Department of Agriculture and Water Resources · · 2017-03-09Agricultural commodities Department...

Agricultural commodities

Department of Agricultureand Water Resources

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

MARCH QUARTER 2017

2017

© Commonwealth of Australia 2017

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ISBN: 978-1-74323-330-6 (online) ISSN: 1839-5627 (online) ISBN: 978-1-74323-331-3 (printed) ISSN: 1839-5619 (printed) ABARES project 43506

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1ABARESAgricultural commodities – March quarter 2017

ContentsEconomic overview 4

Crops

Wheat 29

Coarse grains 38

Oilseeds 46

Sugar 55

Cotton 63

Horticulture 73

Australian wine exports 84

Livestock

Beef and veal 92

Sheep meat and wool 99

Pig meat 111

Chicken meat 115

Dairy 119

Fisheries 128

Articles

Farm performance: broadacre and dairy farms, 2014–15 to 2016–17 146

Productivity in Australia’s broadacre and dairy industries 187

Disaggregating farm performance statistics by size 203

The EU sheep meat industry 212

Boxes

Recent developments in Australian agriculture 22

Market for Australian oilseed meals 52

Australian wine under the China–Australia Free Trade Agreement 87

The importance of the United Kingdom to the EU sheep meat industry 220

Statistical tables 225

Report extracts 267

ABARES contacts 270

The ABARES Regional Outlook conferences are an essential part of sharing our commodity forecasts and research results directly with regional communities. ABARES works with local organisations to develop a tailored conference program to address key local agricultural issues and commodities.

At each Regional Outlook conference, senior ABARES economists present the economic overview and forecasts for key agricultural commodities and farm �inancial performance. A range of regionally based speakers and producers discuss industry challenges and strategies for growth, investment and innovation opportunities, natural resource management, plus case studies from people taking innovative approaches in their businesses.

Conference delegates can hear commodity forecasts, discuss industry trends, access information and make new contacts in their community that can encourage new approaches to traditional issues. Delegates include producers, bankers, consultants and other service providers, rural counsellors, local business owners, state and local government staff, regional development groups and others with an interest in their region.

The Regional Outlook conferences follow from the national Outlook 2017 conference in Canberra in March with its theme of Innovation in agriculture – capturing the opportunities.

2017 locations and datesSouth Australia Renmark 3 MayNorthern Territory Darwin 5 JulyVictoria Ararat 26 JulyTasmania Devonport 23 AugustWestern Australia Kununurra 20 SeptemberQueensland Toowoomba 4 OctoberNew South Wales Tamworth 25 October

Regional Outlook conferences 2017

To register your interest in upcoming conferences contact

Email [email protected]

agriculture.gov.au/abares/regional

2017Department of Agricultureand Water Resources

Join ABARES at a Regional Outlook conference in your area

Economic overview

4 ABARESAgricultural commodities – March quarter 2017

Economic overviewOutlook to 2021–22

Natasha Frawley, Matthew Howden and Kirk Zammit

• World economic growth is assumed to increase from an estimated 3.1 per cent in 2016 to 3.3 per cent in 2017. Over the medium term, it is projected to strengthen further before easing to around 3.3 per cent by 2022.

• China’s transitioning economy, the policy direction of the new US administration and geopolitical risks stemming from Brexit and upcoming elections in several large eurozone economies present uncertainties for global economic growth.

• Australian farm exports are forecast to be around $47.7 billion in 2016–17 and $48.7 billion in 2017–18, up from $44.7 billion in 2015–16. By 2021–22 earnings from agricultural exports are projected to be around $46.6 billion (in 2016–17 dollars).

Global economic outlookEconomic growth in 2017 and 2018In preparing this set of agricultural commodity forecasts, world economic growth is assumed to strengthen in 2017 to 3.3 per cent and in 2018 to 3.4 per cent, led by stronger growth in emerging economies. This follows world economic growth of 3.1 per cent in 2016, the slowest since 2009.

World economic growth, 2002 to 2022

%

a ABARES assumption.Sources: ABARES; International Monetary Fund

0

1

2

3

4

5

6

2022a2019a20162013201020072004

Economic overview


Average GDP growth in OECD countries is assumed to strengthen from an estimated 1.6 per cent in 2016 to 1.8 per cent in 2017. GDP growth is expected to rise further to 1.9 per cent in 2018. For non-OECD countries as a whole, economic growth is assumed to average 4.4 per cent in 2017 and 4.6 per cent in 2018.

The value of world trade fell sharply from late 2014 to the end of 2016. This was driven largely by a decrease in commodity prices, particularly for oil. Growth in trade volumes remained largely positive over this period. However, the fall in the value of trade significantly affected many non-OECD exporting economies, including the Russian Federation and those in South America, the Middle East and Africa. The value of trade is expected to increase from 2017 as commodity prices recover. This will lend support to economic growth in many emerging economies.

Several OPEC member countries agreed at the November meeting to cut production from January 2017. This decision combined with the fall in output from several non-OPEC oil-producing countries in 2016 is expected to weaken growth in world oil production from 2017. Weaker supply and continued growth in demand from emerging economies are expected to put upward pressure on oil prices in 2017 and 2018.

World merchandise trade growth, September quarter 2007 to September quarter 2016

%

Trade valueTrade volume

Source: World Trade Organization

–30

–20

–10

0

10

20

30

Sep2016

Sep2015

Sep2014

Sep2013

Sep2012

Sep2011

Sep2010

Sep2009

Sep2008

Sep2007

Slowing growth in China continues to pose a risk to the global economic outlook. Government stimulus has lessened fears of a sharp economic slowdown in China in the near term. However, slower than expected growth in the longer term could adversely affect global trade and business and consumer confidence inside and outside China. This could lead to weaker global economic activity than currently assumed.

Policy changes under the new US administration, the exit of the United Kingdom from the European Union (Brexit) and elections in the Netherlands, France and Germany pose risks to the outlook. In particular, the possible adoption of inward-looking policy measures in several of the world’s largest economies could weaken global economic growth.

Economic overview


Medium-term growth outlookGlobal economic growth is assumed to recover to around 3.5 per cent by 2019, driven by a recovery in emerging markets. Global growth is assumed to moderate to 3.3 per cent in 2022.

Economic growth in OECD economies is assumed to average around 1.8 per cent in 2019 and 1.7 per cent from 2020 to 2022. The US economy is expected to grow relatively strongly over the medium term, but economic growth in the eurozone and Japan is expected to remain subdued.

For non-OECD countries, economic growth is assumed to strengthen to 4.7 per cent in 2019 and 2020 before moderating to 4.6 per cent in 2021 and 2022. China is expected to continue to be a major driver of growth for non-OECD countries and the world as a whole.

Regional economic growth, 2016 to 2022

%World

Eastern Europe, Russian Federation

and Ukraine

Latin America

Non-OECD Asia b

OECD

20162017a

2018a

a ABARES assumption. b Includes China.Sources: ABARES; International Monetary Fund

0

2

4

6

8

2019–22a

Economic overview


Key world macroeconomic assumptions

unit 2015 2016 2017 a 2018 a 2019 a 2020 a 2021 a 2022 a

OECD % 2.1 1.6 1.8 1.9 1.8 1.7 1.7 1.7

United States % 2.6 1.6 2.2 2.2 2.1 2.1 2.0 2.0

Japan % 1.2 0.9 0.6 0.7 0.7 0.1 0.5 0.5Eurozone % 2.0 1.7 1.5 1.6 1.6 1.6 1.5 1.5

– Germany % 1.5 1.7 1.5 1.6 1.5 1.5 1.3 1.3

– France % 1.3 1.3 1.4 1.6 1.5 1.5 1.5 1.4

– Italy % 0.7 0.9 1.0 1.0 1.0 1.0 0.9 0.9

United Kingdom % 2.2 2.0 1.1 1.4 1.6 1.8 2.0 2.1

Korea, Rep. of % 2.6 2.7 2.5 2.7 2.6 2.6 2.6 2.6

New Zealand % 3.0 2.8 3.6 3.5 2.9 2.4 2.3 2.2

non-OECD % 4.1 4.1 4.4 4.6 4.7 4.7 4.6 4.6

– non-OECD Asia % 6.6 6.3 6.2 6.2 6.1 6.0 5.9 5.8

South-East Asia b % 4.8 4.8 4.9 5.0 4.9 5.0 4.9 4.8

China c % 6.9 6.7 6.4 6.2 6.0 5.8 5.7 5.6

Taiwan % 0.6 1.0 1.7 1.9 2.0 2.0 2.2 2.2

Singapore % 2.0 1.7 1.5 2.0 2.4 3.0 3.0 3.0

India % 7.2 7.5 7.5 7.8 7.9 7.9 7.7 7.5

– Latin America % 0.1 – 0.7 1.6 2.1 2.6 2.7 2.7 2.7

Russian Federation % – 3.7 – 0.6 1.0 1.2 1.5 1.5 1.5 1.5

Ukraine % – 9.9 1.5 2.0 3.0 3.5 4.0 4.0 3.5

Eastern Europe % 3.7 2.9 3.1 3.2 3.1 3.2 3.2 3.3

World d % 3.2 3.1 3.3 3.4 3.5 3.4 3.4 3.3

United States % 0.1 1.3 1.9 2.0 2.0 2.0 2.0 2.0

US prime rate e % pa 3.3 3.5 3.9 4.5 5.0 5.0 5.0 5.0

Key world macroeconomic assumptions

a ABARES assumption. b Indonesia, Malaysia, the Philippines, Thailand and Vietnam. c Excludes Hong Kong. d Weighted using 2015 purchasing power parity (PPP) valuation of country gross domestic product by the International Monetary Fund. e Commercial bank prime lending rates in the United States.Sources: ABARES; International Monetary Fund; US Bureau of Labor Statistics; US Federal Reserve

Economic growth

Inflation

Interest rates

Economic overview


Economic prospects for Australia’s major trading partnersSteady slowdown in ChinaEconomic growth in China was 6.7 per cent in 2016, down from 6.9 per cent in 2015. It is assumed to continue to slow to 6.4 per cent in 2017 and 6.2 per cent in 2018. By 2022 economic growth is assumed to be around 5.6 per cent.

The service sector increased by 7.8 per cent in 2016. Mining and industrial production grew by around 6.1 per cent over 2016, supported by short-term government measures to boost demand. These measures included policy changes to encourage lending for property and increased infrastructure spending. The manufacturing Purchasing Managers’ Index indicates that expansion in the manufacturing sector has continued into 2017.

GDP growth by industry, China, December quarter 2006 to December quarter 2016

%

Services

Mining and industrialproductionAgriculture, forestryand �sheries

Source: National Bureau of Statistics, China

4

8

12

16

20

Dec2016

Dec2015

Dec2014

Dec2013

Dec2012

Dec2011

Dec2010

Dec2009

Dec2008

Dec2007

Dec2006

Downside risks to China’s short-term economic outlook include uncertainty about the duration of the housing market recovery and the potential for increased financial market volatility as a result of strong capital outflows.

Over the medium term, China’s progress in implementing its reform agenda and ability to manage high debt levels will be important determinants of economic growth.

Economic overview


US growth supported by stronger labour marketEconomic growth in the United States was 1.6 per cent in 2016 and is assumed to be 2.2 per cent in 2017. Over the medium term, economic growth is assumed to ease to around 2 per cent in 2021 and 2022.

The biggest driver of the US economy in 2016 was private consumption growth, supported by the strengthening labour market. Private consumption increased by 2.7 per cent. Spending on durable goods was particularly strong, reflecting strengthening US consumer confidence. The University of Michigan’s Index of Consumer Sentiment remained elevated in 2016, similar to pre–global financial crisis levels.

The unemployment rate fell throughout 2016 to reach 4.7 per cent in the December quarter, the lowest quarterly rate since 2007. In 2016 the employment cost index (a measure of wage growth) increased by 2.2 per cent, the highest rate of growth since 2008.

Export growth remained subdued in 2016 because of the stronger US dollar. The real trade-weighted value of the US dollar increased by 10.7 per cent in 2015 and by 3.9 per cent in 2016, reaching its highest level since 2003. Export conditions are expected to remain challenging in 2017 and 2018 because the US dollar is projected to remain relatively strong.

Weak export demand and the low price of oil contributed to a sharp fall in private investment in 2016. Manufacturing investment fell by 4.8 per cent and fixed investment in mining industries by 45 per cent. The assumed modest increase in the price of oil is expected to assist growth in the US oil and gas industries.

Real trade-weighted exchange rate index, United States, January 2001 to January 2017

index

Source: US Federal Reserve

90

100

110

120

Jan2017

Jan2015

Jan2013

Jan2011

Jan2009

Jan2007

Jan2005

Jan2003

Jan2001

Economic overview


The US Federal Reserve increased its official interest rate to between 0.5 per cent and 0.75 per cent in December 2016. The stronger labour market and an expected increase in inflation contributed to the decision to raise interest rates. The Federal Reserve is expected to increase rates at least once before the end of 2017 as domestic and global economic conditions improve. Over the medium term, the Federal Reserve is assumed to continue to tighten monetary policy settings in line with the strengthening economy.

The new US President took office in January 2017. Over the short term the new administration is expected to apply significant fiscal stimulus measures. However, until the administration announces its policy direction, effects on the US economy will remain uncertain.

Modest economic growth in JapanEconomic growth in Japan was 0.9 per cent in 2016 and is assumed to be 0.6 per cent in 2017. By 2022 the economy is expected to grow by 0.5 per cent.

Private consumption growth remained weak in 2016 at 0.4 per cent. However, additional government stimulus in 2016 should encourage private consumption in 2017 and 2018.

Contributions to GDP growth, Japan, December quarter 2012 to December quarter 2016

Public investment

%

GDP growth

Private consumptionPrivate investmentGovernment consumption

Source: Cabinet O�ce, Japan

–2

–1

0

1

2

3

4

5

Net exports

Dec2016

Dec2015

Dec2014

Dec2013

Dec2012

Economic overview


In July 2016 the unemployment rate in Japan fell to a 21-year low of 3 per cent. The workforce participation rate also improved over 2016, supported in part by Japanese Government policies including additional welfare payments (such as child care and aged care payments) to enable parents and carers to re-enter the workforce. Tax reforms to encourage dependent spouses to work more hours are expected to further boost the participation rate for female workers.

In 2016 exports fell by 7.4 per cent, largely because of weak global demand and the relatively high value of the yen. Since the US election in November 2016 and the increase in the official US interest rate in December 2016, the yen has depreciated slightly. Continuing weakness could assist growth in Japanese exports and industrial production in 2017.

Growth in real trade-weighted exchange rate and real value of exports, Japan, December quarter 2006 to December quarter 2016

Exports

%

Trade-weighted index(right axis)

%

Source: Bank of Japan; Cabinet Oce, Japan

–40–30–20–10

01020304050

Dec2016

Dec2015

Dec2014

Dec2013

Dec2012

Dec2011

Dec2010

Dec2009

Dec2008

Dec2007

Dec2006

–20–15–10–505

10152025

Japan’s economy is expected to continue to grow modestly over the medium term. Increased trade activity from emerging economies will improve demand for exports.

Japan exports high value-added components such as vehicle, computer and telephone parts to China and other low- and middle-income Asian countries for assembly. Demand for Japanese goods is expected to increase in line with increases in trade activity in the region. However, Japan’s consumption tax increase planned for October 2019 is expected to limit growth in 2020.

Economic overview


Eurozone economy shows modest growthEconomic growth in the eurozone was 1.7 per cent in 2016. Growth is expected to slow to 1.5 per cent in 2017 and 1.6 per cent in 2018 and 2019. It is assumed to be around 1.5 per cent in 2021 and 2022.

Private consumption remains the main driver of eurozone economic growth. In 2016 it grew by about 2 per cent, assisted by low interest rates, low oil prices and the strengthening labour market.

Private consumption and GDP growth, eurozone, September quarter 2006 to September quarter 2016

Private consumption

%

GDP growth

Source: Eurostat

–4

–2

0

2

4

Sep2016

Sep2015

Sep2014

Sep2013

Sep2012

Sep2011

Sep2010

Sep2009

Sep2008

Sep2007

Sep2006

The eurozone unemployment rate has continued to decrease since peaking at over 12 per cent in early 2013. However, in many countries it is still well above the pre–financial crisis rate and is expected to remain so throughout the medium term. Wage growth is expected to remain subdued.

Political uncertainty and the possibility of inward-looking policy measures being adopted are downside risks to the eurozone economic outlook. In 2017 three of the largest eurozone economies will hold elections: the Netherlands (March), France (April) and Germany (September). The United Kingdom has publically stated its intention to trigger Article 50 before the end of March 2017, after which exit negotiations with the European Union will begin (Brexit). Negotiations are expected to take at least two years. Brexit is assumed to dampen private consumption and investment growth in the United Kingdom and other European countries in the short term. The longer-term effects of Brexit are uncertain.

Over the medium term, accommodative monetary policy and the strengthening labour market are supportive for economic growth in the eurozone. However, high unemployment and high debt across the eurozone, and fragility in the banking sector, are likely to limit economic growth.

Economic overview


Mixed outlook for other non-OECD Asian economiesIn 2016 economic growth in many non-OECD Asian countries remained modest because of slower world growth and weaker demand for exports, particularly to China.

The general improvement in commodity prices for energy and metals over 2016 and depreciation of several non-OECD Asian currencies following the US election are potentially positive for exporters in the region. However, much of the region’s debt is denominated in US dollars so the falling currency values may affect real economic growth by raising debt servicing costs.

Exchange rates of select Asian currencies, July 2016 to January 2017

ringgit/US$

rupee/US$

Malaysian ringgitIndian rupee(right axis)

Source: US Federal Reserve

4.0

4.1

4.2

4.3

4.4

4.5

4.6

4.7

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

Jan2017

Dec2016

Nov2016

Oct2016

Sep2016

Aug2016

Jul2016

South-East AsiaEconomic growth in South-East Asia averaged around 4.8 per cent in 2016. It is expected to increase to around 4.9 per cent in 2017 and 5.0 per cent in 2018. Over the medium term, average economic growth is expected to remain at around 4.9 per cent, supported by strong domestic demand and a gradual recovery in exports.

Indonesia’s economy is the largest in South-East Asia. In 2016 it grew by 4.9 per cent, assisted by strong private consumption and investment growth despite lower government consumption and a contraction in exports. Economic growth in 2017 and 2018 will be supported by accommodative monetary policy and a budgeted increase in infrastructure spending.

Economic overview


IndiaIndia’s economy grew by an estimated 7.5 per cent in 2016 and is assumed to remain around the same in 2017.

In early November 2016, as part of an initiative to tackle corruption and criminal activity, the Indian Government announced that two large banknotes were no longer legal currency and had to be exchanged for legal currency by the end of 2016. The banknotes represented 86 per cent of all cash in circulation. Many transactions in India are made in cash, so this is expected to delay purchases of goods and services. Consumption in late 2016 and early 2017 is expected to have fallen as a result.

Over the medium term, India’s economic growth should be supported by ongoing policy reforms aimed at improving the ease of doing business and reducing corruption.

Economic growth, other Asian non-OECD countries, 2016 to 2022

2018a

2017a

2016

%

a ABARES assumption.Source: ABARES

Vietnam

Thailand

Taiwan

Singapore

Philippines

Malaysia

Indonesia

India

2019–22a

1

2

3

4

5

6

7

8

9

Australian economyEconomic growth in Australia is assumed to decelerate from 2.7 per cent in 2015–16 to 2 per cent in 2016–17, before recovering to 2.8 per cent in 2017–18.

Temporary weakness in the September quarter 2016, which included delays to construction projects because of heavy rainfall, resulted in slower than expected growth of 1.7 per cent year-on-year. These temporary factors alongside assumed lower household spending and net export growth in the remainder of 2016–17 are expected to result in a deceleration of growth.

Economic overview


GDP growth, Australia, September quarter 2001 to September quarter 2016

Quarter-on-quarter

%

Year-on-year

Source: Australian Bureau of Statistics

0

1

2

3

4

5

6

Sep2016

Sep2014

Sep2012

Sep2010

Sep2008

Sep2006

Sep2004

Sep2002

Household consumption growth moderated to 2.5 per cent year-on-year in the September quarter 2016. Consumption growth of durable goods was particularly weak. Low interest rates and strong growth in asset prices over recent years should encourage consumption over the short term despite modest disposable income growth.

Household consumption and income growth, Australia, September quarter 2002 to September quarter 2016

%

Disposable incomeConsumption

Note: Household sector includes unincorporated enterprises. Disposable income is after tax and interest payments.Source: Australian Bureau of Statistics

Sep2016

Sep2014

Sep2012

Sep2010

Sep2008

Sep2006

Sep2004

Sep2002

0

2

4

6

8

10

12

Economic overview


Residential construction should continue to assist economic growth in 2017–18, but its contribution to growth is expected to diminish as outstanding construction work is progressively completed. Non-mining business investment is assumed to improve gradually as borrowing costs remain low and economic growth strengthens. The value of commercial building jobs approved increased strongly over the September quarter 2016. Mining investment—which contracted from 2013–14 to 2015–16—is expected to decline further over 2016–17 and 2017–18, as construction of major projects is completed. However, the impact of the fall in mining investment on GDP growth is expected to lessen.

The volume of non-mining exports (including rural goods) increased by 6 per cent year-on-year in the September quarter 2016. The lower Australian dollar and strong demand from Asia have supported activity in tradable sectors, including tourism, education, manufacturing and agriculture. The total volume of exports is expected to increase in 2017–18, with strong increases expected in resource exports—particularly liquefied natural gas and iron ore.

GDP growth is assumed to be 3 per cent each year over the period 2018–19 to 2021–22.

Mining and non-mining exports, Australia, September quarter 2000 to September quarter 2016

2014–15$b

MiningNon-mining

Note: Non-mining exports includes manufactured and rural goods, and services; Chain volume measures usedto remove price e�ect on exports.Source: Australian Bureau of Statistics

30

40

50

Sep2016

Sep2014

Sep2012

Sep2010

Sep2008

Sep2006

Sep2004

Sep2002

Sep2000

Consumer price indexInflationary pressures remain weak as a result of low wage growth, strong competition in the retail sector and easing housing costs. Inflation in Australia has also been affected by global factors, including the sharp decline in oil prices from the end of 2014 to early 2016.

In 2016–17 inflation is assumed to be 1.5 per cent, before rising to 1.9 per cent in 2017–18. It is expected to increase to 2.5 per cent by 2018–19, in line with a strengthening economy.

Economic overview


Over the period 2019–20 to 2021–22 the inflation rate is assumed to remain at 2.5 per cent, the midpoint of the Reserve Bank of Australia’s inflation rate target range. This is consistent with strong economic growth over the outlook period.

Australian dollarThe Australian dollar is assumed to average US75 cents and to have a trade-weighted index value of 64 in 2016–17. In 2017–18 the Australian dollar is assumed to average US73 cents, with a trade-weighted value of 62. Over the medium term, the Australian dollar is assumed to appreciate slightly in 2018–19 to US74 cents and remain broadly steady to 2021–22.

Australia’s terms of trade—the ratio of export prices to import prices—increased by 4.4 per cent in the September quarter 2016. Renewed strength in bulk commodity prices, particularly for coking coal and iron ore, is expected to raise Australia’s terms of trade further in 2016–17 and provide support for the Australian dollar.

Bulk commodity prices increased in 2016–17 in response to several temporary factors, including short-term stimulus and coalmine closures in China and other global supply disruptions. Prices are assumed to fall in 2017–18 as these temporary factors fade. However, the outlook remains positive for Australia’s terms of trade given the expected improvement in global growth and the stabilisation of global commodity markets for Australia’s major exports.

Improved economic conditions in the United States and the December 2016 increase in its official interest rate exerted downward pressure on the Australian dollar. Further increases in the official US interest rate could exert further downward pressure.

Terms of trade and exchange rates, Australia, December quarter 2006 to December quarter 2016

index USc/A$

Terms of trade index2013–14=100

Exchange rate, USc/A$ (right axis)

Trade-weighted index (A$) May 1970=100

100

60

80

120

140

100

60

80

120

140

Sources: Australian Bureau of Statistics; Reserve Bank of Australia

Dec2016

Dec2014

Dec2012

Dec2010

Dec2008

Dec2006

Economic overview


Outlook for Australian agricultural and fisheries exportsTotal volume of farm production is forecast to fall by 5.6 per cent in 2017–18, following record production in 2016–17. The decline reflects an assumed return to average seasonal conditions in 2017–18. This follows an exceptional year and a forecast fall in the volume of grain and oilseed production from a record high in 2016–17. This fall is expected to offset a small forecast rise in the volume of livestock production. Assuming average seasonal conditions, farm production will slowly rise over the medium term to 2021–22, when it is projected to exceed the 2016–17 level.

Export prices are forecast to increase by 2.8 per cent in 2017–18, as reflected in the Australian farm exports unit returns index. This follows a forecast increase of 0.8 per cent in 2016–17. Export prices in Australian dollar terms are forecast to rise in 2017–18 for wool, dairy products, sugar, wine, lamb, barley, canola, rock lobster and mutton. Export prices for cotton and chickpeas are forecast to fall. Prices for beef and veal, wheat and live feeder/slaughter cattle are forecast to remain around the same as in 2016–17. Towards 2021–22 the assumed lower Australian dollar and forecast decline in world prices of many agricultural products will lead to a projected decline in the unit returns for farm exports, in real terms.

Earnings from farm exports in 2017–18 are forecast to rise by 2 per cent to $48.7 billion, following a forecast 6.7 per cent increase in 2016–17 to $47.7 billion. In 2021–22 the value of Australian farm exports is projected to be around $46.6 billion (in 2016–17 dollars), 4 per cent higher than the five-year average to 2016–17 of $44.6 billion (in 2016–17 dollars).

CropsExport earnings for crops are forecast to fall to around $26.5 billion in 2017–18 from a forecast $26.8 billion in 2016–17. The decrease follows record production of wheat and barley in 2016–17, which resulted from favourable seasonal conditions during winter and spring.

Export earnings are forecast to decrease in 2017–18 for wheat (down 9 per cent), coarse grains (down 11 per cent), canola (down 6 per cent) and chickpeas (down 42 per cent). Partly offsetting these falls are forecast increased export earnings for sugar (up 10 per cent), cotton (up 35 per cent) and wine (up 5 per cent).

Key macroeconomic assumptions for Australia

unit 2014–15 2015–16 2016–17 a 2017–18 a 2018–19 a 2019–20 a 2020–21 a 2021–22 aEconomic growth % 2.4 2.7 2.0 2.8 3.0 3.0 3.0 3.0

Inflation % 1.7 1.4 1.5 1.9 2.5 2.5 2.5 2.5

Interest rates b % pa 4.3 4.1 3.9 4.0 4.5 5.5 5.8 6.0

– US$/A$ US$ 0.84 0.73 0.75 0.73 0.74 0.74 0.74 0.74

for A$ c index 67 62 64 62 63 63 63 63

Key macroeconomic assumptions for Australia

a ABARES assumption. b Large business weighted-average variable rate on credit outstanding. c Base: May 1970 = 100.Sources: ABARES; Australian Bureau of Statistics; Reserve Bank of Australia

Nominal exchange rates

Trade-weighted index

Economic overview


LivestockExport earnings for livestock and livestock products are forecast to rise to $22.2 billion in 2017–18 from an estimated $20.9 billion in 2016–17. This rise is partly driven by recovering world dairy prices as a result of slowing production in New Zealand and the European Union. This is supporting higher Australian export values for cheese and skim milk powder. Exports of Australian wool are forecast to increase, reflecting a forecast rise in production. A moderate increase in demand is also expected to support export prices.

Export earnings in 2017–18 are forecast to rise for beef and veal (up 1 per cent), dairy (up 11 per cent), wool (up 10 per cent), lamb (up 3 per cent), live feeder/slaughter cattle (up 4 per cent) and mutton (up 1 per cent).

FisheriesExport earnings for fisheries products are forecast to rise by 2.3 per cent to around $1.5 billion in 2017–18. Export earnings are forecast to rise for rock lobster (up 6 per cent) as a result of strengthening demand from China. Export earnings for tuna are also forecast to rise in 2017–18 (up 5 per cent) as higher total allowable catch lifts domestic production. The value of Australian fisheries exports is projected to be around $1.5 billion (in 2016–17 dollars) in 2021–22.

