to average $113 000 a farm in 2015–16, around 5 per cent below the 10-year average to 2014–15.



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Farm investmentProducers’ capacity to generate farm income will be influenced by their past investments in additional land to expand the scale of their farming activities and in new infrastructure, plant and machinery to boost productivity in the longer term.

Over the decade to 2014–15 broadacre and dairy farmers invested heavily in land, plant and machinery. In 2014–15 new investment remained relatively high in historical terms.

In 2014–15 the proportion of broadacre and dairy farms acquiring additional land through purchase or lease increased (Figure 12). Around 8 per cent of broadacre farms acquired additional land in 2014–15. This was above the average of 5 per cent for the previous 10 years but well below the rates of the late 1990s and early 2000s.

FIGURE 12 Proportion of broadacre farms acquiring land percentage of farms

%

p ABARES preliminary estimate. Source: ABARES Australian Agricultural and Grazing Industries Survey

2

4

6

8

10

2014–15p

2011–12

2008–09

2005–06

2002–03

1999–2000

1996–97

Land values reported for broadacre and dairy farms declined in some regions between 2009–10 and 2013–14, particularly in the pastoral zone of northern Australia (Figure 13). Reported land values in 2013–14 were up to 30 per cent below those reported in 2007–08 in some regions of northern Australia, where very large increases were recorded over the previous decade. Farmers in the high rainfall zone reported small reductions in land values between 2009–10 and 2013–14. Reductions in land values averaged around 7 per cent. In 2014–15 reported land values in the high rainfall zone increased slightly. Despite the increase in land sales, reported broadacre land values did not increase in most regions.

Average land prices for broadacre farms increased sharply relative to the cash receipts per hectare generated by farming activity between 2001–02 and 2007–08 (Figure 14). On broadacre farms, the ratio of average land price per hectare to total cash receipts per hectare doubled from an average of 5:1 in the three years to 2001–02 to 10:1 in the three years to 2009–10. The ratio increased from 7:1 to 14:1 in the high rainfall zone and from 4:1 to 8:1 in the wheat–sheep zone. The largest increase was reported in the pastoral zone, from 4:1 to 9:1.



FIGURE 13 Land prices for broadacre farms average per farm

Wheat–sheepPastoral


High rainfall

100

200

300

400

500

600

700

800

2014–15p

2010–11

2006–07

2002–03

1998–99

1994–95

1990–91

1986–87

1982–83

1978–79

index100=1977–78

FIGURE 14 Land prices and receipts per hectare, broadacre farms average per farm

2015–16$/ha

p ABARES preliminary estimate.Source: ABARES Australian Agricultural and Grazing Industries Survey

100

200

300

400

500

600 Land value per hectareReceipts per hectare

2014–15p

2011–12

2008–09

2005–06

2002–03

1999–2000

1996–97

Only a relatively small proportion of farms buy land in any one year, but most producers make some annual investment in plant, vehicles, machinery and/or infrastructure. The value of land purchases typically dominates total investment because of the much larger average value of land transactions.



Net investment in plant, vehicles, machinery and farm infrastructure on broadacre farms has been relatively high since 2007–08 (Figure 15). Net investment is the difference between total value of plant, vehicles, machinery and farm infrastructure purchased and total value of those items sold or disposed of. In addition to acquiring new capital items and replacing old items, farms must cover ongoing maintenance and repair of existing plant, vehicles, machinery and farm infrastructure. This expenditure is recorded in ABARES surveys as the cash cost of repairs and maintenance. Some reported annual expenditure on repairs and maintenance is actually the capital cost of replacing and upgrading items of farm capital, such as fencing, stockyards, buildings and watering facilities. Annual expenditure on repairs and maintenance is strongly correlated with farm income. Expenditure on repairs and maintenance rises in years of high farm cash income and falls in years of lower farm cash income.

FIGURE 15 Composition of investment in farm machinery, vehicles and farm improvements, broadacre farms average per farm

Computer, office, workshop and other equipment

2015–16$’000

Repairs andmaintenance


Buildings, fences, yards and structures

Grain storageAccommodation

VehiclesIrrigation equipment

Harvesting andhandlingCultivation, sowing,fertiliser and spraying

Tractors

10

20

30

40

50

2014–15p

2012–13

2010–11

2008–09

2006–07

In the five years to 2013–14, investment in crop growing plant and machinery on broadacre farms continued at a high level, but investment in equipment related to livestock production or used more generally across all farm activities declined in real terms. Investment by beef industry farms declined by almost 50 per cent between 2006–07 and 2013–14. Beef industry incomes in 2014–15 were higher, and beef industry farm investment in 2014–15 increased by around 25 per cent. Investment by dairy industry farms remained high throughout 2008–09 to 2014–15 in real terms.

Most of the rising trend in real expenditure on net capital additions and repairs and maintenance over the past 20 years for both broadacre and dairy farms resulted from increases in average scale of operations of farms, production of crops and intensification of enterprises.



Farm debtDebt 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.

Farm business debt more than doubled in real terms in the decade to 2009. Nationally, total indebtedness of the agriculture, fishing and forestry industries to institutional lenders increased from $42.2 billion at 30 June 2001 by 77 per cent to $74.7 billion in real terms at 30 June 2009. Total rural debt subsequently declined in real terms to $68.5 billion at 30 June 2015. Bank lending accounts for around 95 per cent of total institutional lending, and bank lending declined from $66.9 billion at 31 December 2009 to $64.4 billion at 30 September 2015 (RBA 2016a, 2016b).

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, raising farm equity (net wealth) and inducing lenders to provide more finance. This continued until a correction in land values in some regions after 2009 and banks tightening lending practices 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.

Borrowing to fund new on-farm investment, particularly purchase of land, machinery and vehicles, made the largest contribution to the increase in average broadacre farm debt. In particular, debt to fund land purchase accounted for the largest share of debt—an estimated 44 per cent of average debt of broadacre farms in 2014–15 (Figure 16).

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.

In addition, loan repayment slowed and borrowing to meet working capital requirements increased during the 2000s drought. Working capital debt accounted for 37 per cent of average farm debt of broadacre farms in 2014–15.

Similar to broadacre farm debt, average dairy farm debt more than doubled between 2000–01 and 2014–15, mainly resulting from an increase in average farm size. The increase in average debt per farm is modest relative to the increase in average litres of milk produced per farm (a measure of capacity to generate income to service debt). Borrowing has increased most for land purchase and on-farm investment. Borrowing for ongoing working capital has risen with increases in average herd size and with greater mechanisation and intensification of dairy enterprises.



FIGURE 16 Composition of farm business debt, broadacre farms average per farm

Other debt

2015–16$’000

Buildings and structures


Land developmentMachinery, plant and vehiclesReconstructed debt

Land purchaseWorking capital

100

200

300

400

500

600

2014–15p

2011–12

2008–09

2005–06

2002–03

1999–2000

1996–97

Growth in average debt of farm businesses in the broadacre and dairy industries has slowed in recent years as a result of a reduction in new borrowing and continued debt repayments. Broadacre debt is estimated to have increased by 4 per cent to average $506 900 a farm at 30 June 2015. Dairy industry debt increased by around 2 per cent during 2014–15 to average $888 200 a farm.

Change in farm debt 2014–15Around 40 per cent of broadacre and dairy industry farm businesses reduced overall farm debt in 2014–15. The largest reductions were in regions with high farm cash incomes during 2014–15, including pastoral regions of Queensland and Western Australia, and the Northern Territory. In contrast, in 2014–15 debt increased on 24 per cent of broadacre and dairy farm businesses, particularly those undertaking additional investment and subject to drought.

Farms subject to drought in 2014‒15In 2014–15 around 9 per cent of broadacre and dairy farms were subject to drought conditions. Most of these farms were located in Queensland, north-western New South Wales, the Victorian Wimmera and the NT Alice Springs District. Debt increased by an average of 7 per cent for drought-affected farms in 2014–15, but this average masks substantial variation.

Debt increased for 35 per cent of farms subject to drought, by an average of 27 per cent. Cashflow shortfall (business losses) accounted for 54 per cent of the increase in principal owed by drought-affected farms in 2014–15. A further 31 per cent went to the purchase of land; 8 per cent to the purchase of farm machinery and vehicles; 8 per cent to purchase of livestock; 1 per cent to farm development, including provision of watering facilities; and 1 per cent to other purposes (Figure 17).

Around 28 per cent of farms subject to drought recorded little or no change in farm debt in 2013–14.



Debt decreased for 38 per cent of farms subject to drought, by an average of 10 per cent. The main contributor to reductions in farm debt was cashflow, mainly from sale of cattle. This accounted for 53 per cent of the reduction in principal owed. A further 18 per cent of the reduction was achieved by sale of farm assets, including land; 12 per cent by using and/or reducing assets, including bank deposits and farm management deposits; 7 per cent from off-farm income; and 9 per cent from other sources.

Drought affects farm businesses in many ways in addition to debt. Cattle numbers, stocks of grain and fodder and, typically, liquid assets available are reduced to fund cash outlays. The combined effect in 2014–15 was that farm business equity declined for 49 per cent of drought-affected farms. On average, farm business equity ratio declined by just over 1 per cent for drought-affected farms. A high proportion of farms subject to drought in Queensland in 2014–15 were beef industry farms. Beef cattle account for more than 20 per cent of farm assets on beef industry farms. When these farms reduce beef cattle numbers during drought, they incur larger reductions in equity.

FIGURE 17 Change in farm business debt for farms subject to drought, all broadacre and dairy farms, 2014–15p average per farm

Other

Purchase of non-farm assets

Livestock purchase

Farm development

Cash�ow shortfall

Machinery andvehicle purchase

Land purchase

Other

Sale of non-farm assets

O�-farm income

Reduction in liquid assetsand FMDs a

Sale of farm assets

Cash�ow surplus

$’000

$’000

a Farm management deposits. p ABARES preliminary estimate. Note: Other includes borrowing to fund changes in farm business ownership/partnership.Source: ABARES Australian Agricultural and Grazing Industries Survey

10 20 30 40 50 60

10 20 30 40

Reduction

Increase



Farms not subject to drought in 2013‒14Most (91 per cent) broadacre and dairy farms were not subject to drought in 2014–15. For these farms debt decreased by an average of 3 per cent.

Around 37 per cent of farms not affected by drought in 2014–15 recorded little or no change in farm debt.

In 2013–14 debt increased for 23 per cent of farms not affected by drought, by an average of 28 per cent in 2013–14. Land purchase accounted for 33 per cent of the increase in principal owed. A further 16 per cent was used to purchase farm machinery and vehicles; 12 per cent to cover cashflow shortfalls; 2 per cent to farm development; 1 per cent to livestock purchase; and 6 per cent to other purposes (Figure 18). Most of the ‘other’ category went to funding changes in business ownership or partnership arrangements.

Debt decreased for 40 per cent of farms not affected by drought, by an average of 14 per cent. The main contributor to reductions in farm debt was cashflow surplus. This accounted for 75 per cent of the reduction in principal owed. Off-farm income accounted for 6 per cent of the reduction. The remainder was 4 per cent from the sale of non-farm assets, 3 per cent from reduction in liquid assets and 3 per cent from other sources.

FIGURE 18 Change in farm business debt for farms not subject to drought, broadacre and dairy farms, 2014–15p average per farm

Other

Purchase of non-farm assets

Livestock purchase

Farm development

Cash�ow shortfall

Machinery andvehicle purchase

Land purchase

Other

Sale of non-farm assets

O�-farm income

Reduction in liquid assetsand FMDs a

Sale of farm assets

Cash�ow surplus

$’000

$’000

a Farm management deposits. p ABARES preliminary estimate. Note: Other includes borrowing to fund changes in farm business ownership/partnership.Source: ABARES Australian Agricultural and Grazing Industries Survey

10 20 30 40

10 20 30 40

Reduction

Increase



Farm equityThe decline in land values between 2007–08 and 2013–14 reduced farm equity in some regions and prompted financial institutions to tighten lending. This restricted access of some farm businesses to further finance.

In regions including the pastoral regions of northern Australia, farm equity is estimated to have fallen significantly over the five years to June 2014, mainly as 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 slightly with the general rise in beef cattle and sheep prices in 2014–15 and the small increase in land values for beef industry farms in some high rainfall regions.

On average, farm business equity remains strong for broadacre farms. It declined only slightly after the large increase of the 2000s (Figure 19). The average equity ratio for broadacre farms at 30 June 2015 was estimated at 87 per cent, unchanged from 30 June 2014. Around 82 per cent of farms had equity ratios exceeding 80 per cent at 30 June 2015.

FIGURE 19 Change in farm business debt and equity, broadacre farms Australia average per farm

index1999–2000

= 100 %

Farm businessequity

Farm businessdebt


Equity ratio (right axis)

100

200

300

400

500

20

40

60

80

100

2014–15p

2011–12

2008–09

2005–06

2002–03

1999–2000



At the national level, the average equity ratio for dairy farms has declined since 2004–05 as debt levels have increased with increased herd size and milk production—particularly in regions with increased focus on dairy production for export, including Tasmania, Western Victoria and South Australia. The average farm equity ratio of dairy industry farms at 30 June 2015 was 80 per cent, up 1 per cent from 30 June 2014 and around 9 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.

Distribution of farms by debt and equityThe proportion of broadacre farms with relatively high debt varies across jurisdictions and industries (Table 9 and Table 10).

Around 31 per cent of broadacre farms in Western Australia and around 32 per cent of Northern Territory farms carried in excess of $1 million in debt at 30 June 2015. 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 in excess of $1 million in debt at 30 June 2015. Both industries have a high proportion of large farms.

In contrast, 68 per cent of beef farms and 53 per cent of sheep–beef farms nationally were recorded as having debt less than $100 000 at 30 June 2015. Many of these businesses are small. The number of dairy farms with debt less than $100 000 was 17 per cent at 30 June 2015.

Much of the aggregate broadacre sector debt is held by a relatively small proportion of mostly larger farms. Around 70 per cent of aggregate broadacre sector debt, at 30 June 2015, was held by just 13 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 2014–15.

Aggregate debt is slightly less concentrated with larger farms in the dairy industry. Nevertheless, around 70 per cent of aggregate dairy sector debt at 30 June 2015 was held by 30 per cent of farms.



TABLE 9 Distribution of broadacre farms, by farm business debt and equity ratio at 30 June 2015 pa percentage of farms

New South Wales Victoria Queensland

South Australia

Western Australia Tasmania

Northern Territory Australia

Farm business debt b

<$100 000 % 52 (7) 60 (8) 52 (7) 59 (10) 49 (10) 60 (13) 38 (37) 54 (4)

$100 000 and <$250 000 % 14 (19) 17 (27) 8 (25) 7 (38) 6 (38) 9 (66) 0 12 (13)

$250 000 and <$500 000 % 10 (21) 9 (23) 11 (21) 8 (33) 6 (40) 15 (38) 9 (72) 9 (11)

$500 000 and <$1m % 11 (16) 7 (17) 10 (20) 15 (28) 8 (31) 4 (50) 21 (58) 10 (9)

$1m and <$2m % 8 (22) 5 (21) 10 (18) 8 (32) 19 (16) 5 (55) 11 (73) 9 (10)

≥$2m % 5 (15) 3 (21) 9 (15) 5 (26) 12 (18) 8 (24) 21 (28) 6 (8)

Total % 100 100 100 100 100 100 100 100

Average farm debt at 30 June $’000 474 (9) 268 (9) 722 (10) 425 (15) 843 (12) 454 (18) 1 392 (22) 505 (5)

Farm business equity ratio bc

≥90 per cent % 65 (5) 77 (4) 68 (5) 67 (8) 62 (7) 79 (4) 50 (26) 68 (2)

80 and <90 per cent % 20 (14) 11 (26) 11 (20) 13 (26) 12 (22) 7 (29) 33 (35) 14 (9)

70 and <80 per cent % 6 (24) 8 (25) 8 (20) 13 (26) 11 (23) 8 (36) 13 (48) 8 (11)

60 and <70 per cent % 5 (23) 3 (32) 6 (20) 4 (30) 10 (25) 1 (167) 2 (125) 5 (12)

<60 per cent % 5 (37) 2 (38) 6 (23) 3 (61) 5 (31) 5 (43) 3 (71) 4 (17)

Total % 100 100 100 100 100 100 100 100

Average farm business equity ratio at 30 June % 87 (1) 91 (1) 86 (2) 89 (2) 84 (2) 88 (2) 85 (3) 87 (1)

Population of farms no. 17 609 12 770 9 394 6 550 6 428 993 167 5 3912

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



TABLE 10 Distribution of farms by industry, by farm business debt and equity ratio at 30 June 2015 pa percentage of farms

Wheat and other crops

Mixed livestock–

crops Sheep Beef Sheep–beef Dairy

Farm business debt b

<$100 000 % 32 (13) 44 (12) 62 (8) 68 (5) 53 (10) 17 (33)

$100 000 and <$250 000 % 7 (35) 16 (23) 12 (35) 10 (29) 17 (29) 8 (34)

$250 000 and <$500 000 % 9 (24) 11 (26) 12 (25) 7 (21) 11 (32) 20 (28)

$500 000 and <$1m % 16 (19) 13 (22) 7 (26) 6 (19) 11 (31) 25 (20)

$1m and <$2m % 19 (13) 11 (20) 5 (40) 6 (29) 5 (36) 19 (24)

≥$2m % 16 (10) 6 (23) 3 (33) 4 (15) 2 (43) 12 (17)

Total % 100 100 100 100 100 100

Average farm debt at 30 June $’000 1 161 (7) 504 (12) 256 (14) 368 (10) 307 (17) 888 (8)

Farm business equity ratio bc

≥90 per cent % 49 (8) 57 (9) 73 (5) 82 (3) 72 (6) 31 (20)

80 and <90 per cent % 17 (17) 20 (20) 15 (24) 9 (21) 17 (26) 25 (21)

70 and <80 per cent % 14 (17) 12 (26) 7 (35) 4 (23) 8 (26) 21 (24)

60 and <70 per cent % 13 (18) 7 (24) 3 (39) 2 (24) 3 (47) 13 (25)

<60 per cent % 8 (24) 5 (31) 2 (51) 4 (39) 0 (104) 10 (40)

Total % 100 100 100 100 100 100

Average farm business equity ratio at 30 June % 81 (1) 86 (2) 91 (1) 91 (1) 92 (1) 80 (2)

Population of farms no. 9 206 11 488 8 443 19 646 5 102 6 913

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



Debt servicingFor the broadacre and dairy industries, the proportion of farm receipts needed to fund interest payments rose substantially between 2001–02 and 2007–08. 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 farm receipts since 2009–10 and reductions in interest rates resulted in a decline in the average proportion of farm receipts needed to fund interest payments for grains, dairy and sheep industry farms (Figure 20).

Much larger increases in borrowing through the 2000s and a reduction in farm receipts between 2004–05 and 2013–14 resulted in the proportion of receipts needed to fund interest payments being historically high in the beef industry. The proportion of farm receipts needed to fund interest payments peaked at almost 16 per cent in 2007–08 as northern beef industry farms restocked after the cessation of the 2000s drought. The proportion has since trended steadily downwards, to 11 per cent in 2014–15, and is projected to be around 9 per cent in 2015–16. If achieved, this would be slightly above the historically low proportion recorded in the period 1999–2000 to 2001–02, when drought interest subsidies were in place and beef cattle prices were high, but below the average of 11 per cent for the 20 years to 2014–15.

FIGURE 20 Ratio of interest payments to total cash receipts, farms with debt, by industry average per farm

%


4

8

12

16

20 BeefSheepDairyGrains

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

In 2015–16 the ratio of interest payments to farm receipts is projected to reduce further in most industries and regions, declining to 7 per cent for NSW and Victorian broadacre farms, 6 per cent for WA broadacre farms and 5 per cent for SA broadacre farms (the lowest recorded in the past 20 years). The proportion of farm receipts needed to meet interest payments is projected to increase in Tasmania to around 9 per cent, driven by lower farm receipts because of dry seasonal conditions. This would be around the average of the past 20 years for Tasmanian broadacre farms.



The proportion of farm receipts needed to meet interest payments is estimated to have declined to 13 per cent for Queensland broadacre farms in 2014–15 and is projected to decline to 10 per cent in 2015–16 (below the average for the previous 20 years of 12 per cent) (Figure 21).

FIGURE 21 Ratio of interest payments to total cash receipts, farms with debt, by state average per farm

%


4

8

12

16

20 QueenslandNew South WalesRest of Australia

Victoria

2015–16y

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

Farm cash incomes of broadacre and dairy farms were highly variable over the 15 years ending 2014–15 (see farm cash income charts for industries and states). Mechanisms that farm businesses employ to manage income variability include holding liquid financial assets (such as farm management deposits) and maintaining high farm equity to provide a reserve of credit to manage income downturns. Credit reserves are unused borrowing capacity, such as an overdraft or line of credit. Maintaining a credit reserve avoids costs of liquidating farm assets to meet cash demands and reacquiring those assets once the adversity has passed.

Critical to maintaining credit reserves is a lender’s willingness to provide loans. Financial institutions lend to farm businesses on the basis of the equity farmers have in their businesses and the capacity of the business to service increased debt long term. Most businesses that institutional lenders allow to operate with an equity ratio of less than 70 per cent are large operations that mostly generate high farm cash incomes or have access to substantial off-farm assets or income.

