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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland Toowoomba, Queensland Peter Martin, Haydn Valle and ABARES commodity analysts Research by the Australian Bureau of Agricultural and Resource Economics and Sciences Conference paper 12.14 October 2012

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Page 1: Commodity outlook and financial performance of key ...data.daff.gov.au/brs/data/warehouse/cofp_d9abcc006/... · Table 1 Number of farms, by industry classification, 2009–10 Industry

Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland Toowoomba, Queensland

Peter Martin, Haydn Valle and ABARES commodity analysts

Research by the Australian Bureau of Agricultural

and Resource Economics and Sciences

Conference paper 12.14 October 2012

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ii

© Commonwealth of Australia 2012 Ownership of intellectual property rights Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the Commonwealth of Australia (referred to as the Commonwealth). Creative Commons licence All material in this publication is licensed under a Creative Commons Attribution 3.0 Australia Licence, save for content supplied by third parties, logos and the Commonwealth Coat of Arms.

Creative Commons Attribution 3.0 Australia Licence is a standard form licence agreement that allows you to copy, distribute, transmit and adapt this publication provided you attribute the work. A summary of the licence terms is available from creativecommons.org/licenses/by/3.0/au/deed.en. The full licence terms are available from creativecommons.org/licenses/by/3.0/au/legalcode. This publication (and any material sourced from it) should be attributed as Martin, P, Valle, H & ABARES commodity analysts 2012, Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of

Queensland, ABARES conference paper 12.14, Canberra, October. CC BY 3.0. Cataloguing data Martin, P, Valle, H & ABARES commodity analysts 2012, Commodity outlook and financial performance of key agricultural

industries in the Darling Downs region of Queensland, ABARES conference paper 12.14, Canberra, October. ABARES project 43001 Internet Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland is available at daff.gov.au/abares/publications. Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Postal address GPO Box 1563 Canberra ACT 2601 Switchboard +61 2 6272 2010| Facsimile +61 2 6272 2001 Email [email protected] Web daff.gov.au/abares Inquiries regarding the licence and any use of this document should be sent to [email protected]

The Australian Government acting through the Department of Agriculture, Fisheries and Forestry represented by the

Australian Bureau of Agricultural and Resource Economics and Sciences, has exercised due care and skill in the preparation

and compilation of the information and data in this publication. Notwithstanding, the Department of Agriculture, Fisheries

and Forestry, ABARES, its employees and advisers disclaim all liability, including liability for negligence, for any loss,

damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information

or data in this publication to the maximum extent permitted by law.

Acknowledgements

The commodity notes in this paper are based on forecasts presented in the September 2012 edition of Agricultural

commodities by Fiona Crawford (vegetables), James Fell (wheat), David Mobsby (coarse grains), Clay Mifsud (beef and veal),

David Barrett (dairy) and Ben Agbenyegah (cotton and sugar).

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Contents

Regional overview .......................................................................................................................................... 1

Agriculture sector profile ................................................................................................................. 1

Number and type of farms ............................................................................................................... 2

Employment .......................................................................................................................................... 3

Farm financial performance—Australia and Queensland................................................... 4

Performance of broadacre farms—Australia and Queensland ......................................... 5

Performance of grains industry farms—Australia and Queensland ............................... 7

Performance of beef industry farms—Australia and Queensland ................................... 8

Performance of dairy industry farms—Australia and Queensland ................................. 9

Performance of broadacre farms—Eastern and Western Darling Down regions of Queensland ......................................................................................................................................... 11

Outlook for selected commodities ........................................................................................................ 15

Beef and veal ...................................................................................................................................... 15

Cotton.................................................................................................................................................... 16

Wheat .................................................................................................................................................... 17

Coarse grains ...................................................................................................................................... 19

Horticulture ........................................................................................................................................ 21

Dairy ...................................................................................................................................................... 21

Sugar...................................................................................................................................................... 23

Tables

Table 1 Number of farms, by industry classification, 2009–10 .................................................... 2

Table 2 Financial performance, broadacre industries ..................................................................... 6

Table 3 Financial performance, dairy industry ............................................................................... 10

Table 4 Financial performance for broadacre farms, Darling Downs ..................................... 14

Figures

Figure 1 Value of agricultural production, Darling Downs, Queensland, 2009–10 .............. 2

Figure 2 Distribution of farms by estimated value of agricultural operations, Darling Downs, 2009–10 .................................................................................................................................. 3

Figure 3 Employment profile, Darling Downs region, August quarter 2012 .......................... 4

Figure 4 Real farm cash income, broadacre industries ................................................................... 5

Figure 5 Real farm cash income, grains industry ............................................................................... 7

Figure 6 Real farm cash income, beef industry ................................................................................... 9

Figure 7 Total cash receipts for broadacre farms, Western Darling Downs region .......... 12

Figure 8 Total cash receipts for broadacre farms, Eastern Darling Downs region ............ 12

Figure 9 Real farm cash income for broadacre farms, Darling Downs ................................... 13

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Figure 10 Australian cattle slaughter and saleyard price ............................................................ 15

Figure 11 World cotton indicators (annual) ..................................................................................... 16

Figure 12 Australian cotton production, Queensland and New South Wales ...................... 17

Figure 13 Queensland annual wheat export volumes ................................................................... 19

Figure 14 World coarse grains production ....................................................................................... 19

Figure 15 Australian grain sorghum production and exports ................................................... 20

Figure 16 World dairy prices .................................................................................................................. 22

Figure 17 World sugar indicators (annual)....................................................................................... 23

Figure 18 Australian sugar production, Queensland and New South Wales (annual) ..... 24

Maps

Map 1 Darling Downs region of Queensland ....................................................................................... 1

Map 2 Eastern Darling Downs and Western Darling Downs ...................................................... 11

Boxes

Box 1 Major financial performance indicators .................................................................................... 4

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

1

Regional overview This paper contains an overview of the recent financial performance of the broadacre and dairy

industries in Queensland and a discussion of the outlook for some key commodities. The

agricultural sector overview is based on Australian Bureau of Statistics (ABS) data for the

Darling Downs region of Queensland (Map 1). The area contains the regional centres of Dalby,

Goondiwindi, Toowoomba and Warwick.