Economic overview


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

2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 zExchange rate US$/A$ 0.84 0.73 0.75 0.73 0.74 0.74 0.74 0.74

Farm index 94.6 99.2 100.0 102.8 101.7 101.8 102.6 104.0– real b index 97.3 100.7 100.0 100.9 97.3 95.1 93.5 92.5

Farm A$m 44,138 44,744 47,737 48,679 48,675 49,245 50,362 52,440– real b A$m 45,402 45,398 47,737 47,771 46,602 45,998 45,894 46,623Crops A$m 21,617 22,598 26,829 26,527 25,875 25,861 26,572 27,955– real b A$m 22,235 22,928 26,829 26,032 24,773 24,156 24,215 24,853Livestock A$m 22,522 22,146 20,908 22,152 22,799 23,384 23,790 24,486– real b A$m 23,166 22,470 20,908 21,739 21,828 21,842 21,679 21,769Fisheries products A$m 1,440 1,542 1,489 1,524 1,546 1,591 1,633 1,686– real b A$m 1,481 1,564 1,489 1,496 1,481 1,487 1,488 1,499

Farm A$m 54,431 58,907 63,791 61,296 62,711 63,967 65,257 67,070– real b A$m 55,989 59,769 63,791 60,153 60,041 59,749 59,467 59,629Crops A$m 27,438 28,175 33,866 30,049 30,225 30,766 31,564 32,649– real b A$m 28,224 28,587 33,866 29,488 28,938 28,738 28,764 29,026Livestock A$m 26,993 30,732 29,925 31,248 32,486 33,200 33,693 34,421– real b A$m 27,766 31,181 29,925 30,665 31,103 31,011 30,703 30,603Fisheries products A$m 2,761 2,967 3,028 3,000 3,036 3,079 3,152 3,247– real b A$m 2,840 3,010 3,028 2,944 2,907 2,876 2,872 2,887Forestry products A$m 2,034 2,271 2,272 2,275 2,280 2,287 2,254 na– real b A$m 2,093 2,304 2,272 2,233 2,183 2,136 2,054 na

Farm index 122.3 120.7 129.8 122.5 124.4 126.1 127.9 130.5– crops index 125.0 130.4 164.2 142.4 142.2 143.3 144.5 146.3– livestock index 118.1 110.8 102.7 105.2 108.4 110.4 112.6 115.7Forestry index 129.3 139.3 137.9 136.7 135.6 134.6 132.2 na

grains and oilseeds ’000 ha 22,934 23,318 23,739 23,590 23,394 23,205 23,230 23,204Sheep million 70.9 68.7 73.6 76.6 78.6 80.4 81.8 83.0Cattle million 27.4 26.1 26.6 27.2 27.8 28.4 29.0 29.4

Net cash income e A$m 21,434 25,288 28,515 25,897 25,482 24,201 23,921 24,138– real b A$m 22,048 25,658 28,515 25,414 24,397 22,605 21,799 21,460Net value of farm production g A$m 15,990 19,762 22,903 20,177 19,624 18,203 17,779 17,848– real b A$m 16,448 20,051 22,903 19,800 18,788 17,002 16,202 15,868Farmers’ terms of trade h index 103.9 112.7 113.3 113.6 111.4 107.7 105.7 104.2

MajorindicatorsofAustralia'sagricultureandnaturalresourcebasedsectors

Australian export unit returns a

Gross value of production c

Volume of production d

a Base: 2016–17 = 100. b In 2016–17 Australian dollars. c For a definition of the gross value of farm production see Table 13. d Chain‐weighted basis using Fisher’s ideal index with a reference year of 1997–98 = 100. e Gross value of farm production less total cash costs. f ABARES forecast. g Gross value of farm production less total farm costs. h Ratio of index of prices received by farmers and index of prices paid by farmers, with a reference year of 1997–98 = 100. s ABARES estimate. z ABARES projection. na Not available.Sources: ABARES; Australian Bureau of Statistics; Reserve Bank of Australia

Value of exports

Production area and livestock numbersCrop area

Farm sector

Economic overview


Major Australian agricultural commodity exports

Price aValue ValueVolume

2017–18f2016–17f

2017–18f

A$b

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

Mutton

Rock lobster

Chickpeas

Cheese

Live feeder/slaughter cattle

Canola

Barley

Lamb

Wine

Cotton

Sugar

Wool

Wheat

Beef and veal1%

–9%

10%

10%

35%

5%

3%

–8%

–6%

4%

13%

–42%

6%

1%

2%

–8%

4%

0%

37%

1%

0%

–26%

–7%

4%

2%

–29%

2%

–3%

0%

0%

6%

5%

3%

4%

3%

1%

–2%

0%

12%

–19%

4%

4%

$7.10b

$6.48b

$3.61b

$2.57b

$1.98b

$2.37b

$1.80b

$1.99b

$1.75b

$1.12b

$0.89b

$1.30b

$0.67b

$0.61b

$7.20b

$5.91b

$3.97b

$2.83b

$2.67b

$2.50b

$1.86b

$1.82b

$1.64b

$1.17b

$1.01b

$0.76b

$0.72b

$0.62b

2 4 6 8

Economic overview


Recent developments in Australian agricultureKirk Zammit

The real value of agricultural production increased over the three years to 2015–16, at an average rate of 5.3 per cent a year. This period of solid growth coincided with strong demand for Australia’s exports, favourable global market prices for livestock, a depreciating exchange rate and subdued growth in input costs. Poor seasonal conditions early in the period detrimentally affected crop production and returns to producers. However, lower crop production was more than offset by increased returns from livestock production. This was the result of higher slaughter rates, as producers responded to reduced pasture availability caused by dry conditions. Returns to producers continued to increase in 2015–16 as a result of a rise in crop production nationally and ongoing high cattle turn-off in major cattle-producing regions of Queensland.

Real farm gross value of production, Australia, 2000–01 to 2015–16

2015–16A$b

s ABARES estimate.Sources: ABARES; Australian Bureau of Statistics

10

20

30

40

50

60

2015–16s

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

These developments lent additional support to Australia’s real net farm cash income, which had been rising since 2009–10. This followed a period of declining income from 2001–02 to 2008–09 as farmers contended with drought, low availability of irrigation water and rising input costs. Real net farm cash income is estimated to have been $25.3 billion in 2015–16, well above the 20-year average to 2014–15 of $15.4 billion (in 2015–16 dollars). However, income growth at the industry level was more varied. For example, the dairy industry has experienced more difficult conditions in recent years.

continued ...

Economic overview


Recent developments in Australian agriculture continued

Real net farm cash income, Australia, 2000–01 to 2015–16

2015–16A$b

s ABARES estimate.Sources: ABARES; Australian Bureau of Statistics

2015–16s

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

5

10

15

20

25

30

Australian agricultural exports

The total real value of Australian agricultural exports increased for seven consecutive years from 2008–09 to 2014–15. This growth can be attributed to domestic and foreign factors. Global demand for food, particularly from Asian countries, has led to a rise in Australian exports to Asia. Growth in this region is projected to remain strong. Productivity growth in Australian agriculture has led to a rise in total farm production and an ability to compete in world markets despite being a higher-cost producer. Factors such as changes in seasonal conditions and the value of the Australian dollar have had a more temporary impact on export growth.

Real value of agricultural exports, Australia, 2000–01 to 2015–16

2014–15A$b


2015–16

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

10

20

30

40

50

continued ...

Economic overview



Agricultural export prices and the Australian dollar

Strong global demand was a major factor behind increases in the prices received for some of Australia’s major agricultural exports. This was evident for livestock, when the volume of beef exported to the United States increased sharply in 2013–14 and 2014–15, leading to stronger returns to Australian exporters. Export returns have been more variable for the cropping sector since 2000–01.

Export price indexes for crops and livestock, Australia, 2000–01 to 2015–16

index2011–12

=100

Note: Annual indexes are calculated on a chained-weight basis using a Laspeyres index with a reference year of 2011–12 = 100.Source: ABARES

Crop & livestockindex

Livestock index

Crop index

140

20

40

60

80

100

120

2015–16

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

From 2013 to the end of December 2016 the depreciation of the Australian dollar relative to the US dollar increased the competitiveness of Australian exports. Because exports are predominately traded in US dollars, depreciation of the Australian dollar increased the amount received by exporters and protected some exporters from bearing the full burden of less favourable price movements. The positive influence of the weaker dollar on export returns is reflected in the index of crop and livestock prices, which accounts for prices received for 11 of Australia’s agricultural export commodities.

continued ...

Economic overview



Crop & livestock price index in Australian and US dollars, 2000–01 to 2015–16

index2011–12

=100

Note: Annual index is calculated on a chained-weight basis using a Laspeyres index with a reference yearof 2011–12 = 100.Source: ABARES

US$A$

20

40

60

80

100

120

2015–16

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

Input costs

Prices paid by farmers for inputs include costs for materials, services, labour, marketing and overheads. Over the eight years from 2008–09 to 2015–16, real prices paid by farmers declined by an average of 2.1 per cent a year. Lower input costs have benefited farmers by reducing the cost of production.

The decline in real prices paid by farmers was principally the result of a decline in interest paid, which is about one-tenth of total farm costs. The decline in interest rates and reduced bank lending following the global financial crisis, and more recently the strong increase in farm income, have reduced the burden of servicing debt and increased the rate of debt repayment.

Real farm prices paid index, Australia, 2000–01 to 2015–16

index1997–98

=100

s ABARES estimate.Note: Annual index is calculated on a chained-weight basis using Fisher’s ideal index with a reference year of 1997–98 = 100. Source: ABARES

2015–16s

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

80

90

100

110

120

Agriculture

Crops


a US no. 2 hard red winter, fob Gulf. b France feed barley, fob Rouen. c Europe rapeseed, fob Hamburg. d Intercontinental Exchange, nearby futures, no. 11 contract (October to September). e Cotlook ‘A’ index.

CROPS

WheatWorld wheat prices to remain low, re ecting ample supplies.~0%

to US$190/tin 2017–18

a

Coarse grainsWorld barley prices to remain low due to abundant supplies and weak demand for industrial-use coarse grains.

1%to US$155/tin 2017–18

b

OilseedsWorld canola prices to fall due to increased global supply of oilseeds with high oil content.

2%to US$418/tin 2017–18

c

SugarWorld sugar prices to increase, re ecting lower stocks.

CottonWorld cotton prices to rise dueto forecast consumption exceeding production.

3%to USc 80/lb

in 2017–18e

5%dto USc 22/lb

in 2017–18


WheatOutlook to 2021–22

Sarah Smith

• Wheat prices are projected to remain low in the short to medium term because of abundant world supplies and competition from other feed grains on the global market.

• World production of wheat is forecast to decline in 2017–18 but increase in the medium term as average yields return to historical trends.

• Australian wheat production and export volumes are forecast to fall from large volumes in 2016–17.

World indicator price expected to remain lowThe world wheat indicator price (US no. 2 hard red winter, fob Gulf) is forecast to average US$190 a tonne in 2017–18, largely unchanged from the forecast average for 2016–17. If realised, this will be the lowest annual average price since 2001–02 in real terms.

The world indicator price is expected to continue to face downward pressure in 2017–18 because of large carry-over stocks and relatively high forecast production. Four consecutive years of record global production have resulted in a significant accumulation of stocks, particularly in exporting countries. In 2017–18 production is forecast to fall year-on-year. Assuming average seasonal conditions, yields will return to trend and production will be the third-highest on record. A major production shock would be an upside risk to international wheat prices, particularly for milling wheat. Compared with feed wheat, which faces strong competition from corn and barley, milling wheat has few substitutes and relatively inelastic demand.

In the medium term, prices are projected to decline further in real terms. The area planted to wheat is projected to fall in high-cost producing regions in response to continued low prices. However, global production is projected to continue to increase over the medium term because of productivity improvements, particularly in Argentina and the Black Sea region. Ample exportable supplies are expected to be available to satisfy increasing import demand from a growing world population unless there is a major disruption to supply over the next five years. A strong US dollar over the outlook period will continue to affect the competitiveness of US wheat exports and place downward pressure on the world indicator price.

Wheat


World wheat supply and indicator price, 2007–08 and 2021–22

Production

Mt

Opening stocks

f ABARES forecast. z ABARES projection.

US no. 2 hard red winter, fob Gulf(right axis)

200

400

600

800

1,000

2016–17US$/t

100

200

300

400

500

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

World wheat production forecast to fall in 2017–18 but increase in the medium termWheat production is forecast to fall by 2 per cent in 2017–18 to 735 million tonnes, reflecting falls in planted area and average yields. In 2017–18 the average yield is expected to fall from the 2016–17 record that was achieved because of favourable seasonal conditions in most wheat-producing regions.

Over the medium term, the area planted to wheat is expected to remain largely unchanged. High-cost producers are expected to respond to several years of low prices by reducing the area planted, particularly in Australia, Canada and the United States. In other major producing regions, the incentive to plant wheat is expected to remain strong because of either supportive government policies or favourable exchange rates relative to the US dollar. Average yields are projected to continue trending upwards in the medium term, particularly in emerging economies such as Argentina, the Black Sea region and India. As a result, global production is projected to increase to more than 760 million tonnes by 2021–22.

In Argentina, wheat production is expected to rise in 2017–18 and increase further in the medium term to 2021–22. The area planted to wheat is forecast to increase by 2 per cent in 2017–18, following 20 per cent growth in 2016–17. Those changes reflect supportive regulation enacted by the Argentine Government in 2015, including the elimination of wheat export taxes and quantitative restrictions. Gains in average yields are also expected to continue in Argentina over the medium term because of increased use of fertiliser and pesticides.

In the Black Sea region—Kazakhstan, the Russian Federation and Ukraine—production is forecast to fall by 7 per cent in 2017–18 to 106 million tonnes. An increase in area planted is expected to be more than offset by a fall in the average yield from the 2016–17 record that resulted from exceptional seasonal conditions. In the medium term, production is projected to rise as a result of yield improvements despite a relatively stable planted area.

Wheat


EU production is expected to recover in 2017–18. This follows the low-yielding, poor-quality harvest in 2016–17 that resulted from unfavourably wet conditions. Increasing yields in the medium term are projected to just offset a reduction in area planted to wheat.

Indian production is forecast to increase by 2 per cent in 2017–18, largely because of an increase in the area planted. In late 2016 the Indian Government announced the withdrawal of all 500 and 1,000 rupee banknotes, estimated to make up 86 per cent of cash in circulation. With less than eight weeks to exchange the obsolete notes, acute cash shortages raised concerns that the purchase of seed and fertiliser would be disrupted. However, good soil moisture during the planting window, following the return of typical monsoonal conditions, is likely to offset any negative impact.

US wheat production is forecast to fall in 2017–18, reflecting a fall in yields from the record in 2016–17 and a significant decline in planted area. Area planted to wheat is forecast to contract to its smallest in 100 years, driven by large declines in the hard red winter plantings. In the medium term, area planted to wheat is expected to remain below historical averages.

Forecast change in wheat production, 2017−18

Volume change

Percentage change(right axis)

Mt %–12–10–8–6–4–20246

EuropeanUnion

India

Argentina

Black SearegionUnited

States

Australia

–30–25–20–15–10–5051015

World wheat consumption projected to growWorld wheat consumption is forecast to remain largely unchanged in 2017–18 at 735 million tonnes. Growth in wheat for human consumption is expected to offset a reduction in feed wheat use. Over the medium term, world wheat consumption is projected to increase by around 1 per cent a year to 762 million tonnes in 2021–22.

Human consumption represents around two-thirds of total world wheat consumption and is projected to rise by 1 per cent a year over the medium term. Most of this increase is expected to stem from population growth, with only a modest increase in per person consumption. However, patterns of consumption are expected to differ around the world.

Wheat


Asian countries, excluding China, are expected to make the largest contribution to the volume increase of wheat for human consumption. Human consumption in these countries is expected to grow as a result of the projected increase in population and per person consumption in line with increasing incomes and changing diets. Sub-Saharan Africa is projected to contribute less to the global increase in human consumption because of a smaller population base. This is despite the expectation that per person consumption and population will grow strongly. Industrialised countries, including China, are expected to make an even smaller contribution to the change in global human consumption of wheat because population growth is projected to be more modest and per person consumption to fall.

Contribution to global change in human consumption of wheat, by region, 2017–18 to 2021–22

Sub-Saharan Africa

0

Asia, excluding ChinaIndustrialised countries,including China

Percentage change in per person consumption

Popu

lati

on

% –0.5 0 0.5 1.0 1.5 2.0 2.5 3.0

2

4

6

8

10

12

14

Note: Circle size represents the total increase in consumption volume.

Feed wheat consumption is typically the more variable component of total wheat consumption because of the availability of substitutes. Feed wheat use is forecast to fall by 5 per cent in 2017–18 to 145 million tonnes. Ample supplies of corn and feed barley underpin considerable competition in the feed grain market. Total feed grain demand is projected to grow in the medium term because of a projected increase in meat and dairy production in major livestock-producing regions. Feed wheat use is projected to increase moderately by 2021–22, but it will continue to face competition from other feed grains.

Wheat trade to fall year-on-year but remain historically highThe volume of wheat traded internationally is forecast to fall by 1 per cent in 2017–18 from the record in 2016–17 to 165 million tonnes. Production in major exporting countries is forecast to fall in 2017–18. However, exportable supplies including stocks remain historically high.

Over the medium term, improved production is projected to support increased export volumes in all major exporting countries, especially in the Black Sea region. In 2016–17 the Russian Federation overtook the European Union to become the largest global exporter of wheat. Russian exports are projected to remain strong over the medium term because of government investment in port capacity and export infrastructure combined with a projected expansion in production.

Wheat


Wheat exports from major exporters, 2009–10 to 2021–22 a

Argentina

Mt

Canada

a Export volume is the three-year average to the year shown. z ABARES projection.

Australia

United States

European Union

Black Sea region

30

60

90

120

150

180

2021–22z2015–162009–10

Growing global consumption and low prices are expected to drive increasing wheat imports over the medium term, particularly in Africa and Asia. These two regions are net importers of wheat and are projected to increase their wheat consumption over the medium term.

World wheat closing stocks to remain largeWorld wheat closing stocks are expected to be largely unchanged over the outlook period. Increasing global consumption is expected to be met with growth in global production. The Chinese Government’s grain reserve and price support policies encourage domestic production of wheat. Chinese domestic production is projected to remain large and outstrip consumption over the medium term. This will add to growing stocks. By 2021–22 China is projected to hold 45 per cent of the world’s stocks. Stocks in the rest of the world are projected to decline in the medium term but remain large.

The stocks-to-use ratio is projected to decline to 2021–22 because world consumption is expected to grow while world stocks remain unchanged. However, the stocks-to-disappearance ratio for major exporters is expected to rise. This is because stocks in major exporting countries are projected to rise at a faster rate than domestic consumption plus exports. A high stocks-to-disappearance ratio is an indication of ample exportable supplies that are more likely to enter the global market if prices rise markedly. Comparatively, stocks in the rest of the world are more likely to be consumed domestically.

Wheat


World wheat closing stocks, 2007−08 to 2021−22

Rest of world

Mt %

ChinaMajor exporters a

a Argentina, Australia, Canada, the European Union, Kazakhstan, the Russian Federation, Ukraine and theUnited States. b Disappearance de�ned as domestic consumption plus exports. f ABARES forecast. z ABARES projection.

50

100

150

200

250

Stocks-to-use ratio(right axis)

10

20

30

40

50

Stocks-to-disappearanceratio for major exporters b(right axis)

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

Outlook for Australian wheat to 2021–22Wheat production to increase modestly in medium termThe area planted to wheat is forecast to fall by 1 per cent in 2017–18 to 12.8 million hectares. This is because favourable returns to canola, pulses and sheep are expected to result in increased competition for planting area. The final area planted to wheat will depend on climatic conditions leading into and during the planting window (usually between March and June), when cropping decisions are made.

Assuming average seasonal conditions, wheat production is forecast to fall from 35 million tonnes in 2016–17 to 24 million tonnes in 2017–18. This reflects yields returning to trend after exceptional seasonal conditions in most wheat-producing areas resulted in record yields in 2016–17.

Wheat area and production, Australia, 2010–11 to 2021–22

New South Wales

Mt million ha

VictoriaQueensland


Total area (right axis)

South AustraliaWestern Australia

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

5

10

15

20

25

30

35

40

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

Wheat


In the medium term, the area planted to wheat is projected to contract marginally. Despite low prices, wheat is an important rotational crop and will continue to be used in cropping mixes. Total winter cropping area faces competition from livestock production, particularly of sheep. Favourable returns to lamb and wool are projected in the medium term. However, wheat production is projected to increase modestly to 25 million tonnes in 2021–22. This is because a gradual increase in average yields from productivity improvements is projected to offset the reduction in planted area.

Wheat export shipments to declineThe volume of wheat exports is forecast to fall by 8 per cent in 2017–18 to 21 million tonnes from the 23 million tonne forecast in 2016–17. Record production is expected to boost export shipments in 2016–17.

World import demand is strong, supported by low prices and poor-quality domestic harvests in China and India. In the final six months of 2016, Australia exported large volumes of wheat to India. The Indian Government reduced the wheat import duty from 25 per cent to 10 per cent in September 2016 before eliminating it completely in December 2016. These changes were driven by a domestic shortage of milling quality wheat following the lower-quality harvest and a drawdown in stocks. Milling wheat demand from India is expected to remain strong until at least March 2017, when the Indian domestic harvest will commence.

Monthly wheat exports to India, Australia, January 2015 to December 2016

Australian wheat exportsto IndiaIndian wheat import duty(right axis)

kt

50

100

150

200

250

300

350

%

5

10

15

20

25

30

35

Dec2016

Oct2016

Aug2016

Jun2016

Apr2016

Feb2016

Dec2015

Oct2015

Aug2015

Jun2015

Apr2015

Feb2015

Wheat


In 2017–18 the volume of Australian wheat exports is expected to fall but remain relatively high due to ample supplies from the previous season. The combination of reduced export volumes and weak international prices is forecast to result in a 9 per cent reduction in the value of exports in 2017–18 to $5.9 billion.

Wheat exports, Australia, 2010–11 to 2021–22

Volume

Mt

Value (right axis)


2016–17$b

5

10

15

20

25

2

4

6

8

10

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

Towards the end of the outlook period, export volumes are projected to stabilise at around 17 million tonnes. Demand for milling wheat in China, Indonesia and the Republic of Korea—Australia’s largest export markets—is expected to strengthen in line with population growth. However, Australian exports will continue to face competition from other major exporters. Low international prices are expected to cause the value of exports to fall to around $4.4 billion in 2021–22 in real terms.

Wheat


Outlook for wheatunit 2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

Area million ha 221 225 222 221 220 221 222 222

Yield t/ha 3.30 3.28 3.38 3.32 3.35 3.38 3.40 3.43

Production Mt 730 737 750 735 738 747 755 762

Consumption Mt 715 720 737 735 739 748 754 762

Closing stocks Mt 205 221 234 234 233 233 234 234

Trade Mt 153 164 167 165 167 170 172 175

Stocks-to-use ratio % 28.6 30.8 31.8 31.9 31.6 31.2 31.0 30.8

– nominal US$/t 266 211 190 190 188 190 193 196– real b US$/t 272 215 190 186 181 179 179 178

Area ’000 ha 12,384 12,793 12,917 12,773 12,709 12,645 12,582 12,519

Yield t/ha 1.92 1.89 2.72 1.88 1.91 1.94 1.97 2.00

Production kt 23,743 24,168 35,134 23,979 24,300 24,570 24,798 24,987Export volume c kt 16,571 15,777 22,784 20,872 18,042 17,268 17,095 17,189

– nominal A$m 5,547 5,120 6,479 5,914 5,064 4,855 4,877 4,981– real d A$m 5,706 5,195 6,479 5,804 4,848 4,535 4,445 4,428

– nominal A$/t 326 303 270 277 273 274 277 280– real d A$/t 335 307 270 271 261 256 253 249

Outlook for wheat

a US no. 2 hard red winter wheat, fob Gulf, July–June. b In 2016–17 US dollars. c July–June years. d In 2016–17 Australian dollars. f ABARES forecast. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; International Grains Council; US Department of Agriculture

World

Australia

Price a

Export value c

APW 10 net pool return


Coarse grainsOutlook to 2021–22

Amelia Brown

• World coarse grain indicator prices are forecast to remain historically low in 2017–18 and over the medium term, reflecting abundant world grain stocks.

• Consecutive years of increasing production have resulted in record world stock levels.

• Australian coarse grain production and exports are forecast to fall in 2017–18 but to increase over the medium term.

Record supplies to continue to pressure pricesThe 2017–18 world coarse grain indicator price (US no. 2 yellow corn, fob Gulf) is forecast to be US$157 a tonne, largely unchanged from the average price in 2016–17. The world indicator price for barley (France feed barley, fob Rouen) is forecast to average 1 per cent higher in 2017–18 at US$155 a tonne. These low prices reflect abundant world coarse grain supply and relatively weak demand for coarse grains for industrial use.

World coarse grain indicator prices, 2003–04 to 2021–22

2016–17US$/t

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


50

100

150

200

250

300

350

400

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

Coarse grains


Consecutive years of increasing production have resulted in record world stocks of coarse grains, which is forecast to result in continued low prices. Area planted to coarse grains in 2017–18 is expected to decline in response to lower prices—particularly in the United States, Canada and Australia.

In Argentina, devaluation of the peso and removal of export restrictions have improved the competitiveness of Argentine corn on the world market. This has resulted in domestic producers increasing production of coarse grains, particularly corn. Over the medium term, production and exports from Argentina are projected to increase.

In the five years to 2021–22 the rate of growth of global coarse grain demand, particularly corn for industrial use, is expected to be slower than between 2006–07 and 2015–16. The expansion of the US ethanol industry will be limited over the outlook period as a result of US biofuel policies and constraints on ethanol consumption. Demand for coarse grains for livestock feed has trended upwards since 2009–10, reflecting increasing demand for livestock products in developing countries. This is expected to be the main source of growth in world coarse grain consumption over the outlook period.

World coarse grain prices are forecast to remain at historically low levels over the medium term because growth in supply is projected to increase to balance growing demand. Demand for livestock feed is expected to increase over the outlook period, driven predominantly by expanding world livestock industries. Demand for grain for human consumption is also expected to increase over the medium term in line with population growth and rising incomes in developing countries.

World coarse grain stocks are projected to fall in the short term—providing some support for prices—but to recover towards the end of the outlook period.

ProductionIn 2017–18 world production of coarse grains is forecast to fall by 3 per cent to 1.28 billion tonnes, reflecting a reduction in area planted. Area planted to corn, particularly in the United States and China, is forecast to contract in response to lower prices.

Over the remainder of the outlook period, growth in world coarse grain production is projected to resume and reach 1.37 billion tonnes in 2021–22.

World coarse grain use, 2006–07 to 2021–22

Production

Mt2016–17$/t

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

Consumption


200

400

600

800

1,000

1,200

1,400

1,600

50

100

150

200

250

300

350

400

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

Coarse grains


CornWorld corn production is forecast to fall by 5 per cent in 2017–18 to 992 million tonnes because lower prices are expected to lead to a contraction in area planted in major producing countries. Corn production in the United States is forecast to fall by 7 per cent to 359 million tonnes in 2017–18. This fall reflects a reduction in area planted and yields returning to the long-term average after reaching record highs in 2016–17.

In Argentina, area planted to corn in 2017–18 is forecast to fall to 4.4 million hectares. This is 2 per cent lower than the record set in 2016–17 but would be the second-highest level on record, resulting from producers continuing to take advantage of the Argentine Government’s decision to remove export restrictions and taxes on corn. Average yields in Argentina are assumed to fall slightly from 2016–17, with overall production forecast to be marginally lower.

Brazilian corn production has increased by 70 per cent over the past 10 years, boosted by record harvests of its safrinha (second-season) crop. The crop is expected to account for two-thirds of 2016–17 production. Second-season crop yields have been trending upwards but are more susceptible to production risks than first-season crop yields. This is because the safrinha crop is planted after the soybean harvest, and if the soybean harvest is delayed the chance of sufficient rainfall throughout the safrinha growing season decreases. Safrinha planted area is expected to continue to increase over the projection period as a result of the Brazilian Government’s minimum price guarantee programme. Corn production in Brazil is forecast to increase by around 1 per cent in 2017–18 to a record 86.5 million tonnes.

Corn production, Argentina and Brazil, 2002–03 to 2016–17

Argentina Brazil

Mt

f ABARES forecast.

20

40

60

80

100

120

140

2016–17f

2014–15

2010–11

2012–13

2008–09

2006–07

2004–05

2002–03

Production of corn in China is forecast to fall for the second consecutive year in 2017–18 to around 206.6 million tonnes, reflecting a further decline in area planted. In 2016–17 area planted to corn fell in response to the Chinese Government’s March 2016 removal of the corn price support scheme. The scheme had resulted in a large build-up of domestic corn stocks and a sharp increase in imports of cheaper alternatives such as barley and sorghum.

Coarse grains


Over the medium term, world corn production is projected to increase from 2018–19 onwards to around 1.1 billion tonnes in 2021–22. Production increases are expected to come mainly from yield improvements because availability of land for crop expansion in major developed countries is limited. Corn consumption is projected to increase in line with growing world population and rising incomes in developing countries, leading to increased demand for meat and consequently for feed grains in the livestock sectors.

BarleyWorld barley production in 2017–18 is forecast to decline by 3 per cent, reflecting a fall in area planted and an assumed return to average yields. Production decreases in Australia and Canada will be partially offset by production increases in the European Union.