The proportion of broadacre farms with relatively low additional borrowing capacity (equity ratio of less than 70 per cent) and relatively high debt servicing commitments (interest-to-receipts ratio exceeding 15 per cent) reached 8 per cent in 2006–07 and 7 per cent in 2009–10 before declining to an estimated 5 per cent in 2014–15 (Figure 22). This was well below the highs of around 12 per cent recorded in the early 1990s, when interest rates were high and farm cash incomes were uniformly low across all industries.



FIGURE 22 Debt servicing and borrowing capacity, all broadacre farms average per farm

Farms with greater than 15% interest-to-receipts ratio

Farms with less than 70% equity ratio

%

Farms with equity ratio less than 70% and interest-to-receipts ratiogreater than 15%

5

10

15

20

25

30

y ABARES provisional estimate.

2015–16y

2011–12

2007–08

2003–04

1999–2000

1995–96

1991–92

In 2015–16 the proportion of broadacre farms with relatively low additional borrowing capacity and relatively high debt servicing commitments is projected to decrease further to around 4 per cent, the lowest proportion recorded since 2005–06. Reductions in interest rates and higher receipts for livestock farms are projected to offset small increases expected in debt in most states and industries.

ReferencesABS 2015, Agricultural commodities, Australia, 2013–14, cat. no. 7121, Australian Bureau of Statistics, Canberra, available at abs.gov.au/AUSSTATS/abs@nsf/DetailsPage/7121.02013-14.

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 2016a, ‘Bank lending to business—total credit outstanding by size and sector’, Reserve Bank of Australia, Sydney, available at rba.gov.au/statistics/tables, accessed 2 February 2016.

RBA 2016b, ‘Rural debt by lender’, Reserve Bank of Australia, Sydney, available at rba.gov.au/statistics/tables, accessed 2 February 2016.


Summary• Productivity in the broadacre industries grew by 1.1 per cent a year on average

between 1977–78 and 2013–14.• Broadacre productivity growth was driven largely by declining input use (–1 per cent

a year) while maintaining modest output growth (0.1 per cent a year).• The long-run decline in total input use is largely attributable to trends in livestock

industries, which have outweighed increases in input use by cropping industries.• Dairy industry productivity grew by 1.6 per cent a year on average between

1978–79 and 2013–14. This reflects strong output growth (1.3 per cent a year) and some reduction in input use (–0.2 per cent a year).

IntroductionProductivity is an important measure of performance for Australian agriculture because it reflects improvements in the efficiency with which inputs such as land, labour and capital are used to produce outputs such as crops, meat, wool and milk. Productivity growth is important for maintaining international competitiveness and profitability given long-term declines in Australian farmers’ terms of trade.

As part of its ongoing research into productivity, ABARES releases updated indexes of productivity performance in Australian broadacre and dairy industries annually. This article updates ABARES productivity series to include measures for the 2013–14 financial year and summarises previous research on the drivers of Australian agricultural productivity.

Productivity growth is determined as an increase in output beyond any associated increase in input (or a decrease in the quantity of inputs needed to produce a unit of output). ABARES measures productivity using total factor productivity (TFP), which takes into account the full range of inputs and outputs that are generated on-farm (Box 1). Productivity growth is generally measured over the long term because it is treated as an indicator of technological progress, which can involve significant time lags in both on-farm implementation and realised benefits. Further, short-term variability in productivity can reflect seasonal conditions rather than shifts in underlying technology or efficiency.

Productivity in Australian broadacre and dairy industriesHaydn Valle

Productivity in Australian broadacre and dairy industries


Box 1 Productivity statistics produced by ABARESABARES preferred estimate of productivity is total factor productivity (TFP), which is the ratio of a quantity index of market outputs relative to a quantity index of market inputs. To produce industry-level TFP estimates, multiple outputs and inputs across farms are aggregated using the Fisher index. Average annual TFP growth rates are estimated by fitting an exponential trend line. A detailed description of ABARES TFP methodology is in Zhao, Sheng & Gray (2012).

Data used to estimate the productivity of Australian broadacre (non-irrigated cropping and grazing) and dairy industries are collected annually through the ABARES national farm survey programme. A consistent method for conducting these surveys has been applied to broadacre farms since 1977–78 and to dairy farms since 1978–79. In particular, a weighted sample of farms is constructed using population estimates supplied by the Australian Bureau of Statistics.

The broadacre and dairy industries accounted for approximately 73 per cent of commercial-scale Australian farm businesses and more than 60 per cent of the total gross value of agricultural output in 2013–14. In addition, these farms managed more than 90 per cent of the total area of agricultural land in Australia and accounted for most of Australian family owned and operated farms (ABARES 2015).

The broadacre and dairy industries are defined by the Australian and New Zealand Standard Industrial Classification (ANZSIC), which is managed by the Australian Bureau of Statistics (ABS 2006). Typically, a farm is classified as specialist if more than 50 per cent of whole-farm receipts is generated by a particular enterprise. Farms that do not meet this criterion for any single enterprise are classified as mixed crop–livestock producers.

Crops industry (ANZSIC06 Class 0146 and 0149)—farms engaged mainly in growing cereal grains, coarse grains, oilseeds, rice and/or pulses.

Mixed crop–livestock 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. TFP estimates are not reported separately for these farms, although they are included in the aggregate broadacre estimates.

Dairy industry (ANZSIC06 Class 0160)—farms engaged mainly in running dairy cattle.



Broadacre productivityBroadacre productivity increased at an average annual rate of 1.1 per cent between 1977–78 and 2013–14 (Figure 1). Productivity growth is defined as output growth minus input growth. As shown in Figure 1, productivity growth over the past 37 years has been driven mainly by reduced input use rather than output growth.

FIGURE 1 Input, output and total factor productivity growth, broadacre industry, Australia, 1977–78 to 2013–14

index

Total factor productivityOutputInput

50

100

150

200

2013–14

2009–10

2005–06

2001–02

1997–98

1993–94

1989–90

1985–86

1981–82

1977–78

Source: ABARES Australian Agricultural and Grazing Industries Survey

Total input use in the broadacre industry declined from 1977–78 to 2013–14 at an average annual rate of 1 per cent (Figure 1). Land use, which accounts for the largest share of total broadacre input use, has declined on average by 1 per cent a year.

Similarly, aggregate use of capital and labour declined by 1.6 per cent and 2.2 per cent a year, respectively. In contrast, the use of material inputs, including fertiliser and crop chemicals, increased by 1.7 per cent a year over the same period, largely reflecting a trend towards more intensive crop production systems.

Despite declining input use, broadacre output increased slightly (0.1 per cent) between 1977–78 and 2013–14. However, this has varied substantially over time, mostly because of changing seasonal conditions. The relatively small change in aggregate broadacre output over this period masks significant structural change, including a 48 per cent decline in the number of farms and a shift from livestock to crop production in many regions.

Productivity has increased in all broadacre industries (Table 1). In the mixed crop–livestock, sheep and beef–sheep industries, growth has been driven by reductions in input use, which have outstripped declines in output. In contrast, the cropping industry increased input use but growth in outputs was much greater. In the beef industry, productivity growth was driven by both a reduction in input use and growth in outputs.



TABLE 1 Input, output and total factor productivity growth, by broadacre industry, Australia, 1977–78 to 2013–14

Industry Input (%) Output (%) TFP (%)

All broadacre –1.0 0.1 1.1

Cropping specialists 1.1 2.6 1.5

Mixed crop–livestock –1.7 –0.8 0.9

Sheep –2.9 –2.6 0.3

Beef –0.2 1.1 1.3

Beef–sheep –2.2 –2.1 0.0


Productivity growth has slowed across broadacre agriculture since 1999–2000. However, changes in productivity growth within the sector have varied over time, and some industries have increased productivity growth in the past decade. In particular, the cropping and mixed crop–livestock industries had much higher productivity growth between 1977–78 and 1988–89 than in the two subsequent decades, while estimated productivity growth in the beef industry was higher in the 1990s and 2000s than in the 1980s. Sheep industry productivity began to grow in 1993–94 and average productivity growth turned positive between 2000–01 and 2013–14 (Figure 2).

FIGURE 2 Productivity growth, by industry, 1977–78 to 2013–14

2000–01 to 2013–141988–89 to 2000–011977–78 to 1988–89

%

–1

0

1

2

3

4

CroppingMixedcrop–livestock

SheepBeefAll broadacre




Drivers of broadacre productivityAgricultural productivity indexes are highly sensitive to climate variability (Hughes et al. 2011; Sheng, Mullen & Zhao 2011). Much of the productivity growth between the late 1970s and mid 1990s has been attributed to generally above average rainfall, which increased cropping yields and contributed to strong pasture growth. Likewise, a slowdown in productivity growth since the mid 1990s can be partly attributed to adverse seasonal conditions, particularly during the 2000s. Some farmers postponed making productivity-enhancing investments and instead used debt finance or savings to overcome below average cash flow as a result of drought.

Australian agricultural industry reforms, such as removing marketing and price support mechanisms, have contributed directly and indirectly to productivity growth (Gray, Oss-Emer & Sheng 2014). These reforms led to structural change, through the amalgamation of farms, better risk management and change in mix of agricultural commodities produced. In turn these changes altered the allocation of resources between farms, with more efficient producers tending to obtain a greater share of inputs and market share over time. Resource reallocation in broadacre agriculture accounted for around half of the industry-level productivity growth that occurred between 1977–78 and 2013–14, and its contribution appears to have increased over time (Sheng, Jackson & Davidson 2015).

Public and private investment in R&D has significantly contributed to productivity growth in the Australian agriculture industry (Sheng, Gray & Mullen 2011). In particular, technical change has been the primary driver of long-run productivity growth over the past three decades through the development and adoption of new technology and management practices (Hughes et al. 2011). 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.

Farm size has increased over the past four decades. Individual farms have expanded, and some small farms have left the industry. ABARES has found that the productivity of larger farms tends to be higher than that of their smaller counterparts. This is most likely because large farms are better positioned to make productivity-enhancing investments because technology providers are more likely to produce technologies fit for large farms and because these farms generally have greater ability to fund such investments (Jackson & Martin 2014).

Managers also have a significant bearing on the productivity of farms. Farming is an inherently complex production process, requiring a broad skill set to maximise profit given significant uncertainty about seasonal conditions and future prices. Good managers are more likely to take advantage of information flows and change technology when it is advantageous to do so. This allows them to maximise output from a given set of inputs, leading to higher productivity.



CroppingProductivity growth among Australian cropping specialists is higher than in any other broadacre industry, with TFP increasing at an average annual rate of 1.5 per cent between 1977–78 and 2013–14 (Figure 3). Total output grew at an average annual rate of 2.6 per cent while total inputs grew more slowly, at 1.1 per cent.

FIGURE 3 Input, output and total factor productivity growth, cropping specialists, Australia, 1977–78 to 2013–14

index


50

100

150

200

250

300

350

2013–14

2009–10

2005–06

2001–02

1997–98

1993–94

1989–90

1985–86

1981–82

1977–78


Jackson (2010) and Knopke, O’Donnell & Shepherd (2000) attributed strong productivity growth in the cropping industry in the 1980s and 1990s to developments in technology such as larger tractors, new plant varieties, better water management and a better understanding of harvesting and planting strategies. Productivity growth in the cropping industry has declined since the early 2000s. This has been attributed to drought, the slower spread of new technology, a decline in the increment of technological progress, knowledge constraints, the loss of a profitable break crop and broader focus for R&D investment beyond productivity-related factors (Jackson 2010).

In some regions, productivity growth in the cropping industry has also been constrained by land degradation, such as dryland salinity and loss of topsoil. This has increased the need for additional inputs to produce the same amount of output. Resistance of weeds and pests to herbicides and pesticides can also constrain productivity growth. Despite these challenges, cropping still has the highest TFP growth of all industries and, with the exception of the sheep industry, has had the highest productivity growth in the past decade.

The Grains Research and Development Corporation (GRDC 2015) identifies three broad grain growing regions: northern, southern and western. The regions are differentiated by their climate conditions, soil types and farming characteristics. Productivity growth in the western and southern regions averaged 1.4 per cent and 1.8 per cent a year, respectively, between 1977–78 and 2013–14. This was driven by strong input growth and even stronger growth in outputs. Similar productivity growth occurred in the northern region (1.4 per cent a year), but this resulted from reduced input use and more moderate output growth.



TABLE 2 Input, output and total factor productivity growth, broadacre cropping industries, by region, Australia, 1977–78 to 2013–14

Cropping specialists Input (%) Output (%) TFP (%)

Northern –0.7 0.7 1.4

Southern 1.5 3.2 1.8

Western 2.2 3.6 1.4

Mixed crop and livestock enterprises

Northern –1.7 –1.3 0.5

Southern –1.2 –0.1 1.1

Western –2.3 –1.2 1.1

Source: ABARES Australian Agricultural Grazing Industries Survey

Productivity growth among cropping specialists has been higher than in the mixed crop–livestock industry, and this has been the case in all regions. In contrast with cropping specialists, productivity growth in the mixed crop–livestock industry has been the result of input use declining more rapidly than output has contracted.

BeefProductivity in the Australian beef industry increased by 1.3 per cent a year on average between 1977–78 and 2013–14. Output increased by 1.1 per cent a year while inputs declined by 0.2 per cent a year (Figure 4). Productivity growth in the beef industry has been supported by improvements in pastures, herd genetics and disease management. This has led to increased branding rates (calves marked as a percentage of cows mated) and lower mortalities.

FIGURE 4 Input, output and total factor productivity, beef industry, Australia, 1977–78 to 2013–14

index


50

100

150

200

2013–14

2009–10

2005–06

2001–02

1997–98

1993–94

1989–90

1985–86

1981–82

1977–78




Productivity in the beef industry can be further disaggregated into the broad regions of northern and southern Australia. These two regions have marked differences in climate, pastures, infrastructure and markets. This has affected the development and nature of the beef industry in each region.

Most of the productivity gains in the beef industry between 1977–78 and 2013–14 were made in the northern region (Table 3). Productivity growth in this region averaged 1.5 per cent a year, driven by output growth of 1.1 per cent a year and reduced input use of 0.4 per cent a year. This can be partly attributed to improved reproductive performance and reduced death rates resulting from the brucellosis and tuberculosis eradication campaign of the 1980s. Managers culled poor performing stock and invested significantly in fences, on-farm infrastructure and cattle management systems. Expansion of the feedlot sector and the live export trade during the 1990s also drove shifts in herd structure and greater use of hardy Bos indicus breeds.

TABLE 3 Input, output and total factor productivity growth, beef industry, by region, Australia, 1977–78 to 2013–14

Beef farms Input (%) Output (%) TFP (%)

Northern –0.4 1.1 1.5

Southern 0.5 1.2 0.6

Australia –0.2 1.1 1.3


Productivity in the southern beef region increased by 0.6 per cent a year between 1977–78 and 2013–14. Southern region output growth of 1.2 per cent a year was greater than that of northern Australia, but its substantially higher growth in input use (0.5 per cent a year) meant that productivity increased at a slower rate.

Farms in the southern region face different constraints from their northern counterparts. The climate is more varied and beef farms in the southern region are more sensitive to drought conditions, which lead to increased feed purchases and destocking and restocking cycles that hamper output growth. Beef cattle farms in southern Australia are more intensive and diversified than those in the northern region. They are also smaller and less profitable, which is likely to have contributed to lower average productivity growth (Jackson & Valle 2015).

SheepProductivity growth in the sheep industry averaged 0.3 per cent a year between 1977–78 and 2013–14. Inputs declined by 2.9 per cent a year, which was slightly faster than the contraction in outputs of 2.6 per cent a year. TFP in the sheep industry was lower than in other broadacre industries. All productivity growth in the sheep industry occurred between 1993–94 and 2013–14. Over this period, productivity growth was faster than in any other broadacre industry.



The Australian sheep industry has undergone significant structural adjustment since the early 1990s, when price support mechanisms for wool were removed (Figure 5). In particular, many farmers shifted their enterprise mix away from wool and towards cropping, resulting in lower sheep numbers. This was exacerbated by farmers destocking their properties during periods of drought. Sheep meat and lamb production increased in importance compared with wool production after deregulation of the wool industry (Ashton 2004).

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, Leith & Davidson 2014).

FIGURE 5 Input, output and total factor productivity, sheep industry, Australia, 1977–78 to 2013–14

index


50

100

150

200

250

Collapse of the wool reserve price scheme

2013–14

2009–10

2005–06

2001–02

1997–98

1993–94

1989–90

1985–86

1981–82

1977–78


Since the early 1990s, a significant increase in the share of ewes in flocks and a corresponding decline in that of wethers has contributed to long-term growth in lamb production, although wool production has declined at a faster rate (Dahl, Leith & Gray 2013). 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, has boosted productivity through higher lamb growth rates and greater incidence of twinning. Improved pastures and greater use of fodder crops and supplementary feed has improved ewe fertility, reduced lamb mortality rates and increased average slaughter weights.

Dairy productivityProductivity growth across the Australian dairy industry was 1.6 per cent a year between 1978–79 and 2013–14. Output grew by 1.3 per cent a year while input use declined by 0.2 per cent a year. This is faster than the broadacre sector as a whole.

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) (Figure 6). This trend peaked in 2000 following deregulation of milk marketing arrangements and the resulting exit of many small farms. Since then, productivity growth has been characterised by declining input use. Output has been declining at a slower rate.



FIGURE 6 Input, output and total factor productivity, dairy industry, Australia, 1978–79 to 2013–14

index


50

100

150

200


2013–14

2009–10

2005–06

2001–02

1997–98

1993–94

1989–90

1985–86

1981–82

Widespread adoption of new technologies has been a significant driver of productivity growth on dairy farms (Ashton et al. 2014). Larger, automated milking sheds have allowed farmers to reduce their labour input. Better understanding of calving patterns and pasture systems has allowed dairy producers to cope with varying regional climate conditions. Improved animal genetics, herd health and animal welfare has also led to higher productivity.

Improvements in human capital have also driven productivity growth on dairy farms. Dairy farmers are now better educated and continue learning through information sources provided by extension officers and industry bodies and by participating in benchmarking groups. Dairy farmers’ greater awareness of the industry and their individual circumstances has allowed them to make more informed decisions and better manage risk (Ashton et al. 2014).

ReferencesABARES 2015, Australian farm survey results, 2012–13 to 2014–15, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra, March.

ABS 2006, Australian and New Zealand standard industrial classification (ANZSIC) 2006 (Revision 1.0), Australian Bureau of Statistics, cat. no. 1292.0, Australian Bureau of Statistics, Canberra.

Ashton, D 2004, ‘Sheep and wool outlook to 2008–09’, in Agricultural commodities: March quarter 2004, Australian Bureau of Agricultural and Resource Economics, Canberra.

Ashton, D, Cuevas-Cubria C, Leith, R & Jackson, T 2014, Productivity in the Australian dairy industry: pursuing new sources of growth, ABARES research report 14.11, Canberra, September.

Dahl, A, Leith, R & Gray, E 2013, ‘Productivity in the broadacre and dairy industries’, in Agricultural commodities: March quarter 2013, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.



GRDC 2015, ‘Our grains industry’, Grains Research and Development Corporation, available at grdc.com.au/About-Us/Our-Grains-Industry.

Gray, E, Oss-Emer, M & Sheng, Y 2014, Australian agricultural productivity growth: past reforms and future opportunities, ABARES research report 14.2, Canberra, February.

Gray, E, Leith, R & Davidson, A 2014, ‘Productivity in the broadacre and dairy industries’, in Agricultural commodities: March quarter 2014, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Hughes, N, Lawson, K, Davidson, A, Jackson, T & Sheng, Y, 2011, Productivity pathways: climate adjusted production frontiers for the Australian broadacre cropping industry, ABARES research report 11.5, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Jackson, T 2010, Harvesting productivity: ABARE–GRDC workshops on grains productivity growth, ABARE research report 10.6 for Grains Research and Development Corporation, Australian Bureau of Agricultural and Resource Economics, Canberra.


Jackson, T & Valle, H 2015, ‘Profitability and productivity in Australia’s beef industry’, in Agricultural commodities: March quarter 2015, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Knopke, P, O’Donnell, V & Shepherd, A 2000, Productivity growth in the Australian grains industry, ABARE research report 2000.1 for Grains Research and Development Corporation, Australian Bureau of Agricultural and Resource Economics, Canberra.

Sheng, Y, Jackson, T & Davidson, A 2015, Resource reallocation and its contribution to productivity growth in Australian broadacre agriculture, ABARES technical report 15.1, Canberra, April.

Sheng, Y, Gray, E & Mullen, J 2011, ‘Public investment in R&D and extension and productivity in Australian broadacre agriculture’, paper presented at Australian Agricultural and Resource Economics Society conference, Melbourne, 9–11 February.

Sheng, Y, Mullen, J & Zhao, S 2011, A turning point in agricultural productivity: consideration of the causes, ABARES research report 11.4 for Grains Research and Research and Development Corporation, Canberra, May.

Zhao, S, Sheng, Y & Gray, E 2012, ‘Measuring productivity of the Australian broadacre and dairy industries: concepts, methodology and data’, in KO Fuglie, SL Wang & VE Ball (eds), Productivity growth in agriculture: an international perspective, CABI, Wallingford.


Disaggregating farm performance statistics by sizeTom Jackson and Walter Shafron

Clarifying which businesses are represented in farm performance statistics is becoming increasingly important because of substantial differences between small and large farms. Although aggregate statistics illustrate the overall performance of farms in a particular industry, they do not necessarily reveal trends within particular subsectors. For example, corporate agriculture businesses and investors have a growing interest in data on the performance of large Australian farms. Conversely, the majority of Australian farms are relatively small and the performance of these farms is important to many farmers.