Map 1 Darling Downs region of Queensland

Source: Australian Bureau of Statistics

Agriculture sector profile

In 2009–10 the gross value of agricultural production (GVAP) in the Darling Downs region was

$1.5 billion, which was 17 per cent of the total gross value of agricultural production in

Queensland ($9.1 billion) for 2009–10. This is the most recent year for which data are available

from the ABS on GVAP by statistical division.

The Darling Downs has a diverse and important agricultural sector. In 2009–10, the Darling

Downs accounted for around 86 per cent of the total value of Queensland egg production, 65 per

cent of the total value of cotton, 62 per cent of grain sorghum, 56 per cent of wheat and 54 per

cent of pig production.

However, the most important commodity in the region, based on the value of agricultural output,

is beef cattle (Figure 1). In 2009–10, cattle and calves contributed 21 per cent ($317 million) to

the total gross value of agricultural production in the Darling Downs. Cotton accounted for

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

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13 per cent ($196 million), wheat 11 per cent ($168 million), pigs 8 per cent ($126 million),

grain sorghum 7 per cent ($107 million) and eggs 6 per cent ($95 million). Vegetables

contributed 6 per cent ($92 million) to the region’s gross value of agricultural production, and

milk and fruit each contributed around 5 per cent ($82 million and $73 million, respectively).

Figure 1 Value of agricultural production, Darling Downs, Queensland, 2009–10

Number and type of farms

ABS data indicate that in 2009–10 there were 5208 farms in the Darling Downs with an

estimated value of agricultural operations of more than $5000 (Table 1). The region contains

21 per cent of all farm businesses in Queensland.

Table 1 Number of farms, by industry classification, 2009–10

Industry classification Darling Downs Queensland

no. % no. %

Beef cattle 2 381 46 12 619 51

Grain growing 857 16 1 242 5

Mixed grain–livestock 578 11 1 089 4

Other crop growing 318 6 712 3

Dairy 211 4 764 3

Horse, beekeeping & other livestock 195 4 570 2

Vegetable 148 3 952 4

Cotton 117 2 211 1

Other 404 8 6 567 27

Total agriculture 5 208 100 24 727 100

Note: Where the estimated value of agricultural operations is more than $5000.

Source: Australian Bureau of Statistics

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

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Farms are classified in Table 1 according to the activities that generate most of their value of

production. Beef cattle (2381 farms) were the most common, accounting for 46 per cent of all

farms in the Darling Downs, and 19 per cent of all beef cattle farms in Queensland.

A large proportion of farms in the region are small in terms of their business size. Estimated

value of agricultural operations (EVAO) is a measure of the value of production from farms and a

measure of their business size, and is somewhat similar to turnover. Around 50 per cent of farms

in the Darling Downs region had an EVAO of less than $50 000 (Figure 2). These farms

accounted for only 6 per cent of the total value of agricultural operations in 2009–10. In

comparison, 14 per cent of farms in the region had an EVAO of more than $350 000 and

accounted for an estimated 64 per cent of the total value of agricultural operations in the region

in 2009–10.

Figure 2 Distribution of farms by estimated value of agricultural operations, Darling Downs, 2009–10

Employment

ABS quarterly data from August 2012 indicate that around 147 600 people were employed in

the Darling Downs – South West statistical region. This region extends beyond the Darling

Downs to the South Australian border in the south-west including towns such as Quilpie,

Cunnamulla, Charleville, St George and Roma. This larger regional grouping is the only one for

which current employment data are available for the Darling Downs.

The Darling Downs – South West statistical region accounts for 6 per cent of total employment in

Queensland and 25 per cent of all people employed in the Queensland agriculture, forestry and

fishing sector.

Health care and social assistance (21 800 people) is the largest sector in terms of employment,

followed by agriculture, fisheries and forestry (16 100 people) (Figure 3). The next three largest

employment sectors are retail trade (15 500 people), education and training (14 100 people)

and construction (9100 people). Altogether, these five sectors employ more than half (55 per

cent) of all people that work in the region.

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

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Figure 3 Employment profile, Darling Downs region, August quarter 2012

Farm financial performance—Australia and Queensland

Each year, ABARES interviews Australian broadacre and dairy producers as part of its annual

survey program. Broadacre industries covered in this survey include the grains, grains–

livestock, sheep, beef and sheep–beef industries. The information collected is a basis for

analysing the current financial position of farmers in these industries and expected changes in

the short term. This paper uses data from the ABARES Australian agriculture and grazing

industries survey (AAGIS) and Australian dairy industry survey (ADIS) to compare estimates of

financial performance indicators (Box 1) for farms in Australia and Queensland. Financial

performance is also analysed for broadacre farms in the Eastern and Western Darling Down

regions of Queensland.

Box 1 Major financial performance indicators

Total cash receipts: total revenues received by the business during the financial year.

Total cash costs: payments made by the business for materials 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 + changes 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: return to all capital used, profit at full equity * 100 / total opening capital

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

5

Performance of broadacre farms—Australia and Queensland

Nationally, average farm cash income for broadacre farms increased from $59 400 in 2009–10

to $117 300 in 2010–11. It is projected to have declined to $116 000 in 2011–12, which is still

39 per cent above the average of $83 200 in real terms (in 2011–12 dollars) for the 10 years to

2010–11 (Figure 4, Table 2). In 2011–12, average to above average seasonal conditions for most

Australian broadacre farms sustained high grain and livestock production and, as a result,

average farm cash income is projected to be among the highest recorded (in real terms) since

2001–02 (Figure 4).

Figure 4 Real farm cash income, broadacre industries

average per farm

Farm cash income is estimated to have increased for Queensland broadacre farms in 2010–11 to

average $89 100 per farm, up by 68 per cent from the average farm cash income of $52 950 per

farm recorded in 2009–10. Increased production of grain, particularly wheat and barley, as well

as an increase in numbers of beef cattle sold pushed total cash receipts higher, offsetting a small

increase in total cash costs.

Compared with the situation nationally, farm cash income is estimated to have increased for

Queensland broadacre farms in 2011–12 to an average of $103 000 per farm.

The result is driven mostly by higher crop receipts due to increased production of grain crops

and cotton, together with a decline in expenditure on beef cattle purchases. Beef cattle receipts

are estimated to have declined slightly with reduced turn-off, despite a small increase in average

cattle prices received due mainly to the sale of heavier cattle in 2011–12.