EU production is forecast to increase by 2 per cent in 2017–18, with yields assumed to return to average after poor seasonal conditions in 2016–17. Area planted to barley is forecast to remain largely unchanged from the previous year.

World barley production over the medium term is projected to increase as area planted to barley increases modestly and average yields continue to trend upwards. Area planted to barley in Australia, Canada and the European Union is expected to remain largely unchanged, reflecting low prices. Area planted in Argentina and the Black Sea region is expected to increase modestly over the medium term, reflecting supportive government policies. Demand for barley is forecast to increase in line with world population growth and rising incomes in developing countries, leading to increased demand for meat and consequently feed grains. Increasing world beer consumption is expected to result in the continued increase in demand for malting barley.

ConsumptionWorld consumption is forecast to remain at 1.3 billion tonnes in 2017–18 and continue to grow over the medium term. This mainly reflects an increase in demand for feed grains in world livestock production. Industrial use of barley is also expected to grow but at a slower rate, largely reflecting the increase in demand for malting barley for beer production.

CornWorld consumption of corn is forecast to increase by only 1 per cent in 2017–18, largely as a result of the slowdown in use of corn for industrial purposes.

In 2017–18 US corn consumption is forecast to fall marginally from a record high, reflecting a reduction in demand. Growth in US corn consumption over the medium term is expected to be driven primarily by demand from the livestock sector as production of beef, pork and broiler meat continues to increase.

Growth in US corn consumption was strong over the decade to 2015–16, primarily as a result of the US Government Renewable Fuel Standard (RFS) programme. The RFS programme ensures US consumption of ethanol will continue to increase, but the rate of growth is expected to remain relatively low over the medium term.

Coarse grains


Corn consumption, United States, 2002–03 to 2021–22

IndustrialFeed

Mt

z ABARES projection.

0

50

100

150

200

250

300

350

2021–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

Corn consumption in China is forecast to increase by 2 per cent to 231 million tonnes in 2017–18. This reflects an expected increase in use of corn in livestock feed following Chinese Government measures to reduce national corn stocks. It removed the domestic corn price support scheme in early 2016—which improved corn’s competitiveness—and is paying subsidies to encourage use of domestic corn.

Over the medium term, world consumption of corn is projected to increase by around 1 per cent a year to 1,046 million tonnes by the end of the outlook period. This is expected to be driven by growth in world livestock production in response to growing world population, evolving diets and higher incomes—especially in developing countries, particularly in China.

BarleyWorld consumption of barley is forecast to fall by around 1 per cent in 2017–18, reflecting decreased production and abundant supply of feed grain substitutes, such as wheat and corn. Demand for malting barley is forecast to remain strong as beer consumption continues to increase, particularly in East Asia.

Consumption of barley in China is forecast to fall by 13 per cent to 6.1 million tonnes in 2017–18, reflecting policy changes that encourage use of domestic corn over imported feed grains. Demand for malting barley remains strong and consumption is expected to increase in 2017–18.

Over the medium term, consumption of barley is projected to increase by around 1 per cent a year to 152 million tonnes in 2021–22. This growth is expected to be driven by demand for malting barley as a result of increasing world beer consumption and increased demand for barley in livestock feed during the outlook period.

Coarse grains


TradeWorld trade in coarse grains is forecast to fall by 1 per cent to 184 million tonnes in 2017–18. Trade in corn and barley is expected to be lower than the high levels associated with record global production in 2016–17. US corn exports are forecast to fall by around 13 per cent in 2017–18 to 49 million tonnes. This is expected to be partially offset by increased exports from Argentina and Brazil. World trade in barley is forecast to remain unchanged as lower exports from Australia are offset by the return of EU exports to normal levels after poor seasonal conditions reduced supply in 2016–17.

Over the medium term, world trade in corn is projected to increase—primarily reflecting increased demand for livestock feed. World trade in barley is projected to grow to 33 million tonnes in 2021–22. This mainly reflects expected growth in world demand for barley for malt production. Demand for barley for use in feed grains is also projected to grow but at a slower rate than for malt production.

StocksWorld coarse grain closing stocks are forecast to fall by 5 per cent in 2017–18 to 247 million tonnes as continued growth in world coarse grain consumption outpaces production.

World closing stocks of corn are forecast to fall by 4 per cent in 2017–18 to 217 million tonnes. This fall mainly reflects a drawdown of stocks in China, the European Union and the United States. World closing stocks of barley are forecast to fall by 20 per cent in 2017–18 to 19 million tonnes, reflecting forecast lower production in major producing countries.

Over the medium term, world coarse grain stocks are expected to tighten in the first three years of the projection period as consumption growth outpaces increases in production. Towards the end of the projection period, stocks are expected to increase slightly as projected increases in production exceed consumption.

World coarse grain stocks, 2007–08 to 2021–22

Barley

Corn

Other

Mt


50

100

150

200

250

300

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

Coarse grains


Outlook for Australian coarse grains to 2021–22Production to decrease in 2017–18Total area planted to coarse grains is forecast to fall by 6 per cent in 2017–18 to 5.2 million hectares. This mainly reflects an expected fall in area planted to barley as growers respond to lower barley prices by shifting production to pulse and oilseed crops. Increased competition from livestock production is also expected to constrain area planted to coarse grains. In 2017–18 barley production is forecast to fall by 37 per cent to around 8.5 million tonnes, largely reflecting a return to average yields following the record highs achieved in 2016–17.

Area planted to grain sorghum is forecast to increase in 2017–18 following a significant decline in 2016–17. Demand for grain sorghum for ethanol production is expected to provide some incentive to increase area planted—particularly in southern Queensland, given that the Queensland Government’s ethanol mandate came into effect in January 2017.

China’s demand for feed grain is expected to weaken over the medium term. However, demand for Australian grain sorghum for the production of baijui—an alcoholic spirit distilled mainly from grain sorghum—is expected to grow, providing an alternative market.

Over the medium term, area planted to coarse grains is projected to increase to around 5.7 million hectares by 2021–22. Barley yields are projected to increase by around 1 per cent a year, reflecting productivity growth, but planted area is expected to remain relatively stable. Total barley production is projected to reach 9 million tonnes by 2021–22. Area planted to grain sorghum is forecast to increase in 2017–18 after falling sharply in 2016–17 in response to higher cotton prices. Over the medium term, area planted to grain sorghum is forecast to increase modestly.

ExportsTotal coarse grain exports are forecast to fall in 2017–18, reflecting decreased production. Record high barley production in 2016–17, combined with Australian barley being competitively priced on the world market, is forecast to lead to record volumes exported in 2016–17.

In 2016–17 exports of Australian grain sorghum are forecast to fall by around 40 per cent. This reflects a forecast 39 per cent fall in production combined with lower feed demand in China, Australia’s largest export market. Exports in 2017–18 are forecast to increase in line with increased production.

Australian coarse grain exports are projected to increase gradually over the medium term to 8.0 million tonnes in 2020–21, mainly reflecting growing world demand for feed grain in the livestock sector. Demand for malting barley and grain sorghum for distilling is projected to remain strong over the medium term.

Coarse grains


Outlook for coarse grainsunit 2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

Area million ha 325 320 324 319 323 327 329 333

Yield t/ha 4.02 3.90 4.11 4.02 4.06 4.08 4.11 4.12

Production Mt 1,306 1,250 1,331 1,282 1,314 1,335 1,351 1,371

corn Mt 1,014 961 1,040 992 1,013 1,029 1,042 1,055

barley Mt 142 149 144 140 149 152 154 159

Consumption Mt 1,255 1,266 1,307 1,316 1,329 1,336 1,344 1,357

corn Mt 964 979 1,015 1,021 1,030 1,036 1,041 1,046

barley Mt 143 146 146 145 148 149 150 152

Closing stocks Mt 245 246 256 247 232 231 237 251

Trade Mt 186 165 186 184 182 190 195 202


Corn price a– nominal US$/t 174 168 155 157 167 171 177 170– real b US$/t 178 170 155 154 161 161 163 154

Barley price c– nominal US$/t 204 173 153 155 163 174 177 174– real b US$/t 209 176 153 152 157 164 164 157

barley ’000 ha 4,078 4,105 4,035 3,500 3,775 3,800 3,900 3,950

oats ’000 ha 854 832 909 900 910 910 910 910

triticale ’000 ha 82 117 96 100 100 100 100 100

grain sorghum ’000 ha 732 681 441 631 640 645 650 655

corn ’000 ha 60 67 70 61 61 61 61 61

total ’000 ha 5,806 5,802 5,552 5,192 5,486 5,516 5,621 5,676

barley kt 8,646 8,593 13,414 8,500 8,700 8,800 8,900 9,000

oats kt 1,198 1,308 1,879 1,229 1,471 1,485 1,500 1,515

triticale kt 143 195 247 171 171 171 171 171

grain sorghum kt 2,209 2,037 1,208 1,923 1,952 1,968 1,983 1,998

corn kt 495 439 467 370 372 373 373 373

total kt 12,691 12,571 17,215 12,193 12,666 12,797 12,927 13,057

Export volume kt 7,756 6,844 8,560 6,307 7,578 7,700 7,860 7,992


feed barley e A$/t 252 237 179 185 192 194 196 198

malting barley g A$/t 282 274 213 234 236 239 241 244

grain sorghum h A$/t 301 261 213 221 243 248 253 258

feed barley e A$/t 259 241 179 182 184 182 179 176

malting barley g A$/t 290 278 213 230 226 223 220 217

grain sorghum h A$/t 310 264 213 217 233 232 231 229a US no. 2 yellow corn, fob Gulf, July–June. b In 2016–17 US dollars. c France feed barley, fob Rouen, July–June. d In 2016–17 Australian dollars. e Feed 1, delivered Geelong. f ABARES forecast. g Gairdner Malt 1, delivered Geelong. h Gross unit value of production. s ABARES forecast. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; FranceAgriMer; United Nations Commodity Trade Statistics Database (UN Comtrade); US Department of Agriculture

Outlook for coarse grains

World

AustraliaArea

Production

Export value

Price – nominal

Price – real d


• The world oilseed indicator price is forecast to average lower in 2017–18, reflecting abundant stocks at the beginning of the year and another year of good harvests in major exporting countries.

• Over the outlook period to 2021–22 prices are projected to fall because of a continuation of strong yield gains and area expansion in South America.

• Production is expected to rise over the outlook period due to growth in South America. This is despite a projected price-led drop in planted area in other key soybean- and rapeseed-producing countries.

• In Australia, canola plantings are forecast to rise in 2017–18, reflecting better returns to producers compared with other cropping alternatives.

South American production growth to push prices downThe world oilseed indicator price (US no. 2 soybeans, fob Gulf) is forecast to fall by 2 per cent in 2017–18 to average US$382 a tonne. An increase in supplies (opening stocks plus production) is expected to affect global soybean prices. This follows expected bumper 2016–17 oilseed crops in South America, which will be harvested through to June 2017.

The world canola indicator price (Europe rapeseed, fob Hamburg) is forecast to fall by 2 per cent in 2017–18 to average US$418 a tonne, reflecting improved supplies of high oil-bearing oilseeds in major exporting and importing countries. Prices of vegetable oil are likely to be affected by improved harvests of palm oil in South-East Asia, following a recovery from earlier El Niño conditions. This is expected to reduce processing margins and consequently demand for canola.

OilseedsOutlook to 2021–22

James Fell

Oilseeds


Prices in real terms are projected to fall over the medium term despite a small upward turn towards the end of the outlook period. Continued expansion of area planted to oilseeds in South America and growth in yields are expected to affect prices. A small increase in prices towards the end of the period will be supported by growth in underlying demand for meal and vegetable oil. A reduction in the area planted to soybean and rapeseed (including canola) is also expected in response to overall projected prices.

Oilseed prices in real terms are projected to fall but will remain above the 10-year average to 2007–08.

World oilseed indicator prices, 1993–94 to 2021–22

2016–17US$/t

Europe rapeseed, fob HamburgUS no. 2 soybeans, fob Gulf


100

200

300

400

500

600

700

800

2021–22z

2017–18f

2013–14

2009–10

2005–06

2001–02

1997–98

1993–94

South America to drive oilseed production over medium termWorld oilseed production is forecast to rise slightly in 2017–18 to 555 million tonnes, largely due to increases in cottonseed and rapeseed production. Globally, rapeseed (including canola) production is forecast to increase by 3 per cent to 70 million tonnes, mainly reflecting an assumed improvement in seasonal conditions in the European Union.

Over the medium term, global production is projected to continue its long-term upward trend. Soybeans dominate global oilseed markets. In South America, soybean producers will continue a long-run trend to increase area planted. Average yields grew by 2 per cent a year in Brazil and 4 per cent a year in Argentina over the decade to 2015–16. In Argentina, production growth is expected to be boosted towards the end of the outlook period when export taxes are lowered. In Brazil, area planted is projected to expand, but growth in area planted is projected to slow in response to low prices. In contrast, area planted in the United States is projected to fall in response to the overall weakening of prices over the medium term.

Oilseeds


Soybean production in Brazil and Argentina, 1997–98 to 2021–22

BrazilArgentina

Mt


40

80

120

160

200

2021–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

World rapeseed (including canola) production is projected to grow by 1 per cent a year to 73 million tonnes by 2021–22 as a result of projected growth in yields. However, world harvested area is projected to be lower over the medium term as low crop prices relative to sheep and beef cattle encourage a shift to livestock production where possible, particularly in Australia and Canada.

World rapeseed (including canola) production, 2006–07 to 2021–22

Other

Mt

China

Australia

Canada

European Union

20

40

60

80

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08


Oilseeds


Crush demand and ample supplies to underpin consumptionWorld consumption of oilseeds, predominantly for crush (processing use), is forecast to rise by 2 per cent to 556 million tonnes in 2017–18. This is in response to ample supplies of oilseeds globally and generally favourable crush margins due to robust oilseed product demand.

Assumed continued growth in global livestock product demand is forecast to raise consumption of oilseed meal by 3 per cent in 2017–18 to 326 million tonnes. Soymeal is the largest component of world oilseed meal, with China as its top consumer. China’s soymeal consumption grew by an average of 9 per cent a year over the decade to 2015–16. However, this rate is projected to slow over the medium term as softer economic growth limits increases in consumption of livestock products.

World vegetable oil consumption is forecast to rise by 2 per cent a year to 190 million tonnes in 2017–18. This reflects an increase in food and industrial uses consistent with growth in recent years. Global food demand for vegetable oils has been increasing in line with population growth and rising incomes in developing economies.

Over the medium term, growing demand for vegetable oils and meal is expected to provide favourable incentives for processors to increase demand for oilseeds for crushing. Seed availability is expected to be ample. Consumption of oilseeds (mainly for crush) is projected to rise by 2 per cent a year to 608 million tonnes in 2021–22.

For oilseed meals, assumed economic growth in developing economies is projected to raise demand for livestock products, which require protein meals as an input. Global demand for vegetable oils for biodiesel and food use is projected to rise over the medium term. However, growth is projected to slow significantly after 2019–20 as the current biodiesel policy framework in the European Union expires. US biodiesel production is expected to increase, using animal fats and recycled oils rather than vegetable oil.

World vegetable oil industrial use, 2006–07 to 2021–22

Mt2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08


10

20

30

40

50

Oilseeds


Trade to riseWorld oilseed exports are forecast to increase slightly to 158 million tonnes in 2017–18, supported by ample supplies in major exporting countries and growth in demand for soybeans in importing countries. World rapeseed (including canola) trade is forecast to increase slightly to 14 million tonnes, largely due to an increase in availability in Australia and Ukraine.

Trade in oilseeds over the medium term is expected to be shaped by large harvests in South America and importers’ crush (processing) needs. World trade in oilseeds is projected to rise by 1 per cent a year to 167 million tonnes in 2021–22. The reduction in soybean export taxes in Argentina is expected to increase export volumes from that country.

Over the outlook period, weak projected growth in demand for rapeseed in EU biodiesel production will dampen world trade in rapeseed (including canola). This is because EU processors have shown a preference for imported vegetable oils, particularly palm oil and soy oil, over seed.

Stocks to fall but remain ampleWorld closing stocks of oilseeds are forecast to decline slightly to 96 million tonnes in 2017–18, reflecting a fall in global production and growth in consumption. Of this total, rapeseed (including canola) stocks are forecast to fall slightly to 5.7 million tonnes. Over the medium term, closing stocks are projected to decline but remain above the long-term average.

Outlook for Australian oilseeds to 2021–22 Price incentives to support canola plantings in 2017–18Area planted to canola is forecast to increase in 2017–18, reflecting favourable expected relative prices in the upcoming planting window. In contrast to wheat and barley, local canola prices have risen compared with March 2016. However, actual area planted to canola will depend on the timing of rainfall in autumn, with early rainfall supporting plantings. Assuming an average yield of 1.3 tonnes a hectare, production is forecast to fall by 11 per cent to 3.7 million tonnes in 2017–18 after record yields in 2016–17.

Over the medium term, increases in the sheep flock are projected to reduce area planted to canola. This follows an initial increase in area planted in 2017–18 in response to strong canola prices. Assuming modest yield growth in line with historical trends, production is projected to remain largely unchanged at 3.7 million tonnes in 2021–22.

Oilseeds


Prices of wheat, barley and canola, March 2016 to January 2017

A$/t

CAN1 non-GM canola, fis KwinanaAPW1 wheat, fis KwinanaF1 feed barley, fis Kwinana

100

200

300

400

500

600

Jan2017

Nov2016

Sep2016

Jul2016

May2016

Mar2016

�s Free in store.

Domestic consumption of canola is projected to continue growing over the medium term, reflecting local oil and meal demand. However, Australia’s overall oilseed meal production is insufficient to meet domestic oilseed meal requirements. Over the medium term, imports of oilseed meal are projected to increase by 1 per cent a year to 808,000 tonnes, driven by demand from Australia’s growing meat and dairy industries (see box). However, growth is expected to be slower than in recent years due to above average cottonseed production.

Canola exports to remain strongAustralian canola exports are forecast to fall by 7 per cent in 2017–18 to 2.8 million tonnes, reflecting lower production. Over the medium term, canola exports are projected to remain around 2.8 million tonnes, reflecting largely stable production and steady international demand.

The value of Australian canola exports is forecast to fall by 6 per cent to $1.6 billion in 2017–18, reflecting lower volumes. Over the outlook period to 2021–22, the value of Australian canola exports is projected to average $1.5 billion in real terms—33 per cent above the 10-year average.

Oilseeds


Market for Australian oilseed mealsJames Fell

Processing oilseeds transforms the seed into two products, meal and oil. Oilseed meal is used as a protein source in livestock feed and complements carbohydrate sources such as feed wheat, barley and grain sorghum. Demand for meal is driven by growth in the livestock sector. Meal is also used in aquaculture and pet food.

Oilseed meals include soymeal, canola meal, cottonseed meal, copra, palm kernel meal, peanut meal and sunflower seed meal. Each oilseed meal has different characteristics (for example, protein content, fibre content and digestibility). Soymeal prices are consistently higher than rapeseed (including canola) meal on international markets, and Australian importers prefer soymeal over any other protein meal.

Soymeal represents a large share of protein meal inputs in the pig and chicken meat industries as a result of its high crude protein content and high digestible energy content for those animals. Beef cattle diets comprise high fibre oilseeds and meals such as whole cottonseed or cottonseed meal. In Australia, the beef feedlot sector’s proximity to cotton gins and processors increases the attractiveness of cottonseed and meal because of reduced transportation costs. The main protein meal for the dairy industry is canola meal, with the majority of the herd in close proximity to major canola-producing and canola-processing regions in south-east Australia.

Over the decade to 2015–16 Australia’s consumption of oilseed meal has risen by 40 per cent to an estimated 1.4 million tonnes. Soymeal consumption is estimated at around 782,000 tonnes, canola meal at 415,000 tonnes and cottonseed meal at around 242,000 tonnes. The estimates for cottonseed meal include the meal-equivalent volume of whole cottonseed, which can be fed in a raw form after ginning.

Consumption of oilseed meal, Australia, 2007–08 to 2015–16

Other

Mt

Canola meal

Cottonseed meal

Soymeal

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

s ABARES estimate.Note: Cottonseed meal includes meal equivalent of whole cottonseed used as feed.

2015–16s

2014–15

2013–14

2012–13

2011–12

2010–11

2009–10

2008–09

2007–08

continued ...

Oilseeds


Market for Australian oilseed meals continued

Australia produces mainly canola meal and cottonseed meal. Domestic production of oilseed meals is insufficient to meet demand and so is supplemented by imports. Soymeal fills the shortfall in local supply. In 2015–16 Australia imported 706,000 tonnes of soymeal (mostly from Argentina) and only negligible volumes of other oilseed meals.

Australian soymeal imports, by country, 2007–08 to 2015–16

Other

’000 t

United States

Brazil

Argentina

2015–16

2013–14

2011–12

2009–10

2007–08

100

200

300

400

500

600

700

800

200

400

600

800

Over the decade to 2015–16 oilseed meal imports increased as protein meal demand rose with increases in chicken meat, egg and beef feedlot production. However, the increase in imports was limited by a large increase in domestic cotton production, which enabled substitution to cottonseed meal.

Australian soymeal imports, by state, 2007–08 to 2015–16

Western Australia

’000 t

New South Wales

South Australia

Queensland

Victoria

100

200

300

400

500

600

700

800

200

400

600

800

2015–16

2013–14

2011–12

2009–10

2007–08

continued ...

Oilseeds


Market for Australian oilseed meals continued

Soymeal is mostly imported into the east coast states, where livestock feeding industries are based. Victoria is the largest importer of soymeal, with major livestock feed industries for chicken meat, layer hens, pigs and dairy. New South Wales and Queensland import significant volumes to meet the needs of the pig, chicken meat and layer hen industries and the beef feedlot sector.

Outlook for oilseeds

unit 2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

Production Mt 537 522 555 555 568 585 595 604Consumption Mt 517 526 546 556 568 585 597 608Exports Mt 147 153 157 158 160 166 166 167Closing stocks Mt 93 89 97 96 96 97 95 92Indicator price a US$/t 418 373 390 382 380 380 387 401– real b US$/t 428 379 390 375 365 358 358 363Canola indicator price c US$/t 424 415 425 418 414 412 420 436– real b US$/t 434 422 425 410 398 388 388 395

Production Mt 299 306 320 324 331 341 348 354Consumption Mt 294 305 318 326 331 341 348 354Exports Mt 85 87 92 98 98 99 101 103Closing stocks Mt 15 17 18 16 15 15 15 14Indicator price d US$/t 427 345 349 350 351 354 359 364– real b US$/t 438 351 349 343 338 334 332 330

Production Mt 176 176 187 190 195 202 206 211Consumption Mt 173 178 186 190 198 203 207 210Exports Mt 77 75 78 80 82 86 89 91Closing stocks Mt 20 19 19 19 16 15 14 15Indicator price e US$/t 808 742 879 887 900 914 932 949– real b US$/t 827 754 879 870 865 862 861 860

Production kt 4,376 3,923 5,709 5,373 5,175 5,112 5,206 5,286Exports kt 2,617 2,102 3,258 3,231 3,485 3,418 3,362 3,439

Area ’000 ha 2,897 2,357 2,327 2,800 2,700 2,650 2,625 2,600Production kt 3,540 2,944 4,144 3,690 3,629 3,633 3,671 3,709Export volume g kt 2,445 1,946 3,063 2,849 2,784 2,772 2,796 2,840

– nominal A$m 1,349 1,097 1,749 1,637 1,573 1,552 1,597 1,685– real h A$m 1,388 1,113 1,749 1,607 1,506 1,450 1,455 1,498Price i A$/t 484 542 530 532 523 518 529 549– real h A$/t 498 550 530 522 501 484 482 488

Outlook for oilseeds

a US no.2 soybeans, fob Gulf. b In 2016–17 US dollars. c Rapeseed, Europe, fob Hamburg, July–June. d Soybean meal, cost insurance and freight, Rotterdam, 45 per cent protein. e Soybean oil, Dutch, free on board ex-mill. f ABARES forecast. g July–June. h In 2016–17 Australian dollars. i Delivered Melbourne, July–June. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; US Department of Agriculture

WorldOilseeds

Australia

Canola

Protein meals

Vegetables oils

Export value g


SugarOutlook to 2021–22

Benjamin K Agbenyegah

• The world indicator price for raw sugar is forecast to increase in the short term to average around US22 cents a pound in 2017–18 as a result of world sugar consumption exceeding production.

• The world sugar price is projected to fall to average US19 cents a pound, in 2019–20 before rising to US23 cents a pound (all in 2016–17 dollars) in 2021–22 as world sugar consumption grows faster than production and stocks decline.

• In 2021–22 returns to Australian growers are projected to increase to average $56 a tonne (in 2016–17 dollars), reflecting higher world prices.

Strong demand to support world sugar pricesThe world indicator price for raw sugar (Intercontinental Exchange, nearby futures, no. 11 contract) is forecast to increase by 26 per cent in 2016–17 (October to September marketing year) to average US21 cents a pound. In 2017–18 the world sugar price is forecast to increase by a further 5 per cent to average around US22 cents a pound. These forecast price rises reflect an expectation that world sugar consumption will grow faster than production, reducing world stocks and the stocks-to-use ratio.

Over the medium term, the world sugar price is projected to ease before rising again to average US23 cents a pound (in 2016–17 dollars) in 2021–22. The price is projected to decline to US19 cents a pound, in real terms, in 2019–20, which reflects production exceeding consumption in 2018–19 and 2019–20 and a projected 3 per cent rise in world opening stocks to 68.9 million tonnes in 2019–20. World sugar consumption and production are projected to increase over the remainder of the medium term. However, consumption is projected to grow faster, leading to further reductions in world stocks and the stocks-to-use ratio.

Sugar


World sugar indicators, 2009–10 to 2021–22 a

Production

Mt

Price (right axis)

StocksConsumption

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

2016–17USc/lb

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

Favourable prices to drive world sugar productionWorld sugar production is forecast to be around 177 million tonnes in 2016–17, up from 173 million tonnes in 2015–16. This forecast reflects an estimated rise in area planted to cane and beet in Australia, Brazil, China, the European Union and the United States. Lower production is forecast in India and Thailand because adverse seasonal conditions in 2015–16 negatively affected cane yields.

In 2017–18 world sugar production is forecast to increase by a further 4 per cent to 183.1 million tonnes because cane and beet plantings are expected to increase in response to favourable world sugar prices. Higher production is expected in all major producing countries.

Over the medium term, world sugar production is projected to grow at an average annual rate of around 1.6 per cent to reach 198 million tonnes in 2021–22, compared with 177 million tonnes forecast in 2016–17. This medium-term projection is based largely on an expected rise in area planted to cane and beet leading to production growth in Brazil, China, India, the European Union, Thailand and all smaller major producing countries. Assuming average seasonal conditions, some improvements are also expected in cane and beet yields and in the sugar content of cane over the medium term.

Sugar production in Brazil is projected to reach 48 million tonnes in 2021–22, up from around 40 million tonnes forecast in 2016–17. This projection reflects an expected increase in sugarcane production and in the share of cane used for sugar rather than ethanol production.

Sugar


The projected increase in sugar cane assumes that the Brazilian Government will continue its Prorenova programme. Prorenova encourages the Brazilian sugarcane industry to expand or renew the area planted to sugar cane by financing the renovation of old plantations. The government launched Prorenova in 2012 with a loan package of US$2.2 billion and a goal of renovating or expanding more than 1 million hectares of sugar cane. In the first three years Prorenova granted around US$778.3 million in loans and cane production rose by 8 per cent to 667 million tonnes. In 2015–16 the area planted to cane expanded by 18 per cent to 11.5 million hectares. Sugarcane area in Brazil is expected to increase to 13.5 million hectares in 2021–22.

Cane in Brazil is used to produce sugar and ethanol. The proportions allocated are influenced by the Brazilian Government’s biofuels policy and sugar–ethanol price relativities. Ethanol production in Brazil is projected to increase over the medium term because of the mandatory ethanol blending ratio and a rise in ethanol prices. The OECD projects ethanol prices will rise to around US$46 a tonne (in 2016 dollars) in 2022. In the first 10 months of the 2016–17 season (April to March), sugar prices were high relative to ethanol and the share of cane allocated to sugar production increased to around 47 per cent from its low of 41 per cent in 2015–16. This allocation is forecast to remain at 47 per cent for the rest of 2016–17, leading to higher sugar production. In 2021–22 the world raw sugar price is projected to be 10 per cent above the forecast average price in 2016–17, compared with 5 per cent for ethanol. This will lead to a further increase in the sugar–ethanol price ratio. The allocation of cane for sugar production is expected to increase to 51 per cent by 2021–22. The projected price rise is expected to be driven by continued strong demand for world sugar consumption in developing countries.

Sugarcane allocation and sugar production, Brazil, 2009–10 to 2021–22 a

Cane allocated to ethanol

Mt

Sugar production(right axis)

Cane allocated to sugar

a Sugar production is raw value equivalent and years are from March to April. f ABARES forecast. z ABARES projection.