Reflecting these diverse interests, ABARES regularly releases farm performance statistics for small, medium and large farms in various industries (for example, see ABARES 2015, p. 16). In this article, a more detailed disaggregation of farm performance statistics with 10 size categories is introduced. These tables will be updated annually and historical data will be available on the ABARES website.

Defining categoriesDisaggregating farm performance statistics based on size is useful because of the strong relationship between farm size and performance. Farm performance tends to improve as farm size increases in all major agricultural industries (Jackson & Martin 2014). Few other variables within farmers’ control influence farm performance so consistently. As such, to understand the economic performance of farms and the agriculture sector more broadly, evaluating farms in the context of their size is useful.

Farm size can be measured in several ways. The measure used in this article is the annual value of receipts generated. This variable is preferred to physical measures of size, such as the number of hectares operated or the number of dry sheep equivalents that can be carried, because it accounts for ways in which farmers can increase the size of their operations other than by purchasing more land—for example, by intensifying their operations or switching from producing low-value to high-value outputs.

Disaggregating farm performance statistics by size


In selecting the number of size categories to distinguish, a number of factors must be balanced. Using a relatively large number of categories allows data for more similar groups of farms to be constructed than would be possible when using a relatively small number of categories. However, as the number of categories increases, the reliability of statistics declines because the number of surveyed farms in each category decreases. In addition, the effect of farm size on particular variables can be more easily seen with fewer categories but a more detailed analysis is possible with more categories.

In this article, farm performance statistics are presented for 10 size categories, each of which represents 10 per cent of the farm population within each industry and region, ranked from smallest to largest according to total farm receipts. Farm revenues vary substantially from year to year, as does the value of receipts that corresponds to each size category.

The industries represented in these statistics include broadacre, dairy and vegetables. The broadacre industry is further split into wheat and other crops, beef, sheep, mixed cropping–livestock and sheep–beef. Many farms produce more than one type of output. They are classified into whichever industry accounts for 75 per cent or more of total receipts. If no industry accounts for 75 per cent or more then they are classified as a mixed farm. The method used to allocate farms into particular industries varies between studies. As such, the results presented in this article are not necessarily directly comparable with those published in other ABARES reports.

Statistics for each industry are presented for Australia. In addition, the cropping industry is separated into the Grains Research and Development Corporation’s western, northern and southern regions (Map 1) and the beef industry is separated into Meat & Livestock Australia’s northern and southern regions (Map 2). Overall, this classification by industry and region creates a set of 13 tables.

MAP 1 Grains Research and Development Corporation regions

Source: Grains Research and Development Corporation

Western regionSouthern regionNorthern region



MAP 2 Australian beef cattle industry

NorthernSouthern

Note: Regions based on aggregations of ABS statistical local areas.Source: ABARES Australian Agricultural and Grazing Industries Survey

Each of the tables contains the most recently available 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• equity ratio.

Tables that contain these data for each industry and region are presented in this article. Farm returns are highly variable from year to year, reflecting variation in factors such as seasonal conditions and commodity prices. As such, data are averaged over the most recent three years to provide the most meaningful picture of farm performance. Historical data for farms in each size category are available from the ABARES website.



Key points for 2011–12 to 2013–14• The largest 10 per cent of farms produced 48 per cent of all broadacre farm

output, while the smallest 50 per cent of farms produced 11 per cent of total broadacre output.

• The average rate of return including capital appreciation generated by the largest 10 per cent of broadacre farms was 4.5 per cent, while the smallest 10 per cent generated average returns of –3.7 per cent.

• The largest 10 per cent of broadacre farms made 56 per cent of investment in net capital additions, while the smallest 10 per cent of farms accounted for 1 per cent of total investment.

• The largest 10 per cent of broadacre farms had the lowest average equity ratio of all farms, at 79 per cent, while the smallest 10 per cent of farms had the highest average equity ratio at 97 per cent.

TABLE 1 Broadacre farms, Australia, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)

Cash costs ($) Profit ($) Capital ($)

Net capital additions ($)

Rate of return (%)

Equity ratio (%)

1 0.8 37 341 47 236 –51 138 1 670 178 5 894 –3.7 97.0

2 1.4 67 010 69 257 –50 649 1 582 045 8 086 –3.8 94.7

3 2.1 98 849 83 179 –41 406 1 978 668 928 –2.2 94.4

4 2.7 126 544 101 791 –35 626 2 570 964 –4 652 –1.7 96.1

5 3.6 171 969 147 630 –26 245 2 570 678 –20 973 –0.5 90.6

6 4.9 234 070 175 448 –7 382 3 124 322 19 174 –0.6 92.4

7 7.2 342 199 249 307 25 845 4 061 376 20 156 1.2 91.6

8 11.0 520 997 378 336 70 249 5 009 710 54 944 1.0 88.2

9 18.3 866 866 608 487 192 018 6 317 840 132 444 2.9 83.4

10 47.9 2 272 402 1 611 384 618 882 13 179 067 271 628 4.5 78.6

TABLE 2 Wheat and other crops farms, Australia, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 0.8 74 532 64 285 –37 644 1 292 032 16 626 –4.5 97.7

2 1.6 162 903 121 934 –33 933 1 983 626 21 480 –1.6 95.3

3 2.7 273 157 211 069 –3 315 2 368 386 75 879 –1.2 89.0

4 4.3 427 899 331 881 40 794 3 069 619 70 891 2.1 82.4

5 5.6 592 690 405 957 125 041 3 550 702 43 844 4.4 80.7

6 7.3 763 631 530 888 156 810 4 596 907 46 079 4.1 84.0

7 9.8 1 001 590 659 074 331 654 5 620 148 366 332 5.7 80.9

8 13.3 1 366 485 943 783 353 912 6 682 957 132 752 5.7 80.8

9 18.0 1 860 324 1 288 761 567 433 9 002 853 451 131 6.4 73.8

10 36.7 3 772 578 2 565 994 1 229 890 17 083 887 271 888 7.9 76.2



TABLE 3 Beef farms, Australia, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.1 27 685 44 156 –45 487 1 710 812 19 678 –2.7 96.3

2 2.0 47 158 53 556 –62 962 1 798 336 –4 895 –5.4 97.3

3 2.1 62 337 74 587 –63 177 1 607 534 10 382 –3.3 93.6

4 2.9 81 719 84 911 –56 961 2 275 101 –7 084 –3.2 93.0

5 4.1 103 373 83 522 –32 474 2 300 922 32 697 –1.0 95.0

6 4.2 120 434 94 955 –48 964 3 618 778 17 831 –1.2 98.8

7 6.0 163 051 138 354 –35 905 3 090 168 27 899 –2.6 92.8

8 9.0 240 261 202 537 –7 077 4 516 254 9 463 –0.7 91.3

9 15.0 406 000 274 920 44 947 6 805 635 –10 543 0.2 93.3

10 53.6 1 456 999 1 106 726 210 159 15 543 751 149 285 –0.6 84.8

TABLE 4 Sheep farms, Australia, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 2.4 46 092 46 291 –39 773 1 351 615 –22 263 –3.0 95.5

2 2.8 70 616 65 628 –44 713 1 181 229 6 977 –5.8 95.7

3 4.6 97 999 87 986 –35 816 2 110 839 8 018 –2.3 93.5

4 5.1 113 474 76 346 –1 706 1 550 244 –60 511 –0.2 96.1

5 6.3 135 861 106 968 –20 494 2 137 009 12 420 0.4 95.1

6 7.3 162 531 123 896 –9 063 2 016 385 –44 449 0.1 93.9

7 8.8 187 735 153 193 –27 088 2 287 989 32 356 –0.3 87.8

8 11.2 245 476 179 951 6 496 2 950 840 –51 604 0.0 91.9

9 15.7 355 050 258 502 34 014 3 738 259 –636 1.5 90.9

10 35.8 784 078 555 496 167 734 6 315 560 14 444 2.5 86.0



TABLE 5 Cropping–livestock farms, Australia, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.7 88 318 79 805 –61 342 1 645 235 –43 650 –5.8 95.0

2 2.4 147 797 149 947 –35 597 1 851 886 7 619 –0.5 81.3

3 3.5 198 728 146 543 –14 149 1 925 493 –11 080 0.2 91.1

4 4.3 260 765 199 345 –12 197 2 853 068 85 846 –1.3 92.8

5 5.7 332 683 237 607 38 766 3 834 901 27 155 2.3 92.5

6 6.9 402 363 276 235 54 843 3 543 784 76 588 3.2 92.1

7 9.0 532 216 378 591 57 175 4 202 801 64 905 1.6 88.2

8 12.8 746 159 529 787 131 693 5 422 984 125 774 4.5 84.0

9 18.0 1 050 510 773 402 211 173 6 943 666 22 451 3.0 79.8

10 35.8 2 094 734 1 559 264 505 866 12 298 925 239 338 4.6 80.3

TABLE 6 Sheep–beef farms, Australia, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 2.1 44 530 34 487 –59 852 1 397 176 30 –4.3 99.9

2 2.2 67 308 71 192 –40 757 2 133 434 0 –1.9 93.8

3 3.1 84 325 74 043 –39 797 1 002 521 10 002 –1.5 95.1

4 4.0 124 083 111 757 –61 488 1 864 495 10 877 –3.3 96.2

5 5.6 146 585 97 269 –5 315 2 152 542 28 552 1.8 96.4

6 6.4 174 951 152 577 –37 405 4 406 743 –322 395 –0.6 94.8

7 7.9 222 069 162 850 –11 181 3 419 487 –17 969 0.2 91.9

8 11.2 301 075 206 522 30 747 3 350 516 –23 131 0.0 91.4

9 16.6 480 034 393 529 40 934 5 760 534 37 760 0.1 88.0

10 41.1 1 176 971 889 390 261 424 12 040 319 323 468 1.2 86.4



TABLE 7 Dairy farms, Australia, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 3.1 143 707 139 431 –27 557 1 503 911 9 821 –1.9 79.3

2 1.6 234 064 183 357 –12 934 894 097 168 668 1.2 87.7

3 4.0 307 725 221 522 3 086 2 137 121 62 883 –1.9 92.2

4 5.8 419 170 326 785 71 103 3 415 918 179 621 1.8 88.3

5 9.0 557 734 436 174 91 907 3 624 432 34 633 2.5 82.1

6 8.1 662 905 555 815 79 373 3 699 846 –93 943 1.8 73.5

7 11.2 842 590 703 903 154 326 4 667 787 76 326 1.8 75.5

8 13.5 1 001 417 810 809 234 967 4 981 383 118 214 4.7 72.1

9 16.3 1 223 759 973 721 254 841 5 699 878 153 580 4.1 78.2

10 27.6 2 057 188 1 711 686 411 092 8 272 698 293 065 3.8 73.2

TABLE 8 Vegetable farms, Australia, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 0.4 34 865 42 694 –77 986 903 701 0 –8.6 97.3

2 0.9 77 107 67 894 –58 580 1 304 430 –4 295 –5.0 93.6

3 1.3 116 223 90 106 –66 106 1 515 201 0 –4.4 94.9

4 2.0 169 104 125 085 –20 639 2 119 059 –15 960 –0.9 91.8

5 2.7 224 361 194 340 –53 332 2 177 274 53 147 –2.9 92.4

6 3.6 318 781 218 725 20 762 4 547 664 5 007 4.1 96.0

7 5.3 466 267 358 421 30 675 2 959 765 4 697 1.2 89.3

8 8.1 693 083 532 489 60 965 4 706 284 –27 550 1.2 88.6

9 13.3 1 156 232 910 320 144 758 5 846 243 28 250 6.0 81.8

10 62.5 5 395 081 4 243 992 1 069 571 13 632 698 145 983 8.9 80.5



TABLE 9 Wheat and other crops farms, Western region, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 0.6 57 114 73 442 –56 072 2 245 889 2 094 –2.5 96.2

2 1.2 120 122 127 542 –62 222 1 671 293 –1 055 –3.7 90.0

3 2.0 195 367 147 498 –19 829 3 775 649 –329 278 1.4 95.8

4 4.2 393 106 304 902 28 908 4 022 100 –18 175 4.2 92.0

5 5.3 566 783 438 953 115 574 3 690 556 51 740 6.3 77.2

6 8.0 773 241 584 108 104 510 5 291 983 180 441 0.6 80.3

7 9.7 998 013 763 424 327 182 6 043 546 208 896 3.8 77.0

8 14.1 1 368 476 1 051 897 307 880 6 577 813 –10 755 4.8 73.2

9 18.5 1 862 343 1 345 916 549 043 9 039 940 287 406 6.1 68.5

10 36.4 3 680 395 2 529 416 1 249 883 15 971 304 279 381 7.4 75.0

TABLE 10 Wheat and other crops farms, Southern region, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.1 67 915 67 796 –53 607 1 285 568 39 823 –6.0 93.4

2 1.9 116 161 101 137 –30 045 1 908 027 –48 945 1.4 93.4

3 2.6 175 730 143 104 –25 890 2 056 547 11 340 –0.3 89.8

4 3.8 234 894 171 524 –15 649 2 743 949 85 036 –0.6 93.0

5 5.0 315 611 212 271 38 264 3 048 425 24 047 2.0 92.7

6 6.4 402 274 277 361 46 929 3 151 894 72 539 1.1 88.3

7 8.9 554 670 390 393 90 760 4 204 207 41 502 2.9 86.3

8 12.7 783 779 510 334 179 719 5 120 367 160 101 4.6 85.9

9 18.3 1 171 717 767 631 359 041 7 004 552 197 357 5.5 85.0

10 39.3 2 461 461 1 675 351 712 574 12 017 578 399 436 6.6 79.5



TABLE 11 Wheat and other crops farms, Northern region, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.6 67 497 67 760 –62 761 1 658 860 31 217 –4.6 92.3

2 1.9 107 092 78 570 –34 872 2 021 036 –69 273 –1.8 95.3

3 2.5 131 216 125 943 –79 455 2 182 904 8 650 –3.7 95.4

4 3.5 169 747 164 488 –39 149 2 301 677 33 531 –1.7 86.6

5 3.6 198 012 158 445 –21 179 2 609 971 –56 659 –1.6 92.8

6 5.3 264 562 208 176 –3 779 3 848 733 14 966 –0.8 91.8

7 7.8 368 230 327 323 –8 068 4 803 671 89 804 0.3 88.1

8 10.5 553 999 416 636 71 388 5 335 094 74 731 0.1 87.6

9 16.3 820 846 650 569 82 492 7 738 662 17 546 0.6 84.5

10 46.9 2 378 932 1 795 335 525 070 17 892 799 258 944 2.8 80.2

TABLE 12 Beef farms, Southern region, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.8 30 396 53 682 –57 159 1 699 629 5 602 –3.4 97.2

2 3.1 49 932 48 344 –45 318 1 737 236 7 981 –4.3 96.1

3 3.0 60 289 64 688 –59 188 1 418 581 7 069 –3.3 99.3

4 3.9 72 300 65 085 –39 225 1 902 210 –50 012 –2.3 94.4

5 5.5 92 408 87 614 –55 487 1 947 230 11 394 –2.9 92.8

6 5.7 106 806 80 065 –30 808 2 592 556 48 342 –0.4 95.4

7 7.2 122 753 85 582 –43 276 2 972 270 6 736 –1.3 98.8

8 8.3 169 108 138 553 –41 237 2 782 918 –1 944 –1.2 93.9

9 14.4 259 804 197 790 –1 078 4 198 090 10 829 0.3 93.8

10 47.2 863 245 606 446 168 995 9 038 933 96 896 2.0 92.7



TABLE 13 Beef farms, Northern region, 2011–12 to 2013–14

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 0.9 27 594 33 264 –35 598 1 837 211 31 807 –2.8 96.5

2 0.8 44 060 71 022 –102 542 1 645 041 –41 878 –8.5 98.2

3 1.8 72 206 109 702 –81 475 2 535 386 70 895 –4.2 88.7

4 2.7 109 382 95 062 –53 269 3 306 877 29 911 –1.7 97.4

5 3.2 134 629 127 150 –49 437 4 419 600 4 248 –3.1 96.0

6 4.8 193 512 188 108 –17 881 3 906 730 76 705 –2.5 88.3

7 6.7 268 044 214 771 13 495 5 147 050 4 691 –0.5 90.3

8 9.9 404 611 275 698 45 311 8 013 529 15 642 0.0 94.2

9 14.7 607 512 421 624 28 456 8 692 223 35 584 –2.4 89.6

10 54.5 2 226 183 1 766 686 303 454 23 729 119 149 656 –1.2 78.7

ReferencesABARES 2015, Australian farm survey results 2012–13 to 2014–15, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.


Jackson, T & Valle, H 2015, ‘Profitability and productivity in Australia’s beef industry’, in Agricultural commodities: March quarter 2015, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

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Statistical tables


Figures

1 Contribution to GDP Australia, chain volume measures, reference year 2013–14 239

2 Markets for Australian merchandise exports in 2014–15 dollars 239

3 Sources of Australian merchandise imports in 2014–15 dollars 240

4 Principal markets for Australian agricultural, forestry and fisheries exports (nominal) 241

5 Contribution to exports by sector, balance of payments basis 247

Tables

1 Indexes of prices received by farmers 244

2 Indexes of prices paid by farmers, and terms of trade 245

3 Farm costs and returns 246

4 Volume of production indexes 248

5 Industry gross value added 248

6 Employment 249

7 All banks lending to business 249

8 Rural indebtedness to financial institutions 250

9 Annual world indicator prices of selected commodities 250

10 Gross unit values of farm products 251

11 World production, consumption, stocks and trade for selected commodities 252

12 Agricultural, fisheries and forestry commodity production 254

13 Gross value of farm, fisheries and forestry production 256

14 Crop and forestry areas and livestock numbers 258

15 Average farm yields 259

16 Volume of agricultural and fisheries exports 260

17 Value of agricultural and fisheries exports (fob) 262

18 Agricultural exports to China (fob) 264

19 Agricultural exports to Indonesia (fob) 265

20 Agricultural exports to Japan (fob) 266

21 Agricultural exports to the Republic of Korea (fob) 267

22 Agricultural exports to the United States (fob) 268

23 Volume of fisheries products exports 269

24 Value of fisheries products exports (fob) 270

25 Volume of fisheries products imports 271

26 Value of fisheries products imports 272

27 Value of Australian fisheries products trade, by selected countries 273

28 Volume of forest products exports 274

29 Value of forest products exports (fob) 275

30 Volume of forest products imports 276

31 Value of forest products imports 277

32 Value of Australian forest products trade, by selected countries 278


GDP, exports

FIGURE 2 Markets for Australian merchandise exports in 2014–15 dollars

China China

Japan Japan

ASEAN ASEAN

Other Asia Other Asia

European Union 28 European Union 28

Middle East Middle East

United States United States

Other Other

Japan Japan

China China

Korea, Rep. of Korea, Rep. of


New Zealand New Zealand

India India

European Union 28 European Union 28

Other Other

Japan Japan

Hong Kong Hong Kong

China China


Singapore Singapore

Taiwan Taiwan

Vietnam Vietnam

Other Other

2014–152004–05

Total $165.7b $254.6b

$35.7b $43.9bAgriculture

$2.0b $1.4bFisheries

20% 17%

10% 32%

8% 7%

7% 5%

7% 3%

5% 4%

11% 5%

32% 27%

9% 20%

20% 10%

14% 19%

15% 15%

10% 6%

7% 7%

12% 12%

13% 11%

29% 15%

34% 17%

7% 4%

10% 3%

3% 3%

5% 1%

1% 50%

11% 7%

FIGURE 1 Contribution to GDP Australia, chain volume measures, reference year 2013–14

Services 75%

Mining 9%

Building and construction 8%

Manufacturing 6%

Agriculture, fishing and forestry 2%

Services 75%

Manufacturing 9%

Mining 6%

Building and construction 7%

Agriculture, fishing and forestry 3%

2014–15

$1 619.2b

2004–05

$1 235.7b


Import markets

FIGURE 3 Sources of Australian merchandise imports in 2014–15 dollars

United States

Japan

China

Germany

Malaysia

Singapore

New Zealand

Other

United States

Japan

China

Germany

Malaysia

Singapore

New Zealand

Other

China

ASEAN

Other Asia

European Union 28

New Zealand

United States

Other

China

ASEAN

Other Asia

European Union 28

New Zealand

United States

Other

2014–152004–05

Total $195.3b $256.4b

$8.8b $16.5bAgriculture

$1.5b $2.0bFisheriesThailand

New Zealand

China

Vietnam

Malaysia

United States

Other

Thailand

New Zealand

China

Vietnam

Malaysia

United States

Other

14% 11%

11% 7%

13% 22%

6% 5%

4% 4%

5% 4%

4% 3%

43% 44%

20% 21%

14% 10%

8% 15%

10% 12%

2% 5%

3% 3%

43% 34%

5% 6%

15% 21%

4% 5%

31% 23%

18% 18%

11 % 11%

16% 16%


Export markets

FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports (nominal)

Quantity wheat

kt

Value wheat

$m

Quantity barley

kt

Value barley

$m

Quantity sugar

kt

Value sugar

$m

Quantity wine

ML

Value wine

$m

2014–152004–05

Indonesia

Korea, Rep. of

Malaysia

Japan

United States

New Zealand

Korea, Rep. of

Indonesia

Malaysia

Japan

United States

New Zealand

200 400 600 1 000800

Indonesia

Vietnam

100 200 300 400 500 600

600300 900 1 200 1 500

600300 900 1 200 1 500

200 400 600 800 1 000 1 200

United Kingdom United Kingdom

United States

Canada

New Zealand

China

Hong Kong

1 000 2 000 3 000 4 000 5 000

1 000 2 000 3 000 4 000 5 000

Korea, Rep. of

Japan

Iran

Iraq

China China

United States

Canada

China

New Zealand

Hong Kong

50 100 150 200 250 300

Indonesia

Vietnam

Korea, Rep. of

Japan

Iran

Iraq

Japan

Korea, Rep. of

Vietnam

United ArabEmirates

Saudi Arabia

Japan

Korea, Rep. of

Vietnam

United ArabEmirates

Saudi Arabia

continued ...