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

6

Tab

le 2

Fin

anci

al p

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rman

ce, b

road

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ust

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aver

age

per

far

m

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2

00

9–

10

2

01

0–

11

p

2

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1–

12

y

20

09–

10

2

01

0–

11

p

2

01

1–

12

y

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ceip

ts

C

rop

s $

6

2 0

10

6

0 7

00

(1

5)

78

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0

13

6 3

20

1

77

70

0

(5)

18

4 0

00

B

eef

catt

le s

ales

$

2

08

80

0

23

2 2

00

(7

) 2

24

00

0

89

01

0

96

50

0

(7)

94

00

0

Shee

p a

nd

lam

bs

$

7 6

40

7

90

0

(24

) 7

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0

46

52

0

56

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0

(5)

57

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0

Wo

ol

$

7 7

20

7

50

0

(23

) 9

00

0

27

59

0

35

40

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(6)

36

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0

To

tal c

ash

rec

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ts

$

34

8 8

00

3

79

90

0

(8)

36

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3

42

16

0

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9 2

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(4

) 4

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sts

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an

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rch

ases

$

1

21

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1 3

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(3

8)

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7

66

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(8)

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B

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catt

le p

urc

has

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$

38

41

0

43

60

0

(22

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(1

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dd

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$

25

35

0

15

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0

(37

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9 2

50

6

90

0

(55

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00

0

Fer

tili

ser

$

4 7

70

5

60

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(14

) 6

00

0

28

49

0

29

70

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(5)

32

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0

Spra

ys

$

9 1

30

9

40

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(16

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22

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(6)

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rica

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$

1

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1

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(5

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(3

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R

epai

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mai

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ce

$

25

96

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25

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(5)

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25

60

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(4)

29

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rest

pay

men

ts

$

41

07

0

41

60

0

(8)

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33

26

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10

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(8)

32

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Hir

ed la

bo

ur

$

13

88

0

12

10

0

(11

) 1

1 0

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1

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1

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(9

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T

ota

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2

95

85

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(1

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82

76

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(5

) 2

91

00

0

Fin

an

cia

l p

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ce

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com

e

$

52

95

0

89

10

0

(16

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03

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59

40

0

11

7 3

00

(5

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Far

ms

wit

h n

egat

ive

farm

cas

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com

e

%

26

2

7

(14

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1

30

2

3

(7)

25

F

arm

bu

sin

ess

pro

fit

$

–6

45

0

33

00

0

(31

) 5

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16

46

0

57

50

0

(18

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F

arm

s w

ith

neg

ativ

e fa

rm b

usi

nes

s p

rofi

t %

7

4

63

(6

) 5

1

69

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4

(4)

53

R

ate

of

retu

rn

exc

lud

ing

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ap

pre

ciat

ion

%

0

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1.6

(1

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2.5

(6

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– in

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din

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pp

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) n

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relim

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a N

ot

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te:

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res

in p

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vid

ed

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

7

Performance of grains industry farms—Australia and Queensland

Average farm cash income for Australian grains industry farms—defined as farms in the grains

and grains–livestock industries—improved significantly in 2010–11 compared with 2009–10.

This improvement was because of large increases in grain and oilseed production in New South

Wales, Victoria and South Australia, combined with higher grain and oilseed prices (Figure 5). At

the same time, there was only a relatively small rise in total cash costs resulting mainly from

higher expenditure on fertiliser, fuel, crop chemicals, interest payments and costs associated

with harvesting a larger crop than in 2009–10.

After declining in the previous two financial years, farm cash income increased for Queensland

grain industry farms in 2010–11 to an average of $91 400 per farm, or around 12 per cent

higher than the 10-year average to 2009–10 (in real terms) (Figure 5). Overall, crop receipts

increased as production rose despite very wet seasonal conditions and widespread flooding. In

addition, beef cattle receipts increased on mixed grains–beef farms as abundant grazing resulted

in heavier turn-off weights for cattle and higher average sale prices, and fodder costs were much

reduced.

Although Australian grain and oilseed production reached a record high in 2011–12, lower

prices for most grains and oilseeds, together with increases in farm cash costs, are estimated to

have resulted in a fall in overall average farm cash income for grains industry farms. Nationally,

farm cash income is estimated to have averaged $151 000 per farm in 2011–12. This is

significantly below the average farm cash income for 2010–11, but still around 31 per cent

above the industry average for the previous 10 years (Figure 5).

Figure 5 Real farm cash income, grains industry

average per farm

Farm cash income for Queensland grain farms is estimated to have increased further in 2011–12

to average $111 000 per farm, which is around 30 per cent higher than the 10-year average to

2010–11 (in real terms). Despite lower prices for grains and cotton, increased production of

wheat, grain sorghum and cotton resulted in higher crop receipts, which offset a small increase

in total cash costs.

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Performance of beef industry farms—Australia and Queensland

In 2010–11, beef cattle turn-off slowed in the eastern states and beef cattle numbers increased.

In the Northern Territory herd numbers remained relatively stable despite an increase in turn-

off, and in Western Australia cattle numbers decreased as dry conditions resulted in higher turn-

off. Overall, the average number of cattle that beef industry farms sold was similar to 2009–10,

but increases in average prices received for cattle resulted in total cash receipts for beef industry

farms rising by around 8 per cent. Although expenditure on beef cattle purchases increased,

total cash costs were reduced on average, mainly as a result of improved seasonal conditions

leading to a reduction in expenditure on fodder. Overall, with total cash receipts increasing and

total cash costs decreasing, farm cash income increased to average $59 100 per farm for beef

industry farms.

Similarly, total cash receipts increased for beef industry farms in Queensland due to a small

increase in the number of beef cattle sold, combined with higher cattle prices and the sale of

heavier cattle compared with 2009–10. This was complemented by reduced expenditure on

purchased fodder due to the good seasonal conditions. Average farm cash income increased to

average $87 300 per farm in 2010–11, compared with $42 470 per farm in 2009–10.

In 2011–12, lower expenditure on beef cattle purchases, together with reduced expenditure on

fodder and interest payments, is projected to have resulted in average total cash costs for beef

industry farms in Australia declining by around 10 per cent. With only a small reduction in cash

receipts and much larger reduction in cash costs, average farm cash income is projected to

increase to average $67 000 per farm in 2011–12. If this has been achieved, it would be around

6 per cent above the average for the previous 10 years (in real terms) (Figure 6).