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

Mt

100

200

300

400

500

600

700

800

10

20

30

40

50

60

70

80

Sugar


In India, sugar production is projected to increase to 35 million tonnes in 2021–22, compared with around 28 million tonnes forecast in 2016–17. This projection reflects forecast increased cane plantings, improved productivity and increased allocation of cane to sugar production, driven largely by India’s sugar and ethanol support policies.

Sugarcane production in India varies widely from season to season depending on the performance of the Indian monsoon. Over the medium term, India is expected to invest further in electricity generation and construction of new irrigation dams to reduce reliance on monsoon rainfall for cane production. Government support for domestic sugar production is also expected to continue, including support prices for cane, minimum support prices for raw and refined sugar, export subsidies and loan facilities.

Cane crush in India is largely used to produce sugar and gur (jaggery or crude, non-centrifugal lump sugar). The price relativity determines how cane crush is allocated to produce each commodity. Since May 2016 the wide gap between gur and sugar prices has narrowed, reflecting stronger sugar prices in 2016–17. With favourable sugar prices projected over the medium term, cane allocation is expected to favour sugar production.

Sugar and gur prices, Delhi market, January 2014 to January 2017

Indianrupee/kg

Sugar

Gur

Jan2017

Jul2016

Jan2016

Jul2015

Jan2015

Jul2014

Jan2014

10

20

30

40

50

Sugar production in Thailand is projected to grow to around 16 million tonnes in 2021–22, compared with 10 million tonnes forecast in 2016–17. This projection is based on expected expansion in harvested area and improvements in cane yields. The continuation of Thai Government policies for sugar is expected to support increased cane area and yields. Policies include revenue sharing between cane growers and millers, domestic price support, low-interest loans, and investment in technology and farm development. In the 10 years to 2014–15 these support policies contributed to Thailand’s cane crush more than doubling to a record 106 million tonnes, producing 11.3 million tonnes of sugar.

Sugar


In China, sugar production is projected to rise to 14 million tonnes in 2021–22 compared with 10.5 million tonnes forecast in 2016–17. This projection is expected to be met through the expansion of cane and beet planted area and improved yield potential. With sugar prices projected to be relatively high over the medium term, Chinese farmers are expected to increase cane and beet planted area at the expense of alternative crops. The Chinese Government is also expected to continue investing in technology and infrastructure improvements to achieve productivity growth.

Sugar production in the European Union is projected to reach 22 million tonnes in 2021–22, up from the 17 million tonnes estimated in 2016–17. This projection assumes the EU quota system will be removed in October 2017 and the European Union will continue to support the sugar industry. The EU quota system restricts the amount of sugar produced by each member state and provides support through a minimum sugar beet price. Any production in excess of the quota in any one year can only be used for export, sold for biofuel or other industrial non-food uses or counted against the following year’s quota. Efficient production systems in France and Germany are expected to drive higher production over the medium term despite the departure from the European Union of the United Kingdom—the third-largest EU sugar producer.

World sugar consumption to growWorld sugar consumption is forecast to rise by 3 million tonnes in 2016–17 to around 184 million tonnes, reflecting strong demand for sugar from food-processing and beverage industries in developing countries. In 2017–18 world sugar consumption is forecast to remain largely unchanged at 184.2 million tonnes. Growth in consumption in 2017–18 is expected to be constrained by forecast relatively high world sugar prices, compared with alternatives such as high-intensity sweeteners and high-fructose corn syrup.

Over the medium term, world sugar consumption is projected to grow by an average of 2.3 per cent a year to reach 200 million tonnes in 2021–22. This projection is based on continued growth in demand for sugar in developing countries, driven by rapid expansion in the food-processing and beverage industries. The expansion of these industries in developing countries is supported domestically by rising incomes, growing populations and urbanisation. Growth in consumption is projected for Brazil, China, India, Indonesia, the Russian Federation and Ukraine. However, a decline in consumption is projected in developed markets, particularly in the European Union and the United States. This is because of a slowdown in population growth, dietary changes based on increased health consciousness, and nutritional policies in these countries.

World sugar exports to increaseWorld sugar exports are forecast to rise by 3 per cent in 2016–17 to 60 million tonnes. This forecast reflects increased exports from Australia, Brazil and Mexico, which are expected to be partially offset by declines in exports from India and Thailand. In 2017–18 world sugar exports are forecast to increase by a further 7 per cent to 64 million tonnes, driven by continued growth in world sugar production and import demand.

Over the medium term, world exports are projected to grow at an average annual rate of 2 per cent to reach around 69 million tonnes in 2021–22. Increases in world supplies and strong world import demand are projected to support world sugar exports. Supplies available for export are projected to increase in all major exporting countries.

Sugar


Lower world sugar stocksWorld closing stocks of sugar are forecast to decline by 10 per cent in 2016–17 to around 66 million tonnes. This reflects an expectation that world consumption will continue to exceed production. At this stock level, the world stocks-to-use ratio is forecast to fall by around 4 percentage points to around 36 per cent.

In 2017–18 continued growth in world consumption is forecast to drive world stocks lower to around 65 million tonnes and result in a decline in the stocks-to-use ratio to 35 per cent.

World sugar stocks are projected to fall to around 63 million tonnes in 2021–22, assuming growth in world demand continues to outpace supply over the medium term. The world stocks-to-use ratio for sugar is projected to decline to around 32 per cent in 2021–22.

World sugar stocks, 2009–10 to 2021–22 a

Stocks

Mt

Stocks-to-use ratio(right axis)

a Stocks are raw value equivalent and years are from October to September. f ABARES forecast. z ABARES projection.

%

20

40

60

80

100

10

20

30

40

50

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

Returns to Australian cane growers to increaseReturns to Australian cane growers are forecast to increase by 20 per cent in 2016–17 to average $52 a tonne of cane cut for crushing, largely reflecting the forecast rise in the world sugar price. Higher world prices are forecast to continue in 2017–18, further driving up grower returns to average $54 a tonne, a rise of 4 per cent.

In 2021–22 the returns to Australian cane growers are projected to average $56 a tonne (in 2016–17 dollars), based on projected high world sugar prices.

Modest growth in Australian sugar productionAustralian sugar production in 2016–17 is estimated to be marginally higher than in 2015–16 at around 5.1 million tonnes. This forecast largely reflects an estimated 2 per cent growth in cane production to 36 million tonnes as a result of an increase in harvested area. Average yield is expected to decline slightly because of adverse seasonal conditions in 2015–16.

Sugar


In 2017–18 Australian sugar production is forecast to rise by a further 1 per cent to around 5.2 million tonnes because of a forecast increase in cane production from an expansion in harvested area.

Over the medium term, the area of sugar cane harvested in Australia is projected to grow by an average of 1 per cent a year to reach 420,000 hectares in 2021–22. This is 7 per cent higher than the 392, 000 hectares forecast for 2016–17. Limited suitable land close to existing sugar mills and competition for land use from alternative crops such as horticulture are expected to constrain growth in area planted to sugar cane.

Australian sugarcane production is projected to reach 38 million tonnes in 2021–22. This projected growth is based on an expansion in planted area and improvements in cane yields, assuming average seasonal conditions. Reflecting higher cane crush, Australian sugar production is projected to rise at an average rate of 2.1 per cent a year over the medium term to reach around 5.6 million tonnes in 2021–22.

Sugarcane area harvested and average cane yield, Australia, 2009–10 to 2021–22

Area harvested

’000 ha

Cane yield (right axis)


2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

t/ha

100

200

300

400

500

20

40

60

80

100

Sugar exports from Australia are forecast to be around 4.3 million tonnes in 2016–17, 9 per cent higher than 2015–16 shipments. In 2017–18 Australian sugar exports are forecast to remain largely unchanged at 4.3 million tonnes. However, the value of Australian sugar exports is forecast to increase by 41 per cent in 2016–17 to around $2.6 billion and in 2017–18 by 10 per cent to $2.8 billion as a result of higher world sugar prices.

Australian sugar exports are projected to be around 4.7 million tonnes in 2021–22, supported by increased Australian production and strong import demand from the Republic of Korea, Indonesia and China. The value of exports is projected to reach around $3 billion (in 2016–17 dollars) in 2021–22, 18 per cent higher than forecast for 2016–17.

Sugar


Australian sugar production, exports and returns to cane growers, 2009–10 to 2021–22 a

Production

Mt

Return to cane growers (right axis)

Exports

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

2016–17$/t

1

2

3

4

5

6

10

20

30

40

50

60

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

Outlook for sugar a

unit 2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

Production Mt 181.8 173.3 176.9 183.1 188.8 192.0 196.2 198.0

– Brazil Mt 37.7 38.1 39.6 41.5 43.8 45.5 46.5 48.0

Consumption Mt 178.9 180.9 183.9 184.2 186.7 191.4 198.7 200.0Exports Mt 55.6 58.5 60.1 64.0 65.0 66.7 68.2 69.0

Closing stocks Mt 80.5 72.9 65.9 64.8 66.9 67.5 65.1 63.1


– nominal USc/lb 13.4 16.7 21.0 22.0 20.8 20.2 22.3 25.4– real d USc/lb 13.7 16.9 21.0 21.6 20.0 19.0 20.6 23.0

Production g kt 4,572 4,920 5,087 5,161 5,235 5,305 5,434 5,571

Export volume kt 3,675 4,140 4,290 4,300 4,420 4,480 4,590 4,710

– nominal A$m 1,643 1,823 2,565 2,833 2,910 2,826 2,993 3,411

– real h A$m 1,690 1,850 2,565 2,780 2,786 2,640 2,727 3,032

– nominal A$/t 40 43 52 54 54 54 57 63

– real h A$/t 41 44 52 53 52 50 52 56

Outlook for sugar a

a Volumes in raw value equivalent. b October–September years. c Nearby futures price, Intercontinental Exchange, New York, no. 11 contract. d In 2016–17 US dollars. e July–June years. f ABARES forecast. g Raw tonnes actual. h In 2016–17 Australian dollars. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; Intercontinental Exchange; International Sugar Organization

World b

Australia e

Price c

Export value

Return to cane growers


• World cotton prices are forecast to increase over the short term as a result of world cotton consumption exceeding production.

• In 2021–22 world cotton prices are projected to average around US80 cents a pound (in 2016–17 dollars), reflecting continued growth in world consumption driven by strong demand from non-OECD apparel-producing countries.

• Returns to Australian cotton growers are projected to rise to average $592 a bale (in 2016–17 dollars) in 2021–22, reflecting higher world prices.

• Cotton exports from Australia are projected to increase to around 1 million tonnes in 2021–22 from a forecast 774,000 tonnes in 2016–17.

World cotton prices to riseThe world indicator price for cotton (Cotlook ‘A’ index) is forecast to rise by 11 per cent to average US78 cents a pound in 2016–17 (August to July marketing year). This forecast reflects decreased world cotton supplies following a 19 per cent fall in world production in 2015–16. World stocks are forecast to fall by 6 per cent to 19.7 million tonnes by the end of 2016–17.

In 2017–18 a further decline in world stocks is forecast to result in a 3 per cent rise in world cotton prices to average around US80 cents a pound. This is the result of forecast world cotton consumption exceeding production in 2017–18.

Over the medium term, world cotton prices in real terms are projected to fall in 2018–19 to around US76 cents a pound before rising to average around US80 cents a pound in 2021–22. The fall in the 2018–19 world average price reflects a projected 8 per cent increase in production in 2017–18. However, average growth in world cotton consumption is projected to continue to outpace production over the medium term, leading to a significant decline in world stocks and the stocks-to-use ratio. This projected growth in world cotton consumption is driven by continued strong demand for raw cotton in non-OECD apparel-producing countries and a projected rise in world crude oil prices, leading to an increase in polyester prices over the medium term.

CottonOutlook to 2021–22

Benjamin K Agbenyegah

Cotton


World cotton supply and indicator price, 2012–13 to 2021–22

Opening stocks

Mt2016–17USc/lb

Price (right axis)Production


10

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40

50

60

20

40

60

80

100

120

2021–22z

2020–21z

2019–20z

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2014–15

2013–14

2012–13

World cotton production to growWorld cotton production is forecast to rise by 8 per cent in 2016–17 to around 23 million tonnes despite a 4 per cent fall in the area planted to cotton globally. Improved seasonal conditions in major cotton-producing countries in 2016–17 are forecast to result in average world lint yields increasing by 13 per cent. Production is forecast to increase in Australia, Brazil, India, Pakistan and the United States.

In 2017–18 world cotton production is forecast to rise by a further 8 per cent to around 24.7 million tonnes, driven largely by an 8 per cent increase in the area planted to cotton. Higher cotton planting is forecast in response to expected favourable cotton prices, compared with alternatives at the time of planting. Production is forecast to increase in all major cotton-producing countries except China, where production is expected to fall. This fall reflects the Chinese Government’s changes in 2014–15 to domestic support policies for cotton farmers.

Forecast changes in world cotton production, by country, 2016–17 and 2017–18

2016–172017–18

MtOther

China

Turkey

Uzbekistan

Australia

Brazil

Pakistan

United States

India

1.0

0.0

0.2

0.4

0.6

0.8

Cotton


Over the medium term, world cotton production is projected to grow at an annual rate of around 2 per cent a year to 28 million tonnes in 2021–22. This projected growth largely reflects a gradual increase in world cotton plantings in response to expected favourable returns to cotton production (compared with alternative crops) and strengthening demand for raw cotton.

Over the medium term, the area planted to cotton worldwide is projected to grow at an average rate of 1.2 per cent a year to reach 35 million hectares in 2021–22. Yield improvements will be constrained over this period because of the almost complete uptake of the current generation of genetically modified varieties. World lint yields are projected to average 0.8 tonnes a hectare in 2021–22. Production in Brazil, India, Pakistan and the United States is projected to increase over the medium term. However, production in China—the world’s second-largest producer—is projected to continue to decline over the medium term.

World cotton indicators, 2007–08 to 2021–22

Production

Mt2016–17USc/lb

Price (right axis)

Consumption


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15

20

25

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90

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150

180

2021–22z

2019–20z

2017–18f

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2011–12

2009–10

2007–08

In India, the world’s largest cotton producer, production is projected to grow over the medium term as a result of improved yield and quality. The Indian Government is expected to encourage cotton production through pest control programmes and to continue construction of irrigation and electricity infrastructure to reduce reliance on the monsoon for crop performance. Currently India has the lowest average lint yield among the major producing countries. Government training in the use of farm machinery in India will also drive productivity gains through the reduction in labour-intensive operations such as hand-picking cotton.

US cotton production is expected to grow gradually over the medium term, assuming average seasonal conditions in the major upland cotton-growing regions in the United States.

Cotton


Production in Pakistan is expected to grow over the medium term, largely as a result of improvements in lint yields. Adoption of current generation genetically modified cotton varieties and investment in irrigation and pest control programmes are expected to improve yields and productivity in Pakistan over the medium term.

Chinese cotton production is projected to decline over the medium term, reflecting reduced government support payments, rising production costs, low returns to cotton relative to other crops and constraints on water supply.

World cotton consumption to growIn 2016–17 world consumption of raw cotton is forecast to increase slightly to 24 million tonnes, constrained by strong competition from synthetic fibres. Since 2015 relatively low world crude oil prices have resulted in lower prices for synthetics and increased price competitiveness against cotton. Cotton consumption is forecast to rise in Bangladesh, China, Turkey and Vietnam but decline in India, Pakistan and the United States.

In 2017–18 world cotton consumption is forecast to increase by a further 7 per cent to around 26.1 million tonnes. This forecast rise is supported by forecast higher competing fibre prices and strong demand for raw cotton from non-OECD textile and garment industries. Consumption is forecast to rise in all the major cotton-consuming countries.

World cotton–polyester price ratio and crude oil prices, August 2013 to January 2017

ratio

World crude oil(right axis)

Cotton–polyester price ratio

US$/barrel

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0.3

0.6

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1.8

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Jul2016

Jan2016

Jul2015

Jan2015

Jul2014

Jan2014

Cotton


World cotton consumption, by country, 2007–08 to 2017–18

Other

Mt

Bangladesh

f ABARES forecast.

Vietnam

Pakistan

IndiaChina

5

10

15

20

30

25

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

Over the medium term, world cotton consumption is projected to grow at an average rate of around 2.4 per cent a year to 28.7 million tonnes in 2021–22. This compares with a forecast of 24.3 million tonnes in 2016–17. Strengthened demand for raw cotton in non-OECD apparel-producing countries—Cambodia, India, Pakistan, Bangladesh, Vietnam, Indonesia, Brazil and Turkey—is expected to drive consumption. The textile and garment industries in these countries are expanding rapidly in response to an expected rise in demand for clothing and textiles in Europe, the United States, Japan and Australia. Crude oil and synthetic fibre prices are projected to increase over the medium term, with the World Bank projecting crude oil to reach around US$102 a barrel (in 2016 dollars) in 2022. As a result, in 2021–22 cotton is expected to regain some of the competitiveness lost between 2014–15 and 2016–17.

Raw cotton consumption in China—the world’s largest consumer—is expected to be constrained by faster growth of imported cotton yarn and textiles and slower growth in finished garment exports. China is facing strong competition in the international textile market from neighbouring, low-cost Asian countries such as India, Bangladesh, Vietnam, Indonesia and Cambodia.

Strong demand to support world cotton trade to 2021–22World cotton exports are forecast to rise by 1 per cent in 2016–17 to 7.8 million tonnes, as increases in exports from the United States and Australia more than offset declines in exports from India and Brazil. Imports are expected to increase in Bangladesh and Vietnam but decline in Indonesia, Thailand and Turkey.

In 2017–18 world exports of raw cotton are forecast to increase by 6 per cent to around 8.2 million tonnes, reflecting increased exportable supplies in the United States, India, Australia, Brazil and Uzbekistan and strong import demand by Bangladesh, Turkey and Vietnam.

Cotton


Over the medium term, world cotton exports are projected to increase at an annual rate of around 1.6 per cent to reach 9.2 million tonnes in 2021–22. This increase will be supported by projected continued strong import demand in non-OECD countries and increased world cotton production.

In 2021–22 China—the world’s largest importer—is projected to maintain its raw cotton imports at 894,000 tonnes (the minimum specified under its World Trade Organization obligations). Despite a significant fall in domestic raw cotton production and growing demand for high-quality cotton, Chinese raw cotton imports are constrained by large national stocks in China, a slowdown in the local textile industry and rapid growth of competition from neighbouring Asian countries.

World cotton stocks to continue to fallWorld cotton stocks are forecast to fall by 7 per cent in 2016–17 to 19.7 million tonnes, driven largely by rising world consumption. Much of this stock run-down is expected to occur in China, where consumption is forecast to continue to grow and production of raw cotton to decline. Chinese cotton stocks are forecast to fall by 17 per cent to 10.5 million tonnes. Cotton stocks in the rest of the world are forecast to rise by 9 per cent to around 9.2 million tonnes. The world stocks-to-use ratio is expected to be around 81 per cent in 2016–17, 6 percentage points lower than in 2015–16.

In 2017–18 world cotton stocks are forecast to decline by a further 7 per cent to 18.3 million tonnes, based on the expectation that world consumption will continue to exceed production. The world cotton stocks-to-use ratio is expected to decline to 70 per cent in the same year.

World cotton stocks and stocks-to-use ratio, 2007–08 to 2017–18

Rest of world

%Mt

Stocks-to-use ratio (right axis)

China

f ABARES forecast.

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100

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2017–18f

2015–16

2013–14

2011–12

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2007–08

Cotton


Over the medium term, world cotton stocks are projected to continue to decline as world consumption continues to exceed production. World stocks are projected to fall over the medium term at an average rate of around 3.4 per cent a year to around 16 million tonnes in 2021–22. This compares with the record 24.3 million tonnes in 2014–15. The world cotton stocks-to-use ratio is projected to decline further to around 56 per cent in 2021–22.

World cotton stocks, 2007–08 to 2021–22

Stocks

%Mt

Stocks-to-use ratio (right axis)


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2007–08

Favourable returns to Australian cotton growersReturns to Australian cotton growers at the gin-gate are forecast to rise by 7 per cent in 2016–17 to average $590 a bale (227 kilograms) of lint, including the value of cottonseed and net of ginning costs. In 2017–18 returns to growers are forecast to increase a further 1 per cent to average $597 a bale. The increased returns in the short term are largely driven by a forecast increase in world cotton prices.

Over the medium term returns to Australian cotton growers are projected to increase to average $592 a bale (in 2016–17 dollars) in 2021–22, reflecting the gradual rise of world cotton prices.

Australian cotton production to recoverAustralian cotton production is forecast to rise by 64 per cent in 2016–17 to 1 million tonnes, reflecting the area planted to cotton more than doubling to 557,400 hectares. This significant increase in cotton plantings was driven by improved availability of irrigation water, high soil moisture in Australia’s cotton-growing regions and expected favourable returns to cotton relative to production alternatives. Irrigated cotton plantings are estimated to have increased by 66 per cent to 348,000 hectares and dryland plantings by more than 248 per cent to around 209,000 hectares. The increased proportion of dryland plantings (which are naturally lower yielding) are assumed to result in a 21 per cent decline in lint yields to average 1.85 tonnes a hectare.

Cotton


Australian cotton production is forecast to increase by a further 9 per cent in 2017–18 to 1.1 million tonnes. Cotton planting is expected to increase by 2 per cent to 570,000 hectares and lint yield is assumed to be around the long-term average of 2 tonnes a hectare. This yield assumption reflects an expected reduction in the share of dryland plantings from current high levels to average levels in 2017–18. At 11 February 2017 the average storage level of public irrigation dams serving Australian cotton-growing regions was 55 per cent of capacity, well above the average of 39 per cent for 11 February 2016. Assuming average seasonal run-off between March and November 2017, the level of water in irrigation dams should enable another large Australian cotton planting in 2017–18.

Storage levels of main irrigation dams, at 11 February

2016

%

2017

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Oth

er Q

ueen

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d

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acqu

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ari (

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re)

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it (N

amoi

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tyre

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Cope

ton

(Gw

ydir)

Over the medium term, Australian cotton production is projected to grow at an average rate of around 1 per cent a year to reach 1 million tonnes in 2021–22. This projection is well above the 10-year average to 2015–16 of 636,000 tonnes. Australian cotton production is projected to decline to 970,000 tonnes in 2019–20, reflecting an assumed return to a long-term average water level in public irrigation dams.

Cotton lint yields in Australia are projected to remain largely unchanged over the medium term at around 2 tonnes a hectare. This is because the uptake in Australia of the current generation of genetically modified cotton varieties is largely complete. Genetically modified varieties account for more than 98 per cent of total Australian cotton planting in an average season.

Cotton


Australian cotton planted area and average lint yield, 2007–08 to 2021–22

Area

’000 ha t/ha

Lint yield (right axis)


0.5

1.0

1.5

2.0

2.5

3.0

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

100

200

300

400

500

600

Australian cotton exports to increaseAustralian cotton exports are forecast to increase by 44 per cent in 2016–17 to 774,000 tonnes. This forecast rise is supported by higher cotton production in 2015–16 and 2016–17 and strong world demand for high-quality Australian cotton. The value of Australian cotton exports is forecast to be around $2 billion in 2016–17, 56 per cent higher than in 2015–16.

In 2017–18 cotton exports from Australia are forecast to increase by a further 37 per cent to around 1.1 million tonnes. The value of Australian cotton exports is forecast to increase by 35 per cent in 2017–18 to around $2.7 billion.

Australian cotton exports are projected to be around 1 million tonnes in 2021–22. The value of Australian exports is projected to be around $2.4 billion (in 2016–17 dollars) in 2021–22, 21 per cent higher than forecast in 2016–17.

Cotton production, exports and gin-gate returns, Australia, 2007–08 to 2021–22

Production

Exports

2016–2017$/balekt

Gin-gate return a (right axis)

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

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

100

200

300

400

500

600

700

200

400

600

800

1,000

1,200

1,400

Cotton


Outlook for cotton

unit 2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

Production Mt 25.9 21.0 22.9 24.7 26.4 26.9 27.4 28.0Consumption Mt 24.3 24.2 24.3 26.1 26.6 27.4 28.1 28.7

Exports Mt 7.7 7.7 7.8 8.2 8.8 9.0 9.2 9.2Closing stocks Mt 24.3 21.1 19.7 18.3 18.1 17.5 16.7 16.0


– nominal USc/lb 70.8 70.4 78.0 80.4 79.0 81.7 84.8 88.0– real b USc/lb 72.5 71.6 78.0 78.8 76.0 77.0 78.4 79.7

Area harvested ’000 ha 197 270 557 570 520 495 515 530

Lint production kt 528 629 1,029 1,117 1,019 970 1,009 1,039

Export volume kt 681 536 774 1,056 1,080 997 982 1,015

– nominal A$m 1,546 1,269 1,976 2,672 2,674 2,506 2,532 2,683

– real d A$m 1,590 1,288 1,976 2,622 2,560 2,341 2,308 2,385

Gin-gate return e– nominal A$/bale 516 551 590 597 621 630 638 665– real d A$/bale 530 559 590 586 595 589 581 592

Outlook for cotton

a August–July years. b In 2016–17 US dollars. c July–June years. d In 2016–17 Australian dollars. e Value of lint and cottonseed less ginning costs. f ABARES forecast. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; US Department of Agriculture

World a

Australia c

Cotlook ’A’ index

Export value


• The gross value of horticultural production is projected to increase from $9.3 billion in 2015–16 to $10 billion in 2021–22 (in 2016–17 dollars).

• Horticultural exports are projected to increase in the medium term from record levels in 2015–16, supported by new and improved market access.

The gross value of Australian horticultural production is projected to increase from $9.3 billion in 2015–16 to around $10 billion in 2021–22 (in 2016–17 dollars). The values of fruit and nuts (excluding wine grapes) and vegetables are projected to grow in the medium term, in response to growing domestic demand for fresh produce and favourable export opportunities. The value of nursery products, cut flowers and turf is projected to remain flat in real terms at $1.3 billion to 2021–22.

Production prospects are particularly favourable for irrigated horticultural products in the short term. Exceptional spring rainfall across much of Australia in 2016 increased water storage levels. The Murray–Darling Basin was at 79 per cent capacity in late January 2017 compared with 37 per cent at the same time last year. Since November 2016 general security water allocations were 100 per cent in the Murray and Murrumbidgee catchment areas.

Gross value of horticultural production, Australia, 2002–03 to 2021–22

2016–17$b

Fruit and nuts (excludingwine grapes)

Vegetables


Nursery, �owers and turf

0.51.01.5

2.02.53.03.54.04.55.0

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

HorticultureOutlook to 2021–22

Sarah Smith and Andrew Cameron

Horticulture


Trade agreements to boost horticultural exportsThe real value of exports of horticultural products is expected to increase from $2.7 billion in 2015–16 to $3.3 billion in 2021–22. Under trade agreements with China, Japan and the Republic of Korea, import tariffs on several horticultural products have been reduced—increasing the competitiveness of Australian horticultural exports. In the 12 months after the China–Australia Free Trade Agreement entered into force in December 2015, horticultural exports to China rose by 68 per cent compared with the previous 12 months. In the two years since the Korea–Australia Free Trade Agreement entered into force in December 2014, horticultural exports to Korea doubled. Australia’s export competitiveness in these key markets is expected to improve in the medium term because of scheduled further reductions in or eliminations of import tariffs under the FTAs, new and improved technical market access and the assumed lower Australian dollar.

Horticultural imports are projected to increase as a result of growing domestic demand for processed goods. In 2015–16 imports of processed fruit and vegetables—78 per cent of total fruit and vegetable imports—were valued at $1.8 billion. However, growth in the value of imports is expected to be moderated somewhat by a lower Australian dollar.

Trade in some fresh fruit and vegetable products follows a counter-seasonal pattern, with products being exported during the Australian production season and imported at other times of the year. Counter-seasonal trade is important because year-round consumer demand for many perishable fresh fruits and vegetables can be met by imports when fresh local produce is not available.

Outlook for fruit and nutsThe gross value of Australian fruit and nut production, excluding wine grapes, is forecast to increase by 2 per cent to $3.7 billion in 2016–17. Over the medium term, the gross value of fruit and nut production is projected to reach $3.9 billion in real terms by 2021–22. Much of the projected increase is attributable to growth in the production of high-value fruit and nuts and in the value of exports. Reductions in import tariffs resulting from several preferential trade agreements is projected to boost Australia’s competitiveness in key export markets.

Outlook for fruitFruit exports are projected to rise from $1.2 billion in 2016–17 to around $1.5 billion (in 2016–17 dollars) by 2021–22. The assumed weaker Australian dollar, coupled with improved export opportunities in Asia following the implementation of scheduled tariff reductions under free trade agreements with China, Japan and the Republic of Korea, is expected to continue to stimulate fruit exports and encourage production. In the five years to 2015–16 the total value of fruit exports grew by over $500 million to reach $1.1 billion (in 2016–17 dollars), following a decade of contraction between 2000–01 and 2009–10.