Export markets

FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports (nominal) continued

Quantity wool

kt

Value wool

$m

Quantity beef and veal

kt

Value beef and veal

$m

Quantity sheep meat

kt

Value sheep meat

$m

Quantity cheese

kt

Value cheese

$m

2014–152004–05

China

India

Czech Republic

Italy

Korea, Rep. of

Taiwan

50 100 150 200 250 300 350 500 1 000 1 500 2 000 2 500

China

India

Italy

Czech Republic

Korea, Rep. of

Taiwan

China

United States

United ArabEmirates

EuropeanUnion 28

Japan

Saudi Arabia

Japan

China

Malaysia

Korea, Rep. of

Singapore

Hong Kong

20 40 60 80 100

Japan

China

Malaysia

Singapore

Korea, Rep. of

Hong Kong

100 200 300 400 500 600

United States

Japan

Korea, Rep. of

China

Taiwan

EuropeanUnion 28

China

United States

United ArabEmirates

EuropeanUnion 28

Japan

Saudi Arabia

United States

Japan

Korea, Rep. of

China

Taiwan

EuropeanUnion 28

100 200 300 400 500 500 1 000 1 500 2 000 2 500 3 000 3 500

20 40 60 80 100 120 100 200 300 400 500

continued ...


Export markets

FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports (nominal) continued

Quantity paper and paperboard

kt

Value paper and paperboard

$m

Quantity edible fish

kt

Value edible fish

$m

Quantity edible crustaceans and molluscs Value edible crustaceans and molluscs

$m

2014–152004–05

20015010050

United States

New Zealand

China

Philippines

South Africa

United States

New Zealand

China

Philippines

South Africa

50 100 150 200 250

Japan

Hong Kong

100 200kt

50 100 150 200 250 300

3 6 9 12 15

2 4 6 8 10 300 400

Japan

China

New Zealand

United States

Hong Kong

Thailand

Hong Kong

China

New Zealand

United States

Hong Kong

Thailand

Japan

China

Malaysia

Singapore

Taiwan

Japan

China

Malaysia

Singapore

Taiwan


TABLE 1 Indexes of prices received by farmers Australia

STATISTICS

2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

Barley 131.7 173.4 167.9 175.7 173.6 178.1Canola 133.1 142.1 144.1 130.7 144.3 147.4Grain sorghum 111.6 148.9 177.2 177.8 170.9 186.7Lupins 118.7 173.5 176.4 149.3 148.2 146.7Oats 147.7 172.9 156.0 182.8 184.8 185.5Wheat 114.6 158.3 159.8 151.5 150.6 143.1Total grains a 115.7 147.9 149.8 146.7 148.8 144.0Cotton 110.8 98.2 103.9 99.0 103.8 105.4Hay 133.0 144.9 160.9 169.6 176.4 180.4Fruit 181.4 156.5 158.8 170.4 173.8 177.8Sugar 147.1 129.9 125.4 111.6 114.1 121.7Vegetables 161.3 172.8 174.1 179.1 182.6 186.9Total crops sector 117.8 129.8 131.1 130.4 132.7 132.1

Cattle 173.3 163.3 156.3 196.7 272.5 286.0Lambs b 250.8 182.8 201.8 225.9 270.9 295.5Sheep 390.3 200.0 250.8 326.9 389.9 428.9Live sheep for export 343.7 247.6 233.4 286.6 321.6 326.7Pigs 134.5 132.5 151.7 157.3 176.0 186.5Poultry 108.3 114.4 116.9 117.5 116.8 116.5Total livestock for slaughter 175.0 158.6 161.2 189.7 241.5 253.6

Wool 169.2 147.3 153.3 159.2 179.2 187.9Milk 139.5 134.7 171.6 162.5 159.2 163.2Eggs 104.2 107.4 112.7 114.6 112.7 114.1Total livestock products 145.2 136.1 158.6 155.8 159.8 164.8Store and breeding stock 199.5 173.8 169.2 208.8 284.6 299.1Total livestock sector 163.2 149.0 157.9 176.2 212.6 222.2Total prices received 137.2 138.5 143.1 150.8 168.4 172.3a Total for the group includes commodities not separately listed. b Lamb saleyard indicator weight 18–22 kilograms. 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

Livestock products

Livestock sector

1IndexesofpricesreceivedbyfarmersAustraliaCrops sector Grains

Livestock for slaughter

Prices


TABLE 2 Indexes of prices paid by farmers, and terms of trade Australia

STATISTICS

2 d f d b f d f d2Indexesofpricespaidbyfarmers,andtermsoftradeAustralia2Indexesofpricespaidbyfarmers,andtermsoftradeAustralia2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f2011 12 2012 13 2013 14 2014 15 s 2015 16 f 2016 17 f

Farmers’ terms of trade a 93 3 95 5 98 3 102 8 112 7 113 3Farmers’ terms of trade a 93.3 95.5 98.3 102.8 112.7 113.3Materials and servicesMaterials and servicesSeed, fodder and livestockFodder and feedstuffs 115.6 127.1 126.8 134.4 138.5 136.6Seed, fodder and livestock Fodder and feedstuffs 115.6 127.1 126.8 134.4 138.5 136.6Seed seedlings and plants 116 4 128 0 130 6 130 3 132 9 132 3 Seed, seedlings and plants 116.4 128.0 130.6 130.3 132.9 132.3

d b d k Store and breeding stock 199.5 173.8 169.2 208.8 284.6 299.1g Total seed, fodder and livestock 135.1 137.9 136.9 151.0 170.5 172.2 Total seed, fodder and livestock 135.1 137.9 136.9 151.0 170.5 172.2Chemicals 112 6 110 3 113 6 114 7 115 8 118 6Chemicals 112.6 110.3 113.6 114.7 115.8 118.6El t i it 176 8 180 8 185 7 176 4 176 4 180 6Electricity 176.8 180.8 185.7 176.4 176.4 180.6Fertiliser 165.5 157.9 153.2 154.7 156.3 159.9Fertiliser 165.5 157.9 153.2 154.7 156.3 159.9Fuel and lubricants 228 2 216 8 221 1 196 8 177 1 167 4Fuel and lubricants 228.2 216.8 221.1 196.8 177.1 167.4Total 149 2 149 5 150 7 155 0 162 0 164 0Total 149.2 149.5 150.7 155.0 162.0 164.0Marketing 154.1 153.5 159.3 152.9 148.5 148.1gOverheadsInsurance 185 8 190 0 195 2 198 5 202 5 207 2OverheadsInsurance 185.8 190.0 195.2 198.5 202.5 207.2I t t id 114 9 96 4 85 3 79 7 74 1 77 9Interest paid 114.9 96.4 85.3 79.7 74.1 77.9pRates and taxes 152.9 156.4 160.6 163.4 166.6 170.5Rates and taxes 152.9 156.4 160.6 163.4 166.6 170.5Other overheads 148 3 151 7 155 8 158 5 161 6 165 4Other overheads 148.3 151.7 155.8 158.5 161.6 165.4Total 129 9 117 6 110 6 107 2 103 8 107 8Total 129.9 117.6 110.6 107.2 103.8 107.8Capital items 153.2 157.0 161.5 164.8 168.5 172.8Capital itemsTotal prices paid 147.2 145.1 145.5 146.7 149.4 152.1Total prices paid 147.2 145.1 145.5 146.7 149.4 152.1Excluding capital items 146 6 143 9 143 9 144 9 147 5 150 1Excluding capital items 146.6 143.9 143.9 144.9 147.5 150.1E l di i l d h dExcluding capital and overheads 151.2 151.9 154.2 156.8 161.5 163.5g pExcluding seed, fodder and store and breeding stock 149 7 146 5 147 2 145 6 144 8 147 6Excluding seed, fodder and store and breeding stock 149.7 146.5 147.2 145.6 144.8 147.6R ti f i d f i i d b f d i d f i id b f f ABARES f t ABARESa 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 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 GSTreference year of 1997–98 = 100. Prices used in these calculations exclude GST.S A A S ( il d f i k ) A li f S i iSources: ABARES (compiled from various market sources); Australian Bureau of Statistics

Prices


TABLE 3 Farm costs and returns Australia

STATISTICS

unit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

Chemicals $m 1 471 1 370 1 381 1 449 1 468 1 482Fertiliser $m 2 344 2 168 2 063 2 115 2 131 2 153Fuel and lubricants $m 2 407 2 232 2 224 1 971 1 755 1 629Marketing $m 4 007 3 853 4 103 4 085 4 149 4 279Repairs and maintenance $m 3 876 4 108 4 506 4 870 5 497 5 849Seed and fodder $m 4 133 4 619 4 639 4 935 5 131 5 148Other $m 4 411 4 541 4 702 4 713 4 753 4 883Total materials and services $m 22 648 22 891 23 618 24 138 24 884 25 424Labour $m 4 170 4 297 4 343 4 275 4 300 4 348

Interest paid $m 4 836 4 259 3 956 3 883 3 792 4 181Rent and third‐party insurance $m 525 537 551 561 572 585Total overheads $m 9 531 9 092 8 851 8 718 8 665 9 115Total cash costs $m 32 179 31 983 32 468 32 856 33 549 34 538Depreciation a $m 5 070 5 197 5 345 5 455 5 579 5 721Total farm costs $m 37 249 37 180 37 813 38 311 39 128 40 259

Gross value of farm production $m 47 453 48 542 51 262 53 748 58 736 60 341

Net value of farm production b $m 10 203 11 362 13 449 15 437 19 609 20 081Real net value of farm production c $m 11 119 12 106 13 951 15 744 19 609 19 604Net farm cash income d $m 15 273 16 559 18 794 20 892 25 187 25 802Real net farm cash income c $m 16 645 17 644 19 496 21 307 25 187 25 189

3FarmcostsandreturnsAustralia

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 2015–16 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

Costs Materials and services

Overheads

Returns

Net returns and production

Costs and returns


Exports

FIGURE 5 Contribution to exports by sector, balance of payments basis Australia

2011–12

2012–13

2014–15

2010–11

Othermerchandise

16%

Rural a18%

Mineralresources

66%

Othermerchandise

14%

Rural a15%

Mineralresources

71%

Mineralresources

69%

Rural a16%

Othermerchandise

15%

Services18%

Rural a13%

Othermerchandise

12%

Mineralresources57%

Services 16%

Rural a12%

Othermerchandise

13%

Mineralresources59%

Services17%

Rural a12%

Othermerchandise

13%

Mineralresources58%

Services20%

Rural a15%

Othermerchandise

13%

Mineralresources53%

Othermerchandise

15%

Rural a14%

Mineralresources

71%

Proportion ofmerchandise exports

Proportion of exportsof goods and services

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

2013–14

Mineralresources

70%

Rural a16%

Othermerchandise

14%

Services17%

Rural a13%

Othermerchandise

12%

Mineralresources58%


TABLE 5 Industry gross value added ab Australia

STATISTICS

55 Industry gross value added ab Australia5IndustrygrossvalueaddedabAustraliaunit 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15unit 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15

Agriculture forestry and fishingi l $

Agriculture, forestry and fishingAgriculture $m 29 025 30 243 30 595 30 372 30 604 30 463gForestry and fishing $m 4 823 4 840 4 984 5 010 5 038 5 244Forestry and fishing $m 4 823 4 840 4 984 5 010 5 038 5 244Total $m 33 864 35 082 35 579 35 382 35 643 35 706Total $m 33 864 35 082 35 579 35 382 35 643 35 706Mi i $ 99 627 101 790 109 456 119 067 130 420 139 216Mining $m 99 627 101 790 109 456 119 067 130 420 139 216ManufacturingFood beverage and alcohol $m 25 605 25 596 26 182 26 635 26 627 26 315ManufacturingFood, beverage and alcohol $m 25 605 25 596 26 182 26 635 26 627 26 315Textile clothing footwear

d l h $Textile, clothing, footwear and leather $m 5 237 5 052 4 851 4 794 4 939 4 937$Wood and paper products $m 7 318 6 890 6 321 6 317 6 420 6 741Wood and paper products $m 7 318 6 890 6 321 6 317 6 420 6 741Printing publishing

d d d di $ 3 989 3 985 3 582 3 542 3 340 3 090Printing, publishing and recorded media $m 3 989 3 985 3 582 3 542 3 340 3 090Petroleum, coal, chemical products $m 19 291 19 313 19 659 18 577 18 337 17 958Petroleum, coal, chemical products $m 19 291 19 313 19 659 18 577 18 337 17 958Non‐metallic mineral products $m 6 678 6 572 6 232 5 954 6 012 6 513Non‐metallic mineral products $m 6 678 6 572 6 232 5 954 6 012 6 513Metal products $m 16 386 17 133 17 490 16 000 16 339 15 817Metal products $m 16 386 17 133 17 490 16 000 16 339 15 817Machinery and equipment $m 21 710 21 272 22 199 21 210 19 793 19 039y q p $Total manufacturing $m 106 053 105 889 106 588 103 011 101 807 100 407Total manufacturing $m 106 053 105 889 106 588 103 011 101 807 100 407Building and construction $m 103 827 106 820 117 640 120 166 125 512 124 539Building and construction $m 103 827 106 820 117 640 120 166 125 512 124 539El i i d l $ 42 469 43 657 43 921 44 316 43 237 43 843Electricity, gas and water supply $m 42 469 43 657 43 921 44 316 43 237 43 843y, g pp yTaxes less subsidies on products $m 99 415 102 162 103 990 105 299 105 266 105 715Taxes less subsidies on products $m 99 415 102 162 103 990 105 299 105 266 105 715Statistical discrepancy $m 0 0 0 0 1 2 244Statistical discrepancy $m 0 0 0 0 1 2 244Gross domestic product $ 1 422 363 1 456 209 1 509 109 1 545 932 1 584 578 1 619 196Gross domestic product $m 1 422 363 1 456 209 1 509 109 1 545 932 1 584 578 1 619 196a Chain volume measures, reference year is 2013–14. b ANZSIC 2006., yNote: Zero is used to denote nil or less than $0.5 million.Note: Zero is used to denote nil or less than $0.5 million.Source: Australian Bureau of Statistics Australian national accounts: national income expenditure and product cat noSource: Australian Bureau of Statistics, Australian national accounts: national income, expenditure and product, cat. no. 5206 0 C b5206.0, Canberra

TABLE 4 Volume of production indexes Australia

STATISTICS

4 Volume of production indexes Australia4VolumeofproductionindexesAustraliaunit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 funit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

Farmi d il d

FarmGrains and oilseeds index 158.4 138.4 144.9 134.9 137.3 142.7Total crops index 135.0 132.9 131.5 124.5 127.2 133.5Total crops index 135.0 132.9 131.5 124.5 127.2 133.5Livestock slaughterings index 110 2 116 1 127 7 137 1 128 1 123 2Livestock slaughterings index 110.2 116.1 127.7 137.1 128.1 123.2T t l li t k i d 100 9 104 7 111 4 117 9 111 8 109 0Total livestock index 100.9 104.7 111.4 117.9 111.8 109.0Total farm sector index 118.6 119.4 122.1 122.0 119.8 121.0Total farm sector index 118.6 119.4 122.1 122.0 119.8 121.0Forestry aHardwood index 94 1 89 0 107 9 123 7 123 0 124 3Forestry aHardwood index 94.1 89.0 107.9 123.7 123.0 124.3f dSoftwood index 126.6 123.0 130.3 134.8 136.8 137.6

Total forestry index 111.1 106.7 119.6 129.5 130.2 131.2Total forestry index 111.1 106.7 119.6 129.5 130.2 131.2a Volume of logs harvested excluding firewood f ABARES forecast s ABARES estimatea Volume of logs harvested excluding firewood. f ABARES forecast. s ABARES estimate.N t ABARE i d th th d f l l ti d ti i d i O t b 1999 Th i d f th diff tNote: 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. g g ySources: ABARES; Australian Bureau of StatisticsSources: ABARES; Australian Bureau of Statistics

Sectors


TABLE 6 Employment ab Australia

STATISTICSSTATISTICS

6 Employment Australia b A l6EmploymentAustraliaabAustralia6EmploymentAustraliaabAustralia2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009–10 2010–11 2011–12 2012–13 2013–14 2014–15

’000 ’000 ’000 ’000 ’000 ’000’000 ’000 ’000 ’000 ’000 ’000Agriculture, forestry and fishingAgriculture 308 294 277 261 270 275Agriculture, forestry and fishingAgriculture 308 294 277 261 270 275gForestry and logging 7 5 8 6 6 5Forestry and logging 7 5 8 6 6 5Commercial fishing 12 12 11 9 9 14Commercial fishing c 12 12 11 9 9 14gSupport services 23 23 23 22 24 21Support services 23 23 23 22 24 21T t lTotal 349 334 319 299 309 315Total 349 334 319 299 309 315Mining 171 203 247 265 266 226Mining 171 203 247 265 266 226Manufacturing Food beverage and tobacco product 220 220 219 215 223 228Manufacturing Food, beverage and tobacco product 220 220 219 215 223 228g pTextiles, clothing, footwear

d l th 46 44 39 40 37 37Textiles, clothing, footwear and leather 46 44 39 40 37 37Wood and paper product 63 56 54 52 61 56Wood and paper product 63 56 54 52 61 56P i ti bli hiPrinting, publishing

and recorded media 52 55 41 47 41 43g, p g

and recorded media 52 55 41 47 41 43P t l lPetroleum, coal

and chemical product 87 84 88 90 85 91Petroleum, coal and chemical product 87 84 88 90 85 91Non‐metallic mineral product 36 36 37 35 35 29Non metallic mineral product 36 36 37 35 35 29Metal product 143 143 144 127 138 127Metal product 143 143 144 127 138 127Other manufacturing 339 332 318 328 307 303Other manufacturing 339 332 318 328 307 303Total manufacturing 987 970 938 934 926 914Total manufacturing 987 970 938 934 926 914gOther industries 9 334 9 601 9 741 9 882 9 945 10 195Other industries 9 334 9 601 9 741 9 882 9 945 10 195T t l 10 841 11 108 11 245 11 380 11 446 11 649Total 10 841 11 108 11 245 11 380 11 446 11 649a Average employment over four quarters. b ANZSIC 2006. c Includes aquaculture, fishing, hunting and trapping.a Average employment over four quarters. b ANZSIC 2006. c Includes aquaculture, fishing, hunting and trapping.N t A t li B f St ti ti d i ti i l t t ti ti t th ANZSIC bdi i i dNote: Australian Bureau of Statistics advises caution using employment statistics at the ANZSIC subdivision and group g p y g plevels because estimates may be subject to sampling variability and standard errors too high for most practicallevels because estimates may be subject to sampling variability and standard errors too high for most practical purposes. p pSource: Australian Bureau of Statistics Labour force Australia cat no 6291 0 55 003 CanberraSource: Australian Bureau of Statistics, Labour force, Australia, cat. no. 6291.0.55.003, Canberra

TABLE 7 All banks lending to business a Australia

STATISTICS

7 All banks lending to business a Australia7AllbankslendingtobusinessaAustralia2015–162014–152013–14 2015–16

Dec Mar Jun Sep Dec Mar Jun Sep2014 152013 14

Dec Mar Jun Sep Dec Mar Jun Sep$b $b $b $b $b $b $b $b$b $b $b $b $b $b $b $b

Agriculture, forestry and fishing 59.8 60.1 62.4 63.8 62.6 63.0 64.9 64.4Agriculture, forestry and fishing 59.8 60. 6 .4 63.8 6 .6 63.0 64.9 64.4Mining 28.3 29.1 31.4 34.1 37.0 36.5 38.1 34.0Mining 28.3 29.1 31.4 34.1 37.0 36.5 38.1 34.0Manufacturing 38 4 42 2 43 5 40 1 40 3 43 0 46 9 48 2Manufacturing 38.4 42.2 43.5 40.1 40.3 43.0 46.9 48.2

iConstruction 28.1 28.7 28.8 28.9 29.3 30.7 30.3 33.7Wholesale and retail trade,

transport and storage 105 2 107 4 104 0 105 2 108 1 109 6 108 9 118 3Wholesale and retail trade, transport and storage 105.2 107.4 104.0 105.2 108.1 109.6 108.9 118.3Fi d i 122 4 124 5 130 9 134 9 133 1 132 8 136 9 153 6Finance and insurance 122.4 124.5 130.9 134.9 133.1 132.8 136.9 153.6Other 352.3 355.4 368.6 374.6 378.8 389.2 394.5 404.5Other 352.3 355.4 368.6 374.6 378.8 389.2 394.5 404.5Total 734.5 747.3 769.6 781.6 789.3 804.8 820.6 856.6Total 734.5 747.3 769.6 781.6 789.3 804.8 820.6 856.6a Includes variable and fixed interest rate loans outstanding plus bank bills outstandinga Includes variable and fixed interest rate loans outstanding plus bank bills outstanding.

k f l k l d b l d ll l blSource: Reserve Bank of Australia, Bank lending to business–selected statistics, Bulletin Statistical Table D8g

