Outlook for current and prospective commodities

Max Foster

Overview

• Kimberley region agriculture

• Beef industry

– WA live cattle exports

– Kimberley cattle property performance

• Ord River Irrigation Area

– Existing crops

– Prospective crops

Value of agricultural production, Kimberley, 2006-07

20 40 60 80 100

bananas

french and runner beans

nurseries, cut flowers & cultivated turf

melons (honeydew)

pasture, cereal & other crops cut for hay

mangoes

sugar cane

rockmelons & cantaloupe

pumpkins & squashes

watermelons

cattle and calves

$m

Beef cattle

Live cattle exports, Australia

300

600

900

1200

1998-99 2000-01 2002-03 2004-05 2006-07 2008-09f

200

400

600

800

Exports, WA

Exports, other states

Export price, WA

$/hd 2008-09‘000

Kimberley beef cattle propertiesAverage per farm

-600

-300

0

300

600

900

1200

1990-91 1993-94 1996-97 1999-20 2002-03 2005-06 2008-09f

Farm cash income

Farm business profit

$’000 2008-09

Rates of return, Kimberley beef cattle properties

-20

-10

0

10

20

30

1990-91

1993-94

1996-97

1999-20

2002-03

2005-06

2008-09f

excl. capital appreciation

incl. capital appreciation

%

Ord River Irrigation Area

Ord River Irrigation AreaLand use, 2007-08

Field crops

Tropical forestry

Prepared but not planted

Hybrid seed Cover

crops

Horticulture

Melons

Pumpkins

Mangoes

Grapefruit

Other horticulture

Sandalwood

Sandalwood oil: US imports and import prices from India

1

2

3

4

5

1999 2001 2003 2005 2007

300

600

900

1200

1500Imports Import price

tUS$/kg

2009

Chinese Taipei: Sandalwood Imports and import prices

t US$/t

2009 US$/kg

Horticulture

Horticulture outlook

Domestic markets

• Strong growth in demand, particularly for fresh produce

• ORIA producers benefiting from seasonal price

premiums

World markets

• Rapid growth in the value of world fruit, nut and

vegetable trade

Value of Australian horticulture production

1000

2000

3000

4000

1984-85

1989-90

1994-95

1999-00

2004-05

2009-10f

Fruit and nuts (excl. grapes)

Vegetables

$m 2008-09

Value of world fruit and vegetable trade

10

20

30

40

50

60

70

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Fresh fruit and nuts

Processed fruitJuice

Processed vegetables

Fresh vegetables

US$m 2009

Premiums for selected ORIA horticultural products Perth market

-60

-40

-20

0

20

40

60

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

GrapefruitMango

Paw pawHoneydew melon

Rockmelon

%

Emerging and prospective crops

• Chia

• Cotton

• Exotic tropical fruit

• Native foods

• Food crops

– Rice?

Cotton: daily indicator priceDaily to 12 May 2009

50

60

70

80

90

100

02-Jul-07

15-Nov-07

30-Mar-08

13-Aug-08

27-Dec-08

12-May-09

US$$AMarch forecast

c/lb

Australia cotton returns

200

400

600

800

1000

1988-89 1993-94 1998-99 2003-04 2008-09 2013-14

30

60

90

120

150Cottonseed valueLint valueIndicator price

$/bale 2008-09

USc/lb2008-09

Summary of outlook

• Solid returns to the Kimberley beef industry

• Continuing strong demand for ORIA horticultural products

– However, expansion in production of some horticultural products could pressure

seasonal price premiums

• Interesting possibilities for ‘new’ irrigated crops