China was the largest export market for Australian fruit in 2015–16 ($190 million), ahead of Hong Kong ($173 million). Hong Kong had been Australia’s largest fruit market for much of the previous 20 years. China accounted for 18 per cent of fruit exports by value in 2015–16, up from 9 per cent in 2014–15. Indonesia, Japan, Singapore and the United Arab Emirates were also major export destinations.

Horticulture


Table grapes were Australia’s highest value fruit export in 2015–16, followed by oranges, mandarins and cherries. Table grape exports grew steadily in the five years to 2015–16. Biosecurity restrictions imposed by Vietnam prevented the export of fresh grapes to Vietnam during the 2015 season. However, in July 2015 the temporary suspension was lifted and table grape exports to Vietnam resumed. Vietnam was Australia’s second-largest market in 2013–14, the year before the suspension. Table grape exports to Japan and China have increased substantially since trade agreements came into effect and technical market access was agreed in 2014 for both markets.

Australian table grape exports by destination, 2010–11 to 2015–16

Rest of world

2016–17$m

VietnamJapanHong KongIndonesiaChina

100

200

300

400

2015–16

2014–15

2013–14

2012–13

2011–12

2010–11

In 2015–16 the total value of fruit imports was $1.3 billion, exceeding exports by more than $200 million. Import growth has been dominated by processed products such as canned or frozen fruit because domestic processing costs are high. Fresh fruit exports almost tripled after 2010–11 to reach $948 million (in 2016–17 dollars) in 2015–16 and exceeded the value of fresh fruit imports by $520 million.

Major fresh fruit imports in 2015–16 included the counter-seasonal trade of table grapes ($66 million), avocados ($64 million) and kiwifruit ($50 million). In 2015–16 processed products made up two-thirds of fruit imports and the largest sources were New Zealand, the United States and China.

CitrusProduction of oranges fell by 62,000 tonnes between 2012–13 and 2014–15 to 338,000 tonnes, as a result of lower yields. The Australian orange industry has for some time been shifting from production of valencia oranges for juicing to navel oranges for the fresh food market, because imports of orange juice concentrate have lowered the profitability of juicing oranges. This has seen the composition of orange orchards change—with plantings of navel trees replacing valencia trees—and a fall in the total number of trees since 2010–11. No new plantings are expected over the medium term. As a result, orange production is forecast to increase in 2016–17 as yields for new trees improve but to slowly contract to around 315,000 tonnes by 2021–22 as the total number of trees fall.

Horticulture


Mandarin production grew by an average of 2 per cent a year between 2008–09 and 2014–15 as new plantings began bearing fruit. Production is projected to reach around 130,000 tonnes by 2021–22, compared with 101,000 tonnes in 2014–15.

Citrus exports are forecast to reach 220,000 tonnes in 2017–18, more than a third higher than in 2015–16, because of increased production of export-quality fruit and growing demand from Asia. Japan, Hong Kong and China were Australia’s largest export markets for citrus in 2015–16. Over the medium term, exports are forecast to continue growing because of higher Asian demand. Trade agreements are scheduled to gradually remove tariffs on Australian citrus products in the key markets of China (by 2023) and Japan (by 2024). This will continue to improve the competitiveness of Australian citrus products.

Tariff elimination schedule for Australian oranges, by importing country, 2014–2024

%

KAFTA a

a Seasonal tari� between April and September. b Seasonal tari� between June and November. ChAFTA China–Australia Free Trade Agreement. JAEPA Japan–Australia Economic Partnership Agreement. KAFTA Korea–Australia Free Trade Agreement.

10

20

30

40

50

60Republic of Korea base rateJAEPA bJapan base rateChAFTA China base rate

20242023202220212020201920182017201620152014

ApplesApple production in Australia fluctuated at just below 300,000 tonnes between 2004–05 and 2014–15 and is projected to remain around this level to 2021–22.

Apple exports more than doubled to 4,700 tonnes in 2015–16, worth around $12 million. Increased exports to Thailand and the United Kingdom accounted for half the increase, with growth in exports to Indonesia, Malaysia and the United Arab Emirates also strong.

Apple imports remain low and reached only 619 tonnes in 2015–16, down from 751 tonnes the previous year.

Horticulture


BananasAustralian banana production is forecast to reach 370,000 tonnes in 2016–17, 3 per cent higher than the record estimated in 2015–16. Favourable seasonal conditions have supported higher yields. Production is projected to rise to 2021–22 to meet the demands of a growing population. Both short- and medium-term production is subject to risk from disease and extreme weather events.

Panama disease tropical race 4 is a highly destructive fungal disease that causes affected banana trees to wilt and prevents them from producing marketable fruit. Fungus spores can survive in soil for many years and therefore are difficult to eradicate. The disease was discovered on a Tully banana farm in March 2015. Strict quarantine regulations were implemented to minimise the spread of the disease, and national production has not been significantly affected. An outbreak of the disease is a downside risk factor for banana production in the medium term.

The Australian banana industry is largely domestically focused, with minimal exports. Fresh banana imports are not permitted to Australia because they pose a biosecurity risk.

CherriesCherry exports have grown strongly, increasing in real terms (in 2016–17 dollars) from $15 million in 2010–11 to more than $75 million in 2016–17. Australia and South American countries such as Chile have the same growing season and compete directly. However, lower airfreight costs give Australian exporters to Asian markets a competitive advantage over South American exporters.

In 2015–16 the pest-free status of Tasmanian cherries resulted in them being traded at an 80 per cent premium over cherries grown in other states. Tasmanian cherries were priced at $17.42 a kilo compared with an average of $9.57 a kilo across other states. The Japanese and Korean markets currently do not allow imports of cherries grown on mainland Australia due to the risk of fruit fly contamination.

Value of Australian cherry exports, 1999–2000 to 2015–16

Tasmania

2016–17$m

Rest of Australia

2015–16

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

1999–2000

10

20

30

40

50

60

70

80

Horticulture


Several importing countries only accept cherries and some other fresh fruit after a temperature-based treatment if the product is grown in areas of Australia not recognised as being free from fruit flies. New technologies to irradiate traces of fruit fly have the potential to reduce the cost of eradication and improve ease of export from the mainland to several markets. Increasing demand from Asia combined with potentially cheaper forms of fruit fly eradication are projected to result in continued growth of cherry exports over the medium term.

Outlook for tree nutsProduction of Australian tree nuts, particularly almonds and macadamias, grew strongly from 2010–11 to 2014–15. Over this period almond production grew by 83 per cent to 63,000 tonnes and macadamia production by 38 per cent to 40,000 tonnes. Over the medium term, tree nut production is projected to increase slowly as tree plantings from the late 2000s reach full maturity.

The real value of tree nut exports almost quadrupled to $945 million in the five years to 2015–16. Nut exports are forecast to fall year-on-year to $760 million in 2016–17 but to remain at the second-highest on record. Renewed competition from the United States is expected after several years of limited production due to drought in California. Exports are projected to recover over the medium term to around $900 million in 2021–22 (all in 2016–17 dollars).

Australian tree nut exports, 2005–06 to 2021–22

Other nuts

2016–17$m

PecansWalnutsMacadamiasAlmonds

200

400

600

800

1,000

2021–22z2015–162010–112005–06


AlmondsAustralian almond production expanded rapidly in the five years to 2015–16, resulting from large plantings in 2006 and 2007. Around 80,000 tonnes of kernel were produced in 2015–16. Production is expected to reach more than 90,000 tonnes by 2021–22 as recent plantings reach maturity.

The Australian almond industry is export oriented, with two-thirds of production exported in 2015–16. Australia is now the second-largest almond exporter in the world. However, in 2015–16 Australia exported only around 55,000 tonnes of kernel—less than 10 per cent, by volume, of US exports. India and Spain were Australia’s largest export markets in that year.

Horticulture


Australian almond prices increased by 60 per cent between mid 2014 and mid 2015 because water scarcity in California constrained production. Prices are expected to weaken over the medium term, assuming water supplies in California are replenished and production recovers. Growth in global almond consumption is expected to continue, supporting Australia’s exports in the medium term. Exports are forecast to increase to around 65,000 tonnes by 2021–22.

The European Union is the largest consumer and importer of almonds and has been an important market for Australian almonds since 2005–06. In November 2015 the Australian Government and the European Commission agreed to begin the process of working towards a free trade agreement. However, the reduction or elimination of import tariffs is unlikely to result in a significant competitive advantage for Australia over the United States, because the import tariff on Australian almonds is already low and equal to the rate imposed on imports from the United States.

Australian almond exports, by volume, 2005−06 to 2015−16

Rest of world

kt

United StatesUnited Arab EmiratesIndiaEuropean Union

Note: Volume is expressed in kernel weight.

10

20

30

40

50

60

2015–16

2013–14

2011–12

2009–10

2007–08

2005–06

MacadamiasMacadamia production was steady at around 30,000 tonnes in the 10 years to 2013–14. More recent plantings increased production in 2014–15 to 40,000 tonnes, and production is projected to continue to expand over the medium term.

Australia is the largest global exporter of macadamias. China is the largest market for Australian macadamias, valued at $55 million in 2015–16. Under the China–Australia Free Trade Agreement, the tariff rate on macadamia nuts is scheduled to decrease from the base rate of 24 per cent to zero in 2019. In January 2017 the Chinese Government announced it would reduce tariffs on global macadamia imports from 24 per cent to 19 per cent. However, the ChAFTA tariff applied to Australian macadamia imports will be lower at 9.6 per cent, allowing Australia to maintain its competitive advantage in the Chinese market.

Horticulture


Tariff applied to macadamias imported into China, 2014 to 2021

%

Most-favoured nation tari�Tari� under ChAFTA

5

10

15

20

25

30

20212020201920182017201620152014

ChAFTA China–Australia Free Trade Agreement.

Outlook for vegetablesThe gross value of vegetable production is estimated to have increased in 2015–16 to $3.7 billion. Vegetable production is projected to reach more than $4 billion by 2021–22 because of growing domestic market requirements resulting from population growth and export demand.

Gross value of Australian vegetable production, 2002–03 to 2021–22

Other

2016–17$b

CarrotsOnionsMushroomsTomatoes

s ABARES estimate. z ABARES projection.

Potatoes

1

2

3

4

5

2021–22z

2018–19z

2015–16s

2012–13

2009–10

2006–07

2003–04

Horticulture


The value of vegetable exports increased by 16 per cent to $349 million in 2015–16, reflecting growth in the volume of potato, carrot and asparagus exports. Improved access to key export markets, coupled with opportunities generated by tariff reductions from trade agreements negotiated in the previous three years, assisted recent growth in exports and are expected to continue to do so. The value of vegetable exports is forecast to rise by 10 per cent to $385 million in 2016–17 and is projected to increase steadily to over $500 million in 2021–22 in real terms.

In 2015–16 almost 70 per cent of Australia’s vegetable exports were fresh. Carrots, potatoes, asparagus and onions contributed most to the value of fresh vegetable exports. Singapore, the United Arab Emirates, Japan and Malaysia were the major export destinations. The value of fresh vegetable exports in 2015–16 was over $230 million, more than twice that of fresh vegetable imports.

Fresh vegetable imports increased by 9 per cent to around $85 million in 2015–16. Garlic, mushrooms and counter-seasonal trade of asparagus made up much of this value. Most of these fresh vegetables originated in China or Mexico. Processed potatoes and other processed products dominate Australia’s total vegetable imports, which increased by 9 per cent to just over $1 billion in 2015–16.

PotatoesAustralian potato production contracted slowly over the 15 years to 2014–15 to 1.2 million tonnes. This was largely because of lower demand for potatoes from the domestic processing industry, which in 2014–15 was estimated to use more than half of Australia’s domestic production. Competition from processed potato imports is expected to remain high in the medium term. As a result, potato production is projected to fall slowly to around 1.1 million tonnes in 2021–22 as the domestic processing sector continues to contract.

The price of potatoes (brushed white) doubled between mid September 2016 and mid January 2017, following more than a year of unchanged prices. Poor seasonal conditions are expected to have constrained production in some of the major potato-producing regions. Heavy rainfall and localised flooding occurred in north-west Tasmania throughout much of 2016 and in the SA Riverlands and Murray regions in October 2016. Fresh potatoes cannot be imported in Australia because of the biosecurity risks. As a result, limited domestic supply of fresh product cannot be supplemented with additional imports, and supply shocks can cause domestic prices to rise in the short term. Production is expected to recover and prices are expected to fall back to average levels in the coming months.

Horticulture


Potato price index, Australia, January 2014 to January 2017

index

Note: Prices are for brushed white potatoes in 20-kilogram bag.Source: Data Fresh

50

100

150

200

250

Jan2017

Jul2016

Jan2016

Jul2015

Jan2015

Jul2014

Jan2014

Brussels sproutsBrussels sprout exports have grown strongly since 2014–15. Increased demand from Asia and a lower Australian dollar resulted in export prices doubling in real terms in the 10 years to 2015–16. Improved export opportunities facilitated by tariff reductions are also expected to have contributed to the recent export growth. Since the Korea–Australia Free Trade Agreement came into effect in December 2014, the import tariff applied to Australian brussels sprouts has fallen progressively from 27 per cent to 11.5 per cent in 2017. The Republic of Korea now accounts for a large share of Australia’s brussels sprout exports and is expected to remain a key market over the medium term, with the tariff scheduled to be eliminated by 2019.

Australian brussels sprout exports, by destination, 2013 to 2016

kt

NovFeb

May

Aug

NovFeb

May

Aug

NovFeb

May

Aug

NovFeb

May

Aug

10

20

30

40

50

60

70

80 Rest of worldRepublic of Korea

2016201520142013

Korea–Australia Free Trade Agreement came into force

Horticulture


Outlook for horticultureunit 2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

– nominal $m 8,689 9,193 9,527 9,826 10,142 10,493 10,854 11,225– real a $m 8,938 9,327 9,527 9,642 9,710 9,801 9,891 9,979

– nominal $m 3,512 3,649 3,737 3,843 3,976 4,112 4,253 4,399– real a $m 3,613 3,702 3,737 3,772 3,807 3,841 3,876 3,911

– nominal $m 3,350 3,675 3,885 4,041 4,184 4,332 4,485 4,643– real a $m 3,446 3,728 3,885 3,965 4,006 4,047 4,087 4,128

– nominal $m 343 364 376 390 407 424 442 461– real a $m 353 369 376 383 390 396 403 410

Nursery, cut flowers and turf– nominal $m 1,252 1,264 1,276 1,289 1,301 1,339 1,377 1,415– real a $m 1,287 1,282 1,276 1,265 1,246 1,251 1,255 1,258

Other horticulture nei b– nominal $m 232 241 252 263 274 285 296 307– real a $m 238 245 252 258 262 266 270 273

– nominal $m 2,060 2,671 2,635 2,823 3,074 3,270 3,507 3,754– real a $m 2,119 2,711 2,635 2,770 2,943 3,054 3,196 3,338

– nominal $m 755 1,072 1,150 1,235 1,331 1,431 1,535 1,644– real a $m 776 1,088 1,150 1,212 1,275 1,337 1,399 1,461

– nominal $m 293 344 385 411 450 491 534 578– real a $m 302 349 385 403 431 458 486 514

– nominal $m 734 930 760 803 852 904 957 1,012– real a $m 754 944 760 788 816 844 872 900

– nominal $m 12 15 20 22 25 29 33 37– real a $m 12 15 20 22 24 27 30 32

Other horticulture b– nominal $m 266 310 320 352 415 415 449 484– real a $m 274 315 320 346 398 388 409 430

Nursery

Exports

Outlook for horticulture

a In 2016–17 Australian dollars. b Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. f ABARES forecast. s ABARES estimate. z ABARES projection. nei Not elsewhere included.Sources: ABARES; Australian Bureau of Statistics

Gross value

Fruit and tree nuts (excl. grapes)

Vegetables

Table and dried grapes

Fruits

Vegetables

Tree nuts


• The value of Australian wine exports is forecast to increase to $2.37 billion in 2016–17, supported by strong demand for Australian wine in China and Hong Kong.

• Over the medium term, the value of Australian wine exports is projected to peak in 2017–18 before declining because of increased competition from Chile, Argentina and South Africa.

The Australian wine industry is export focused. Around two-thirds of Australia’s wine production is exported, making Australia one of the world’s largest wine exporters after Spain, Italy, France and Chile. Australia exports large volumes of red and white wine in bottles and in bulk, as well as relatively smaller amounts of sparkling wine and fortified wines.

Australia’s major wine export markets in 2015–16 included Canada, China, the European Union, Hong Kong, New Zealand and the United States. Together, these markets accounted for almost 90 per cent of the value of Australia’s wine exports. The European Union accounted for 26 per cent of the total export value, with exports to the United Kingdom making up 65 per cent.

In 2015–16 the value of Australia’s wine exports rose by 10 per cent to $2.18 billion despite a 2 per cent decline in volume. The average export unit value of wine shipments increased by 13 per cent to $3 a litre.

The increase in the value of wine exports in 2015–16 was driven by demand from China, with exports to that market increasing by 55 per cent in value terms. Exports to Canada, Hong Kong and New Zealand also grew, in both value and volume terms. Higher unit values more than offset a fall in volume to lead to overall growth in the value of exports to the United States.

Australian wine exportsOutlook to 2021–22

Andrew Cameron

Australian wine exports


Change in Australian wine exports to major markets, 2015–16

VolumeValue

%

10

0

20

30

40

50

60

Total exports

United States

Rest ofEuropean Union

UnitedKingdom

New Zealand

Hong Kong

China

Canada

Value of Australian wine exports, by market, 2015–16

Rest of European Union 9%Canada 9%Hong Kong 6%

United Kingdom 17%China 19%United States 22%

New Zealand 4%Other 13%

Australian wine facing strong competition in the United StatesThe United States was the largest export market for Australian wine in 2015–16, accounting for $477 million or 22 per cent of the total value of wine exports. In 2015–16 in value terms bottled red wine accounted for around 60 per cent of Australian wine exports to the United States and bottled white wine 30 per cent.

Australia is the second-largest supplier of wine to the United States by volume behind France, and the third-largest by value behind Italy and France. The United States imports Italian and French wine primarily for the high-end restaurant market. Australia supplies the lower end of the market and competes with Argentina, Chile and US producers. Since 2011 bottled Australian red and white wine has had the lowest import unit value of any major supplier to the United States.



The value of Australian exports to the United States increased by 3 per cent in 2015–16, driven by higher unit values for bottled white wine exports. Total export values fell in the first half of 2016–17 and are forecast to result in the value of Australian wine exports to the United States falling by around 2 per cent in 2016–17. In the first five months of 2016–17, the volume of Australian wine imported by the United States was down by 10 per cent from the same period in 2015–16. In contrast, the volume of Chilean wine was up by 38 per cent.

In the medium term, Argentina and Chile’s share of the US wine market is expected to continue to grow. The volume and value of Australia’s exports to the United States have trended downward since 2010–11. Over the same period, import volumes and unit values (in US dollars) of bottled wine from Argentina and Chile have remained largely unchanged.

Unit value of US bottled red wine imports, by major supplier, 2010 to 2016

2016US$/L cif

Note: 2016 data are January to October.

FranceItalySpainArgentinaAustraliaChile

2

4

6

8

10

12

14

2016201520142013201220112010

China forecast to become largest market by valueChina and Hong Kong continued to grow in importance as markets for Australian wine exports in 2015–16. Exports to China increased by 55 per cent to $416 million in 2015–16, making China Australia’s second-largest export market ahead of the United Kingdom. Exports to Hong Kong, Australia’s sixth-largest market, rose by 4 per cent to $142 million. In 2016–17 China is forecast to overtake the United States to become Australia’s largest wine export market.

In the 10 years to 2015–16, the value of Australian exports to China and Hong Kong increased almost 480 per cent. During the same period, the value of Australian wine exports to all other markets fell by over 50 per cent. Exports to China and Hong Kong have added a cumulative $2.8 billion to the value of Australian wine exports in the 10 years to 2015–16, reversing the downward trend in the value of Australia’s wine exports that began in 2006–07. The China–Australia Free Trade Agreement is expected to further improve the competitiveness of Australian wine in China and support further export growth (see box).



Index of value of Australian wine exports and total value of exports, selected countries 2006–07 to 2015–16

Total value ofexports (right axis)

index2006–07

=100

2016–17$m

China

100

200

300

400

500

600

700

800

Hong KongCanadaUnited StatesUnited Kingdom

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2015–16

2014–15

2013–14

2012–13

2011–12

2010–11

2009–10

2008–09

2007–08

2006–07

Bottled red wine accounted for more than 85 per cent of the value of Australian wine exports to China and Hong Kong in 2015–16. Shiraz, cabernet sauvignon and blends containing the two varieties accounted for over 60 per cent of bottled red wine exports by volume. In 2015–16 Australia was the second-largest supplier of bottled wine to the two countries (around 15 per cent by volume) behind France, which accounted for around 40 per cent of the market. Australian bottled wine competes in the premium end of the Chinese market with wine from France and the United States. Between 2012 and 2015 Australia achieved the highest average import unit value in this market.

Australian wine under the China–Australia Free Trade Agreement The China–Australia Free Trade Agreement (ChAFTA) entered into force on 20 December 2015. The agreement sets out tariffs on Australian wine, which will progressively fall to zero by 1 January 2019. The tariff rates in 2017 are 5.6 per cent for bottled and sparkling wine imports and 8 per cent for bulk wine imports. The reduction in wine import tariffs is expected to improve the competitiveness of Australian wine in China, particularly against French and American imports. China does not have a free trade agreement with either country.

Tariff reduction schedule for Australian wine under ChAFTA, 2015 to 2019

Winetype

Base rate (%)

20 Dec 2015 (%)

1 Jan 2016

(%)

1 Jan 2017 (%)

1 Jan2018 (%)

1 Jan2019 (%)

Bottled wine a 14 11.2 8.4 5.6 2.8 0

Bulk wine 20 16 12 8 4 0

Sparkling wine 14 11.2 8.4 5.6 2.8 0

a Bottled wine classified as containers holding 2 litres or less.



China’s demand for bottled wine continues to grow at a remarkable pace. The volume of bottled wine imports grew by 65 per cent between 2011 and 2015. In the first nine months of 2016 China imported more bottled wine than in the whole of 2015. The value of Australian wine exports to China is forecast to increase by 40 per cent in 2016–17. Continued expansion of the Chinese middle class and the high quality and value perceptions of Australian wine are expected to support Australian exports over the medium term. However, growth is projected to slow as competition intensifies in China from other suppliers such as Chile, Argentina and South Africa. This is expected to lead to the value of Australian wine exports to China falling in real terms from 2018–19 onwards.

Exports to the European Union continue to declineThe United Kingdom was the third-largest market for Australian wine exports in 2015–16, accounting for $371 million. This represented a 1 per cent fall in value from 2014–15. In contrast, export volume declined by 7 per cent. This largely reflects exports of bulk red wine falling by 12 million litres.

Australian wine exports to the remaining EU countries collectively accounted for $203 million over the same period. This represents a fall of 2 per cent in value terms and 3 per cent in volume terms. Bulk wine accounted for over 80 per cent of Australian export volumes to the United Kingdom in 2015–16 and over 70 per cent of volumes exported to the rest of the European Union.

Exports of Australian wine to the European Union (including the United Kingdom) declined in value every year in the 10 years to 2015–16. This was a result of a shift to lower-valued bulk wine exports and competition from other countries.

Value of Australian wine exports to the European Union, 2006–07 to 2015–16

2015–16$m

Rest of European UnionUnited Kingdom

300

600

900

1,200

1,500

1,800

2015–16

2013–14

2011–12

2009–10

2007–08



The effect of Brexit on Australian wine exports over the medium term is uncertain. However, a sharp appreciation of the Australian dollar against the British pound in the first quarter of 2016–17 coincided with lower than average export volumes. In the first quarter of 2016–17 the average value of the Australian dollar was 17 per cent higher against the British pound than it was in 2015–16. This contrasts with the average value of the Australian dollar against the euro, which was 4 per cent higher over the same period. Exports to the United Kingdom are forecast to fall by a further 1 per cent in 2016–17. In contrast, exports to the rest of the European Union are forecast to recover by around 3 per cent, driven by increased demand for bottled white wine.

CanadaAustralian wine exports to Canada increased by 12 per cent in 2015–16 to $199 million, the second consecutive year of growth. Bottled red and white wine accounted for 83 per cent of the value of wine exports to Canada. The average unit price of Australian bottled wine exports to Canada was $5.68 a litre in 2015–16. In contrast, exports of bottled wine to the United States averaged $4.25 a litre.

The market for imported bottled wine has expanded steadily in Canada. In the five years to 2015, the total volume of wine imported by Canada grew at an average of 2 per cent a year and the value grew (in real terms) by an average of 3 per cent a year. Australia was the fourth-largest supplier of bottled wine to the Canadian market in 2015–16, behind Italy, the United States and France. Australian bottled wine competes in the premium and mid-tier markets in Canada along with Spain, France, Argentina, Portugal and South Africa. Australian wine in Canada is relatively cheaper than French and Spanish wine, which should support the competitiveness of Australian exports in 2016–17.

Outlook for Australian wine exportsThe value of Australian wine exports is forecast to increase by 8 per cent in 2016–17 to $2.37 billion. This will be driven by continued demand growth in China and Hong Kong combined with a modest recovery in exports to the European Union (excluding the United Kingdom) and further growth in exports to Canada.

In 2017–18 Australian wine exports are forecast to grow by a further 5 per cent to $2.5 billion. Growth in the Chinese market is projected to slow as a result of increased competition from other major exporters, particularly the United States and Chile.

Over the medium term, Australian wine exports are projected to decline in real terms to $2.34 billion in 2021–22, compared with $2.5 billion in 2017–18. Unit export values and volumes are projected to fall, largely because of increased competition from low-cost producers such as Chile, Argentina and South Africa. Competition for the Chinese market from major exporters is expected to be particularly strong and lead to the value of Australian exports to China falling in real terms from 2018–19 onwards.

Agriculture

Livestock


a Australian weighted average saleyard price of beef cattle. b Australian weighted average saleyard price of lamb.c Eastern Market Indicator price, clean equivalent. d Australian average farmgate milk price.

LIVESTOCK

CattleAustralian cattle prices to remain high as herd rebuilding o�sets weaker export returns.

~0%to 540 Ac/kg

in 2017–18a

LambStrong restocker demand is expected to support lamb prices.3%

to 600 Ac/kgin 2017–18

b

WoolFirming export demand is expected to result in higher wool prices.6%

to 1,440 Ac/kgin 2017–18

c

DairyMilk prices to rise, re�ecting �rmer global demand for dairy products.7%

t0 47 Ac/Lin 2017–18

d


• Australian saleyard prices to decline over the medium term as a result of rising competition in major export markets.

• Average seasonal conditions are assumed to support herd rebuilding.• Australian beef production and export volumes are expected to expand gradually

to 2021–22.• Demand for Australian live cattle is projected to remain relatively robust,

supported by strong income growth in major export markets.

Cattle prices to fall in the medium termThe weighted average saleyard price of beef cattle is forecast to increase by 7 per cent in 2016–17 to 540 cents a kilogram (dressed weight), mainly reflecting a limited supply of cattle for slaughter from a relatively small opening inventory of 23.3 million head. Cattle supplies have also been restricted by herd rebuilding, following an improvement in seasonal conditions in major cattle-producing regions across Australia in the first half of 2016–17.

Assuming average seasonal conditions in 2017–18, herd rebuilding is expected to continue to provide support for Australian prices, particularly for young cattle. However, lower beef prices in Australia’s major export markets are forecast to place downward pressure on producer prices for cows and heavy steers. Overall, the weighted average saleyard price is forecast to remain high in 2017–18 at around 540 cents a kilogram.

Over the medium term, Australian cattle prices are projected to remain relatively strong but decline in real terms to average 465 cents a kilogram (in 2016–17 dollars) in 2021–22. The supply of cattle for slaughter in Australia is expected to rise slowly over this period, reflecting an expansion of the national herd. Increasing competition in international markets for Australian beef is also projected to weaken export returns.

Beef and vealOutlook to 2021–22

Jack Mullumby

Beef and veal


Weighted average saleyard price and export unit value, Australia, 2008–09 to 2021–22

2016–17c/kg (dw)

Export unit value(right axis)

Saleyard price

2016–17$/kg


200

400

600

800

2.0

4.0

6.0

8.0

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

Cattle slaughter and beef productionAustralian beef and veal production is forecast to fall by 13 per cent to 2.0 million tonnes (carcase weight) in 2016–17. A 15 per cent contraction in cattle and calf slaughter to 7.5 million head will be partially offset by slaughter weights averaging around 3 per cent higher than the previous year.

Assuming average seasonal conditions in 2017–18, herd rebuilding is expected to continue to limit the supply of cattle and calves for slaughter to around 7.5 million head. The share of cows and heifers slaughtered is also forecast to remain low, resulting in relatively higher average slaughter weights and an increase in Australian beef and veal production of around 3 per cent to 2.1 million tonnes.