Employment, banks


TABLE 8 Rural indebtedness to financial institutions Australia

STATISTICS

8 l d b d f l8RuralindebtednesstofinancialinstitutionsAustralia8RuralindebtednesstofinancialinstitutionsAustralia2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009 10 2010 11 2011 12 2012 13 2013 14 2014 15

$m $m $m $m $m $m$m $m $m $m $m $mRural debtAll b kRural debtAll banks a 58 097 60 184 59 749 61 778 62 402 64 932Other government agencies b 1 811 1 871 2 076 2 236 2 364 771Other government agencies b 1 811 1 871 2 076 2 236 2 364 771Pastoral and otherfi iPastoral and other finance companies 2 029 2 010 1 801 1 569 1 486 1 464Large finance institutional debt c 61 937 64 065 63 626 65 583 66 251 67 167g 61 937 64 065 63 626 65 583 66 251 67 167DepositsFarm management deposits 2 784 3 216 3 532 3 721 4 139 4 604DepositsFarm management deposits 2 784 3 216 3 532 3 721 4 139 4 604a Derived from all banks lending to agriculture, fishing and forestry. b Includes the government agency business of state g g , g y g g ybanks and advances made under War Service Land Settlement. c Sum of rural debt.banks and advances made under War Service Land Settlement. c Sum of rural debt.Sources: ABARES; Department of Agriculture and Water Resources Canberra; Reserve Bank of Australia Estimated ruralSources: ABARES; Department of Agriculture and Water Resources, Canberra; Reserve Bank of Australia, Estimated rural d bt t ifi d l d B ll ti St ti ti l T bl D9debt to specified lenders, Bulletin Statistical Table D9

TABLE 9 Annual world indicator prices of selected commodities

STATISTICS

9 Annual world indicator prices of selected commodities9Annualworldindicatorpricesofselectedcommoditiesunit 2011–12 2012–13 2013–14 2014–15 2015–16 f 2016–17 funit 2011–12 2012–13 2013–14 2014–15 2015–16 f 2016–17 f

WorldWorldCCropsWheat a US$/t 299 348 317 266 215 210

pWheat a US$/t 299 348 317 266 215 210Corn b US$/t 281 312 219 174 165 160Corn b US$/t 281 312 219 174 165 160Rice c US$/t 590 565 429 419 366 373Rice c US$/t 590 565 429 419 366 373S bSoybeans d US$/t 506 597 547 418 362 355y US$/t 506 597 547 418 362 355Cotton e USc/lb 100 88 91 71 70 68Cotton e USc/lb 100 88 91 71 70 68Sugar g USc/lb 23 18 17 13 14 16Sugar g USc/lb 23 18 17 13 14 16Li t k d tLivestock productsBeef h USc/kg 433 439 439 552 449 434

pBeef h USc/kg 433 439 439 552 449 434Wool i Ac/kg 1 203 1 035 1 070 1 102 1 240 1 300Wool i Ac/kg 1 203 1 035 1 070 1 102 1 240 1 300Butter j US$/t 3 883 3 727 4 498 3 483 3 375 3 510Butter j US$/t 3 883 3 727 4 498 3 483 3 375 3 510hCheese j US$/t 4 258 4 150 4 817 3 921 3 400 3 663j US$/t 4 258 4 150 4 817 3 921 3 400 3 663

Skim milk powder j US$/t 3 233 3 731 4 513 2 592 2 200 2 340Skim milk powder j US$/t 3 233 3 731 4 513 2 592 2 200 2 340a US no 2 hard red winter wheat fob Gulf b US no 2 yellow corn fob Gulf c USDA nominal quote for Thai whitea 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. , p , , , g ( g y ) y ,f ABARES forecast. g Nearby futures price (October–September basis), Intercontinental Exchange, New York no. 11 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 pricescontract. h Cow 90CL US cif price. i Australian Wool Exchange eastern market indicator. j Average of traded prices (excluding subsidised sales)(excluding subsidised sales).Sources: ABARES; Australian Bureau of Statistics; Australian Wool Exchange; Cotlook Ltd; Dairy Australia; ; ; g ; ; y ;Intercontinental Exchange; International Grains Council; Meat & Livestock Australia; New York Board of Trade; Intercontinental Exchange; International Grains Council; Meat & Livestock Australia; New York Board of Trade; United States Department of AgricultureUnited States Department of Agriculture

Farm debt, world prices


TABLE 10 Gross unit values of farm products a

STATISTICS

unit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

Barley $/t 210 276 267 280 276 284Corn (maize) $/t 251 238 297 280 283 249Grain sorghum $/t 189 252 300 301 289 316Oats $/t 202 236 213 250 253 253Rice $/t 270 260 340 412 426 392Triticale $/t 176 249 258 252 235 225Wheat $/t 227 313 316 300 298 283

Canola $/t 513 548 555 504 557 568Soybeans c $/t 510 468 538 538 559 553Sunflower seed c $/t 551 570 660 627 650 659

Chickpeas $/t 457 394 352 567 697 525Field peas $/t 295 406 419 413 441 349Lupins $/t 232 340 345 292 290 287

Cotton lint d c/kg 225 199 229 199 234 228Sugar cane (cut for crushing) $/t 43 41 40 35 37 41Wine grapes $/t 458 499 441 463 472 482

Beef cattle c/kg 337 318 304 383 530 557Lambs c/kg 509 371 410 459 550 600Pigs c/kg 266 262 300 312 348 369Poultry c/kg 194 205 209 211 209 209

Wool c/kg 676 579 603 626 705 739Milk c/L 42 40 51 49 48 49Eggs c/dozen 196 195 221 209 211 215

10Grossunitvaluesoffarmproductsa

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

Crops bGrains

Oilseeds

Pulses

Industrial crops

Livestock

Livestock products

Gross unit values


World

TABLE 11 World production, consumption, stocks and trade for selected commodities a

STATISTICS

unit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

production Mt 695 655 714 723 729 710 consumption Mt 697 676 696 710 718 714 closing stocks Mt 192 171 189 202 213 209 exports bc Mt 145 141 156 153 152 154

production Mt 1 158 1 138 1 282 1 296 1 264 1 277 consumption Mt 1 137 1 142 1 230 1 267 1 264 1 257 closing stocks Mt 167 163 211 243 245 261 exports b Mt 147 123 164 182 161 159

production d Mt 467 473 478 478 473 485 consumption d Mt 459 469 479 483 486 490 closing stocks d Mt 111 114 112 108 95 90 exports be Mt 39 38 43 42 42 43

production Mt 447 475 505 536 529 527 consumption Mt 466 469 494 516 517 532 closing stocks Mt 67 68 78 96 108 103 exports Mt 111 118 133 147 148 152





continued ...

Oilseeds

Vegetable oils

11Worldproduction,consumption,stocksandtradeforselectedcommodities

Vegetable protein meals

Grains

Cotton

Sugar

Farm

Oilseeds and vegetable oils

Industrial crops

Wheat

Coarse grains

Rice


World

TABLE 11 World production, consumption, stocks and trade for selected commodities a continued

STATISTICS

unit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

production Mt 268 272 276 272 275 277 consumption Mt 263 268 270 266 272 276 closing stocks Mt 3.0 3.0 3.2 2.7 2.9 2.8 exports b Mt 27 28 29 29 30 31

production kt 1 135 1 163 1 163 1 158 1 155 1 154 consumption ej kt 1 125 1 162 1 154 1 158 1 155 1 154 closing stocks k kt 24 25 35 35 30 30 exports l kt 447 576 553 551 549 547

production kt 9 027 9 249 9 637 9 848 10 062 na consumption kt 8 490 8 716 9 010 9 167 9 341 na closing stocks kt 247 231 263 324 370 na exports kt 816 868 924 898 945 na

production kt 4 059 4 051 4 512 4 611 4 699 na consumption kt 3 453 3 489 3 606 3 647 3 772 na closing stocks kt 427 378 494 525 487 na exports kt 1 702 1 759 1 967 2 090 2 136 na

11Worldproduction,consumption,stocksandtradeforselectedcommodities

a Some figures are 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 poultry 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. na Not available.Sources: ABARES; Argentine Wool Federation; Australian Bureau of Statistics; Capewools South Africa; Commonwealth Secretariat; Department of Agriculture and Water Resources, Canberra; Economic Commission for Europe; Fearnleys; Food and Agriculture Organization; International Grains Council; International Sugar Organization; International Wool Textile Organisation; Ministry of Agriculture, Forestry and Fisheries (Japan); New Zealand Wool Board; Poimena Analysis, Melbourne; United States Department of Agriculture; Uruguayan Association of Wool Exporters

Livestock products Meat egh

Wool i

Butter eh

Skim milk powder ehm


Australian production

TABLE 12 Agricultural, fisheries and forestry commodity production Australia

STATISTICS

12 Agricultural fisheries and forestry commodity production A l12Agricultural,fisheriesandforestrycommodityproductionAustraliaunit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 funit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

CropsCropsGrainsB l k 8 221 7 472 9 174 8 173 8 490 8 604GrainsBarley kt 8 221 7 472 9 174 8 173 8 490 8 604

( )Corn (maize) kt 451 506 390 401 414 429Grain sorghum kt 2 239 2 229 1 282 2 178 2 029 2 009gOats kt 1 262 1 121 1 255 1 184 1 249 1 169OatsRice kt 919 1 161 819 724 305 906Rice kt 919 1 161 819 724 305 906Triticale kt 285 171 126 225 191 213Triticale kt 285 171 126 225 191 213Wheat kt 29 905 22 855 25 303 23 076 24 219 24 504Wheat kt 29 905 22 855 25 303 23 076 24 219 24 504OilseedsCanola kt 3 427 4 142 3 832 3 447 2 945 3 271OilseedsCanola kt 3 427 4 142 3 832 3 447 2 945 3 271Cottonseed kt 1 732 1 439 1 252 730 772 1 153Cottonseed kt 1 732 1 439 1 252 730 772 1 153S b kt 52 70 32 68 64 61Soybeans kt 52 70 32 68 64 61S fl d kSunflower seed kt 28 38 18 40 46 43Other oilseeds a kt 39 42 27 19 23 25PulsesChickpeas kt 673 813 629 555 1 013 987Chickpeas kt 673 813 629 555 1 013 987Field peas kt 342 320 342 290 205 330Field peas kt 342 320 342 290 205 330Lupins kt 982 459 626 549 607 489Lupins kt 982 459 626 549 607 489Total grains oilseeds and pulses b kt 51 164 43 439 45 726 42 224 43 227 44 729Total grains, oilseeds and pulses b kt 51 164 43 439 45 726 42 224 43 227 44 729Industrial cropsCotton lint kt 1 225 1 017 885 516 546 816Industrial cropsCotton lint kt 1 225 1 017 885 516 546 816Sugar cane (cut for crushing) kt 27 943 30 001 30 521 32 360 33 101 33 830Sugar cane (cut for crushing) kt 27 943 30 001 30 521 32 360 33 101 33 830S (t t l) k 3 683 4 248 4 364 4 572 4 800 5 081Sugar (tonnes actual) kt 3 683 4 248 4 364 4 572 4 800 5 081WiWine grapes kt 1 582 1 642 1 438 1 608 1 634 1 603HorticultureFruitApples kt 289 289 267 259 300 300Apples kt 289 289 267 259 300 300Bananas kt 286 330 254 245 260 260Bananas kt 286 330 254 245 260 260Oranges kt 390 401 350 360 355 350Oranges kt 390 401 350 360 355 350VegetablesCarrots kt 319 272 243 297 304 311VegetablesCarrots kt 319 272 243 297 304 311Onions kt 347 302 256 280 300 340Onions kt 347 302 256 280 300 340P t t k 1 288 1 273 1 171 1 272 1 197 1 190Potatoes kt 1 288 1 273 1 171 1 272 1 197 1 190Tomatoes kt 372 456 326 400 392 391LivestockSlaughteringsCattle and calves ’000 7 873 8 457 9 473 10 103 9 000 8 400

g gCattle and calves 000 7 873 8 457 9 473 10 103 9 000 8 400Lambs ’000 18 879 21 122 21 899 22 867 21 900 21 400Lambs 000 18 879 21 122 21 899 22 867 21 900 21 400Sheep ’000 5 175 8 192 10 066 9 022 7 700 6 500Sheep 000 5 175 8 192 10 066 9 022 7 700 6 500Pigs ’000 4 733 4 745 4 778 4 924 5 071 5 215Pigs ’000 4 733 4 745 4 778 4 924 5 071 5 215Live exportsCattle exported live c ’000 683 634 1 133 1 379 1 290 1 325Live exportsCattle exported live c ’000 683 634 1 133 1 379 1 290 1 325Sheep exported live d ’000 2 562 2 000 2 020 2 180 1 852 2 000Sheep exported live d ’000 2 562 2 000 2 020 2 180 1 852 2 000M t d dMeat producedBeef and veal e kt 2 115 2 245 2 464 2 662 2 420 2 260Lamb e kt 419 457 474 507 485 473Lamb eMutton e kt 120 183 228 214 182 153Mutton e kt 120 183 228 214 182 153Chicken meat e kt 1 030 1 046 1 084 1 116 1 155 1 200Chicken meat e kt 1 030 1 046 1 084 1 116 1 155 1 200Pig meat kt 351 356 360 371 382 393Pig meat kt 351 356 360 371 382 393Total kt 4 034 4 287 4 610 4 869 4 624 4 479Total kt 4 034 4 287 4 610 4 869 4 624 4 479

continued ...continued ...


Australian production

TABLE 12 Agricultural, fisheries and forestry commodity production Australia continued

STATISTICS

12Agricultural,fisheriesandforestrycommodityproductionAustraliacontinuedunit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

Wool g kt 404 427 420 427 397 403Milk h ML 9 574 9 317 9 372 9 732 9 630 9 820Eggs million dozen 298 335 322 329 346 359Butter i kt 120 118 116 119 121 123Cheese kt 347 338 311 344 352 360Casein kt 5 5 4 0 0 1Skim milk powder kt 230 224 211 242 255 260Whole milk powder kt 140 109 126 97 90 90Buttermilk powder kt 11 11 11 12 11 11

Hardwood ’000 m3 9 548 9 029 10 940 12 548 12 476 12 603Softwood ’000 m3 13 949 13 551 14 358 14 853 15 074 15 156Total ’000 m3 23 497 22 580 25 298 27 401 27 549 27 759

Tuna kt 10.1 10.6 10.7 12.5 12.0 11.8Salmonids l kt 44.2 43.0 41.8 48.4 52.8 55.4Other fish kt 113.1 105.6 100.7 109.7 108.6 109.6Prawns kt 22.5 21.1 24.9 24.6 26.3 24.8Rock lobster m kt 9.1 10.3 10.4 10.2 10.4 10.4Abalone kt 5.1 5.0 4.8 4.9 5.2 5.3Scallops kt 3.6 6.8 4.4 5.3 5.6 4.4Oysters kt 12.6 12.4 11.4 11.7 12.1 12.2Other molluscs kt 7.9 7.9 5.9 7.4 7.3 7.1Other crustaceans kt 5.5 5.2 5.4 5.4 5.3 5.5

Livestock products

Forestry products j

Fisheries k

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


Value of production

TABLE 13 Gross value of farm, fisheries and forestry production Australia

STATISTICS

2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f$m $m $m $m $m $m

Barley 1 723 2 063 2 453 2 286 2 346 2 439Corn (maize) 113 120 116 112 117 107Grain sorghum 423 562 384 655 587 634Oats 255 265 268 296 315 296Rice 248 302 279 298 130 355Triticale 50 43 32 57 45 48Wheat 6 775 7 154 7 998 6 914 7 211 6 935

Canola 1 759 2 270 2 129 1 737 1 639 1 859Soybeans 27 33 17 37 36 34Sunflower seed 16 22 12 25 30 28Other oilseeds a 44 33 22 15 19 21

Chickpeas 308 320 222 315 706 519Field peas 101 130 143 120 90 115Lupins 228 156 216 160 176 140Total grains, oilseeds and pulses b 12 471 13 919 14 791 13 568 14 142 14 097

Cotton lint and cottonseed c 2 954 2 174 2 002 1 114 1 234 1 873Sugar cane (cut for crushing) 1 214 1 236 1 226 1 143 1 228 1 386Wine grapes 725 858 672 745 771 772Total industrial crops 4 893 4 268 3 900 3 002 3 234 4 032

Table and dried grapes 316 303 331 351 370 385Fruit and nuts (excl. grapes) 3 050 3 662 3 187 3 543 3 691 3 813Vegetables 3 339 3 770 3 510 3 809 3 983 4 126Nursery, cut flowers and turf 1 272 1 285 1 247 1 420 1 715 1 744Total horticulture 7 976 9 020 8 274 9 123 9 759 10 069Other crops nei d 898 1 165 1 405 1 345 1 345 1 345Total crops 26 238 28 372 28 370 27 038 28 480 29 542

continued ...

Horticulture

13Grossvalueoffarm,fisheriesandforestryproductionAustralia

CropsGrains

Oilseeds

Pulses

Industrial crops


Value of production

TABLE 13 Gross value of farm, fisheries and forestry production Australia continued

2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f$m $m $m $m $m $m

Cattle and calves e 7 134 7 136 7 495 10 188 12 835 12 580Sheep g 419 329 513 629 636 591Lambs gh 2 136 1 696 1 943 2 324 2 669 2 838Pigs 934 934 1 081 1 156 1 330 1 450Poultry 2 078 2 214 2 344 2 430 2 500 2 580

Cattle exported live i 651 589 1 049 1 356 1 630 1 730Sheep exported live j 345 194 185 245 233 256Total livestock k 13 797 13 212 14 765 18 527 22 043 22 159

Wool l 2 734 2 472 2 530 2 676 2 800 2 980Milk m 4 021 3 745 4 798 4 720 4 574 4 782Eggs 583 653 710 687 728 775Honey and beeswax 79 88 88 101 110 102Total livestock products 7 418 6 958 8 126 8 183 8 213 8 640Total farm 47 453 48 542 51 262 53 748 58 736 60 341

Hardwood 745 680 819 942 989 1 009Softwood 879 836 970 1 013 1 081 1 098Total 1 624 1 516 1 789 1 955 2 070 2 107

Tuna 172 176 147 161 145 140Salmonids q 514 518 543 623 653 592Other fish r 456 441 401 438 437 445Prawns 266 277 337 357 379 347Rock lobster t 394 439 586 653 766 772Abalone 170 178 165 182 211 219Scallops 8 15 9 12 13 11Oysters 90 94 90 93 98 101Pearls u 102 79 61 92 96 99Other molluscs v 33 59 48 40 44 45Other crustaceans 67 64 63 67 67 67Total fish 2 305 2 376 2 460 2 741 2 927 2 849a Linseed, safflower seed and peanuts. b Includes Total includes components not listed separately. c Value delivered to gin. d Mainly fodder crops. e Includes dairy cattle slaughtered. f ABARES forecast. g Excludes skin values. h Lamb saleyard indicator weight 18–22 kilograms. 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. q Includes salmon and trout production. r Includes an estimated value of aquaculture. s ABARES estimate. t Includes Queensland bugs. u Northern Territory aquaculture production not included in 2012–13 due to confidentiality. v Also includes fish and aquaculture values not elsewhere included. 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

Fisheries products o

13GrossvalueoffarmandfisheriesproductionAustraliacontinued

LivestockSlaughterings

Live exports

Livestock products

Forestry products n


Areas, stock

TABLE 14 Crop and forestry areas and livestock numbers Australia

STATISTICS

unit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 f

Barley ’000 ha 3 718 3 644 3 814 3 912 4 100 3 911Corn (maize) ’000 ha 70 78 52 67 66 66Grain sorghum ’000 ha 659 647 532 730 712 698Oats ’000 ha 731 729 715 869 863 755Rice ’000 ha 103 113 75 71 31 91Triticale ’000 ha 145 99 80 126 117 165Wheat ’000 ha 13 902 12 979 12 613 12 155 12 728 12 733

Canola ’000 ha 2 461 3 272 2 721 2 824 2 357 2 527Soybeans ’000 ha 33 48 25 32 32 32Sunflower seed ’000 ha 25 33 17 35 36 37Other oilseeds a ’000 ha 26 32 22 13 14 16

Chickpeas ’000 ha 456 574 508 425 661 709Field peas ’000 ha 249 281 245 237 238 257Lupins ’000 ha 689 450 387 443 490 419Total grains, oilseeds and pulses b ’000 ha 24 275 23 856 22 584 22 554 23 339 23 376

Cotton ’000 ha 600 443 392 197 270 400Sugar cane c ’000 ha 368 349 356 363 393 398Winegrapes d ’000 ha 145 133 127 132 135 137

Beef cattle million 25.69 26.46 26.30 24.35 23.70 23.10Dairy cattle million 2.73 2.83 2.81 2.85 2.79 2.80 Milking herd g million 1.70 1.69 1.65 1.74 1.73 1.74Total cattle million 28.42 29.29 29.10 27.19 26.49 25.90Sheep million 74.72 75.55 72.61 69.94 70.06 71.37Pigs million 2.14 2.10 2.31 2.33 2.38 2.42

Hardwood ’000 ha 977 976 963 na na naSoftwood ’000 ha 1 024 1 024 1 024 na na naTotal plantation area h ’000 ha 2 013 2 013 2 000 na na na