Average farm cash income is estimated to have improved slightly for Queensland beef industry

farms in 2011–12. Overall, beef cattle receipts are estimated to have fallen slightly due to a small

decline in the number of beef cattle sold, despite slightly higher cattle prices and a further

increase in the average sale weight of cattle. However, the small reduction in beef cattle receipts

is estimated to have been more than offset by a marked reduction in the number of beef cattle

purchased and together with lower fodder purchase costs resulted in lower average total cash

costs. As a result, farm cash income is estimated to have increased to average $97 000 per farm

in 2011–12, slightly above the 10-year average to 2010–11 (in real terms) (Figure 6).

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

9

Figure 6 Real farm cash income, beef industry

average per farm

Performance of dairy industry farms—Australia and Queensland

Nationally, average farm cash income for dairy industry farms increased from $75 110 per farm

in 2009–10 to $141 000 per farm in 2010–11, the highest since 2007–08, in real terms. The

increase in average farm cash income was mainly because of higher prices paid for milk in

regions producing manufacturing milk. Milk production remained similar to 2009–10 despite

improved grazing conditions and increased availability of irrigation water.

Average dairy farm cash income for Queensland increased slightly from an average of $114 060

per farm in 2009–10 to $115 400 per farm 2010–11. Milk production declined in 2010–11,

resulting in lower milk receipts. However, this reduction was offset by a fall in average total cash

costs resulting mainly from decreased expenditure on purchased fodder (Table 3).

In 2011–12, despite a small increase in national milk production, lower milk prices are projected

to result in reduced average financial performance of dairy farms in all states except Tasmania.

Farm cash income for Australian dairy farms is projected to decline slightly to average $136 000

per farm in 2011–12, which is still around 30 per cent above the average for the 10 years to

2010–11.

Farm cash income is estimated to have declined for Queensland dairy farms in 2011–12. Milk

production and prices were lower. The reduction in total cash receipts is estimated to have been

partly offset by lower total cash costs, particularly due to a further reduction in fodder

expenditure. Nevertheless, average farm cash income is projected to have fallen to $89 000 per

farm in 2011–12, which is around the 10-year average to 2010–11 for Queensland dairy farms

(in real terms).

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10

Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

Tab

le 3

Fin

anci

al p

erfo

rman

ce, d

airy

ind

ust

ry

Qu

ee

nsl

an

d

Au

stra

lia

20

09–

10

2

01

0–

11

p

2

01

1–

12

y

20

09–

10

2

01

0–

11

p

2

01

1–

12

y

Re

ceip

ts

Mil

k –

net

of

frei

ght

$

45

2 0

00

4

24

30

0

(5)

37

7 0

00

4

42

14

0

51

0 9

00

(4

) 4

98

00

0

Dai

ry c

attl

e $

2

2 6

10

3

2 6

00

(2

2)

19

00

0

34

19

0

39

40

0

(7)

37

00

0

To

tal c

ash

rec

eip

ts

$

49

2 8

00

4

76

70

0

(5)

41

4 0

00

5

08

49

0

57

5 7

00

(4

) 5

63

00

0

Co

sts

Dai

ry c

attl

e p

urc

has

es

$

6 3

30

9

50

0

(38

) 3

00

0

6 0

70

7

70

0

(14

) 4

00

0

Fo

dd

er

$

15

1 0

90

1

39

50

0

(9)

12

1 0

00

1

29

65

0

11

9 4

00

(5

) 1

08

00

0

Fer

tili

zer

$

19

39

0

17

90

0

(14

) 1

9 0

00

3

0 2

60

2

9 9

00

(8

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00

Fu

el, o

il a

nd

lub

rica

nts

$

1

5 5

50

1

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00

(8

) 1

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00

1

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90

1

3 6

00

(5

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6 0

00

Rep

airs

an

d m

ain

ten

ance

$

3

7 5

70

3

1 8

00

(1

0)

27

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33

86

0

34

70

0

(7)

38

00

0

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rest

pay

men

ts

$

17

67

0

16

20

0

(19

) 1

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00

4

7 0

90

5

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(8

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0 0

00

Hir

ed la

bo

ur

$

29

00

0

35

50

0

(18

) 3

4 0

00

2

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40

2

6 6

00

(1

0)

29

00

0

To

tal c

ash

co

sts

$

37

8 7

40

3

61

40

0

(6)

32

5 0

00

4

33

38

0

43

4 7

00

(4

) 4

27

00

0

Fin

an

cia

l p

erf

orm

an

ce

Far

m c

ash

inco

me

$

1

14

06

0

11

5 4

00

(1

4)

89

00

0

75

11

0

14

1 0

00

(9

) 1

36

00

0

Far

ms

wit

h n

egat

ive

farm

cas

h in

com

e

%

17

5

(8

7)

18

2

4

11

(4

2)

12

Far

m b

usi

nes

s p

rofi

t $

3

0 6

80

1

5 3

00

(1

38

) –

26

00

0

–3

66

0

69

20

0

(17

) 4

4 0

00

Far

ms

wit

h n

egat

ive

farm

bu

sin

ess

pro

fit

%

62

5

4

(20

) 7

3

59

3

4

(17

) 3

8

Rat

e o

f re

turn

– e

xclu

din

g ca

pit

al a

pp

reci

atio

n

%

1.6

1

.1

(57

) –

0.2

1

.6

3.9

(8

) 3

.1

– in

clu

din

g ca

pit

al a

pp

reci

atio

n

%

1.9

2.7

(1

32

) n

a 0

.2

0.9

(1

06

) n

a

Far

m c

apit

al, d

ebt

and

eq

uit

y

Far

m c

apit

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t 3

0 J

un

e a

$

3

45

3 4

30

3

30

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00

(1

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na

3 6

14

80

0

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28

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(0)

na

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m d

ebt

at 3

0 J

un

e b

$

2

69

05

0

22

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(2

0)

20

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6

66

39

0

66

3 8

00

(1

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00

Eq

uit

y r

atio

at

30

Ju

ne

bc

%

92

9

3

(1)

na

82

8

1

(2)

na

a Ex

clu

des

leas

ed p

lan

t an

d e

qu

ipm

ent.

b A

vera

ge p

er r

esp

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g fa

rm. c

Eq

uit

y e

xpre

sse

d a

s a

per

cen

tage

of

farm

cap

ital

. p P

relim

inar

y es

tim

ate.

y P

rovi

sio

nal

est

imat

e. n

a N

ot

avai

lab

le.