Australian slaughter is projected to rise gradually over the next five years to 8.8 million head in 2021–22, 17 per cent above the 2016–17 forecast. Increased cow and heifer turn-off is expected to result in lower average slaughter weights over this period, offsetting some of the increase in slaughter. Australian beef production is projected to expand by around 3 per cent a year between 2017–18 and 2021–22 to reach 2.3 million tonnes.

Beef and veal


Cattle and calf slaughter and average slaughter weights, Australia, 2007–08 to 2021–22

Cattle and calf slaughter

millionhead

Average slaughterweights (right axis)

kg

2

4

6

8

10

12

50

100

150

200

250

300


2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

Cattle herd to expand over the short to medium termThe forecast sharp reduction in Australian cattle slaughter in 2016–17 is expected to result in an expansion of the national beef cattle herd by 3 per cent to 24 million head by 30 June 2017.

Assuming average seasonal conditions for the short to medium term, Australian producers are expected to increase their cattle holdings, driving an increase in the national herd. However, a relatively small opening cow and heifer inventory in 2016–17 is expected to restrict the rate of expansion over the medium term by limiting the number of calves added to the herd. Between 2016–17 and 2021–22, the national beef cattle herd is forecast to expand by around 2 per cent a year and reach 26.6 million head in 2021–22.

Beef exports to fall and then riseThe value of Australian beef and veal exports is forecast to fall to $7.1 billion in 2016–17. This represents a 16 per cent contraction compared with 2015–16. Beef export volumes are also forecast to fall to 985,000 tonnes (shipped weight), with lower slaughter and beef production limiting export supplies. Exports to the United States are forecast to fall sharply in 2016–17, leaving Japan with the largest share of Australian beef exports at 26 per cent of the total volume.

Over the medium term, expanding beef production is projected to lead to an increase in Australian beef exports. However, average export unit values are expected to fall over this period as rising competition in major export markets places downward pressure on export returns. In 2021–22 the value of Australian beef and veal exports is projected to be around $7.1 billion (in 2016–17 dollars).

Beef and veal


Beef and veal exports, Australia, 2007–08 to 2021–22

Other

kt (sw)

ChinaKorea, Republic ofUnited StatesJapan

300

600

900

1,200

1,500

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08


JapanIn 2016–17 Australian beef exports to Japan are forecast to fall by 3 per cent to 260,000 tonnes. The United States is expected to continue regaining market share in Japan, particularly for fresh and chilled beef. This follows Japan’s relaxation of age restrictions on US beef in 2013. In the first half of 2016–17 Japanese imports of fresh and chilled beef from the United States accounted for 47 per cent of total fresh and chilled beef imports, compared with 36 per cent over the same period in the previous year.

Over the medium term, falling beef production in Japan is expected to result in increased beef imports. However, competition from the United States is projected to strengthen, further reducing Australia’s share of the market. Australian beef exports to Japan are forecast to fall in 2017–18 by 2 per cent to 255,000 tonnes before declining to around 240,000 tonnes by 2021–22.

United StatesAustralian beef exports to the United States are forecast to fall by 42 per cent in 2016–17 to 195,000 tonnes (shipped weight) and by a further 2.6 per cent in 2017–18 to 190,000 tonnes. The forecast declines reflect reduced demand for imported manufacturing beef. Expansion in the US cattle herd is forecast to result in increased cow slaughter, the primary source of domestically produced lean manufacturing beef in the United States.

Over the medium term, Australian beef exports to the United States are forecast to rise gradually to around 210,000 tonnes in 2021–22. US demand for imported beef is expected to remain weak over this period due to an increasing supply of domestically produced lean manufacturing beef.

Beef and veal


Over the outlook period, competition for Australian beef in the US market is also expected to increase from other exporting nations, including Brazil. Imports from Brazil resumed in September 2016 following the removal of disease-related import bans on Brazilian product in July 2016. Volumes shipped from Brazil have initially been small, but average unit values have been considerably lower than those for Australian beef. In the December 2016 quarter the average import unit value of Brazilian beef was US$4.01 a kilogram, 33 per cent below the Australian average of US$6.00 a kilogram.

Average import unit values for beef, United States, January 2016 to December 2016

US$/kg

All suppliersBrazil

Australia

1

2

3

4

5

6

7

Dec2016

Oct2016

Aug2016

Jun2016

Apr2016

Feb2016

Republic of KoreaAustralian exports to the Republic of Korea are forecast to increase by 4.5 per cent in 2016–17 to 197,500 tonnes. The increase reflects strong demand for imported beef in Korea, driven by robust income growth. In 2016 Korean gross domestic product increased by around 3 per cent. Over the same period Korean beef imports rose by 16 per cent year-on-year and imports from Australia rose by 7 per cent.

Over the short to medium term Australian beef exports to Korea are projected to gradually increase, rising to 206,000 tonnes in 2017–18 and reaching 232,000 tonnes in 2021–22. Consumer demand for beef is expected to continue to rise in Korea over the medium term because of relatively strong income growth. However, Korean beef production is projected to continue to decline and result in higher import volumes. The United States is expected to supply most of the increase.

ChinaAustralian beef exports to China are forecast to fall to 99,000 tonnes in 2016–17. The forecast reflects limited supplies of beef available for export from Australia and strong competition from Brazil and Uruguay, South America’s largest exporters. In the first half of 2016–17 Chinese imports of Brazilian beef rose by 48 per cent and imports from Uruguay by 28 per cent. Over the same period, Chinese import unit values of Australian beef averaged US$5.40 a kilogram, 21 per cent above the average of US$4.45 a kilogram for Brazilian beef and 66 per cent above the Uruguayan average of US$3.24 a kilogram.

Beef and veal


Over the short to medium term, Australian beef exports to China are expected to rise, reflecting the projected increase in the volume of beef available for export over this period. In 2017–18 exports to China are forecast to increase to 100,000 tonnes before expanding to around 126,000 tonnes in 2021–22. Australia’s share of the Chinese market for imported beef is projected to continue to fall during this period, with increased Chinese imports to be supplied by South America.

Live exports to recover over the medium termIn 2016–17 Australian live feeder and slaughter cattle exports are forecast to decline by 18 per cent to 915,000 head. Over this period export unit values are forecast to average around $1,230 a head, representing a 7 per cent increase on the previous year. This would be the highest average on record in real terms. The 2016–17 value of Australian live feeder and slaughter cattle exports is forecast to fall by around 12 per cent to $1.1 billion. Indonesia is expected to continue as the largest market for Australian live cattle, accounting for over half of the value of the trade.

Australian live cattle exports are projected to increase over the short to medium term, rising to around 950,000 head in 2017–18 before reaching 1.05 million head in 2021–22. Indonesia is expected to remain the primary market for Australian live cattle exports, with strong income growth expected to continue to support relatively robust demand.

Indonesia’s share of Australian live cattle exports is expected to decline over the medium term. Live cattle exports to Vietnam and other smaller markets such as China are projected to increase. However, Chinese import protocols restrict live imports to cattle sourced from southern Australia. This trade is not expected to compete directly with the northern Australian cattle trade, the primary source of Vietnamese and Indonesian imports. The first sea shipment of live Australian cattle was exported to China in February 2017.

Live feeder and slaughter cattle exports and average export unit value, Australia, 2008–09 to 2021–22

Live exports

’000head

Export unit value(right axis)

2016–17$/head


300

600

900

1,200

1,500

300

600

900

1,200

1,500

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

Beef and veal


Outlook for beef and veal

unit 2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

– nominal c/kg 364 505 540 540 536 531 527 523– real b c/kg 375 513 540 530 513 496 480 465

Cattle numbers cd million 27.4 26.1 26.6 27.2 27.8 28.4 29.0 29.4

– beef cattle c million 24.6 23.3 24.0 24.5 25.1 25.7 26.3 26.6

Slaughterings ’000 10,103 8,796 7,450 7,525 7,750 8,000 8,300 8,750

Production e kt 2,662 2,344 2,033 2,091 2,156 2,181 2,216 2,296

Consumption per person kg 27.5 24.7 23.4 24.9 26.3 26.0 25.7 25.4

Export volume g kt 1,376 1,196 985 1,000 1,010 1,025 1,045 1,095

– to China kt 129 129 99 100 101 108 115 126

– to Japan kt 294 265 260 255 250 248 243 240

– to Korea, Rep. of kt 165 189 198 206 213 220 227 232

– to United States kt 470 336 195 190 195 200 205 210

– nominal $m 9,040 8,495 7,100 7,195 7,295 7,435 7,610 8,005– real b $m 9,298 8,619 7,100 7,061 6,984 6,945 6,935 7,117

Live feeder/slaughter cattle exports ’000 1,295 1,114 915 950 1,015 1,025 1,033 1,050

– nominal $m 1,163 1,280 1,124 1,167 1,237 1,239 1,239 1,249– real b $m 1,197 1,299 1,124 1,145 1,184 1,157 1,129 1,111

Outlook for beef and veal

a Dressed weight. b In 2016–17 Australian dollars. c At 30 June. d Includes dairy cattle. e Carcase weight. f ABARES forecast. g Fresh, chilled and frozen, shipped weight. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; Meat & Livestock Australia

Saleyard price a

Export value


Sheep meat and woolOutlook to 2021–22

Peter Berry

• Saleyard lamb and sheep prices are forecast to rise in 2016–17 and 2017–18 as a result of restocker demand, reduced turn-off and strong export demand.

• The Australian Eastern Market Indicator price of wool is forecast to rise in 2016–17 and 2017–18 before easing in real terms as wool production increases over the medium term.

• The national sheep flock is forecast to increase to 73.6 million head in 2016–17 and to continue increasing to around 83 million head by 2021–22.

Lamb prices to rise on strong restocker demandIn 2016–17 Australian lamb prices are forecast to increase by 10 per cent to average 585 cents a kilogram, driven by reduced slaughter and strong restocker demand following greatly improved seasonal conditions in spring 2016.

In 2017–18 lamb prices are forecast to rise by a further 3 per cent to average 600 cents a kilogram. Continued flock expansion is expected to support domestic saleyard lamb prices, assuming average seasonal conditions and despite a slight increase in slaughter. Growing export demand, particularly from the Middle East and the United States, and an assumed lower Australian dollar are also expected to support lamb prices.

Over the remainder of the outlook period, saleyard lamb prices are projected to remain relatively high but to ease from 2018–19 in response to a projected increase in lamb supplies. Saleyard prices are projected to decline to 507 cents a kilogram (in 2016–17 dollars) in 2021–22.

Sheep meat and wool


Lamb saleyard price and slaughter, Australia, 2002–03 to 2021–22

Lamb slaughter

millionhead

2016–17c/kg

Lamb saleyard price (right axis)

150

300

450

600

750

5

10

15

20

25


2121–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

Sheep prices to riseSheep prices are forecast to increase by 20 per cent to 380 cents a kilogram in 2016–17, reflecting strong demand for flock rebuilding and increased retention of breeding ewes.

In 2017–18 sheep prices are forecast to increase by 4 per cent to 395 cents a kilogram. This forecast reflects an expected continuation of low sheep turn-off and firm restocker demand, assuming average seasonal conditions. Prices for sheep, particularly productive breeding ewes, are expected to remain relatively high as a result.

Over the remainder of the outlook period, saleyard prices are projected to decline gradually as sheep numbers and turn-off increase. In 2021–22 sheep prices are projected to ease to 329 cents a kilogram (in 2016–17 dollars).

Sheep slaughter and saleyard price, Australia, 2002–03 to 2021–22

Sheep slaughter

millionhead

2016–17c/kg

Sheep saleyard price (right axis)

100

200

300

400

500

3

6

9

12

15


2121–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

Sheep meat and wool


Wool prices to riseThe Australian Eastern Market Indicator (EMI) wool price is forecast to rise by 8 per cent in 2016–17 to around 1,360 cents a kilogram, largely driven by stronger processor demand for fine wool set against limited supplies. Excellent seasonal conditions in 2016 have improved sheep nutrition, resulting in production of stronger and slightly broader wools. This has slightly reduced the proportion of fine wool in the national clip and contributed to higher average prices for these wools.

In 2017–18 the EMI is forecast to rise by a further 6 per cent to average 1,440 cents a kilogram, supported by expected moderate growth in export demand. Strengthening economic growth in major wool-consuming countries such as the United States and growing consumer demand in China are expected to result in increased demand for Australian wool, particularly fine apparel wool.

Eastern Market Indicator wool price, Australia, weekly, 6 July 2012 to 6 January 2017

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

Jan2017

Jun2016

Jan2016

Jun2015

Jan2015

Jun2014

Jan2014

Jul2013

Jan2013

Jul2012

Over the medium term, the EMI is projected to decline in real terms to 1,262 cents a kilogram (in 2016–17 dollars) in 2021–22. This projection is in response to global supplies of fine apparel wool increasing, largely driven by increased Australian production.

Flock rebuilding increases sharplyIn the first half of 2016–17 a strong improvement in seasonal conditions resulted in excellent pasture growth in Australia’s major sheep-producing regions. This resulted in a sharp increase in flock rebuilding activity, greater retention of sheep and lambs and lower turn-off through saleyards. Yardings between July and December 2016 were 24 per cent lower year-on-year for sheep and 4 per cent lower for lambs. As a result, the national flock is forecast to increase by 7 per cent to around 73.6 million head by June 2017.

Sheep meat and wool


In 2017–18, assuming average seasonal conditions, graziers are expected to continue to increase their sheep numbers but at a slower rate than the previous year. The national flock is forecast to rise by a further 4 per cent to around 76.6 million head by the end of June 2018.

Sheep flock, Australia, 2002–03 to 2021–22

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


2121–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

The national flock is projected to continue increasing over the projection period but at a slower rate as turn-off and slaughter increase. The Australian sheep flock is projected to reach around 83 million head by 2021–22.

Lamb production to fall before rising over the medium termLamb slaughter is forecast to fall by 3.2 per cent to 22.4 million head in 2016–17 as graziers rebuild their flocks. Lamb production is forecast to fall by 2.5 per cent to 503,000 tonnes in 2016–17, with higher than average carcase weights partially offsetting the impact of lower slaughter.

In 2017–18, assuming average seasonal conditions and continued flock rebuilding, lamb slaughter is forecast to increase by 1 per cent to 22.6 million head and production to increase by 1 per cent to 507,000 tonnes. Lamb slaughter is projected to continue increasing throughout the projection period, reflecting the expanding national flock and a subsequent increase in lamb numbers. In 2021–22 lamb slaughter is projected to be around 25.3 million head and lamb production 569,000 tonnes.

Sheep meat and wool


Mutton production to remain relatively lowSheep slaughter is forecast to fall by 20 per cent in 2016–17 to 6.5 million head. The greater retention of sheep for breeding is expected to reduce slaughter availability. As a result, mutton production is forecast to fall by 20 per cent to 158,000 tonnes in 2016–17.

In 2017–18 sheep slaughter is forecast to be unchanged at 6.5 million head as the national flock expands. Mutton production is forecast to fall slightly to 156,000 tonnes for the year, reflecting an assumed return to average seasonal conditions and slightly lower slaughter weights.

Over the medium term, sheep slaughter is projected to remain relatively low as producers continue to retain breeding ewes. Sheep slaughter is projected to grow slowly to around 7.1 million head in 2021–22, and mutton production is projected to increase to around 171,000 tonnes.

Shorn wool production to growShorn wool production is forecast to increase by 5 per cent to 341,000 tonnes greasy in 2016–17. This reflects the greatly improved seasonal conditions in the first half of the year, which are expected to drive a sharp increase in sheep numbers and an increase in average fleece weights.

In 2017–18 shorn wool production is forecast to increase by 4 per cent to 353,000 tonnes greasy. This reflects an expected increase in the number of sheep shorn as a result of the expanding national flock, together with a forecast increase in the number of wethers (non-breeding sheep kept for wool production) in response to higher wool prices. Partly offsetting this is a forecast fall of 0.5 per cent in average fleece weights as a result of an assumed return to average seasonal conditions in 2017–18.

Shorn wool production and price, Australia, 1997–98 to 2021–22

Shorn wool production

kt2016–17Ac/kg clean

EMI (right axis)

300

600

900

1,200

1,500

200

400

600

800

1,000


2021–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

Sheep meat and wool


Over the medium term, growth in the number of sheep shorn is expected to slow and shorn wool production is projected to reach 392,000 tonnes in 2021–22. The average cut per head is forecast to remain relatively static at around 4.53 kilograms, assuming average seasonal conditions, over the projection period.

Lamb exports to fall but to rise over the medium termIn 2016–17 Australian lamb exports are forecast to fall by 3 per cent to 253,000 tonnes (shipped weight), reflecting lower lamb slaughter and production. Despite lower export volumes, lamb export earnings are forecast to increase by 2 per cent to $1.8 billion—reflecting higher export unit values.

In 2017–18 the volume of lamb exports is forecast to increase by 0.5 per cent to around 255,000 tonnes as a result of increased lamb production. Lamb export earnings are forecast to rise by 3 per cent to $1.86 billion.

Over the remainder of the outlook period, the projected increases in lamb slaughter and production are expected to drive further increases in exports. In 2021–22 Australian lamb exports are forecast to grow to around 289,000 tonnes, valued at $1.8 billion (in 2016–17 dollars).

Australian lamb exports, by major destination, 2002–03 to 2021–22

kt


OtherUnited StatesMiddle EastChina

50

100

150

200

250

300

2021–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

United StatesThe United States is Australia’s largest single-country market for lamb in value and volume terms. Over the five years to 2015–16 exports grew strongly and reached a record 63,000 tonnes, valued at $617 million.

In the first half of 2016–17 lamb exports to the United States fell by 12 per cent year-on-year to 27,000 tonnes, as a result of weaker US economic growth and lower Australian supplies. For the year as a whole, Australian lamb exports to the United States are forecast to fall by 8 per cent to 58,000 tonnes and the value is forecast to fall by 6 per cent to $580 million.

Sheep meat and wool


In 2017–18 and over the remainder of the outlook period, Australian exports of lamb to the United States are projected to grow moderately to reach 60,000 tonnes in 2021–22. This forecast increase reflects assumed strengthening economic growth in the United States and increasing Australian supplies.

Middle EastThe Middle East has been a major growth market for Australian sheep meat exports over the past decade in response to growing incomes, an expanding middle class and large expatriate populations.

In 2016–17 Australian lamb exports to the Middle East are forecast to fall by 2 per cent to 66,000 tonnes, reflecting lower supplies of Australian lamb and the effect of lower oil revenues on incomes in some countries in the region.

In 2017–18 lamb exports to the Middle East are forecast to grow by 5 per cent to 69,000 tonnes as export demand and Australian export supplies grow again. Over the remainder of the outlook period, lamb exports to the Middle East are forecast to grow moderately—reflecting an assumed improvement in economic growth in the region and a forecast increase in Australian supplies. Australian lamb exports to the region are projected to reach 73,000 tonnes in 2021–22.

ChinaChina is a major destination for Australian sheep meat exports—reflecting a large population, rising incomes and steady growth in consumer demand. Australian exports to China face strong competition from local sheep meat supplies and NZ lamb.

In 2016–17 Australian lamb exports to China are forecast to increase by 3 per cent to 44,000 tonnes and by a further 3 per cent to 45,000 tonnes in 2017–18. This growth is the result of a fall in exports from New Zealand (the world’s largest supplier), as a result of recent dry conditions and an ongoing trend of declining ewe numbers.

Over the medium term, projected growth in Chinese consumer demand for sheep meat is expected to result in moderate growth in Australian lamb exports to China. Australian exports to China are forecast to grow to around 50,000 tonnes in 2021–22.

New Zealand maintains a strong advantage in market accessNew Zealand is the world’s largest exporter of sheep meat and Australia’s main competitor in world markets. New Zealand maintains a significant advantage in access to the major markets of the European Union and China. In the European Union, New Zealand has access to a country-specific import quota of 228,254 tonnes (carcase weight equivalent). In contrast, Australian sheep meat exports to the European Union face an import quota of 19,186 tonnes (carcase weight equivalent), which is almost fully utilised each year. Under its free trade agreement with China, New Zealand has had tariff-free access for sheep meat exports from 1 January 2017. In contrast, in 2017 Australian sheep meat exports to China face tariffs ranging from 8 per cent to 15.3 per cent. Under the China–Australia Free Trade Agreement, these tariffs will be phased out over the period to 1 January 2023.

Sheep meat and wool


Despite New Zealand’s strong advantage in access to some high-value markets, its sheep meat production and exports have been in decline over the past decade. Beef + Lamb New Zealand forecast total NZ lamb slaughter to fall by 2.7 per cent in 2016–17 to 19.35 million head, largely reflecting a declining sheep flock.

Over the medium term, NZ lamb production and exports are projected to decline slowly, reflecting an ongoing shift towards other farm enterprises. Despite the projected decline in NZ exports to the European Union, Australian sheep meat producers will be unable to increase exports to the region given the EU quota limitations and large out-of-quota tariffs.

Mutton exports to remain relatively lowIn 2016–17 Australian mutton exports are forecast to fall by 20 per cent to around 125,000 tonnes (shipped weight), reflecting lower mutton production. In 2017–18 mutton exports are forecast to fall by a further 3 per cent to around 122,000 tonnes as ewes continue to be retained for breeding and flock rebuilding gathers pace.

Over the medium term, mutton exports are projected to grow slowly from 2018–19 as an expanding national flock increases the availability of sheep for slaughter. In 2021–22 mutton exports are projected to reach around 136,000 tonnes, valued at $575 million (in 2016–17 dollars).

Australian mutton exports, by destination, 2002–03 to 2021–22

kt


OtherNorth AmericaChinaMiddle East

2021–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

50

100

150

200

Sheep meat and wool


Live sheep exports to grow moderately over the medium termIn 2016–17 Australia’s live sheep exports are forecast to increase marginally as a result of a small rise in the availability of sheep for export. In the six months to December 2016, exports were 1 per cent higher year-on-year. Competition for sheep from the meat-processing sector will also limit growth in live exports over the next two years. As a result, in 2017–18 live sheep exports are forecast to grow by 1 per cent to around 1.9 million head despite increased sheep numbers.

Over the medium term, live sheep exports are projected to continue to increase slowly and reach 2.3 million head in 2021–22 as the supply of live sheep available for export grows. Live exports to the Middle East (Australia’s principal destination for live sheep exports) are projected to grow moderately, reflecting assumed gradual strengthening of economies in the region over the period.

Australian live sheep exports, by destination, 2002–03 to 2021–22

millionhead


OtherUnited Arab EmiratesQatarBahrain

2021–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

1

2

3

4

5

6

JordanSaudi ArabiaKuwait

Australian wool exports to grow over the medium termAustralian wool exports are forecast to increase by 2 per cent to 426,000 tonnes (greasy equivalent) in 2016–17, reflecting the forecast increase in the national flock and a consequent rise in production. Higher prices for wool are forecast to drive a 10 per cent increase in the value of Australian wool exports to around $3.6 billion in that year.

In 2017–18 wool exports are forecast to rise by 4 per cent to 442,000 tonnes as an expanding flock drives further increases in the number of sheep shorn. This trend is expected to continue over the medium term and as a result exports in 2021–22 are projected to grow to around 492,000 tonnes, valued at $3.9 billion (in 2016–17 dollars).

Sheep meat and wool


Australian wool exports, by destination, 2002–03 to 2021–22

kt greasy


OtherTaiwanIndiaCzech Republic

2021–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

ItalyChina

100

200

300

400

500

600

World wool demand to grow moderatelyFine wool is a niche product in the global fibres market. Processor demand for fine wool is driven by consumer demand for luxury woollen textiles and apparel. Consumer spending on these goods is discretionary and strongly linked to incomes and consumer confidence.

The United States is the world’s largest importer of finished woollen apparel. In 2016 US imports of wool products were down by 10 per cent to 538 million square-metre equivalents. The value of these imports also fell by 9 per cent to US$8.8 billion. Lower US imports in 2016 were largely a result of slower economic growth and subdued clothing consumption.

In 2016 in the European Union economic growth and consumer confidence remained relatively weak and, together with a lower euro, negatively affected consumer demand. As a result, EU imports of woollen apparel fell by 3 per cent in volume terms and by almost 4 per cent in value terms to €1.36 billion. Over the same period, the volume of EU exports of woollen apparel fell by 3 per cent but increased marginally in value terms to €2.4 billion.

China is the world’s largest producer and exporter of woollen clothing and textiles and a major consumer of finished woollen goods. Consequently, China is the largest export destination for Australian wool, accounting for 76 per cent of Australian exports in 2015–16. In 2016 China’s domestic sales of garments made of all fibres (not just wool) were up by 7 per cent in value terms compared with 2015.

In 2016–17 global demand for wool is forecast to grow, despite slow growth in consumer demand in the early part of the year. This largely reflects inventory refill by wool processors and textile manufacturers after a run-down in stocks in 2016. Growth in wool demand is expected to continue in 2017–18 as consumer demand improves in response to assumed higher rates of economic growth in the major wool-consuming economies.

Sheep meat and wool


Over the medium term, global consumer demand for woollen apparel is forecast to grow. Wool consumption in the United States and the European Union is forecast to grow relatively slowly as a result of moderate to low rates of economic growth. In China, wool consumption is forecast to grow more strongly as a result of relatively high rates of economic growth and increasing domestic consumption of luxury woollen textiles and apparel.

Price-competitiveness of wool and alternative fibresThe price-competitiveness of wool compared with polyester has weakened as a result of recent increases in the price of wool and relatively low world crude oil prices. In 2016 the average ratio of the 21 micron wool price (in US dollars) to the polyester staple fibre price increased by 23 per cent to 10.1.

The other major competitor for wool is cotton. In 2016 the average ratio of the 21 micron wool price (in US dollars) to the Cotlook ‘A’ price increased by 8 per cent to 6.7, indicating that the price-competiveness of wool against cotton had also fallen despite rising cotton prices.

Price ratios of wool and alternative fibres, Australia, monthly, July 2006 to December 2016

ratio

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

2

4

6

8

10

12

Dec2016

Dec2014

Dec2012

Dec2010

Dec2008

Dec2006

Source: AWEX 2017

The reduction in the price-competitiveness of wool against cotton and polyester is likely to result in greater substitution of these fibres for wool in the manufacture of lower priced textiles and clothing. Wool is expected to maintain its share of the luxury apparel market, where cheaper alternative fibres have not made significant inroads. The cost of input materials, such as wool, represents a smaller share of the overall cost of finished goods in this market.

Sheep meat and wool


Outlook for sheep meat and wool

unit 2014–15 2015–16 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z



– nominal c/kg 1,102 1,253 1,360 1,440 1,435 1,430 1,425 1,420– real b c/kg 1,133 1,272 1,360 1,413 1,374 1,336 1,299 1,262

Total sheep d million 70.9 68.7 73.6 76.6 78.6 80.4 81.8 83.0Sheep shorn million 76.9 73.4 75.0 78.1 81.1 83.5 85.2 86.5Cut per head kg 4.50 4.43 4.55 4.53 4.53 4.53 4.53 4.53

Lambs ’000 22,867 23,131 22,400 22,623 23,211 23,848 24,564 25,317

Sheep ’000 9,022 8,127 6,500 6,500 6,635 6,782 6,933 7,094

Lamb kt 507 516 503 507 521 535 552 569

Mutton kt 214 196 158 156 159 163 167 171

– shorn kt 346 325 341 353 367 378 385 392

– other g kt 81 79 73 74 76 78 80 83

– total kt 427 404 415 427 443 456 465 474

Lamb kg 9.4 9.3 9.0 9.0 8.9 8.9 8.9 8.8

Mutton kg 0.5 0.4 0.5 0.5 0.5 0.5 0.5 0.5

Lamb exports h kt 254 261 253 255 262 270 279 289

– nominal $m 1,779 1,771 1,800 1,855 1,890 1,933 1,964 1,997– real b $m 1,830 1,797 1,800 1,820 1,810 1,806 1,789 1,775

Mutton exports h kt 180 156 125 122 126 130 132 136

– nominal $m 824 699 613 621 634 643 649 647– real b $m 848 710 613 610 607 601 592 575Live sheep exports ’000 2,180 1,859 1,875 1,900 1,950 2,025 2,125 2,250

Wool exports (gr. equiv.) kt 459 417 426 442 458 470 482 492

– nominal i $m 3,154 3,283 3,605 3,972 4,106 4,199 4,289 4,349– real b $m 3,244 3,331 3,605 3,898 3,931 3,922 3,909 3,867

Outlook for sheep and wool

Lamb export value

Mutton export value

Wool export value

Sheep numbers

a Saleyard prices, dressed weight. b In 2016–17 Australian dollars. c Wool price, clean equivalent. d At 30 June. e Carcase weight. f ABARES forecast. g Includes wool on sheepskins, fellmongered and slipe wool. h Fresh, chilled and frozen, shipped weight. i On a balance of payment basis. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; Australian Wool Exchange

PricesLambs a

Slaughterings

Production e

Consumption per person

Exports

Sheep a

Eastern Market Indicator c

Wool production (greasy)


• Pig prices are forecast to increase in 2016–17 and remain high in 2017–18 in response to relatively strong consumer demand for pig meat.