14CropandforestryareasandlivestocknumbersAustralia

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

Crop areasGrains

Oilseeds

Pulses

Industrial crops

Livestock numbers e

Forestry plantation area


Yields

TABLE 15 Average farm yields Australia

STATISTICS

15 f ld15AveragefarmyieldsAustralia15AveragefarmyieldsAustraliaunit 2011–12 2012–13 2013–14 2014–15 s 2015–16 f 2016–17 funit 2011 12 2012 13 2013 14 2014 15 s 2015 16 f 2016 17 f

CropsCropsGrainsGrainsBarley t/ha 2.21 2.05 2.41 2.09 2.07 2.20Barley t/haCorn (maize) t/ha 6.47 6.49 7.45 5.94 6.30 6.50Corn (maize) t/ha 6.47 6.49 7.45 5.94 6.30 6.50Grain sorghum t/ha 3 40 3 45 2 41 2 98 2 85 2 88Grain sorghum t/ha 3.40 3.45 2.41 2.98 2.85 2.88

/ 1 73 1 54 1 76 1 36 1 45 1 55Oats t/ha 1.73 1.54 1.76 1.36 1.45 1.55/Rice t/ha 8.91 10.28 10.94 10.27 9.95 10.00Rice t/ha 8.91 10.28 10.94 10.27 9.95 10.00Triticale t/ha 1 97 1 73 1 57 1 78 1 63 1 29Triticale t/ha 1.97 1.73 1.57 1.78 1.63 1.29Wh t t/h 2 15 1 76 2 01 1 90 1 90 1 92Wheat t/ha 2.15 1.76 2.01 1.90 1.90 1.92OilseedsCanola t/ha 1.39 1.27 1.41 1.22 1.25 1.29OilseedsCanola t/ha 1.39 1.27 1.41 1.22 1.25 1.29Soybeans t/ha 1 57 1 46 1 27 2 12 1 98 1 88Soybeans t/ha 1.57 1.46 1.27 2.12 1.98 1.88Sunflower seed t/ha 1.14 1.16 1.05 1.14 1.26 1.16/PulsesChickpeas t/ha 1 48 1 42 1 24 1 31 1 53 1 39PulsesChickpeas t/ha 1.48 1.42 1.24 1.31 1.53 1.39Fi ld /h 1 38 1 14 1 40 1 23 0 86 1 28Field peas t/ha 1.38 1.14 1.40 1.23 0.86 1.28pLupins t/ha 1.42 1.02 1.62 1.24 1.24 1.17Lupins t/ha 1.42 1.02 1.62 1.24 1.24 1.17Industrial cropsCotton (lint) t/ha 2 04 2 30 2 26 2 62 2 02 2 04Industrial cropsCotton (lint) t/ha 2.04 2.30 2.26 2.62 2.02 2.04Sugar cane (for crushing) t/ha 76 86 86 89 84 85Sugar cane (for crushing) /Winegrapes t/ha 10.9 12.3 11.3 12.1 12.1 11.7Winegrapes t/ha 10.9 12.3 11.3 12.1 12.1 11.7Livestock products

l k / h 4 48 4 47 4 37 4 50 4 40 4 49Livestock productsWool a kg/sheep 4.48 4.47 4.37 4.50 4.40 4.49Whole milk L/cow 5 631 5 518 5 692 5 593 5 583 5 644Whole milk L/cow 5 631 5 518 5 692 5 593 5 583 5 644a Shorn (including lambs) f ABARES forecast s ABARES estimatea Shorn (including lambs). f ABARES forecast. s ABARES estimate.Sources ABARES Australian Bureau of Statistics Pulse AustraliaSources: ABARES; Australian Bureau of Statistics; Pulse Australia


Export volumes

TABLE 16 Volume of agricultural and fisheries exports Australia

STATISTICS

unit 2011–12 2012–13 2013–14 2014–15 2015–16 f 2016–17 f

Barley a kt 6 568 5 165 7 124 6 208 5 863 5 836Corn (maize) kt 68 134 83 58 65 100Grain sorghum kt 1 112 1 291 701 1 205 966 829Oats kt 163 200 219 272 388 270Rice kt 537 584 544 461 307 173Wheat b kt 23 026 21 265 18 336 16 571 16 933 17 267

Canola kt 2 323 3 488 3 194 2 445 2 146 2 308Cottonseed kt 654 754 464 167 112 123Other oilseeds c kt 6 10 14 6 12 13

Chickpeas kt 653 852 562 674 1 007 949Peas d kt 248 208 155 179 141 128Lupins kt 316 416 274 270 261 244Other pulses kt 775 691 795 597 585 702Total grains, oilseeds and pulses kt 36 448 35 058 32 464 29 112 28 786 28 940

Raw cotton e kt 994 1 305 1 036 681 509 624Sugar kt 2 572 3 004 3 052 3 675 3 846 4 004Wine ML 737 717 717 745 735 730

Beef and veal g kt 948 1 014 1 184 1 349 1 185 1 080Live feeder/slaughter cattle h ’000 579 513 1 006 1 295 1 175 1 225Live breeder cattle i ’000 105 121 127 83 115 100Lamb g kt 174 201 226 242 224 215Live sheep j ’000 2 562 2 000 2 020 2 180 1 852 2 000Mutton g kt 89 144 183 169 141 118Pig meat g kt 29 26 27 27 28 29Poultry meat g kt 38 32 37 36 43 45

Greasy ks kt 301 316 295 325 313 326Semi‐processed kt (gr. eq.) 37 34 35 41 40 35Skins kt (gr. eq.) 67 86 97 92 86 81Total ks kt (gr. eq.) 405 437 428 459 438 443

Butter l kt 49 54 49 44 37 39Cheese kt 161 174 151 159 170 173Casein kt 4 4 3 0 0 0Skim milk powder kt 141 147 143 186 190 190Whole milk powder kt 102 87 94 69 55 52

continued ...

Grains

Oilseeds

Pulses

Meat and live animals

Wool

Dairy products

16VolumeofagriculturalandfisheriesexportsAustraliaFarm

Industrial crops

Crops


Export volumes

TABLE 16 Volume of agricultural and fisheries exports Australia continued

STATISTICS

16 l f l l d f h16VolumeofagriculturalandfisheriesexportsAustraliacontinued16VolumeofagriculturalandfisheriesexportsAustraliacontinuedunit 2011–12 2012–13 2013–14 2014–15 2015–16 f 2016–17 funit 2011 12 2012 13 2013 14 2014 15 2015 16 f 2016 17 f

Fisheries productsT kt 8 9 8 9 11 0 12 1 11 3 11 4Fisheries productsTuna kt 8.9 8.9 11.0 12.1 11.3 11.4Salmonids kt 5.8 2.6 1.8 5.0 7.4 7.8Salmonids kt 5.8 2.6 1.8 5.0 7.4 7.8Other fish kt 6.5 5.5 4.9 5.8 6.4 5.7Other fish kt 6.5 5.5 4.9 5.8 6.4 5.7Prawns mFPrawns m Frozen kt 5.3 3.9 7.0 6.4 7.2 6.5Rock lobsterRock lobsterFresh chilled frozen

k d kt 6 9 7 8 8 0 8 2 8 1 8 4 Fresh, chilled, frozen or cooked kt 6.9 7.8 8.0 8.2 8.1 8.4AbaloneLive fresh or chilled kt 1 6 1 4 1 5 1 3 1 6 1 5Abalone Live, fresh or chilled kt 1.6 1.4 1.5 1.3 1.6 1.5Frozen or cooked kt 0 8 0 7 0 7 0 8 0 8 0 8 Frozen or cooked kt 0.8 0.7 0.7 0.8 0.8 0.8 Prepared or preserved kt 0.8 0.7 0.5 0.5 0.7 0.7p pScallops n kt 0.4 0.4 0.5 0.3 0.7 0.4Scallops n kt 0.4 0.4 0.5 0.3 0.7 0.4a Includes the grain equivalent of malt b Includes the grain equivalent of wheat flour c Includes soybeans linseed sunflowera Includes the grain equivalent of malt. b Includes the grain equivalent of wheat flour. c Includes soybeans, linseed, sunflower

d ffl d d t E l d l d il d I l d fi ld d E l d tt t dseed, 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. 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 Australian Bureau of Statistics recorded trade data adjusted for changes in stock levels heldj Includes breeding stock. k Australian Bureau of Statistics recorded trade data adjusted for changes in stock levels held overseas l Includes ghee dry butterfat butter concentrate and butter oil and dairy spreads all expressed as butteroverseas. l Includes ghee, dry butterfat, butter concentrate and butter oil, and dairy spreads, all expressed as butter.

E l d l f th d t I l d b d llm Excludes volume of other prawn products. n Includes crumbed scallops.Note: Zero used to denote nil or less than 500 tonnes.Note: Zero used to denote nil or less than 500 tonnes.Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra; Department ofSources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra; Department of Foreign Affairs and Trade; United Nations Commodity Trade Statistics Database (UN Comtrade)Foreign Affairs and Trade; United Nations Commodity Trade Statistics Database (UN Comtrade)


Export values

TABLE 17 Value of agricultural and fisheries exports (fob) Australia

STATISTICS

17 l f l l f h d f (f b)17Valueofagriculturalfisheriesandforestryexports(fob)Australia17Valueofagriculturalfisheriesandforestryexports(fob)Australia2011–12 2012–13 2013–14 2014–15 2015–16 f 2016–17 f2011 12 2012 13 2013 14 2014 15 2015 16 f 2016 17 f

$m $m $m $m $m $m$m $m $m $m $m $mFarmCFarmCropspGrainsBarley a 1 875 1 626 2 199 2 137 1 871 1 877GrainsBarley a 1 875 1 626 2 199 2 137 1 871 1 877Corn (maize) 24 50 36 30 33 35Corn (maize) 24 50 36 30 33 35Grain sorghum 299 364 253 424 329 293Grain sorghum 299 364 253 424 329 293Oats 47 65 85 101 138 98Oats 47 65 85 101 138 98Rice 427 459 490 506 398 201Rice 427 459 490 506 398 201Wh t bWheat b 6 378 6 776 6 103 5 547 5 604 5 571OilseedsCanola 1 344 2 094 1 929 1 349 1 252 1 420OilseedsCanola 1 344 2 094 1 929 1 349 1 252 1 420C tt d 19 219 168 61Cottonseed 195 219 168 75 57 61Other oilseeds c 10 13 18 14 24 32 10 13 18 14 24 32PulsesChickpeas 384 533 297 414 878 544PulsesChickpeas 384 533 297 414 878 544P dPeas d 93 89 67 91 73 53Lupins 86 143 116 119 118 110Lupins 86 143 116 119 118 110Other pulses 436 418 539 541 296 398Other pulses 436 418 539 541 296 398

l i il d d lTotal grains, oilseeds and pulses 11 598 12 850 12 300 11 348 11 072 10 693g , pIndustrial cropsRaw cotton e 2 736 2 695 2 355 1 546 1 180 1 439Industrial cropsRaw cotton e 2 736 2 695 2 355 1 546 1 180 1 439S 1 556 1 437 1 384 1 643 1 766 1 883Sugar 1 556 1 437 1 384 1 643 1 766 1 883Wine 1 910 1 867 1 847 1 983 2 211 2 218Wine 1 910 1 867 1 847 1 983 2 211 2 218Total industrial crops 6 203 5 999 5 587 5 172 5 157 5 539Total industrial crops 6 203 5 999 5 587 5 172 5 157 5 539HorticultureF itHorticultureFruit 505 634 724 755 821 832Tree nuts 240 348 610 734 949 735Tree nuts 240 348 610 734 949 735Vegetables 276 260 270 293 325 338Vegetables 276 260 270 293 325 338Nursery 15 12 11 12 12 10Nursery 15 12 11 12 12 10h h lOther horticulture g 258 224 250 266 291 258g 258 224 250 266 291 258

Total horticulture 1 294 1 478 1 865 2 060 2 398 2 173Total horticulture 1 294 1 478 1 865 2 060 2 398 2 173Other crops and crop products 2 560 2 740 3 072 3 436 4 095 4 008Other crops and crop products 2 560 2 740 3 072 3 436 4 095 4 008T lTotal crops 21 654 23 067 22 825 22 015 22 722 22 413pMeat and live animalsBeef and veal 4 467 4 871 6 265 8 858 9 175 8 775Meat and live animalsBeef and veal 4 467 4 871 6 265 8 858 9 175 8 775Live feeder/slaughter cattle h 412 339 795 1 163 1 370 1 500Live feeder/slaughter cattle h 412 339 795 1 163 1 370 1 500Live breeder cattle i 239 251 255 192 260 230 239 251 255 192 260 230Lamb 1 060 1 086 1 468 1 695 1 613 1 572Lamb 1 060 1 086 1 468 1 695 1 613 1 572Live sheep j 345 194 185 245 233 256Live sheep j 345 194 185 245 233 256M ttMutton 362 480 758 778 693 613Pig meat 100 81 85 102 122 125Pig meat 100 81 85 102 122 125Poultry meat 45 43 50 56 69 76Poultry meat 45 43 50 56 69 76T t l t d li i lTotal meat and live animals 7 030 7 344 9 859 13 090 13 535 13 148Wool Greasy k 2 448 2 261 2 212 2 497 2 707 2 960Wool Greasy k 2 448 2 261 2 212 2 497 2 707 2 960S i d 242 209 238 282 318 297Semi‐processed 242 209 238 282 318 297kSkins 433 398 426 375 415 41233 398 6 3 5 5Total k 3 123 2 869 2 877 3 154 3 440 3 669Total k 3 123 2 869 2 877 3 154 3 440 3 669

continuedcontinued ...


Export values

TABLE 17 Value of agricultural and fisheries exports (fob) Australia continued

STATISTICS

17 l f l l d f h (f b)17Valueofagriculturalandfisheriesexports(fob)Australiacontinued17Valueofagriculturalandfisheriesexports(fob)Australiacontinued2011–12 2012–13 2013–14 2014–15 2015–16 f 2016–17 f2011 12 2012 13 2013 14 2014 15 2015 16 f 2016 17 f

$m $m $m $m $m $m$m $m $m $m $m $mDairy productsDairy productsButter 201 180 243 198 139 175Butter 201 180 243 198 139 175Cheese 751 784 765 823 886 895Cheese 751 784 765 823 886 895Casein 48 46 42 10 9 9Casein 48 46 42 10 9 9k lk dSkim milk powder 474 467 708 682 583 615pWhole milk powder 378 312 532 294 212 198Whole milk powder 378 312 532 294 212 198Other dairy products 442 443 435 465 472 499Other dairy products 442 443 435 465 472 499T t l 2 295 2 232 2 725 2 473 2 302 2 391Total 2 295 2 232 2 725 2 473 2 302 2 391Other livestock and livestock products 2 287 2 512 2 876 3 192 3 223 3 400Other livestock and livestock products 2 287 2 512 2 876 3 192 3 223 3 400Total livestock exports 14 735 14 956 18 337 21 909 22 500 22 608Total livestock exports 14 735 14 956 18 337 21 909 22 500 22 608Total farm exports 36 389 38 023 41 162 43 924 45 222 45 021Total farm exports 36 389 38 023 41 162 43 924 45 222 45 021i h i dFisheries productsTuna 163 163 136 151 138 138

pTuna 163 163 136 151 138 138Salmonids 42 25 17 48 79 72Salmonids 42 25 17 48 79 72Oth fi h 85 70 72 72 72 72Other fish 85 70 72 72 72 72Prawns lFrozen 65 51 99 93 110 96Prawns l Frozen 65 51 99 93 110 96Rock lobsterRock lobster Fresh, chilled, frozen or cooked 387 447 590 691 792 817 Fresh, chilled, frozen or cookedAbaloneLive fresh or chilled 81 80 74 77 105 103Abalone Live, fresh or chilled 81 80 74 77 105 103F k d Frozen or cooked 57 55 56 60 71 73 Prepared or preserved 59 52 41 36 55 65 Prepared or preserved 59 52 41 36 55 65Scallops m 15 11 14 11 25 16Scallops m 15 11 14 11 25 16P l 207 152 144 111 119 132Pearls 207 152 144 111 119 132Other fisheries products 66 70 61 89 100 75Other fisheries products 66 0 6 89 00 5Total fisheries products 1 227 1 175 1 304 1 440 1 665 1 661Total fisheries products 1 227 1 175 1 304 1 440 1 665 1 661a Includes malt b Includes wheat flour c Includes soybeans linseed sunflower seed safflower seed and peanutsa Includes malt. b Includes wheat flour. c Includes soybeans, linseed, sunflower seed, safflower seed and peanuts. E l d l d il d Fi ld d E l d d li f ABARES f O hExcludes 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 and other miscellaneous horticultural products. h Includes horticulture includes mainly coffee, tea, spices, essential oils 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 Bureaubuffalo. 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 prawn products included inof Statistics recorded trade data adjusted for changes in stock levels held overseas. l Other prawn products included in h f h d l d b d llother fisheries products. m Includes crumbed scallops.p p

Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra; United Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra; United Nations Commodity Trade Statistics Database (UN Comtrade)Nations Commodity Trade Statistics Database (UN Comtrade)


TABLE 18 Agricultural exports to China (fob) Australia

STATISTICS

2009–10 2010–11 2011–12 2012–13 2013–14 2014–15$m $m $m $m $m $m

Barley a 280 311 454 494 1 080 1 464Grain sorghum 14 14 4 98 215 410Wheat b 189 144 457 357 484 323Other grains c 1 0 1 6 0 0Oilseeds 1 45 116 344 627 317Pulses 5 3 4 1 1 17Total grains, oilseeds and pulses 490 516 1 036 1 300 2 407 2 531

Raw cotton d 274 551 1 812 1 849 1 520 851Sugar 4 31 21 2 42 126Wine 144 178 209 241 202 269Total industrial crops 421 760 2 041 2 093 1 764 1 246

Fruit 6 8 10 28 37 64Tree nuts 8 6 11 36 37 39Vegetables 1 2 3 3 3 4Nursery 0 1 1 0 0 1Other horticulture e 4 3 4 4 4 5Total horticulture 20 20 29 71 82 113Other crops and crop products 7 8 22 30 31 46Total crops 938 1 305 3 128 3 493 4 284 3 936

Beef and veal 17 28 40 406 785 736Live breeder cattle g 102 102 133 125 180 149Lamb 34 63 73 108 184 152Mutton 13 12 14 102 209 137Other meat and live animals h 5 4 0 1 19 37Total meat and live animals 171 209 260 741 1 378 1 212

Greasy 1 460 1 864 1 925 1 844 1 713 1 986Semi‐processed 62 21 24 18 18 32Skins 257 351 369 337 378 336Total 1 779 2 235 2 319 2 200 2 109 2 354

Butter 5 4 7 6 7 11Cheese 23 30 37 44 74 72Casein 7 1 1 1 1 0Skim milk powder 22 37 50 35 108 59Whole milk powder 38 52 11 56 159 20Other dairy products 45 35 58 68 71 107Total dairy product exports 139 159 164 210 421 270Other livestock exports 501 558 614 635 778 833Total livestock exports 2 591 3 161 3 357 3 786 4 685 4 669Total agricultural exports 3 529 4 466 6 485 7 280 8 969 8 604a 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 and other miscellaneous horticultural products. g Includes dairy cattle and buffalo. h 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; Department of Agriculture and Water Resources, Canberra

18AgriculturalexportstoChina(fob)Australia

Dairy products

Farm

Industrial crops

Horticulture

Meat and live animals

Wool

CropsGrains

Agricultural exports


TABLE 19 Agricultural exports to Indonesia (fob) Australia19A i lt l t t I d i (f b)19AgriculturalexportstoIndonesia(fob)Australia2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009–10 2010–11 2011–12 2012–13 2013–14 2014–15

$m $m $m $m $m $m$m $m $m $m $m $mFarmFarmCropsCropsGrainsBarley a 13 9 10 7 6 5GrainsBarley a 13 9 10 7 6 5Wheat b 752 1 144 1 156 1 395 1 194 1 403Wheat b 752 1 144 1 156 1 395 1 194 1 403Other grains oilseedsOther grains, oilseedsand pulses c 3 15 14 12 28 14 and pulses c 3 15 14 12 28 14Total grains oilseeds and pulses 768 1 169 1 180 1 414 1 228 1 423Total grains, oilseeds and pulses 768 1 169 1 180 1 414 1 228 1 423Industrial cropsRaw cotton d 160 247 282 220 174 136Industrial cropsRaw cotton d 160 247 282 220 174 136Sugar 420 296 302 316 467 519Sugar 420 296 302 316 467 519Wine 3 4 4 5 3 4Wine 3 4 4 5 3 4Total industrial crops 582 547 588 540 644 659Total industrial crops 582 547 588 540 644 659HorticultureFruit 36 29 33 49 53 62HorticultureFruit 36 29 33 49 53 62Tree nuts 0 0 2 1 1 2Tree nuts 0 0 2 1 1 2Vegetables 13 14 11 12 11 6gNursery 0 0 0 0 0 0yOther horticulture e 1 2 3 2 3 4Total horticulture 50 45 49 65 68 75Other crops and crop products 13 15 17 24 26 28Total crops 1 413 1 775 1 835 2 043 1 968 2 184Meat and live animalsBeef and veal 169 169 156 132 245 233Li f d / l ht ttlLive feeder/slaughter cattle g 428 287 252 165 452 595Li b d ttl hLive breeder cattle h 13 3 2 9 9 5L b 5 6 9 8 4 7Lamb 5 6 9 8 4 7Mutton 1 1 1 2 1 4Mutton 1 1 1 2 1 4Other meat and live animals i 0 0 0 0 0 0Other meat and live animals i 0 0 0 0 0 0Total meat and live animals 615 466 421 316 712 844Total meat and live animals 615 466 421 316 712 844Wool 1 1 0 0 1 1Wool 1 1 0 0 1 1Dair prod ctsB tt 9 9 4 5 7 5Dairy productsButter 9 9 4 5 7 5Cheese 22 19 19 18 18 18Cheese 22 19 19 18 18 18Casein 10 5 7 9 10 0Casein 10 5 7 9 10 0Skim milk powder 49 80 72 68 126 164Skim milk powder 49 80 72 68 126 164Whole milk powder 29 40 34 18 37 8Whole milk powder 29 40 34 18 37 8Other dairy products 15 17 19 21 21 19Other dairy products 15 17 19 21 21 19Total dairy product exports 134 169 155 140 220 214Total dairy product exports 134 169 155 140 220 214Other livestock exports 114 101 113 146 147 142Other livestock exports 114 101 113 146 147 142Total livestock exports 865 737 689 603 1 079 1 201Total livestock exports 865 737 689 603 1 079 1 201Total agricultural exports 2 278 2 512 2 524 2 646 3 046 3 385Total agricultural exports 2 278 2 512 2 524 2 646 3 046 3 385a Includes malt b Includes wheat flour c Includes grains not separately listed oilseeds and pulses d Excludes cottona Includes malt. b Includes wheat flour. c Includes grains not separately listed, oilseeds and pulses. d Excludes cotton waste and linters e Other horticulture includes mainly coffee tea spices essential oils and other miscellaneouswaste and linters. e Other horticulture includes mainly coffee, tea, spices, essential oils and other miscellaneous horticultural products g Includes buffalo h Includes dairy cattle and buffalo i Includes meat and other live animals nothorticultural products. g Includes buffalo. h Includes dairy cattle and buffalo. i Includes meat and other live animals not listed separatelylisted separately.Note: Zero is used to denote nil or less than $0 5 millionNote: Zero is used to denote nil or less than $0.5 million.Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resouces CanberraSources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resouces, Canberra