No

te:

Figu

res

in p

aren

thes

es a

re s

tan

dar

d e

rro

rs e

xpre

ssed

as

a p

erce

nta

ge o

f th

e es

tim

ate

pro

vid

ed.

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

11

Performance of broadacre farms—Eastern and Western Darling Down regions of Queensland

The Eastern Darling Downs region (Map 2) contains farms that, on average, have smaller scales

of operations than farms in the Western Darling Downs.

Map 2 Eastern Darling Downs and Western Darling Downs

Broadacre farming in both the Eastern Darling Downs region and the Western Darling Downs

region of Queensland (Map 2) is dominated by beef cattle and cropping enterprises. For the

10 years ending 2010–11, beef cattle and broadacre cropping accounted for 82 per cent of

average total cash receipts for Eastern Darling Downs farms and 80 per cent of average total

cash receipts in the Western Darling Downs. However, the reliance on summer cropping

activities has differed significantly between the two regions during this period. In the Western

Darling Downs a much higher proportion of cropping receipts have been derived from winter

crops (such as wheat and barley) (Figure 7) compared with the Eastern region, which has had a

higher proportion of summer crops (such as grain sorghum and sunflowers) (Figure 8).

Specialist cotton farms are excluded from the ABARES definition of the broadacre industry.

However, in both 2010–11 and 2011–12, wet seasonal conditions and favourable cotton prices

resulted in increased cotton production and cotton receipts for broadacre farms in both regions.

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

12

Figure 7 Total cash receipts for broadacre farms, Western Darling Downs region

Figure 8 Total cash receipts for broadacre farms, Eastern Darling Downs region

Eastern Darling Downs

In 2010–11, average farm cash income for broadacre farms decreased for the Eastern Darling

Downs because of the effects of wet seasonal conditions and flooding on crop production. Farm

cash income for broadacre farms averaged $44 500 per farm in 2010–11, compared with

$75 280 per farm in 2009–10 (Table 4).

In 2011–12, farm cash income is estimated to have rebounded to average $99 000 per farm

(Table 4). Receipts from beef cattle sales are estimated to have been higher, mainly due to an

increase in the number of beef cattle sold. Receipts from cropping are also estimated to have

increased because of increased crop production and some carry forward of payments on

summer crops, particularly cotton, produced in 2010–11. Overall, farm cash income in the

Eastern Darling Downs is estimated to have been around 65 per cent higher than the 10-year

average to 2010–11 (in real terms) (Figure 9).

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

13

Western Darling Downs

In the Western Darling Downs region, farm cash income increased in 2010–11, from an average

of $43 100 per farm in 2009–10 to an average of $88 700 per farm (Table 4). Total cash receipts

from both cropping and beef cattle sales increased, although this was partly offset by higher

total cash costs from beef cattle purchases and expenditure on crop inputs.

In 2011–12, farm cash income in the Western Darling Downs is estimated to have increased

further to average $98 000 per farm (Table 4). Beef cattle receipts are estimated to have been

higher because of increased sale numbers and higher sale prices, but this was mostly offset by

lower total crop receipts resulting from lower grain prices. However, total cash costs are

projected to have decreased more than total cash receipts, as farms saved by reducing the

number of cattle purchased and lowering crop production. Average farm cash income estimated

for 2011–12 is around double the 10-year average to 2010–11 (in real terms) (Figure 9).

Figure 9 Real farm cash income for broadacre farms, Darling Downs

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14

Table 4 Financial performance for broadacre farms, Darling Downs

2009–10 2010–11 p 2011–12 y

Eastern Darling Downs a

Receipts

Crops $ 156 650 91 200 (29) 173 000

Beef cattle sales $ 98 000 77 300 (19) 105 000

Sheep and lambs $ 4 130 7 300 (50) 5 000

Wool $ 2 510 6 400 (45) 5 000

Total cash receipts $ 293 020 224 600 (16) 314 000

Total cash costs $ 217 740 180 100 (20) 216 000

Financial performance

Farm cash income $ 75 280 44 500 (46) 99 000

Farms with negative farm cash income % 18 21 (27) 19

Farm business profit $ –7 190 –6 000 (54) 32 000

Rate of return

– excluding capital appreciation % 0.7 0.8 (83) 2.1

Western Darling Downs a

Receipts

Crops $ 133 730 205 100 (35) 177 000

Beef cattle sales $ 131 910 160 400 (19) 181 000

Sheep and lambs $ 20 080 17 700 (47) 16 000

Wool $ 7 980 7 300 (57) 7 000

Total cash receipts $ 324 610 448 400 (15) 418 000

Total cash costs $ 281 510 359 700 (14) 319 000

Financial performance

Farm cash income $ 43 100 88 700 (44) 98 000

Farms with negative farm cash income % 32 51 (17) 9

Farm business profit $ –28 150 20 500 (133) 28 000

Rate of return

– excluding capital appreciation % 0.4 1.8 (55) 2.1

a Excludes feedlot farms. p Preliminary estimate. y Provisional estimate.

Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided.

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

15

Outlook for selected commodities

Beef and veal

The Australian weighted average saleyard price of beef cattle is forecast to fall by 4 per cent in

2012–13 to 315 cents a kilogram (dressed weight) (Figure 10). Domestically, demand for

restocker cattle is expected to continue, although at a pace slower than the previous two seasons

when favourable conditions encouraged producers to expand herds. Herd sizes are now the

largest in over 30 years and supplies of cattle suitable for slaughter are forecast to increase in

the coming year.

Figure 10 Australian cattle slaughter and saleyard price

Lower demand for restocker cattle, compared with the previous two years, is expected to

contribute to national cattle herd growth slowing to 2 per cent in 2012–13 to 30.5 million head.

This compares with an estimated growth rate of 5 per cent in 2011–12, when favourable

seasonal conditions led to significant pasture growth in many cattle producing regions.

Producers responded to favourable seasonal conditions by purchasing restocker cattle and

retaining breeding stock.

In 2012–13 Australian cattle slaughter is forecast to increase by 3 per cent to 8.1 million head,

underpinning an increase in beef production to around 2.2 million tonnes (Figure 10). After

more than two years of herd rebuilding, supplies of cattle suitable for slaughter are expected to

increase.

In 2011–12 Australian cattle slaughter fell by 3 per cent to 7.9 million head, its lowest since

1985–86. However, beef production declined less than 1 per cent from the previous year, largely

as a result of increased slaughter of heavier male cattle, which contributed to an increase in

average carcass weights.