• Pig meat production is projected to rise over the short and medium term as a result of increased slaughter and higher weights.

• Over the short to medium term, pork consumption is expected to face strengthening competition as beef and sheep meat supplies increase and red meat prices decline.

• Limited growth in pig meat exports is projected over the medium term, as producers focus on supplying the domestic Australian market with fresh pork.

Pig prices to fall over the medium termThe Australian weighted average over-the-hooks pig price is forecast to increase by 1 per cent in 2016–17 to 370 cents a kilogram (dressed weight). The increase reflects strong demand for fresh pork, supported by relatively high prices for competing meats.

Pig meat production and over-the-hooks prices, Australia, 2008–09 to 2021–22

Production

kt (cw) 2016–17c/kg (dw)

Price (right axis)


50

100

150

200

250

300

350

400

450

50

100

150

200

250

300

350

400

450

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

Pig meatOutlook to 2021–22

Jack Mullumby

Pig meat


Over the short to medium term, pig prices are projected to decline gradually in real terms (2016–17 dollars), falling by 3.5 per cent to 357 cents a kilogram in 2017–18 before reaching 320 cents a kilogram in 2021–22. This reflects strengthening competition for fresh pork at the retail level as increased beef and lamb supplies over the outlook period bring down competing red meat prices.

Australian sow herd to expandIn 2016–17 closing sow numbers are forecast to rise by 3 per cent to 282,000 head, the fourth consecutive year of expansion. This reflects strong demand for domestically produced fresh pork.

Over the short to medium term, domestic fresh pork demand is expected to remain relatively strong and continue to drive expansion in the national sow herd. The rate of expansion is expected to be gradual, due to the high entry costs of housing sows. Overall, Australian sow numbers are projected to rise to around 294,000 head in 2021–22, 5 per cent larger than the forecast 2016–17 closing inventory of 282,000 head.

Increasing slaughter and higher weightsAustralian pig meat production is forecast to increase by 4 per cent in 2016–17 to 393,000 tonnes (carcase weight) and by a further 3 per cent in 2017–18 to 405,000 tonnes. The increase in production over this two-year period is anticipated to be driven mostly by increased slaughter. Higher average slaughter weights are also expected, with feed prices forecast to remain low.

Feed costs are projected to remain low over the medium term and this is expected to support expanding production despite weaker prices for pigs. Between 2017–18 and 2021–22 pig slaughter is projected to increase by around 1.8 per cent a year to reach 5.6 million head. Average weights are also projected to rise over this period to a record 76.8 kilograms in 2021–22, around 1 per cent higher than in 2015–16. As a result, pig meat production is projected to rise gradually over the medium term, reaching 430,000 tonnes in 2021–22.

Pig slaughter and average slaughter weights, Australia, 2008–09 to 2021–22

Slaughter

millionhead

kg

Average weight (right axis)


2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

10

20

30

40

50

60

70

80

1

2

3

4

5

6

7

8

Pig meat


Low import prices to support higher import volumesAustralia has a longstanding ban on imports of fresh pork for direct consumption because of biosecurity concerns. All pig meat imported into Australia must be processed before sale, usually into bacon, ham or smallgoods.

Australian pig meat imports are forecast to fall in 2016–17 by around 4 per cent to 159,000 tonnes (shipped weight). The forecast decline reflects changes in storage policies of major retail purchasers, which have provided importers with incentive to work down stocks in cold storage. In 2017–18 import demand is expected to recover, assuming lower opening stocks. This will result in an increase in pig meat imports to around 162,000 tonnes.

Over the medium term Australian pig meat imports are projected to continue to rise, reaching 187,000 tonnes in 2021–22. The European Union and North America are expected to be the largest suppliers during this period. Relatively weak international pig meat prices are expected to drive higher import volumes. Low international prices are expected to result from low feed costs and expanding herds and production in major exporting markets.

Pig meat imports and exports, Australia, 2008–09 to 2021–22

Exports

kt (sw)

Imports


2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

40

80

120

160

200

Consumption growth projected to slowIn 2016–17 Australian pig meat consumption is forecast to contract by around 3 per cent to 26.8 kilograms a person (carcase weight). The reduction is expected to be mainly of imported product, which accounts for around 50 per cent of all pig meat consumed in Australia. An increase in imports in 2017–18 is forecast to result in consumption increasing again by around 1 per cent to 27.0 kilograms.

Over the medium term, per person consumption of both processed imported pig meat and domestically produced fresh pork is projected to expand. However, the rate of expansion is expected to be gradual, with competition expected to strengthen from beef and sheep meat. In 2021–22 Australian per person pig meat consumption is projected to reach 27.8 kilograms, 3.5 per cent above the 26.8 kilograms forecast for 2016–17.

Pig meat


Value of exports to fallIn 2016–17 the value of Australian pig meat exports is forecast to rise by around 5 per cent to $134 million. The increase reflects higher average export unit values and a 1,000 tonne increase in export volumes to around 29,000 tonnes (shipped weight).

Over the short to medium term, export volumes are projected to expand slowly, reaching 30,000 tonnes in 2021–22. However, lower average export unit values during this period are expected to lead to a fall in the value of exports. In 2017–18 the value of Australian pig meat exports is forecast to be marginally lower at $133 million (in 2016–17 dollars) before declining to around $121 million by 2021–22.

Outlook for pig meat

unit 2014–15 2015–16 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 zOver‐the‐hooks price a– nominal c/kg 317 366 370 364 368 365 361 360– real b c/kg 327 371 370 357 353 341 329 320Sow numbers c ’000 270 275 282 287 290 291 293 294Slaughterings ’000 4,924 5,000 5,150 5,300 5,430 5,510 5,570 5,620Production d kt 371 378 393 405 415 420 425 430Consumption per person kg 27.4 27.7 26.8 27.0 27.2 27.4 27.6 27.8Import volume e kt 160 167 159 162 167 173 180 187Export volume e kt 28.5 27.9 29.0 29.8 29.8 29.8 29.8 30.3

– nominal $m 110 128 134 136 137 136 135 136– real b $m 114 129 134 133 131 127 123 121

Outlookforpigmeat

a Dressed weight. b In 2016–17 Australian dollars. c At 30 June. d Carcase weight. e Shipped weight, includes preserved pig meat. f ABARES forecast. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; Australian Pork Limited

Export value


Chicken meatOutlook to 2021–22

Tim Whitnall

• Chicken meat production is projected to continue growing over the medium term, reaching 1.4 million tonnes in 2021–22.

• Low retail prices for chicken meat relative to other meats are expected to lead to an increase in per person consumption over the medium term.

• Exports of chicken meat are projected to grow by 3 per cent a year to 38,000 tonnes in 2021–22.

Australian chicken meat production grew consistently in the five years to 2015–16. Production growth averaged 3 per cent a year, reaching 1.15 million tonnes (carcase weight) in 2015–16. Growth in production over this period mostly resulted from an increase in the number of birds slaughtered to meet growing domestic demand for chicken meat. Bird slaughter increased by 13 per cent between 2010–11 and 2015–16, reaching 623 million head.

Chicken meat production is forecast to continue to rise over the outlook period. In 2016–17 production is forecast to rise by 4 per cent to 1.2 million tonnes and by a further 3 per cent to 1.23 million tonnes in 2017–18. Growth in chicken meat production is projected to then continue at around 3 per cent a year, reaching 1.4 million tonnes in 2021–22. Annual bird slaughter is projected to reach 724 million in the same year, at an average slaughter weight of 1.9 kilograms.

Chicken meat production and slaughter, Australia, 2011–12 to 2021–22

Meat production

kt

Slaughter (right axis)

million head


200

400

600

800

1,000

1,200

1,400

1,600

100

200

300

400

500

600

700

800

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

Chicken meat


Domestic demand to drive increases in productionChicken meat production is expected to increase in response to growing domestic demand, with the retail price expected to remain relatively low compared with that for beef, lamb and pork.

Consumer price indexes for selected meat, Australia, 1995–96 to 2015–16

index1995–96

=100

Beef and vealLamb and goat

Chicken meat

Pork

50

100

150

200

250

2015–16

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

Chicken meat is projected to remain the most consumed meat in Australia over the outlook period. Per person consumption is projected to grow from 47.0 kilograms in 2015–16 to 49.6 kilograms in 2021–22. Chicken meat’s share of total livestock meat consumption is expected to grow from 42 per cent in 2015–16 to 44 per cent in 2021–22. In contrast, in 2021–22 beef consumption is projected to be 25.4 kilograms per person, pig meat 27.8 kilograms per person and sheep meat 9.3 kilograms per person.

Meat consumption per person, Australia, 2011–12 to 2021–22

kg

Beef and vealPig meat

Chicken meat

Lamb and mutton

10

20

30

40

50

202122z

201920z

201718f

201516

201314

201112


Chicken meat


Average slaughter weight is projected to rise from 1.8 kilograms in 2016–17 to 1.9 kilograms in 2021–22. This is expected to result from improved bird genetics through the import of fertilised eggs from specialised breeders several times a year. Breeders focus on improving growth rates and yields, feed conversion, animal welfare and reproductive fitness. Selective breeding practices combined with chickens’ relatively quick reproductive lifecycle and high number of offspring have recently resulted in rapid productivity gains. Chickens for meat production reach their ideal slaughter weight in around 35 days, using a total of around 3.4 kilograms of feed. In contrast, in the 1970s chickens reached ideal slaughter weight in 64 days and used 4.7 kilograms of feed.

Exports to grow over the medium termAustralian exports of chicken meat are forecast to rise by 24 per cent to 33,030 tonnes (shipped weight) in 2016–17 and a further 3 per cent to 34,000 tonnes in 2017–18. This largely reflects an expected increase in exports to Papua New Guinea following the PNG Government’s February 2016 decision to lift a trade ban on some Australian raw poultry meat products. In the first six months of 2016–17, Australian exports of chicken meat to Papua New Guinea rose by 67 per cent year-on-year to 7,677 tonnes. Papua New Guinea is the largest export market for Australian chicken meat, accounting for 39 per cent of exports in 2015–16.

Over the medium term, Australian chicken meat exports are projected to grow by around 3 per cent a year to reach 38,000 tonnes in 2021–22. This largely reflects an increase in supplies of frozen cuts and offal (such as feet, kidneys and livers) available for export. These products account for over 80 per cent of Australian chicken meat exports because they attract a higher price than in domestic markets. Demand for these products is expected to grow in South-East Asia and the Pacific. These economies are expected to remain Australia’s largest export markets over the outlook period.

Chicken meat exports by destination, Australia, 2010–11 to 2021–22

Other

kt

Solomon IslandsHong Kong


PhilippinesPapua New Guinea

5

10

15

20

25

30

35

40

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

Chicken meat


Outlook for chicken meat

unit 2014–15 2015–16 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 zProduction a kt 1,116 1,150 1,196 1,228 1,273 1,310 1,360 1,401

Consumption per person kg 45.7 47.0 47.0 46.8 47.6 48.1 49.0 49.6

Slaughterings million 590.6 623.3 651.5 664.0 672.0 688.0 704.0 724.0

Export volume b kt 34.2 26.7 33.0 34.0 35.0 35.9 36.9 38.0

Export value– nominal $m 53.7 46.9 48.0 49.1 52.7 54.1 55.7 57.2– real c $m 55.2 47.6 48.0 48.2 50.4 50.6 50.7 50.9

Outlook for chicken meat

a Carcase weight. b Shipped weight. c In 2016–17 dollars. f ABARES forecast. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics


DairyOutlook to 2021–22

Tim Whitnall

• World dairy prices are forecast to average higher in 2016–17 and 2017–18 in response to reduced production in major exporting countries, the lifting of the Russian dairy embargo and firming demand in Asia, the Middle East and North Africa.

• World dairy prices are projected to increase each year to 2019–20 as world consumption grows faster than world supply. World prices are projected to ease in 2020–21 and 2021–22 as increases in global milk production outstrip growth in consumption.

• The value of Australian exports is projected to average higher over the outlook period, peaking at around $3.5 billion (in 2016–17 dollars) in 2019–20.

World prices to rise before easing in 2020–21 and 2021–22World dairy prices are forecast to average higher in 2016–17. This reflects a rapid slowing of production in major exporting countries, particularly in New Zealand and the European Union. World prices for cheese are forecast to increase by 14 per cent to US$3,650 a tonne and for skim milk powder by 16 per cent to US$2,300 a tonne. World prices for butter are forecast to increase by 31 per cent to US$4,125 a tonne and for whole milk powder by 37 per cent to US$3,100 a tonne.

World prices are forecast to rise further in 2017–18—by 11 per cent to US$4,580 a tonne for butter, by 12 per cent to US$4,080 a tonne for cheese, by 7 per cent to US$2,450 a tonne for skim milk powder and by 8 per cent to US$3,360 a tonne for whole milk powder. The factors driving these forecasts are the expected lifting of the Russian embargo on dairy imports in December 2017 and strengthening demand in Asia, the Middle East and parts of Africa.

Demand is expected to strengthen throughout the medium term, driven by rising incomes, changing diets and growing populations in Asia, the Middle East and North Africa. World dairy prices are projected to average higher each year to 2019–20 before easing in 2020–21 and 2021–22 in response to rising world milk production. World prices in 2021–22 are expected to average between 2 per cent and 7 per cent higher in real terms than in 2016–17. However, cheese is projected to remain 9 per cent lower than the 10-year average to 2015–16 in real terms, and skim milk powder is projected to remain 33 per cent lower.

Dairy


World dairy prices, 2002–03 to 2021–22

2016–17US$/t


CheeseWhole milk powderSkim milk powderButter

1,000

2,000

3,000

4,000

5,000

6,000

2021–22z

2018–19z

2015–16

2012–13

2009–10

2006–07

2003–04

Global milk supplies to rise over the medium term

New ZealandMilk production in New Zealand averaged 5 per cent lower year-on-year over the peak production months of October and November 2016. This was largely a result of wet weather in the largest producing region of Waikato and disruption from a severe earthquake affecting parts of the second-largest producing region of North Canterbury. This lower milk production has led to significantly reduced global butter and whole milk powder supplies. New Zealand is the world’s largest exporter of these commodities.

For the 2016–17 year as a whole, NZ milk production is forecast to fall by 3 per cent. The wet spring detrimentally affected silage crops used for supplementary feed, which will limit farmers’ ability to increase milk yields in the remaining months of 2016–17. In 2017–18 NZ milk production is forecast to grow by 3 per cent, encouraged by rising farmgate milk prices.

NZ milk production is projected to continue to grow over the medium term in response to projected higher world prices. This rise is expected to result largely from improvements in milk yields from improved herd genetics, better pasture management and increased use of supplementary feed.

Dairy


European UnionEU milk production is forecast to fall by 2 per cent in the 2016–17 marketing year (April to March), largely reflecting the European Commission’s voluntary milk supply reduction scheme. EU milk production averaged 4 per cent lower year-on-year over the first two months of the scheme’s implementation (October and November 2016). This reduction has been particularly pronounced in the three largest EU milk producers, with production falling by 8 per cent in France, 4 per cent in Germany and 7 per cent in the United Kingdom over that time. EU milk production is expected to remain subdued for the remainder of the marketing year because the supply reduction scheme will be in effect until March 2017.

EU milk production is forecast to grow by 1 per cent in the 2017–18 marketing year, reflecting recovering world prices. EU exports of dairy products (particularly butter and cheese) are forecast to increase after the lifting of the Russian embargo on EU dairy products, expected at the end of 2017.

Over the medium term, EU milk production is projected to continue to grow in response to rising world prices and increasing milk yields. Milk yields are expected to increase as a result of genetic improvements in the dairy herd, wider use of robotic technology and greater use of feed concentrates.

United StatesMilk production in the United States is forecast to rise by 2 per cent in 2016–17 and 1 per cent in 2017–18. This largely reflects increasing yields resulting from lower feed grain prices and strong domestic demand.

US milk production is projected to continue to grow over the medium term, largely reflecting projected low feed grain prices and increasing milk yields. The size of the US herd is expected to remain largely unchanged over the outlook period, but the transfer of herds to higher yielding states is expected to continue. Among the 10 states with highest milk production, herd numbers declined in New York (ranked 12th highest among all states for yield per cow) and Pennsylvania (ranked 28th) but grew strongly in Idaho (ranked 5th) and Michigan (ranked 2nd) over the 10 years to 2016.

US exports are forecast to remain subdued over 2016–17 and 2017–18 as an assumed strong US dollar affects competitiveness. However, US exports are expected to rise over the medium term as prices and production increase.

Dairy


Dairy cow herd size, select US states, at 1 January

20062016

’000head

100

200

300

400

500

600

700

MichiganIdahoNew YorkPennsylvania

Global demand to strengthen over the medium term

Russian FederationThe Russian Federation is expected to resume importing dairy products from major exporters in 2018, with the embargo on dairy products from Australia, Canada, the European Union, Norway and the United States scheduled to be lifted in December 2017. However, imports are not expected to return immediately to the levels achieved before the embargo because of a contraction of the Russian economy over 2015 and 2016 and the depreciation of the Russian currency against the US dollar.

Before it implemented the dairy trade embargo in August 2014, the Russian Federation was the largest importer of cheese and butter and the largest market for EU exports of these products. Russian imports of butter and cheese fell by around 37 per cent in 2015 and are estimated to have risen only marginally in 2016.

Cheese imports, Russian Federation, 2013 to 2015

Rest of worldEuropean Union

kt

Belarus

100

200

300

400

500

201520142013

Dairy


Over the medium term, the Russian Federation is expected to remain a significant importer of cheese and butter because local consumption is projected to outpace local production. Growth in Russian dairy production is expected to be limited over the outlook period by low investment in the dairy industry in 2015 and 2016. Incentives for expansion have been limited as a result of uncertainty surrounding the implementation of government support programmes. However, domestic consumption is expected to grow consistently over the medium term because incomes are assumed to rise modestly each year to 2021–22.

ChinaChinese imports of dairy products are forecast to rise in 2016–17 and 2017–18, reflecting low production growth and strengthening local demand for imported dairy products. Milk production in China is expected to be constrained over this period following an estimated fall of 5 per cent in the national dairy herd in 2016. This fall resulted from structural adjustment in the Chinese dairy industry, with many high-cost producers exiting the industry following sustained competition from low-priced imports.

Over the medium term, Chinese import demand is projected to continue to strengthen. As incomes rise, Chinese consumers increasingly favour imports from major exporters such as New Zealand, the European Union and Australia due to perceived higher quality and assured food safety. This is particularly the case for infant milk formula and liquid milk imports, which are projected to rise strongly over the medium term. However, growth in dairy imports is expected to be slower than for the previous five years. Chinese production is expected to rise over the outlook period as import price rises encourage increased investment in the dairy sector.

Middle East and North AfricaImport demand for dairy products in the Middle East and North Africa is forecast to rise in 2016–17 and 2017–18, reflecting strengthening domestic demand outpacing domestic supply.

Demand for dairy product imports in the Middle East and North Africa is projected to continue to strengthen over the medium term, reflecting rising incomes and population growth. Dairy products are expected to remain an important part of consumer diets in the region. However, local production growth is likely to continue to be constrained by limited water availability and unsuitable climatic conditions.

Algeria is the region’s largest importer of milk powders and is a major exception to this forecast. The Algerian Government has committed to implementing a range of support measures to expand their dairy industry and reduce reliance on dairy imports. These measures include subsidising fodder imports, supporting fodder production and operating programmes to improve herd genetics and breeding performance. However, Algeria is still expected to remain a large importer of milk powders over the outlook period because domestic demand is projected to increase at a faster rate than domestic milk production.

Dairy


Prospects for the Australian dairy industryAustralian milk production is forecast to fall by 7 per cent in 2016–17 to 8.8 billion litres. This is largely due to low production in the first six months of the year, reflecting low farmgate milk prices, lower opening herd numbers and wet weather in Victoria—the state with highest production. National milk production over the peak production months of spring was down 9 per cent year-on-year. Over the remaining months of 2016–17 production is forecast to improve slightly due to producers shifting from grass to grain, largely as a result of low feed prices.

Production is forecast to recover by 2 per cent in 2017–18 to 9.0 billion litres, assuming average seasonal conditions. Herd numbers are forecast to recover by 1 per cent, reflecting forecast rises in farmgate milk prices.

Over the medium term, milk production is projected to rise consistently to around 9.6 billion litres. This projection is based on the expected recovery of the dairy herd and improvement in milk yields. The major driver of expected yield improvement is the continued shift towards low-cost grain and concentrate feeds, particularly in Victoria and Tasmania. Expected improvements in herd genetics, pasture management and farm technology should also assist yields.

Australian farmgate milk prices to riseIn 2016–17 the Australian farmgate milk price is forecast to increase by 2 per cent to average 43.8 cents a litre, reflecting an improvement in export returns. The price is forecast to rise by 7 per cent to 47.0 cents a litre in 2017–18. This reflects an assumed slight depreciation of the Australian dollar and forecast higher world dairy product prices.

The Australian farmgate milk price is projected to rise to 50.1 cents a litre (in 2016–17 dollars) in 2019–20 before easing slightly in 2020–21 and 2021–22 as world production increases and puts downward pressure on world prices.

Milk production and farmgate price, Australia, 2006–07 to 2021–22

Manufacturing milk

million L

Farmgate milk price(right axis)

2016–17c/L


Market milk

2,000

4,000

6,000

8,000

10,000

12,000

10

20

30

40

50

60

2021–22z

2019–20z

2017–18f

2015–16

2013–14

2011–12

2009–10

2007–08

Dairy


Australian exportsThe total value of Australian dairy exports is forecast to rise by 5 per cent in 2016–17 to $3.2 billion, reflecting forecast higher world dairy prices and an increase in export volumes of higher valued dairy products such as infant milk formula. In 2017–18 the value of exports is expected to increase by a further 11 per cent due to rising world prices and some recovery in export volumes of other major Australian dairy commodities, such as cheese and skim milk powder.

The value of Australian dairy exports is projected to grow consistently to around $3.5 billion (in 2016–17 dollars) in 2019–20 before declining in the latter half of the outlook period to $3.3 billion in 2021–22.

Over the outlook period, Australia is expected to remain a significant exporter of dairy products to South-East Asia and North Asia. Cheese, skim milk powder and infant milk formula are expected to remain Australia’s largest export products, reflecting growing demand in these regions.

Value of select dairy exports, Australia, 2015–16

Rest of worldMiddle East and North Africa

$m

South-East AsiaNorth Asia

200

400

600

800

1,000

ButterWhole milkpowder

Infant milkformula

Skim milkpowder

Cheese

Dairy


Outlook for dairy

unit 2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

– nominal US$/t 3,483 3,146 4,125 4,580 4,780 4,930 4,840 4,745– real a US$/t 3,566 3,199 4,125 4,492 4,597 4,648 4,474 4,300

Skim milk powder– nominal US$/t 2,592 1,975 2,300 2,450 2,600 2,705 2,600 2,590– real a US$/t 2,653 2,008 2,300 2,403 2,500 2,550 2,403 2,347

– nominal US$/t 3,921 3,200 3,650 4,080 4,260 4,455 4,380 4,300– real a US$/t 4,014 3,254 3,650 4,002 4,097 4,200 4,048 3,897

Cow numbers b ’000 1,689 1,663 1,600 1,610 1,625 1,640 1,660 1,665

Milk yields L/cow 5,761 5,736 5,525 5,584 5,631 5,683 5,711 5,779

Total milk ML 9,732 9,539 8,840 8,990 9,150 9,320 9,480 9,622

– Market sales ML 2,485 2,489 2,500 2,580 2,625 2,660 2,700 2,750

– Manufacturing ML 7,247 7,050 6,340 6,410 6,525 6,660 6,780 6,872

Butter c kt 119 119 117 119 121 124 126 129

Cheese kt 344 344 344 344 351 358 365 372

Skim milk powder kt 242 256 211 220 224 229 233 238

Whole milk powder kt 97 66 60 58 57 56 55 53

– nominal Ac/L 48.5 43.0 43.8 47.0 51.0 53.6 53.5 53.3– real d Ac/L 49.9 43.6 43.8 46.1 48.8 50.1 48.8 47.4

Butter c kt 44 34 32 33 33 34 35 35

Cheese kt 159 172 165 168 170 172 173 175

Skim milk powder kt 186 181 140 141 142 143 144 145

Whole milk powder kt 69 57 60 59 59 58 58 57


Outlook for dairy

a In 2016–17 US dollars. b At 30 June. c Includes the butter equivalent of butter oil, butter concentrate, ghee and dry butterfat. d In 2016–17 Australian dollars. f ABARES forecast. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics; Dairy Australia, Melbourne

WorldIndicative price

Cheese

Australia

Production

Farmgate milk price

Export volume

Export value

Butter

Fisheries


FisheriesOutlook to 2021–22

David Mobsby, Andrea Bath and Robert Curtotti

• The value of Australia’s fisheries and aquaculture production is forecast to decline marginally in 2017–18 to $3.0 billion. Forecast increases in the value of rock lobster, tuna and abalone production are expected to be more than offset by forecast decreases in the value of prawn, salmonid and other fish.

• Over the medium term, the value of Australia’s fisheries and aquaculture production is projected to fall in real terms. A projected increase in the value of rock lobster production is expected to be more than offset by lower production values for several other species groups.

• The value of Australia’s fisheries and aquaculture exports is forecast to rise in 2017–18, reflecting an increase in the value of rock lobster exports.

• Growth in Asian economies and tariff reductions from Australia’s free trade agreements are expected to support export demand for products from Australian fisheries over the medium term.

World fisheries production, consumption and trade

World fisheries productionGlobal fisheries production reached a record high of 167 million tonnes in 2014. Wild-catch fisheries accounted for 93 million tonnes and aquaculture 74 million tonnes of that total. Wild-catch production remained relatively stable, averaging 91 million tonnes between 1995 and 2014. In contrast, global aquaculture production increased at an annual rate of 6 per cent to reach 74 million tonnes. The rise in global aquaculture production has been critical in meeting the growing global demand for seafood. Regionally, most of this production increase has been in Asia (particularly China). In 2014 the region accounted for 89 per cent of global aquaculture output. World fisheries production is projected to rise by 1.7 per cent a year from 2017 to reach 188 million tonnes in 2022 (OECD–FAO 2016). All increased production is expected to be from aquaculture, with wild-catch fisheries forecast to remain largely unchanged from 2017 to 2022.

Fisheries


World fish production, 1990 to 2022

Aquaculture

Mt

Wild-caught

f OECD–FAO forecast.Source: OECD–FAO 2016

50

100

150

200

2022f2018f2014201020062002199819941990

World fisheries consumptionGlobal consumption of fisheries products increased by 22 per cent between 2005 and 2014 to reach 167 million tonnes. In 2014, 87 per cent of products from fisheries were for direct human consumption. The remainder was used to manufacture fishmeal and fish oil and for non-food uses.

Over the medium term, drivers of seafood consumption such as income growth, higher rates of urbanisation and population growth are expected to result in demand for seafood products continuing to rise. Improvements in the supply chain from producer to consumer are expected to result in increased global consumption of seafood through greater volumes of trade and trade of different species types. Seafood consumption is also expected to be supported by an expanding network of supermarkets in developing economies that will provide consumers with a greater range and volume of seafood (FAO 2016a). Consumption decisions, such as convenience, health and sustainability, are also expected to become increasingly important (FAO 2016a).

Global seafood consumption is projected to rise by around 3 per cent annually from 2016 to reach 173 million tonnes in 2022 (OECD–FAO 2016), supported by projected increases in aquaculture production in Asia. Annual global consumption per person is estimated to increase over the medium term from 20.3 kilograms in 2014 to 21.5 kilograms in 2022 (live-weight equivalent), with total supply of seafood products expected to rise faster than population growth.

Fisheries


World fish consumption, 1990 to 2022

Other uses

Mt

Human consumption

f OECD–FAO forecast. Source: OECD–FAO 2016

50

100

150

200

2022f2018f2014201020062002199819941990

International tradeFisheries products are highly globalised and traded commodities, with around 36 per cent of total fish production volume (live-weight equivalent) exported in 2014. The volume of global seafood trade increased by around 4 per cent a year from 1990 to reach 39.9 million tonnes in 2014 (OECD–FAO 2016). Growth in world trade has been supported by rising world demand, aquaculture production, improvements in supply chains and trade liberalisation (FAO 2016a). The volume of seafood trade is projected to reach 43 million tonnes in 2022 (OECD–FAO 2016). Global trade in seafood is sensitive to economic conditions, as illustrated when the value and volume of global seafood trade declined in 2009 during the global financial crisis (FAO 2016a). The value of global trade is estimated to have declined in 2015. This reflects appreciation of the US dollar and slower global economic growth reducing demand for major seafood traded products (FAO 2016b).