TABLE 20 Agricultural exports to Japan (fob) Australia

STATISTICS

20 Agricultural exports to Japan (fob) A l20AgriculturalexportstoJapan(fob)Australia2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009–10 2010–11 2011–12 2012–13 2013–14 2014–15

$m $m $m $m $m $m$m $m $m $m $m $mFarmFarmGrainsBarleyGrainsBarley a 284 260 316 292 251 177G i hGrain sorghum 70 105 219 202 16 2Wheat bWheat b 299 408 395 392 322 305Oil dC lOilseedsCanola 109 41 47 72 113 175C tt dCottonseed 31 24 31 36 31 23Oth i d il dOther grains and oilseeds c 4 4 9 17 10 6Pulses 11 10 12 10 11 8Total grains, oilseeds and pulses 806 853 1 030 1 021 754 697Industrial cropsRaw cotton d 31 48 63 28 32 25Raw cotton dSugar 190 194 211 198 245 164gWine 43 44 45 42 41 44Total industrial crops 264 286 319 268 318 234pHorticultureFruit 61 70 59 63 61 59 61 70 59 63 61 59Tree nuts 17 16 20 23 19 23 17 16 20 23 19 23Vegetables 33 46 41 41 39 38g 33 46 41 41 39 38Nursery 4 4 3 3 2 2y 4 4 3 3 2 2Other horticulture e 5 7 6 4 9 8 5 7 6 4 9 8Total horticulture 120 142 129 133 130 130Total horticulture 120 142 129 133 130 130Other crops and crop products 47 54 47 50 40 45Other crops and crop products 47 54 47 50 40 45Total crops 1 237 1 335 1 524 1 472 1 242 1 106Total crops 1 237 1 335 1 524 1 472 1 242 1 106Meat and live animalsBeef and veal 1 682 1 667 1 549 1 439 1 446 1 922Meat and live animalsBeef and veal 1 682 1 667 1 549 1 439 1 446 1 922Live feeder/slaughter cattle g 15 16 20 15 15 14Live feeder/slaughter cattle g 15 16 20 15 15 14Lamb 52 60 63 54 76 88Lamb 52 60 63 54 76 88Mutton 24 26 24 17 29 27Mutton 24 26 24 17 29 27Other meat and live animals h 3 3 3 3 4 5Other meat and live animals h 3 3 3 3 4 5Total meat and live animals 1 776 1 772 1 658 1 528 1 570 2 055Total meat and live animals 1 776 1 772 1 658 1 528 1 570 2 055WoolGreasy 4 9 12 8 1 0Wool Greasy 4 9 12 8 1 0Semi‐processed 12 23 26 21 10 14Semi‐processed 12 23 26 21 10 14Skins 1 1 2 1 2 2Skins 1 1 2 1 2 2Total 17 33 39 30 12 16Total 17 33 39 30 12 16Dairy productsB tt 2 6 9 4 2 4Dairy productsButter 2 6 9 4 2 4Ch 358 356 423 415 343 407Cheese 358 356 423 415 343 407C i 26 22 21 17 20 5Casein 26 22 21 17 20 5Ski ilk d 3 2 2 5 17 30Skim milk powder 3 2 2 5 17 30Wh l ilk d 0 0 1 0 0 0Whole milk powder 0 0 1 0 0 0O h d i d 46 38 45 66 38 33Other dairy products 46 38 45 66 38 33T l d i dTotal dairy product exports 436 423 500 507 420 480O h li kOther livestock exports 320 337 302 293 276 293

l li kTotal livestock exports 2 549 2 566 2 499 2 358 2 278 2 845T t l i lt l tTotal agricultural exports 3 786 3 901 4 023 3 830 3 521 3 950a 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 and other miscellaneous horticultural products. g Excludes breeding stock and includes buffalo for feeder/slaughter purposes. p g g / g p ph Includes other meat and live animals not listed separately.h Includes other meat and live animals not listed separately.Note: Zero is used to denote nil or less than $0.5 million.Note: Zero is used to denote nil or less than $0.5 million.Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, CanberraSources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra




TABLE 21 Agricultural exports to the Republic of Korea (fob) Australia21A i lt l t t R bli f K (f b)21AgriculturalexportstoRepublicofKorea(fob)Australia2009 10 2010 11 2011 12 2012 13 2013 14 2014 15

g p p ( )2009–10 2010–11 2011–12 2012–13 2013–14 2014–15

$m $m $m $m $m $m$m $m $m $m $m $mFarmCFarmCrops

B lGrainsBarley a 54 75 94 87 116 116WhWheat b 219 368 628 449 310 354Corn (maize) 4 4 12 20 23 22OilseedsCottonseed 5 16 26 37 30 15Other grains and oilseeds c 2 1 0 2 6 2Pulses 70 51 36 74 57 68Pulses 70 51 36 74 57 68Total grains, oilseeds and pulses 353 514 797 668 541 577Total grains, oilseeds and pulses 353 514 797 668 541 577Industrial cropsRaw cotton d 62 58 120 119 130 82Industrial crops

62 58 120 119 130 82Sugar 685 424 521 475 309 525Sugar 685 424 521 475 309 525Wine 9 7 9 10 8 10Wine 9 7 9 10 8 10Total industrial crops 755 490 650 605 446 617Total industrial crops 755 490 650 605 446 617HorticultureFruit 4 4 5 7 6 10HorticultureFruit 4 4 5 7 6 10Tree nuts 1 1 3 2 4 11Tree nuts 1 1 3 2 4 11Vegetables 4 8 9 7 5 9Vegetables 4 8 9 7 5 9Other horticulture e 2 2 2 3 5 3Other horticulture e 2 2 2 3 5 3Total horticulture 10 15 19 19 19 32Total horticulture 10 15 19 19 19 32Other crops and crop products 114 119 117 131 144 135Other crops and crop products 114 119 117 131 144 135Total crops 1 232 1 138 1 583 1 423 1 151 1 362Total crops 1 232 1 138 1 583 1 423 1 151 1 362Meat and live animalsBeef and veal 535 656 572 641 844 1 016Meat and live animalsBeef and veal 535 656 572 641 844 1 016Lamb 10 13 15 14 24 32Lamb 10 13 15 14 24 32Mutton 4 5 4 4 6 7Mutton 4 5 4 4 6 7Other meat and live animals g 1 2 1 1 1 1Other meat and live animals g 1 2 1 1 1 1Total meat and live animals 549 676 592 659 875 1 056Total meat and live animals 549 676 592 659 875 1 056W l 41 36 43 44 61 81Wool 41 36 43 44 61 81D i d tDairy productsButter 13 16 9 7 6 10hCheese 28 37 31 30 26 32

Casein 3 2 2 2 1 0Skim milk powder 18 23 23 19 27 25Whole milk powder 3 6 7 2 3 2Other dairy products 19 25 29 17 19 14Total dairy product exports 84 109 103 77 82 83y p pOther livestock exports 93 108 125 100 118 185pTotal livestock exports 768 930 862 879 1 136 1 405

l l lp

Total agricultural exports 2 000 2 068 2 446 2 303 2 286 2 766a Includes malt. b Includes wheat flour. c Includes grains and oilseeds not separately listed. d Excludes cotton waste g p yand linters. e Other horticulture includes mainly nursery, coffee, tea, spices, essential oils and other miscellaneous and linters. e Other horticulture includes mainly nursery, coffee, tea, spices, essential oils and other miscellaneous horticultural products. g Includes meat and other animals not listed separately.horticultural products. g Includes meat and other animals not listed separately.Note: Zero is used to denote nil or less than $0.5 million. Note: Zero is used to denote nil or less than $0.5 million. Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, CanberraSources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra


TABLE 22 Agricultural exports to the United States (fob) Australia

STATISTICS

22 Agricultural exports to the United States (fob) A l22AgriculturalexportstotheUnitedStates(fob)Australia2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009–10 2010–11 2011–12 2012–13 2013–14 2014–15

$m $m $m $m $m $m$m $m $m $m $m $mFarmCropsFarm

G iCropsGrains 0 0 0 1 2 0l dOilseeds 10 0 20 50 66 22

Pulses 3 4 5 4 5 4Total grains, oilseeds and pulses 13 4 25 55 73 26Industrial cropsSugar 68 92 135 66 43 60

pg

Wine 627 524 493 483 472 463Total industrial crops 695 616 628 549 515 522pHorticultureFruit 67 33 33 25 31 2467 33 33 25 31 24Tree nuts 22 12 15 28 48 6522 12 15 28 48 65Vegetables 7 6 5 5 6 8g 7 6 5 5 6 8Nursery 3 2 2 2 2 2y 3 2 2 2 2 2Other horticulture a 14 16 15 19 28 3714 16 15 19 28 37Total horticulture 112 69 69 79 115 136Total horticulture 112 69 69 79 115 136Other crops and crop products 167 168 142 191 258 246Other crops and crop products 167 168 142 191 258 246Total crops 987 857 864 873 962 931Total crops 987 857 864 873 962 931Meat and live animalsBeef and veal 817 704 896 961 1 375 3 240Meat and live animalsBeef and veal 817 704 896 961 1 375 3 240Lamb 303 335 305 295 399 504Lamb 303 335 305 295 399 504Mutton 32 38 21 34 49 75Mutton 32 38 21 34 49 75Other meat and live animals b 0 0 0 0 0 1Other meat and live animals b 0 0 0 0 0 1Total meat and live animals 1 152 1 077 1 222 1 290 1 823 3 820Total meat and live animals 1 152 1 077 1 222 1 290 1 823 3 820WoolGreasy 9 11 8 7 4 7Wool Greasy 9 11 8 7 4 7Semi‐processed 3 3 3 2 2 3Semi‐processed 3 3 3 2 2 3Skins 0 0 0 0 0 0Skins 0 0 0 0 0 0Total 12 14 11 9 7 9Total 12 14 11 9 7 9Dairy productsB tt 10 3 7 13 1 13Dairy productsButter 10 3 7 13 1 13Ch 20 12 3 11 9 27Cheese 20 12 3 11 9 27C i 23 13 7 9 4 1Casein 23 13 7 9 4 1Wh l ilk d 9 4 4 5 0 1Whole milk powder 9 4 4 5 0 1Oth d i d t 13 18 15 16 11 10Other dairy products 13 18 15 16 11 10T t l d i d t t 75 50 35 53 24 52Total dairy product exports 75 50 35 53 24 52Oth li t k t 116 125 115 136 176 289Other livestock exports 116 125 115 136 176 289T t l li t k t 1 354 1 266 1 383 1 488 2 030 4 170Total livestock exports 1 354 1 266 1 383 1 488 2 030 4 170Total agricultural exports 2 341 2 123 2 248 2 361 2 992 5 101Total agricultural exports 2 341 2 123 2 248 2 361 2 992 5 101

h h l l d l ff l l d h ll h l l da Other horticulture includes mainly coffee, tea, spices, essential oils 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; Department of Agriculture and Water Resources, Canberra; ; p g ,



Fisheries exports

TABLE 23 Volume of fisheries products exports Australia

STATISTICS

23 Volume of fisheries products exports Australia23VolumeoffisheriesproductsexportsAustralia2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009–10 2010–11 2011–12 2012–13 2013–14 2014–15

k k k k k kkt kt kt kt kt ktEdible aEdible aFishLive 1 0 0 9 0 9 0 8 0 9 0 8Fish Live 1.0 0.9 0.9 0.8 0.9 0.8 Tuna 9.5 7.8 8.9 8.9 11.0 12.1Salmonids 4.0 6.4 5.8 2.6 1.8 5.0 Salmonids 4.0 6.4 5.8 2.6 1.8 5.0Swordfish 0 4 0 4 0 5 0 5 0 4 0 5 Swordfish 0.4 0.4 0.5 0.5 0.4 0.5Whiti 1 3 1 8 0 9 0 4 0 1 0 0 Whiting 1.3 1.8 0.9 0.4 0.1 0.0g Other fish 5.4 5.5 5.1 4.7 4.4 5.3 Other fish 5.4 5.5 5.1 4.7 4.4 5.3Total fish 21 7 22 7 22 0 17 8 18 6 23 6Total fish 21.7 22.7 22.0 17.8 18.6 23.6Crustaceans and molluscsCrustaceans and molluscs Rock lobster 7.7 7.0 6.9 7.8 8.0 8.2Prawns 4.7 6.4 5.4 3.9 7.1 6.5 Prawns 4.7 6.4 5.4 3.9 7.1 6.5Abalone 3 6 3 4 3 1 2 8 2 7 2 6 Abalone 3.6 3.4 3.1 2.8 2.7 2.6S ll Scallops 1.1 0.6 0.4 0.4 0.5 0.3p Crabs 1.1 1.0 0.8 0.4 0.4 0.6 Crabs 1.1 1.0 0.8 0.4 0.4 0.6Other crustaceans and molluscs 1 0 1 2 1 7 2 1 1 6 1 6 Other crustaceans and molluscs 1.0 1.2 1.7 2.1 1.6 1.6Total crustaceans and molluscs 19 2 19 6 18 4 17 5 20 3 19 7Total crustaceans and molluscs 19.2 19.6 18.4 17.5 20.3 19.7Total edible 40.9 42.4 40.5 35.3 38.9 43.3Total ediblea Includes prepared and preserved.a Includes prepared and preserved.Note: Zero is used to denote nil or less than 500 tonnesNote: Zero is used to denote nil or less than 500 tonnes.S A li B f S i iSource: Australian Bureau of Statistics


Fisheries exports

TABLE 24 Value of fisheries products exports (fob) Australia

STATISTICS

2009–10 2010–11 2011–12 2012–13 2013–14 2014–15$m $m $m $m $m $m

Live 40.4 33.4 32.0 30.7 34.2 29.9 Tuna 118.5 131.4 162.7 162.6 135.5 151.0 Salmonids 29.6 54.4 41.8 25.4 17.4 48.1 Swordfish 4.2 4.5 4.2 3.9 3.9 4.4 Whiting 3.4 5.0 2.5 1.4 0.2 0.1 Other fish 61.6 58.1 46.2 34.2 34.2 37.7Total fish 257.8 286.8 289.4 258.2 225.4 271.2

Rock lobster 399.7 369.3 386.7 447.3 590.3 691.2 Prawns 61.5 77.1 66.7 51.8 101.0 94.2 Abalone 216.4 212.0 197.3 186.0 170.0 173.8 Scallops 29.5 15.4 15.3 10.8 13.6 10.7 Crabs 13.8 13.4 11.0 8.2 5.5 7.9Other crustaceans and molluscs 8.5 16.3 34.4 40.2 32.5 43.7Total crustaceans and molluscs 729.3 703.6 711.3 744.2 912.9 1 021.5Total edible 987.1 990.3 1 000.7 1 002.3 1 138.3 1 292.7

Marine fats and oils 4.8 5.4 7.3 10.0 9.1 20.9 Fish meal 2.1 1.6 0.4 1.0 0.7 1.0 Pearls a 243.9 241.3 206.6 151.5 144.4 110.8 Ornamental fish 2.7 2.3 2.3 3.8 2.0 1.9 Other non‐edible 5.5 7.3 9.4 6.5 9.7 12.3Total non‐edible 259.0 257.9 226.1 172.8 165.9 147.0Total fisheries products 1 246.1 1 248.2 1 226.8 1 175.2 1 304.3 1 439.6

24Valueoffisheriesproductsexports(fob)Australia

Edible

Crustaceans and molluscs

Non‐edible

a Includes items temporarily exported and re‐imported.Source: Australian Bureau of Statistics

Fish


Fisheries imports

TABLE 25 Volume of fisheries products imports Australia2525 Volume of fisheries products imports Australia25VolumeoffisheriesproductsimportsAustralia2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009–10 2010–11 2011–12 2012–13 2013–14 2014–15

kt kt kt kt kt ktkt kt kt kt kt ktEdible aFishTuna 39 9 45 6 40 8 46 9 50 1 49 2Fish Tuna 39.9 45.6 40.8 46.9 50.1 49.2S l id Salmonids 9.8 9.9 10.2 11.9 14.2 16.1 Hake 5.4 6.7 5.3 6.1 4.5 4.9 Hake 5.4 6.7 5.3 6.1 4.5 4.9Swordfish 0 2 0 2 0 2 0 2 0 2 0 2 Swordfish 0.2 0.2 0.2 0.2 0.2 0.2Toothfish 0 1 0 1 0 1 0 2 0 2 0 1 Toothfish 0.1 0.1 0.1 0.2 0.2 0.1 Herrings 0.9 1.0 0.9 1.8 0.9 1.1e gsShark 0.6 0.5 0.5 0.5 0.7 0.6 Shark 0.6 0.5 0.5 0.5 0.7 0.6Other fish 83 3 83 1 86 6 92 8 90 0 87 6 Other fish 83.3 83.1 86.6 92.8 90.0 87.6Total fish b 140.3 147.1 144.4 160.5 160.8 159.8Crustaceans and molluscsPrawns 34 5 32 6 37 5 34 8 38 7 32 4Crustaceans and molluscs Prawns 34.5 32.6 37.5 34.8 38.7 32.4L b t 0 7 0 9 0 9 0 8 1 0 1 1 Lobster 0.7 0.9 0.9 0.8 1.0 1.1 Crabs 1.2 1.4 1.5 1.5 2.1 2.0 Crabs 1.2 1.4 1.5 1.5 2.1 2.0Mussels 2 4 2 6 2 8 3 7 3 6 3 1 Mussels 2.4 2.6 2.8 3.7 3.6 3.1Scallops 2 8 2 6 3 0 3 1 3 5 2 9 Scallops 2.8 2.6 3.0 3.1 3.5 2.9 Squid and octopus 16.0 15.2 17.0 19.9 23.2 22.3q pOther crustaceans and molluscs 9.6 9.4 7.3 4.1 4.8 4.0 Other crustaceans and molluscs 9.6 9.4 7.3 4.1 4.8 4.0Total crustaceans and molluscs 67 2 64 7 69 8 67 9 76 7 67 8Total crustaceans and molluscs 67.2 64.7 69.8 67.9 76.7 67.8

l dibl 20 4 211 8 214 2 228 4 23 22 6Total edible abc 207.4 211.8 214.2 228.4 237.5 227.6a Includes prepared and preserved. b Excludes live tonnage. c Includes other fisheries products not classified into fish or a Includes prepared and preserved. b Excludes live tonnage. c Includes other fisheries products not classified into fish or crustaceans and molluscscrustaceans and molluscs.Source: Australian Bureau of StatisticsSource: Australian Bureau of Statistics


Fisheries imports

TABLE 26 Value of fisheries products imports Australia

STATISTICS

26 Value of fisheries products imports Australia26ValueoffisheriesproductsimportsAustralia2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009–10 2010–11 2011–12 2012–13 2013–14 2014–15