Queensland cattle slaughter fell by 1 per cent in 2011–12 to around 3.6 million head. However,

Queensland beef and veal production increased by 1 per cent to 1.05 million tonnes,

underpinned by an increase in average carcass weights to 297 kilograms. Queensland accounted

for 50 per cent of Australian beef and veal production in 2011–12.

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16

The volume of Australian beef and veal exports is forecast to increase by 1 per cent in 2012–13

to 955 000 tonnes (shipped weight). This reflects increased exports to the United States and

many smaller markets more than offsetting lower exports to Japan and the Republic of Korea.

With the Australian dollar assumed to remain relatively high in 2012–13, strong competition is

likely to continue in the traditional markets of Japan and the Republic of Korea, especially from

imported US beef.

In 2011–12, Australian beef and veal exports increased by 1 per cent to 948 000 tonnes (shipped

weight). Exports of Queensland produced beef increased by 3 per cent to 567 000 tonnes

(shipped weight). The largest export destinations of Queensland produced beef were Japan, the

United States, the Republic of Korea and the Russian Federation.

Cotton

The world indicator price for cotton (Cotlook ‘A’ index) is forecast to fall by 14 per cent in

2012–13 (August to July) to average US86 cents a pound (Figure 11). This forecast decline

reflects the effects on world prices of large world cotton stocks carried over from 2011–12 and

world cotton production being forecast to exceed consumption for the third consecutive year in

2012–13.

On the demand side, an assumed recovery of world income growth in 2013 is expected to lead to

a modest increase in world demand for cotton in the latter half of 2012–13. For 2012–13 as a

whole, world cotton consumption is forecast to grow by 3 per cent to 23.6 million tonnes,

compared with a decline of 7.5 per cent in 2011–12 (Figure 11).

World cotton production is forecast to decline to 24.9 million tonnes in 2012–13, 6.7 per cent

down from the record harvest of 2011–12 (Figure 11). This reflects an expected 7 per cent fall in

the area planted to cotton in response to falling cotton prices and increases in the prices of

alternatives crops, particularly corn, soybeans and grain sorghum.

Figure 11 World cotton indicators (annual)

Global closing stocks of cotton are forecast to increase by 9 per cent in 2012–13 to a record

16.1 million tonnes, lifting the world cotton stocks-to-use ratio to a record high of 68.2 per cent.

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17

Australian cotton production is forecast to be 991 400 tonnes in 2012–13; 7 per cent lower than

the record harvest of 1.07 million tonnes in 2011–12 (Figure 12). This forecast is supported by

the availability of plentiful supplies of irrigation water in cotton-growing regions. The area

planted to cotton is forecast to decline by 14 per cent in 2012–13 to 515 000 hectares. While

irrigated plantings are forecast to decline by only 4 per cent, dryland plantings are forecast to be

down 44 per cent. Average yields are forecast to be 8 per cent higher in 2012–13 due to a higher

proportion of higher yielding irrigated cotton in the total area planted to cotton.

Cotton production in Queensland is forecast to decline by 10 per cent in 2012–13 to around

368 000 tonnes. A forecast 17 per cent decline in the area planted to cotton is expected to be

partially offset by an assumed 8 per cent increase in the average yield to 1.8 tonnes per hectare.

Although the area planted to irrigated cotton is forecast to decline by 2 per cent to 160 000

hectares, the area planted to dryland cotton is forecast to decrease by 48 per cent to around

40 000 hectares.

The return to Australian cotton growers at the gin-gate is forecast to decrease by 11.7 per cent

in 2012–13 to $477 a bale (227 kilograms) of lint (including the value of cottonseed and net of

ginning costs), in line with the forecast decline in world cotton prices (Figure 12). This is the

lowest return to Australian cotton growers since 2006–07, when growers received $481 a bale,

and lower than the 10-year average to 2010–11 of around $545 a bale (in 2012–13 dollars).

Australian cotton exports are forecast to increase by 4 per cent in 2012–13 to a record

1.04 million tonnes. If this forecast is realised, Australia would surpass India to become the

second largest exporter of cotton in the world; second to the United States. In 2011–12,

Queensland exported around 526 000 tonnes of raw cotton, accounting for 39 per cent of total

Australian cotton exports.

Figure 12 Australian cotton production, Queensland and New South Wales

Wheat

The world wheat indicator price (US no. 2 hard red winter, fob Gulf) is forecast to rise by 17 per

cent in 2012–13 to around US$350 a tonne. This forecast rise in price reflects an expected fall in

the supply of wheat in major exporting countries, particularly in the Black Sea region, and

expected strong demand for feed wheat in the United States and China.

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

18

World wheat production is forecast to fall by around 4 per cent in 2012–13 to around

665 million tonnes, mainly because of an expected fall in production in the Black Sea exporting

countries of the Russian Federation, Ukraine and Kazakhstan.

World wheat consumption is forecast to remain largely unchanged in 2012–13 at around

693 million tonnes. World food use is forecast to rise by less than 1 per cent to around

464 million tonnes. Human consumption of wheat for food accounts for less than 70 per cent of

world wheat consumption.

World feed use of wheat is forecast to increase in 2012–13. This reflects an expected increase in

demand as a result of forecast higher prices of substitute feed grains such as corn.

World closing stocks of wheat are forecast to fall by 14 per cent in 2012–13 to around

169 million tonnes, reflecting lower production and continued high consumption. Despite the

forecast fall in closing stocks of wheat, the world closing stocks-to-use ratio is forecast to remain

relatively high at 24 per cent.

Australian wheat production is forecast to fall by 24 per cent in 2012–13 to around 23 million

tonnes. This reflects an estimated decline in planted area and a forecast fall in average yields

from the highs of last season. Rainfall over winter in Australia’s major growing regions was

mixed; sufficient and timely rainfall will still be needed over the important spring growing

period to achieve prospective yields.

In Queensland, wheat production is forecast to be largely unchanged in 2012–13 at around

1.8 million tonnes, which reflects the offsetting effects of an estimated fall in planted area and

forecast above average yields. The area planted to wheat is estimated to have fallen by 5 per cent

in 2012–13 to around 950 000 hectares, largely in response to lower prices at the time of

planting.