$ $ $ $ $ $$m $m $m $m $m $mEdible aEdible aFishTuna 169 3 200 8 205 5 258 2 296 1 283 9Fish Tuna 169.3 200.8 205.5 258.2 296.1 283.9 Salmonids 85.8 84.4 91.8 118.8 167.5 190.7Hake 26.1 27.2 20.9 23.4 19.5 21.8 Hake 26.1 27.2 20.9 23.4 19.5 21.8Swordfish 1 8 1 5 1 2 1 7 1 4 1 7 Swordfish 1.8 1.5 1.2 1.7 1.4 1.7T thfi h 1 3 1 4 1 3 2 2 3 0 3 5 Toothfish 1.3 1.4 1.3 2.2 3.0 3.5 Herrings 4.5 4.3 4.2 5.1 4.5 3.9 Herrings 4.5 4.3 4.2 5.1 4.5 3.9Shark 5 6 4 4 4 0 4 6 5 5 4 9 Shark 5.6 4.4 4.0 4.6 5.5 4.9Other fish 455 0 443 7 459 6 480 0 507 5 544 2 Other fish 455.0 443.7 459.6 480.0 507.5 544.2Total fish b 751.5 769.1 788.6 866.5 1 004.9 1 054.6Total fish bCrustaceans and molluscsPrawns 298 7 291 0 350 9 304 8 495 1 431 2Crustaceans and molluscs Prawns 298.7 291.0 350.9 304.8 495.1 431.2L b t Lobster 11.8 15.0 16.0 15.3 22.4 28.3 Crabs 12.4 13.3 15.5 16.8 28.3 31.1 Crabs 12.4 13.3 15.5 16.8 28.3 31.1Mussels 9 3 10 2 11 7 17 1 19 1 17 9 Mussels 9.3 10.2 11.7 17.1 19.1 17.9Scallops 33 5 34 5 43 6 41 1 52 9 49 6 Scallops 33.5 34.5 43.6 41.1 52.9 49.6 Squid and octopus 62.0 74.3 90.4 97.7 114.5 111.6Squ d a d oc opusOther crustaceans and molluscs 66.5 65.3 57.0 40.7 44.0 42.9 Other crustaceans and molluscs 66.5 65.3 57.0 40.7 44.0 42.9Total crustaceans and molluscs 494 2 503 5 585 1 533 4 776 3 712 5Total crustaceans and molluscs 494.2 503.5 585.1 533.4 776.3 712.5Total edible abc 1 243.9 1 271.3 1 373.8 1 427.7 1 781.3 1 767.3Non‐ediblePearls d 170 8 166 9 138 2 105 4 102 1 97 2Non ediblePearls d 170.8 166.9 138.2 105.4 102.1 97.2Fish meal 51 9 46 7 34 2 43 3 43 2 64 3Fish meal 51.9 46.7 34.2 43.3 43.2 64.3Ornamental fish 4.6 3.9 3.7 4.0 4.5 4.4Ornamental fish 4.6 3.9 3.7 4.0 4.5 4.4Marine fats and oils 26.8 31.0 39.5 39.1 40.1 52.7Marine fats and oils 26.8 31.0 39.5 39.1 40.1 52.7Other marine products 14 9 9 9 17 1 29 0 30 4 22 2Other marine products 14.9 9.9 17.1 29.0 30.4 22.2T l diblTotal non‐edible 269.0 258.4 232.8 220.7 220.3 240.8Total fisheries products 1 512.9 1 529.7 1 606.6 1 648.4 2 001.6 2 008.1Total fisheries products 1 512.9 1 529.7 1 606.6 1 648.4 2 001.6 2 008.1a Includes prepared and preserved b Includes live value c Includes other fisheries products not classified into fish ora Includes prepared and preserved. b Includes live value. c Includes other fisheries products not classified into fish or

t d ll dM i l i tcrustaceans and molluscs. d Mainly re‐imports.Source: Australian Bureau of Statistics


Fisheries trade

TABLE 27 Value of Australian fisheries products trade, by selected countries Australia

STATISTICS

2009–10 2010–11 2011–12 2012–13 2013–14 2014–15$m $m $m $m $m $m

Hong Kong 530.0 425.9 479.1 317.0 208.9 192.3Vietnam 4.3 8.4 60.5 293.2 565.6 715.6Japan 215.5 225.9 254.6 236.0 192.1 192.1China 43.5 143.2 58.5 45.2 36.6 48.7Singapore 37.4 41.2 42.5 31.0 34.2 35.0United States 49.5 35.7 23.1 17.9 22.1 28.0Taiwan 32.5 29.6 17.5 9.8 13.7 15.1Thailand 9.0 16.0 18.1 9.3 8.0 10.0New Zealand 16.6 9.6 10.1 9.1 14.5 13.9Malaysia 9.2 12.9 7.7 7.8 9.9 11.2Indonesia 6.9 8.7 6.1 7.4 9.9 9.3

Hong Kong 137.8 145.1 96.6 54.3 74.6 55.9Japan 49.8 43.3 44.4 33.0 26.9 23.4United States 15.5 8.1 22.2 21.0 19.2 16.6

Thailand 322.1 340.2 362.1 399.8 417.0 422.1New Zealand 212.3 210.0 197.3 206.3 206.8 189.6China 173.0 185.6 231.5 196.5 341.5 284.7Vietnam 152.7 161.7 174.5 163.1 231.7 233.1Malaysia 63.0 71.2 73.2 81.0 97.9 94.7United States 37.3 39.9 45.1 52.2 56.0 53.0Indonesia 38.9 27.9 36.3 50.9 73.5 85.6Taiwan 36.7 39.5 38.9 48.1 44.5 58.3South Africa 35.8 33.1 32.2 36.2 50.5 53.0Denmark 29.6 28.2 31.3 35.1 31.6 27.5Norway 23.6 18.8 25.3 32.2 44.8 58.2Other 26.7 24.7 27.1 29.9 45.4 68.1

27ValueofAustralianfisheriesproductstrade,byselectedcountriesAustra

a Country details for non‐edible imports are not available.Source: Australian Bureau of Statistics

Exports

Imports a

Edible (including live)

Non‐edible

Edible (excluding live)


Forest exports

TABLE 28 Volume of forest products exports Australia

STATISTICS

unit 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15

Roundwood ’000 m3 1 377 1 638 1 806 1 516 2 363 2 616

Softwood roughsawn ’000 m3 322 265 198 207 268 299 Softwood dressed ’000 m3 13 9 13 3 5 25 Hardwood roughsawn ’000 m3 37 39 26 20 73 117 Hardwood dressed ’000 m3 16 30 15 7 25 73 Total ’000 m3 387 344 252 237 371 514Railway sleepers ’000 m3 9 8 8 8 17 14

Veneers ’000 m3 90 119 106 52 64 50 Plywood ’000 m3 24 7 18 36 36 14 Particleboard ’000 m3 11 6 4 2 6 11 Hardboard b ’000 m3 1 2 2 2 3 11 Medium‐density fibreboard ’000 m3 152 115 79 52 75 78 Softboard and other fibreboards ’000 m3 2 5 5 1 1 21 Total ’000 m3 280 254 214 146 184 185

Newsprint kt 6 19 30 72 85 56 Printing and writing kt 146 84 132 139 153 141 Household and sanitary kt 31 39 26 12 20 23 Packaging and industrial kt 708 887 933 906 950 948 Total kt 890 1 029 1 121 1 127 1 207 1 168Recovered paper kt 1 444 1 323 1 403 1 506 1 449 1 397Pulp kt 18 31 1 0 0 0Woodchips cd kt 4 818 5 064 4 150 3 806 4 776 5 707

Quantity

Sawnwood a

Wood‐based panels

28VolumeofwoodproductexportsAustralia

a Excludes railway sleepers. b Uncoated hardboard confidential from January 2007. c Includes particles. d Bone dry tonnes.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

Paper and paperboard


Forest exports

TABLE 29 Value of forest products exports (fob) Australia

STATISTICS

2009–10 2010–11 2011–12 2012–13 2013–14 2014–15$m $m $m $m $m $m

Roundwood 138 198 175 155 292 313

Softwood roughsawn 76 67 55 61 75 74 Softwoods dressed 7 5 3 2 3 11 Hardwood roughsawn 33 34 23 20 22 20 Hardwood dressed 10 10 7 6 7 5 Total 125 115 88 90 108 110Railway sleepers 2 3 3 3 3 2Miscellaneous forest products a 52 60 59 61 71 75

Veneers 44 52 51 24 29 27 Plywood 3 2 2 4 3 3 Particleboard 4 2 1 1 1 2 Hardboard b 1 2 2 2 2 2 Medium‐density fibreboard c 54 39 26 19 26 27 Softboard and other fibreboards 1 1 1 0 0 6 Total 106 98 83 51 62 67

Newsprint 6 13 15 36 59 39 Printing and writing 143 88 120 117 139 146 Household and sanitary 97 94 64 33 49 60 Packaging and industrial 404 552 518 526 605 657 Total 649 747 717 712 853 901Paper manufactures d 102 112 134 132 132 109Recovered paper 228 240 240 230 241 241Pulp 13 11 1 0 0 0Woodchips 856 884 729 611 768 954Total 2 272 2 469 2 229 2 044 2 529 2 772a 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 Uncoated hardboard confidential from January 2007. c Some categories of medium‐density fibreboard are confidential. d Includes other paper articles that have had some further processing.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

Value

Sawnwood


Wood‐based panels

29Valueofwoodproductsexports(fob)Australia


Forest imports

TABLE 30 Volume of forest products imports Australia

unit 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15

Roundwood ’000 m3 1 1 1 1 1 1

Softwood roughsawn ’000 m3 293 290 239 247 271 291 Softwood dressed ’000 m3 367 468 470 443 449 608 Hardwood roughsawn ’000 m3 43 43 46 41 41 43 Hardwood dressed ’000 m3 45 45 36 28 25 26 Total ’000 m3 748 846 791 759 786 968

Veneers ’000 m3 15 17 15 13 9 12 Plywood ’000 m3 228 278 293 278 287 341 Particleboard ’000 m3 57 72 67 72 95 95 Hardboard ’000 m3 33 49 69 60 86 82 Medium‐density fibreboard ’000 m3 70 58 91 77 65 85 Softboard and other fibreboards ’000 m3 6 7 7 6 5 7 Total ’000 m3 410 480 542 505 548 622

Newsprint kt 191 222 121 85 75 76 Printing and writing kt 1 167 1 237 1 174 1 155 1 172 1 040 Household and sanitary kt 101 114 118 159 123 142 Packaging and industrial kt 285 314 333 385 357 392 Total kt 1 744 1 886 1 746 1 783 1 727 1 651Recovered paper kt 3 2 3 4 5 4Pulp kt 265 233 256 263 297 302Woodchips kt 1 1 1 1 2 2

30VolumeofwoodproductimportsAustralia

Wood‐based panels


Quantity

a Excludes railway sleepers.Sources: ABARES; Australian Bureau of Statistics

Sawnwood a


Forest imports

TABLE 31 Value of forest products imports Australia

STATISTICS

2009–10 2010–11 2011–12 2012–13 2013–14 2014–15$m $m $m $m $m $m

Roundwood 0 1 1 1 1 1

Softwood roughsawn 140 135 105 100 111 128 Softwood dressed 200 248 248 246 281 382 Hardwood roughsawn 39 40 44 41 46 57 Hardwood dressed 50 50 51 35 31 34 Total 429 473 448 423 468 601Miscellaneous forest products a 630 707 756 769 946 1 102

Veneers 22 21 21 19 15 22 Plywood 138 170 183 184 210 264 Particleboard 18 21 26 27 35 38 Hardboard 30 40 54 48 72 67 Medium‐density fibreboard 37 34 36 32 35 45 Softboard and other fibreboards 3 3 3 2 3 3 Total 248 289 323 311 370 439

Newsprint 158 176 91 58 49 48 Printing and writing 1 355 1 347 1 217 1 151 1 194 1 123 Household and sanitary 164 185 187 244 208 254 Packaging and industrial 499 515 543 590 654 728 Total 2 175 2 223 2 037 2 043 2 105 2 153Paper manufactures b 563 557 486 446 537 582Recovered paper 1 0 1 1 2 1Pulp 178 180 164 154 203 217Woodchips 1 2 2 3 3 3Total 4 225 4 431 4 217 4 151 4 636 5 099

Value

Sawnwood

Wood‐based panels


31ValueofwoodproductsimportsAustralia

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


TABLE 32 Value of Australian forest products trade, by selected countries a

STATISTICS

32 Value of Australian wood products trade, by selected countries a32ValueofAustralianwoodproductstrade,byselectedcountriesa2009–10 2010–11 2011–12 2012–13 2013–14 2014–152009–10 2010–11 2011–12 2012–13 2013–14 2014–15

$ $ $ $ $ $$m $m $m $m $m $mExportsChina 394 544 534 474 542 816ExportsChina 394 544 534 474 542 816H K 69 42 39 16 10 12Hong Kong 69 42 39 16 10 12Japan 774 745 579 394 21 316Japan 774 745 579 394 21 316Korea Rep of 48 40 40 33 45 38Korea, Rep. of 48 40 40 33 45 38Malaysia 82 106 112 73 87 70Malaysia 82 106 112 73 87 70New Zealand 319 314 305 269 290 296Taiwan 88 79 68 68 57 73Taiwan 88 79 68 68 57 73ImportsChiImportsChina 635 690 800 913 1 110 1 321Finland 172 143 120 205 221 184Finland 172 143 120 205 221 184Germany 179 183 148 135 163 150Germany 179 183 148 135 163 150I d i 355 332 342 313 348 427Indonesia 355 332 342 313 348 427Malaysia 218 228 236 227 249 270Malaysia 218 228 236 227 249 270New Zealand 705 715 634 557 605 646New Zealand 705 715 634 557 605 646United States 315 285 298 304 339 361United States 315 285 298 304 339 361

l f d d d l d l d d h f d l la Value of wood products trade to selected countries may exclude data where confidentiality restrictions apply.p y y pp ySources: ABARES; Australian Bureau of StatisticsSources: ABARES; Australian Bureau of Statistics

Forestry trade


ABARES reports released since Agricultural commodities (vol. 5 no. 4 December quarter 2015)This section provides an overview of the range of subjects covered by ABARES.

Full reports can be downloaded from agriculture.gov.au/abares/publications. For more information contact [email protected].

Research reports

Wine grape farms in the Murray–Darling Basin

Research report 15.11

Publication date: 17 December 2015

Authors: Dale Ashton and Mark Oliver

This report presents key farm performance measures from 2012–13 to 2014–15 for irrigated wine grape farms in the southern Murray–Darling Basin (MDB). It includes data on water trading and use of irrigation technologies. ABARES has conducted surveys of irrigation farms in selected industries and regions in the MDB since 2006–07. The latest survey was funded by the Murray–Darling Basin Authority.

Dairy farms in the Murray–Darling Basin




This report presents key farm performance measures from 2012–13 to 2014–15 for irrigated dairy farms in the Murray and Goulburn–Broken regions in the southern Murray–Darling Basin (MDB). It includes data on water trading and use of irrigation technologies. ABARES has conducted surveys of irrigation farms in selected industries and regions in the MDB since 2006–07. The latest survey was funded by the Murray–Darling Basin Authority.

Report extracts


Report extracts

Irrigated agriculture in the Murray–Darling Basin: an economic survey of irrigators, 2012–13 to 2014–15




This report presents key farm performance measures from 2012–13 to 2014–15 for irrigated horticulture, dairy, cotton and rice farms in the Murray–Darling Basin (MDB). It includes data on water trading and use of irrigation technologies. ABARES has conducted surveys of irrigation farms in selected industries and regions in the MDB since 2006–07. The latest survey was funded by the Murray–Darling Basin Authority.

Australian sugarcane farm businesses: financial performance, 2013–14



Authors: Haydn Valle and Peter Martin

In 2014 the Queensland Department of Agriculture and Fisheries and Sugar Research Australia commissioned ABARES to conduct a survey of Australian sugarcane growing farm businesses. Financial, physical and management information was collected from sugarcane growers that had more than 5 hectares planted to sugar cane and an estimated value of agricultural operations of $30 000 or more. This report presents the analysis and results of the survey for 2013–14.

Other reports

Illegal logging regulation: analysis of regulated importers by business sizePublication date: 8 December 2015

Authors: Mihir Gupta and Beau Hug

This report builds on work by ABARES on the Illegal Logging Prohibition Regulation 2012. It investigates differences in the characteristics of importers of regulated timber products for four different business size categories. ABARES also conducted sensitivity testing to examine the potential impact of changes to the Regulation’s key eligibility criteria.


Australian water markets report 2013–14Publication date: 11 December 2015

Authors: Kristopher Morey, Melissa Grinlinton and Neal Hughes

This is the first edition by ABARES since it took responsibility for the report from the former National Water Commission. The report presents statistics on water entitlement trade and water allocation trade volumes and prices, trade processing times and environmental water holdings and trade. The summary of water trading activity in surface and groundwater systems focuses on the Murray–Darling Basin region. The report includes statistics on environmental water transfers and the Commonwealth’s progress in recovering water for the environment under the Basin Plan.

Agricultural commodity statistics 2015Publication date: 15 December 2015

This report presents statistics covering the agriculture, fisheries, food and forestry sectors. It also includes comprehensive statistical tables on Australian and world prices, production, consumption, and stocks and trade for 19 rural commodities. Commodities covered include grains and oilseeds, livestock, livestock products, food, wool, horticulture, forestry products and fisheries products. Also included are statistics on agricultural water use and macroeconomic indicators such as economic growth, employment, balance of trade, exchange rates and interest rates.

Australian fisheries and aquaculture statistics 2014Publication date: 18 December 2015

This report analyses fisheries product consumption, production and trade from 2003–04 to 2013–14. It includes data on the volume and value of production from state, territory and Commonwealth commercial fisheries (wild-catch and aquaculture) for 2013–14. Data is also provided on the volume and value of Australian fisheries trade by destination, source and product. Profiles of Commonwealth and state/territory commercial fisheries and state/territory aquaculture cover key species, fishing methods and number of licence holders for 2012–13 and 2013–14. Also included is information on the recreational sector and customary fishing by Indigenous Australians.

Australian fisheries economic indicators report 2014: financial and economic performance of the Southern and Eastern Scalefish and Shark FisheryPublication date: 22 December 2015

Authors: Maggie Skirtun and Richard Green

This edition of the former Australian fisheries surveys report presents survey results, productivity analysis and other economic indicators for 2011–12, 2012–13 and 2013–14. Data covers financial returns to fishers and net economic returns from fisheries to the Australian community. Results cover the Commonwealth Trawl Sector and the Gillnet, Hook and Trap Sector of the Southern and Eastern Scalefish and Shark Fishery.

Report extracts


Australian crop reportPublication date: 9 February 2016

This quarterly report provides a consistent and regular assessment of crop prospects for major field crops, forecasts of area, yield and production, and a state-by-state summary of seasonal conditions.

Conference papers

Measuring boat-level efficiency in Commonwealth fisheries: an example using the Commonwealth Trawl Sector of the Southern and Eastern Scalefish and Shark FisheryPublication date: 3 February 2016

Author: Richard Green

This paper presents a stochastic frontier analysis (STA) of the Commonwealth Trawl Sector of the Southern and Eastern Scalefish and Shark Fishery. ABARES used boat-level data to explore the potential of the STA approach to determine the efficiency of the fleet and explain any inefficiencies.

A theoretical framework for resource sharing between commercial and recreational fishersPublication date: 3 February 2016

Authors: Kasia Mazur and Robert Curtotti

This paper presents a framework for using the travel cost method to derive non-market values associated with recreational fishing. The framework is combined with economic data from the commercial sector to assess the effect of changes in allocation of a fish stock between recreational and commercial fishers. Recent work by ABARES in valuing game fishing activities in eastern Australia is also quoted to support the framework.

Report extracts


ABARES contactsExecutive Director Karen Schneider [email protected] (02) 6272 4636

Agricultural Commodities and TradeAssistant Secretary and Chief Commodity Analyst Jammie Penm [email protected] (02) 6272 2030Agricultural Trade Caroline Gunning-Trant [email protected] (02) 6272 2123Agricultural Commodities Trish Gleeson [email protected] (02) 6272 2124ACT Outlook Peter Collins [email protected] (02) 6272 2017Agricultural Risks Management Matthew Miller [email protected] (02) 6272 3527

Farm Analysis and BiosecurityAssistant Secretary Peter Gooday [email protected] (02) 6272 2138Productivity Alistair Davidson [email protected] (02) 6272 2487Infrastructure and Water Tim Goesch [email protected] (02) 6272 2009Farm Survey and Analysis Milly Lubulwa [email protected] (02) 6272 2069Biosecurity Alistair Davidson [email protected] (02) 6272 2487Invasives and Social Sciences Bertie Hennecke [email protected] (02) 6272 4263

Fisheries, Forestry and LandAssistant Secretary Ilona Stobutzki [email protected] (02) 6272 4277Domestic Fisheries and Marine Simon Nicol [email protected] (02) 6272 4638International Fisheries and Data James Larcombe [email protected] (02) 6272 3388Fisheries Economics Robert Curtotti [email protected] (02) 6272 2014Quantitative Sciences Belinda Barnes [email protected] (02) 6272 5374Forest Sciences Steve Read [email protected] (02) 6272 5582Forest Economics Beau Hug [email protected] (02) 6272 3929

Portfolio Strategies and LandAssistant Secretary Lisa Elliston [email protected] (02) 6272 2091Deregulation Donna Hawkes [email protected] (02) 6272 4627Data and Land John Sims [email protected] (02) 6272 5732

Editing, Production, Online and Design John Wilson [email protected] (02) 6272 3811Library Resources Karen Kidd [email protected] (02) 6272 4270Media [email protected] (02) 6272 3232Publication inquiries [email protected] (02) 6272 3933

Agricultural commodities March quarter 2016 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

agriculture.gov.au/abares

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)

Postal address GPO Box 858 Canberra ACT 2601

Switchboard +61 2 6272 3933

Email [email protected]

Web agriculture.gov.au/abares

ABA

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The ‘Biosphere’ Graphic ElementThe 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.

Also in this series• Agricultural commodities, December 2014• Agricultural commodities, March 2015• Agricultural commodities, June 2015• Agricultural commodities, September 2015• Agricultural commodities, December 2015

agricultural commodities – march quarter...

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