Across the state, conditions were favourable for crop development over winter and rainfall was

above average. August was dry but this helped reduce waterlogging in some regions. Heading

into the important spring period, lower layer soil moisture was above average and the Bureau of

Meteorology’s seasonal outlook, issued on 22 August 2012, points to an approximately 50 per

cent chance of exceeding average rainfall in Queensland’s cropping regions over spring.

The volume of Australian wheat exports is forecast to be largely unchanged in 2012–13 at

around 23 million tonnes, reflecting high opening stocks. The value of Australian wheat exports

is forecast to rise by 15 per cent in 2012–13 to around $7.3 billion, reflecting a forecast rise in

world wheat prices.

Queensland produced an estimated 1.8 million tonnes of wheat in 2011–12, which was a 17 per

cent rise from the previous year. Production has been above average over the previous two

years, resulting in a significant increase in Queensland’s wheat export volumes in 2011–12

(Figure 13).

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

19

Figure 13 Queensland annual wheat export volumes

Coarse grains

The world coarse grains indicator price (US corn, fob Gulf) is forecast to rise by 13 per cent in

2012–13 to US $318 a tonne and the world indicator price for barley (French Rouen feed) is

forecast to rise by 8 per cent to US$292 a tonne. These forecast price increases are driven mainly

by severe drought conditions in the United States and dry seasonal conditions in the Black Sea

region, leading to a reduction in coarse grains supply in 2012–13.

World coarse grains production is forecast to fall by 3 per cent in 2012–13 to 1.1 billion tonnes,

driven mainly by a 4 per cent fall in world corn production to 834 million tonnes (Figure 14),

mainly as a result of an expected large decline in US corn production. World barley production is

forecast to fall by 2 per cent in 2012–13 to 132 million tonnes largely as a result of a forecast fall

in production in the Black Sea region.

Figure 14 World coarse grains production

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Commodity outlook and financial performance of key agricultural industries in the Darling Downs region of Queensland ABARES

20

World consumption of coarse grains is forecast to decrease by 1 per cent in 2012–13 to around

1.1 billion tonnes in response to high coarse grain prices. World consumption of corn is forecast

to decrease by 1 per cent to 856 million tonnes mainly as a result of forecast lower consumption

in the United States. World consumption of barley is forecast to decrease by 1 per cent to

135 million tonnes, mainly reflecting forecast lower consumption in Ukraine and the Russian

Federation.

In Australia, total coarse grains production is forecast to decline by 13 per cent in 2012–13 to

11.7 million tonnes from a recent high of 13.4 million tonnes in 2011–12. The forecast fall in

coarse grains production mainly reflects the effects of a smaller planted area and a decline in the

average yield as a result of varied seasonal conditions in major growing regions.

For the major winter coarse grain, barley, production is forecast to decrease by 19 per cent in

2012–13 to 7.0 million tonnes. Queensland’s barley production is forecast to fall by 6 per cent in

2012–13 to around 160 000 tonnes, reflecting a decrease in planted area.

The outlook for summer coarse grains is more positive than winter coarse grains in 2012–13.

Favourable soil moisture levels in the key growing regions of southern Queensland and northern

New South Wales, together with high grain sorghum prices, are expected to lead to a 24 per cent

increase in the area planted to grain sorghum to 782 000 hectares, of which around 550 000

hectares is forecast to be planted in Queensland.

Australian grain sorghum production is forecast to increase by 10 per cent in 2012–13 to

2.6 million tonnes (Figure 15). Assuming average seasonal conditions, Queensland grain

sorghum production is forecast to increase by 8 per cent to around 1.8 million tonnes.

Figure 15 Australian grain sorghum production and exports

Total Australian coarse grains exports are forecast to decrease by 21 per cent in 2012–13 to

6.2 million tonnes, largely as a result of a 29 per cent fall in barley exports. However, exports of

grain sorghum are forecast to increase by 13 per cent in 2012–13 to 1.3 million tonnes (Figure

15). The forecast increase in the volume of grain sorghum exports, combined with high export

prices, is forecast to increase the value of grain sorghum exports by 19 per cent to $356 million.

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Horticulture

The gross value of the Australian horticulture industry (excluding wine grapes) is forecast to

increase by 6.7 per cent in 2012–13 to $9.2 billion. The forecast growth largely reflects

improved availability of irrigation water and a return to more normal seasonal conditions

following the heavy rains and floods in early 2011–12. Water storage in the Murray–Darling

Basin was at 97 per cent of capacity as at 13 September 2012, compared with 87 per cent at the

same time in 2011. The increase in gross value is forecast to occur despite the strength of the

Australian dollar, which is reducing the Australian dollar value of Australian horticulture

exports and increasing the price competitiveness of horticulture imports.

Assuming favourable season conditions in major growing regions, the value of Australian

vegetable production is forecast to rise by close to 5 per cent in 2012–13 to $3.6 billion. The

value of Australian vegetable production increased steadily over the past decade and in 2010–11

was 15 per cent higher in real terms than in 2000–01.

The total value of fruit, nuts and vegetable production in Queensland in 2010–11 was around

$2.1 billion, with vegetable production accounting for $1.1 billion and fruit and nuts for just

under $1 billion. The climate in Queensland allows most fruit and vegetables to be grown year-

round, which allows Queensland producers to supply southern states outside their growing

seasons. Queensland is an important producer of fruit and vegetables, mainly tomatoes,

capsicum, lettuce, bananas, avocadoes, pineapples and strawberries.

Vegetables are grown in all states of Australia. The Queensland vegetable industry is the largest,

accounting for around 32 per cent of total Australian production in gross value terms in

2010–11, followed by Victoria (22 per cent) and South Australia (15 per cent).

The Australian tomato industry can be categorised into two distinct markets: tomatoes grown

for use in processed foods and tomatoes grown for the fresh market. Queensland is the major

producer of tomatoes for the fresh market, accounting for around 60 per cent of production in

2010–11, followed by Victoria (11 per cent), New South Wales (9 per cent) and Western

Australia (8 per cent). In 2010–11 Queensland produced around 127 000 tonnes of tomatoes—

125 600 tonnes for the fresh market and 1200 for processing.

Queensland is the largest producer of lettuce, capsicums (including chillies), beans (French and

runner), mandarins, and lemon and limes in Australia. In 2010–11 Queensland produced around

54 000 tonnes of lettuce, 40 000 tonnes of capsicums, 23 000 tonnes of beans, 70 000 tonnes of

mandarins and around 16 000 tonnes of lemon and limes.

Queensland exported more than 9000 tonnes of fresh vegetables in 2011–12, valued at

$22 million. The largest exports of fresh vegetables in value terms were tomatoes ($3.8 million)

and beans ($3.6 million).

The largest exports of fresh fruit from Queensland in 2011–12 were mandarins ($26 million),

mangoes ($8.6 million) and avocadoes ($5.8 million).

Dairy

Despite a forecast slowing in the growth of global milk production in 2012–13, an assumed

economic slowdown in the European Union and weaker demand growth in Asia is expected to

result in world dairy prices averaging lower in 2012–13 (Figure 16).

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Figure 16 World dairy prices

Forecast lower farmgate milk prices and higher world feed grain prices in 2012–13 are likely to

constrain growth in milk production in many major dairy producing countries over the

remainder of 2012–13.

EU milk production is expected to rise by around 1 per cent in 2012–13. This follows increases

in EU milk production of 2.6 per cent in 2010–11 and 2.3 per cent in 2011–12.

Milk production in the United States is forecast to fall by 1.4 per cent in 2013 to 90.2 million

tonnes, following a forecast rise of 2 per cent in 2012. Assuming average seasonal conditions,

New Zealand milk production is forecast to remain relatively unchanged in 2012–13 (June to

May marketing year) at 19.6 million litres.

While global economic growth is assumed to remain subdued in 2012–13, relatively robust

economic activity in the developing countries of Asia, North Africa and Central America is

expected to continue to support an increase in world dairy trade, especially milk powders.

China is expected to remain a significant importer of milk powders in 2012–13. Imports of skim

milk powder are forecast to increase by nearly 40 per cent to 180 000 tonnes in 2012, double

the volume of imports in 2010. Imports of whole milk powder are forecast to rise by 6 per cent

in 2012 to around 340 000 tonnes. Imports of milk powders in South-East Asia are also forecast

to rise in 2012–13, with Indonesian imports forecast to increase by 10 per cent to

240 000 tonnes.

Algerian imports of whole milk powder are expected to increase by 5 per cent to around

200 000 tonnes in 2012, reflecting the longer-term trend of increased consumption of dairy

products.

The Australian farmgate price for milk is forecast to fall by 7 per cent in 2012–13 to average

around 39 cents a litre.

Assuming favourable seasonal conditions in the main dairying regions, national milk production

is forecast to increase by 1.3 per cent in 2012–13 to 9.6 billion litres, following a 4 per cent rise

in 2011–12.

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Following significant improvement in availability of irrigation water in northern Victoria and

southern New South Wales, milk production increased strongly in these regions in 2011–12.

Milk production in these regions is forecast to rise further in 2012–13.

The Queensland dairy industry accounted for around 5 per cent of national milk production in

2011–12 when its milk production remained relatively unchanged at 465 million litres. This

followed an 8 per cent decline in production in the previous year. Nearly all of Queensland’s milk

production is used in the fresh milk sector.

The total value of Australian dairy exports is forecast to decline by 2.5 per cent in 2012–13 to

$2.2 billion, primarily reflecting the effect of forecast lower average dairy product prices on

world markets.

Sugar

The world indicator price for raw sugar (Intercontinental Exchange, nearby futures, no. 11

contract) is forecast to decline by around 20 per cent in 2012–13 to average US18 cents a pound

(October to September) (Figure 17). The forecast price decline reflects large closing stocks in

2011–12 and production forecast to exceed consumption in 2012–13. If realised, this price

forecast will be above the average of US15.5 cents a pound (in 2012–13 dollars) over the

10 years ending 2010–11. A downside risk to this price forecast is the expected record world

production leading to higher closing stocks in 2012–13, which has the potential to put further

downward pressure on world prices.

World sugar production is forecast to increase by 3.8 million tonnes in 2012–13 to a record of

around 178 million tonnes (Figure 17). Increased production is forecast for Brazil, China,

Mexico, Thailand, Australia and the United States. In contrast, production of beet sugar in Europe

is expected to be lower, reflecting an assumed return to average yields following the above

average yields of 2011–12.

World sugar consumption is forecast to grow by 2 per cent in 2012–13 to around 172 million

tonnes (Figure 17). The forecast increase is due to falling sugar prices and rising consumer

incomes, particularly in developing countries. This forecast consumption growth is lower than

the average of 2.4 per cent in the 10 years ending 2010–11.

Figure 17 World sugar indicators (annual)

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With world sugar production forecast to exceed consumption in 2012–13, it is expected that

world closing stocks of sugar will increase by nearly 6 million tonnes to 68.8 million tonnes. If

realised, this will increase the stocks-to-use ratio by 2.9 percentage points to around 40 per cent,

the highest since 2007–08 but still slightly below the average of 41 per cent for the 10 years to

2010–11.

Australian sugar production is forecast to increase by around 788 000 tonnes in 2012–13 to

4.5 million tonnes (Figure 18). This forecast increase is driven by an increase in the area

harvested and higher sugar yields aided by hot dry weather in the harvesting period to date.

Queensland accounts for around 94 per cent of national raw sugar production and is forecast to

produce around 4.2 million tonnes of raw sugar in 2012–13, 21 per cent higher than in 2011–12.

The average mill-gate return for sugar cane to Australian growers is forecast to fall by $7 a tonne

in 2012–13 to $35 a tonne, primarily the result of forecast lower world prices (Figure 18). This

forecast average mill-gate return is slightly lower than the average of $36 a tonne (in 2012–13

dollars) over the 10 years to 2010–11.

Queensland Sugar Limited (QSL) ended the 2011–12 season with a seasonal pool return of

$518 a tonne (International Polarity Scale) up from $444 a tonne in 2010–11. This compares

with a 10-year average of $496 a tonne (in 2012–13 dollars). QSL is forecasting its 2012–13

harvest pool return to be $462 a tonne (International Polarity Scale).

Australian sugar exports are forecast to increase by nearly 12 per cent in 2012–13 to 3.4 million

tonnes. However, the value of Australian sugar exports is forecast to decrease by 9 per cent in

2012–13 to nearly $1.6 billion, reflecting lower forecast world sugar prices. Queensland

accounts for almost all of Australia’s sugar exports.

Figure 18 Australian sugar production, Queensland and New South Wales (annual)