PricesFishery products encompass a diverse range of commodities, and price trends can differ between species depending on supply and demand factors. However, substitution between species and common factors such as population and economic growth provide a price linkage between species.

Global supply is expected to increase for some aquaculture-produced species groups such as salmonids and prawns. Prices are expected to average lower over the medium term compared with recent years, assuming an absence of disease outbreaks, sufficient productivity growth and relatively low input prices. In contrast, supply of predominantly wild-caught species is constrained, so prices are expected to be driven by demand-side factors.

Fisheries


World fish indicator prices, 1991 to 2016

2016US$/kg

Note: Salmon indicator price is Farm Bred Norwegian Salmon, export price. Prawn indicator price is Shrimp,No. 1 shell-on headless, 26–30 count per pound, Mexican origin, New York port.Source: IMF 2017

2016201220082004200019961992

5

10

15

20

25

30

SalmonPrawns

Australia’s fisheries and aquaculture industry is highly export-oriented. Consequently, trends in world markets and Australia’s exchange rate influence the price received for many of Australia’s major species. For example, lobster prices are expected to rise in real terms, reflecting a constrained global supply response to higher world demand. In contrast, global prices for premium tuna are expected to decline in real terms as weakness persists in the key importing market (by value) of Japan.

Outlook for Australian fisheries to 2021–22The value of Australia’s fisheries and aquaculture production is forecast to decline marginally in 2017–18 to $3.0 billion. Forecast increases in the value of rock lobster, tuna and abalone production are expected to be more than offset by forecast decreases in the value of prawn, salmonid and other fish production. Of the major species groups, the value of rock lobster production is forecast to rise by 4 per cent to $729 million because of higher production volumes and prices. The production value of salmonids (salmon and trout) is forecast to fall marginally to $772 million because of lower forecast prices. The value of prawn production is forecast to fall by 5 per cent, reflecting lower forecast prices more than offsetting an expected partial production recovery from the white spot outbreak of 2016–17.

Over the medium term, the value of Australia’s fisheries and aquaculture production is projected to fall in real terms to $2.9 billion (in 2016–17 dollars). A projected increase in the real value of rock lobster production is expected to be more than offset by lower production values of several other species groups.

The value of Australia’s fisheries and aquaculture exports is forecast to rise by 2 per cent in 2017–18 to $1.5 billion, reflecting an increase in the value of rock lobster exports. Assuming a stable exchange rate over the medium term, movements in world prices will be a major determinant of export values. In aggregate, total export value is expected to remain largely unchanged in real terms over the outlook period.

Fisheries


Value of Australian fisheries and aquaculture production, 2017–18 and 2021–22

2017–18f

2016–17 $m

2021–22z


Other

Rock lobster

Salmonids

Prawns

Abalone

Tuna

100 200 300 400 500 600 700 800

Growth in Asian economies and tariff reductions under Australia’s free trade agreements are expected to support export demand for Australian fisheries products over the medium term. Asia, particularly the China, Vietnam and Hong Kong region, is an important export market for Australian seafood exports. Barton, Chen and Jin (2013) estimate that the number of urban Chinese middle-class households will expand from around 174 million in 2012 to 271 million by 2022. Higher incomes are a key driver of increased demand for seafood in China. However, as per person income rises, the relationship between seafood demand and income weakens while the relationship between income and demand for quality seafood products increases (Gale & Huang 2007). As the Chinese middle class expands, the rate of seafood consumed is expected to slow. However, the type of seafood demanded is expected to shift towards higher-quality products such as lobster, abalone and salmonids.

Value of Australian fisheries and aquaculture exports, 1997–98 to 2021–22

2016–17$b


2021–22z

2018–19z

2015–16f

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Fisheries


Rock lobsterGlobal lobster production increased from around 255,000 tonnes in 2008 to around 307,000 tonnes in 2014 (FAO 2017). The increase in world supply since 2008 has largely originated from Canada and the United States. Lobster production from these two countries combined increased by 9 per cent a year from 2008 to 2014 to reach around 162,000 tonnes. Average landed prices in the United States reached a low in 2012 but have since trended upwards despite large US and Canadian harvests since 2014. In 2015 total Canadian and US lobster production declined for the first time since 2007, placing upward pressure on international prices.

Globally, lobster is virtually all wild-caught and only a negligible amount is produced by commercial aquaculture operations. This largely constrains the supply response to higher prices. Assuming North American lobster production remains stable over the medium term, world prices are expected to be driven by demand-side factors. Strong economic growth in Asia is expected to be a key driver of demand over the outlook period. Growing demand and constrained supply are expected to result in lobster prices rising in real terms over the outlook period.

World lobster production, 1990 to 2014

United StatesCanada

Rest of world

kt

Source: FAO 2017

201420112008200520021999199619931990

50

100

150

200

250

300

350

The value of Australian rock lobster production is forecast to rise by 4 per cent in 2017–18 to $729 million. This growth is supported by a forecast increase in rock lobster production, an assumed depreciation of the Australian dollar and growing import demand from Asia. These factors are expected to support beach prices. Higher projected global lobster prices over the medium term are expected to result in the gross value of Australian rock lobster production increasing to $779 million in 2021–22 (in 2016–17 dollars). This outlook largely reflects higher average beach prices in real terms, with production volumes expected to rise moderately over the outlook period.

Fisheries


Rock lobster is Australia’s most valuable fishery commodity, with exports valued at $693 million in 2015–16. The China, Vietnam and Hong Kong region is Australia’s key export destination for rock lobster, accounting for over 90 per cent of export value. From around 2010 this market has been subject to rising competition from the United States and Canada. US and Canadian exports of lobster to the region increased more than fourfold in real terms from 2006 to reach US$286 million in 2015 (in 2016 US dollars).

Lobster exports to China, Vietnam and Hong Kong, 2007 to 2015

United StatesCanada

New Zealand

Australia

2016US$m

Source: UN Statistics Division 2017

200

400

600

800

1,000

1,200

20152013201120092007

In late 2016 the Chinese Government announced a tentative reduction of the most-favoured-nation tariff rate imposed on live, fresh and chilled lobsters. This would reduce the 15 per cent tariff to 10 per cent in 2017 (USDA–FAS 2017). Under the China–Australia Free Trade Agreement, in 2017 Australian exporters face a tariff of 6 per cent for live, fresh and chilled lobsters, a 3 percentage point reduction on 2016.

The value of rock lobster exports is forecast to rise by 6 per cent in 2017–18 to $716 million, driven by higher export volumes and prices. Over the medium term the value of Australian rock lobster exports is projected to reach $763 million (in 2016–17 dollars) in 2021–22, largely reflecting higher export prices. Growth in regional Asian economies and tariff reductions from Australia’s free trade agreements in Asia are expected to be the key drivers of Australian rock lobster exports over the medium term.

PrawnsWorld prawn production increased at an annual rate of 3.7 per cent from 2005 to reach 8.2 million tonnes in 2014. This was largely the result of a rise in aquaculture prawn production, which increased by 6 per cent a year during this period (FAO 2017). Since 2008 global aquaculture prawn production has exceeded wild-catch production, largely driven by aquaculture production growth in Asia. OECD–FAO (2016) projects world aquaculture prawn production to grow strongly to 2025. This suggests prices are expected to remain below the highs recorded between 2013 and 2015, which largely reflected international supply disruptions in Asia, particularly Thailand.

Fisheries


The Australian prawn industry is highly trade exposed and movements in global prawn prices and the Australian exchange rate are expected to be reflected in domestic prices. However, in the short term Australian prices are forecast to rise, reflecting a forecast decline in domestic production and import bans on uncooked prawns.

White spot disease, a highly contagious viral infection that affects crustaceans, was detected in five Queensland prawn farms in late 2016. In early February 2017 white spot was detected at a sixth farm on the Logan River and in wild-caught prawns south of the mouth of the Logan River (BINCN 2017). The Queensland Department of Agriculture and Fisheries has destroyed prawns in the production ponds of five affected farms. However, decontamination of the production ponds could take several months (BINCN 2017). The white spot outbreak is expected to result in Queensland aquaculture prawn production declining significantly in 2016–17. The Department of Agriculture and Water Resources imposed a ban on the importation of uncooked prawns (with some exemptions) for six months as of 9 January 2017 (Department of Agriculture and Water Resources 2017a, b). Uncooked prawns comprise a significant proportion of Australian prawn imports. The import ban alongside forecast lower domestic production is expected to result in higher domestic prices in 2016–17.

A forecast partial recovery in domestic production in 2017–18 is expected to result in prices easing in 2017–18. The gross value of prawn production is expected to fall in 2017–18 because forecast lower average prices are expected to more than offset a forecast increase in production. Over the medium term the value of Australian prawn production is projected to remain largely unchanged in real terms. This assumes that the Australian dollar will be stable over the outlook period and a moderate increase in domestic production will offset declining world prices. The value of Australian prawn exports is forecast to fall in 2017–18 to $101 million but remain largely unchanged over the medium term at around $97 million a year (in 2016–17 dollars), reflecting trends in domestic production and world prices.

AbaloneWorld abalone production increased by around sixfold from 1990 to 2014. This was driven by aquaculture production, which increased from just 1,124 tonnes in 1990 to 128,207 tonnes in 2014. In contrast, global wild-catch production declined by around 60 per cent over the same period (FAO 2017). A decline in global wild-catch stocks, leading to restrictive quotas, contributed to this decline (Cook 2016). The global price of abalone has gradually declined, reflecting increased supply of aquaculture-produced abalone.

The increase in global production has largely occurred in China, where abalone aquaculture production increased at an annual rate of 24 per cent from 2004 to 2014. In 2014 abalone production in China reached 115,397 tonnes, accounting for 83 per cent of global output (FAO 2017). Rising production has largely been absorbed into the domestic Chinese market, but exports of abalone products have risen strongly since 2012. The major abalone species produced in China is the Pacific abalone, accounting for 95 per cent of domestic abalone production in 2013 (Wu & Zhang 2016). Abalone production in China is expected to continue to expand, but the growth rate is expected to slow (Cook 2016). Additional Chinese production of abalone is expected to put downward pressure on world prices over the medium term.

Fisheries


World abalone production, 2004 to 2014

Rest of world

Mt

China

Source: FAO 2017

30

90

60

120

150

201420122010200820062004

The value of Australian abalone production is forecast to rise by 3 per cent in 2017–18 to $183 million. The volume of wild-catch production is expected to decline, assuming conservative total allowable catches set by fishery managers over the medium term. In contrast, the volume of aquaculture production is expected to increase, continuing a trend from 2005–06 to 2014–15.

Australian aquaculture abalone production increased by 68 per cent to around 900 tonnes from 2005–06 to 2014–15. This trend is expected to continue over the medium term, but wild-caught volumes are expected to remain constrained, assuming total allowable catch limits continue to be conservative. Growing aquaculture production is expected to result in the value of Australian abalone production increasing by 1 per cent a year to reach $187 million (in 2016–17 dollars) in 2021–22. Despite production rising rapidly in China, major harvested abalone species in Australia are different from the major species of abalone produced in China, supporting Australian exports over the medium term. Over the outlook period the value of Australian abalone exports is forecast to rise to $192 million in 2017–18, supported by an assumed depreciation in the Australian dollar and free trade agreements with major trading partners.

SalmonidsGlobal production of salmonids (including salmons, trouts and smelts) reached 4.4 million tonnes in 2014. On average, 30 per cent of global production is through aquaculture from Norway and 22 per cent from Chile (FAO 2017). Both producers export high volumes, with major importers including Sweden, China and Japan. Shortages of global supply in 2016 were the result of mass fish deaths caused by an outbreak of sea lice in Norwegian salmon farms and algae blooms in Chilean farms. In response to the supply shortage, international salmonid prices have increased and are expected to remain high in the short term while production recovers. Real unit international prices show a 10-year high for salmonid prices in 2016 (IMF 2017).

Fisheries


International salmonid price, 2006 to 2016

2016US$/kg

Source: IMF 2017

2

4

6

8

10

201620142012201020082006

The value of Australian salmonid production is forecast to decrease marginally in 2017–18 to $772 million. This is the result of an expected drop in domestic prices from 2016–17 to 2017–18 in response to a partial recovery of international supply.

Tasmania produced an average of 96 per cent of total Australian salmonid volumes from 2005–06 to 2015–16. Total salmonid production grew from 21,000 tonnes in 2005–06 to an estimated 55,000 tonnes in 2015–16 due to the expansion of Tasmania’s aquaculture industry. Production in 2017–18 is forecast to increase by 1 per cent to 61,000 tonnes.

Australian salmonid production, 1999–2000 to 2015–16

kt

10

20

30

40

50

60

2015–16s

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

1999–2000

s ABARES estimate.

Fisheries


The value of Australian salmonid exports is forecast to decrease in 2017–18 by 3 per cent to $84 million, with some easing of high international prices. Expansion in salmonid production in Australia is resulting in increased volumes being exported, primarily to Japan and China. Australian salmonid exports peaked in 2015–16 at just over 8,000 tonnes and similar volumes are forecast for 2016–17. Australian producers are expected to continue exporting high volumes in 2017–18, assuming that the Australian dollar weakens and international prices remain relatively high despite some easing as global supplies return.

Total Australian salmonid production is expected to grow at a steady rate to reach 63,400 tonnes by 2021–22, assuming some expansion of the aquaculture industry. The value of salmonids is expected to reach $672 million by 2021–22, with a return of prices to longer-term trends after global supply and prices recover. Export volumes over the medium term are forecast to decline to 73,000 tonnes in 2021–22 in response to an easing of international prices. Export earnings are expected to fall in line with volumes, decreasing to $58 million (in 2016–17 dollars) in 2021–22.

TunaGlobal tuna production over the long term has been increasing (FAO 2017). Major species of tuna produced globally include skipjack, yellowfin and bigeye. The value of tuna markets varies depending on the species. For example, skipjack tuna is commonly used in the canned market, while bluefin species are desirable on the higher-value sashimi market. The biggest importer of tuna worldwide in volume terms is Thailand, accounting for a third of global tuna import volumes in 2015 (UN Statistics Division 2017). Thailand re-exports most of this tuna to global markets as canned tuna products. Thailand has one of the world’s largest tuna canning industries and produces the majority of globally traded canned tuna. The low production and labour costs for canning in South-East Asian countries such as Thailand, the Philippines and Indonesia mean that Australian tuna cannot compete in the canning market. Australia’s advantage in the global tuna market lies in the production of premium species for the sashimi market.

Global tuna production, 1995 to 2014

Other

Albacore

Bigeye tuna

Yellow�n tuna

Skipjack tuna

Mt

Source: FAO 2017

2014201120082005200219991996

1

2

3

4

5

6

7

Fisheries


Japan is the world’s second-largest importer of tuna, accounting for 10 per cent of global tuna imports (UN Statistics Division 2017). The country’s imports comprise higher-value species for the sashimi market such as bigeye, yellowfin and bluefin. In value terms, Japan is the largest importer of tuna. However, demand for tuna in Japan appears to be decreasing. Younger Japanese are tending towards more Western diets consisting of beef proteins (Statistics Bureau 2015). This trend is supported by a longer-term decline in overall tuna exports to Japan.

Tuna production in Australia consists primarily of farmed southern bluefin tuna. The juveniles are wild-caught using purse seine methods and then fattened in tuna farms in Port Lincoln, South Australia. Other tuna species that make up production from wild-catch fisheries include albacore, yellowfin and bigeye. Australian tuna production is expected to increase in 2017–18 to 13,500 tonnes. This is driven by an increase in the total allowable commercial catch (TACC) for the Australian Southern Bluefin Tuna Fishery.

Over the decade to 2015–16 more than 90 per cent of Australian tuna was exported. This was mostly southern bluefin tuna destined for the Japanese sashimi market. In 2017–18 increased production is expected to result in the quantity exported reaching 12,400 tonnes. This would represent a 3 per cent increase from 2016–17. Export prices for Australian tuna fell from 2012–13 to 2015–16 but recovered in the first six months of 2016–17 because the Australian dollar weakened against the yen. Some dampening of prices is expected in 2017–18, with an assumed slight strengthening of the Australian dollar against the yen. However, the total value of tuna exported is expected to increase due to higher volumes, increasing value by 4 per cent to $161.1 million.

Over the medium term, the volume of global southern bluefin tuna production is expected to remain steady to 2021–22 at around 13,500 tonnes. The TACC for the Australian Southern Bluefin Tuna Fishery is determined by the Commission for the Conservation of Southern Bluefin Tuna, an international governing body that ensures sustainable use of the global Southern Bluefin Tuna Fishery. The commission has increased the TACC for Australia to 6,165 tonnes a year (up from 5,665 tonnes) through to 2020. Export prices are expected to decrease post 2017–18 due to a slowing of demand in the Japanese economy and anticipated further strengthening of the Australian dollar against the yen. The value of exports is anticipated to decline from 2017–18 to $157 million in 2021–22.

Innovation to increase competitiveness of Australian fisheries and aquaculture sectorExpanding the production base of Australia’s fisheries and aquaculture sector is challenging. Many of Australia’s wild-caught fisheries, including those producing rock lobster, tuna, prawns, shark and finfish species groups are fully developed and are managed under strict output and/or input controls. These controls are designed to limit catches to volumes that are economically and biologically sustainable and to allow any overfished stocks to rebuild. Aquaculture producers face challenges in identifying suitable sites for aquaculture enterprises and in meeting planning requirements.

Many Australian fishing and aquaculture enterprises are focusing on innovative solutions that add value to their products. These solutions help maintain profitability when changing factors beyond the control of fishers, such as exchange rates and fuel prices, make fishing less profitable. For aquaculture enterprises, innovation is the key to developing farming solutions that limit the impact on the broader environment.

Fisheries


Rock lobsterSince the 1990s the transition of rock lobster exports from predominantly cooked and frozen products to live products has presented challenges for the industry. The establishment of live trade required the industry to develop solutions to managing lobsters from the point of capture to the point of final delivery to the customer. This has involved building holding infrastructure close to airports and developing efficient air transport packaging and delivery logistics. Australia’s rock lobster fisheries have largely been successful in establishing an efficient supply chain into Asia.

The Geraldton Fishermen’s Co-operative (GFC) manages over 60 per cent of Western Australia’s western rock lobster catch. In 2016 the GFC established holding tanks in China, at Guangzhou Baiyun International Airport. The China-based facility enables GFC to access additional airspace to service existing clients better during peak demand periods and benefit from tariff reductions for rock lobster exports under the China–Australia Free Trade Agreement (Braidotti 2016). Such developments are built on past innovations. These include the management plan that ensures each fisher’s property right to their share of the total allowable catch, and the creation of fisher cooperatives that allow fishers to collectively achieve the economies of scale required to manage their product through the supply chain.

The South Australian Rock Lobster Fishery has also made innovations through the research development and extension activities of Southern Rock Lobster Limited (SRL). SRL was formed with funding from the Fisheries Research and Development Corporation to help southern rock lobster producers understand the critical relationship between supply, demand and price in key markets for luxury seafood products. SRL’s strategic plan for the sector outlines activities in three key areas: adding value to lobster from fisher to customer; optimising fisheries production; and promoting and supporting people development.

TunaTuna is exported largely as a frozen-whole product to meet the exacting standards of Japan’s seafood market. It is also exported processed and in smaller portions that are marketed as value-added products. Innovations in the supply chain have allowed Australian tuna exporters to maintain access into the highly competitive Japanese tuna market. A large part of the effort has been on adding value to caught tuna by catching and towing tuna at low speed to purpose-built grow-out pens in Port Lincoln, South Australia. The industry in Port Lincoln continues to invest in new ways to grow out finfish products, such as the recent establishment of aquaculture kingfish production. Tuna processors at Port Lincoln have invested in advanced processing and freezing technologies that meet the needs of the export market. The Southern Bluefin Tuna Fishery is internationally managed under a global quota, shared between member nations of the Commission for the Conservation of Southern Bluefin Tuna. The quota in Australia is tightly held by existing tuna farmers. Strong property rights ensure that the industry is able to capture the benefits of innovation.

Fisheries


SalmonidsTasmania’s salmonid industry has grown into a major aquaculture earner for the state. The typical life cycle of a salmonid is three years, from hatchery to harvest. Over the long grow-out period, producers have to maintain fish health and growth to ensure profitable yields and a quality product for consumers. The industry breeds salmon for Tasmanian conditions, a process that involves incorporating selective breeding programmes into the production process (Tassal 2017a).

Salmonid production can have adverse effects on the environment if not well managed, largely because production systems are close to shore and coexist with marine wildlife. The industry uses innovative net designs to reduce the chances of seals being caught in nets. Media reports in early 2017 highlighted concerns about the potential effect of salmonid aquaculture on marine ecosystems. Companies involved in salmonid aquaculture engage with the communities around the production facilities to ensure that an adequate balance between production and community amenity is maintained (Tassal 2017b).

Some companies in Tasmania have promoted offshore farming to minimise the effects of farming on the environment. One of the leaders in this area is Huon Tasmania, which has recently changed the way it farms by moving some of its production into offshore lease areas. This has required the reorganisation of existing infrastructure and the strengthening of pens to withstand higher wave energy conditions in open water (Huon n.d.). The benefits of offshore farming include improved fish health and reduced environmental impact and marine debris. Substantial investment in infrastructure capacity will be required to meet the demand for salmonid consumption in Australia. Offshore farming is likely to be an important part of the industry’s growth strategy.

AbaloneWild-caught abalone production is limited by total allowable catch limits. The land-based aquaculture facilities in Australia are expensive operations that require constant monitoring of conditions in the aquaculture site to avoid costly stock losses. A recent innovation is abalone ranching, where abalone are grown on purpose-built concrete reefs using hatchery seed stock. This approach could help grow the abalone export market without compromising sustainability, potentially adding around 100 tonnes to annual production over the medium term. The first abalone ranching farm was established in Augusta, Western Australia in 2016. The project is likely to expand to other areas of Western Australia and to South Australia (Murphy 2016).

Exporting live product is a recent innovation that helps ensure a price premium for products. It is attracting growing numbers of exporters, who have until recently largely relied on the export of processed product. Live export requires exporters to address every aspect of the supply chain, including the provision of purpose-built infrastructure to keep abalone in prime condition, from harvest to final consumer. Some of these aspects have been resolved, including provision of adequate packaging for live product and improving the logistics of moving abalone through the supply chain.

Fisheries


PrawnsTo ensure viability, prawn fisheries around Australia typically use prawn trawling fishing techniques. As a result, most innovations in the commercial prawn industry aim to achieve higher efficiency from trawling. For a given swept area, it is generally more efficient to tow multiple nets rather than a single large net. For example, many operators in Australia’s Northern Prawn Fishery (NPF) use quad gear (four nets in tow). These nets have been designed to optimise fuel efficiency and to exclude interactions with significant bycatch species, such as marine turtles.

The production of prawns is also associated with a larger proportion of bycatch than most other commercial fisheries. Bycatch reduces the productivity of prawn trawling because it takes time to separate bycatch from the prawn catch and discard it. It also has negative environmental effects because much of the bycatch discarded is dead. Several bycatch reduction devices have been deployed in prawn fisheries, but bycatch remains a significant issue for most prawn trawling operations.

In a bid to reduce bycatch, the Australian Northern Prawn Fishery is trialling innovative net designs. This is part of the Northern Prawn Fishery Bycatch Strategy 2015–2018 (AFMA 2015), which aims to reduce bycatch by 30 per cent by 2018 through industry initiatives. One such initiative was a prize of $20,000 offered in 2016 by NPF Industry Pty Ltd for skippers, owners or crew who developed devices or methods to help meet the strategy’s bycatch reduction goal. AFMA trials of the winning device during the 2016 NPF tiger prawn season indicated that it reduced small bycatch by an average of 40 per cent, with a less than 2 per cent loss of prawns (AFMA 2016). Such examples show an active engagement by industry in seeking innovative solutions to issues.

ReferencesAFMA 2015, Northern Prawn Fishery Bycatch Strategy 2015-2018 (pdf 1.2mb), Australian Fisheries Management Authority, Canberra.

AFMA 2016, Shrimply irresistible this Christmas!, Australian Fisheries Management Authority, Canberra, accessed 30 January 2017.

Barton, D, Chen, Y & Jin, A 2013, Mapping China’s middle class, McKinsey and Company, New York, accessed 30 January 2017.

BINCN 2017, White spot disease, Biosecurity Incident National Communication Network, Canberra, accessed 13 February 2017.

Braidotti, G 2016, China warehouse secures new route to market, FISH, Fisheries Research and Development Corporation, Canberra, June, vol. 24, no. 2, accessed 30 January 2017.

Cook, P 2016, Recent trends in worldwide abalone production (pdf 450kb), Centre of Excellence in Natural Resource Management, University of Western Australia.

Department of Agriculture and Water Resources 2017a, Suspension of uncooked prawns and uncooked prawn meat imports, Canberra, accessed 30 January 2017.

http://www.afma.gov.au/wp-content/uploads/2014/02/NPF-Bycatch-Strategy-2015-18-FINAL-VERSION.pdf

http://www.afma.gov.au/shrimply-irresistible-christmas/

http://www.mckinsey.com/industries/retail/our-insights/mapping-chinas-middle-class

http://www.outbreak.gov.au/current-responses-to-outbreaks/white-spot-disease

http://www.frdc.com.au/knowledge/publications/fish/Pages/24-2_articles/34_China-warehouse.aspx

http://agriculture.gov.au/import/industry-advice/2017/02-2017

http://agriculture.gov.au/import/industry-advice/2017/02-2017

Fisheries


—— 2017b, Update on temporary suspension of uncooked prawns and uncooked prawn products, Canberra, accessed 7 February 2017.

FAO 2016a, The state of world fisheries and aquaculture 2016 (pdf 5.58mb), UN Food and Agriculture Organization, Rome.

—— 2016b, Food outlook: biannual report on global food markets (pdf 7.36mb), UN Food and Agriculture Organization, Rome, October.

—— 2017, Statistics—introduction, Fisheries and Aquaculture Department, UN Food and Agriculture Organization, Rome, accessed 15 January 2017.

Gale, F & Huang, K 2007, Demand for food quantity and quality in China (pdf 197kb), Economic Research Report, no. 32, Economic Research Service, US Department of Agriculture, Washington, DC.

Huon n.d., The future of fish farming (pdf 716kb), Huon Aquaculture Group Limited, Dover, Tasmania.

IMF 2017, IMF Commodity Prices, International Monetary Fund, Washington, DC, accessed 1 February 2017.

Murphy, S 2016, Abalone grown in world-first sea ranch in WA ‘as good as wild catch’, Australian Broadcasting Corporation, 4 May 2016, accessed 1 February 2017.

OECD–FAO 2016, OECD–FAO Agricultural Outlook 2016–2025, Organisation for Economic Co-operation and Development and the UN Food and Agriculture Organization, Paris, accessed 30 January 2017.

Statistics Bureau 2015, Statistical handbook of Japan (1,277kb), Ministry of Internal Affairs and Communications, Tokyo.

Tassal 2017a, Our community, Hobart, accessed 30 January 2017.

—— 2017b, Our salmon, Hobart, accessed 30 January 2017.

UN Statistics Division 2017, UN Comtrade, New York, accessed 30 January 2017.

USDA–FAS 2017, 2017 brings new duty rates for some agricultural products (531kb), GAIN report, no. CHN 16067, 18 January, Foreign Agricultural Service, US Department of Agriculture, Washington, DC.

Wu, F & Zhang, G 2016, Pacific abalone farming in China: recent innovations and challenges (pdf 3.96mb), Centre of Excellence in Natural Resource Management, University of Western Australia.

http://www.fao.org/3/a-i5555e.pdf

http://www.fao.org/3/a-i6198e.pdf

http://www.fao.org/fishery/statistics/en

https://www.ers.usda.gov/webdocs/publications/err32/11803_err32fm_1_.pdf

https://www.huonaqua.com.au/wp-content/uploads/2016/09/Huon-Aquaculture-Future-of-Fish-Farming.pdf

http://www.imf.org/external/np/res/commod/index.aspx

http://www.abc.net.au/news/2016-04-23/world-first-abalone-sea-ranch-creating-opportunity/7345448

http://www.agri-outlook.org/

http://www.stat.go.jp/english/data/handbook/pdf/2015all.pdf

http://www.tassal.com.au/sustainability/our-community/

http://www.tassal.com.au/sustainability/our-salmon/

https://comtrade.un.org/data

https://gain.fas.usda.gov/Recent GAIN Publications/2017 Brings New Duty Rates for Some Agricultural Products_Beijing_China - Peoples Republic of_1-18-2017.pdf

http://www.cenrm.uwa.edu.au/__data/assets/pdf_file/0010/2954350/Pacific-Abalone-farming-in-China,-recent-innovations-and-challenges.pdf

http://www.cenrm.uwa.edu.au/__data/assets/pdf_file/0010/2954350/Pacific-Abalone-farming-in-China,-recent-innovations-and-challenges.pdf

Fisheries


Outlook for fisheries2014–15 2015–16 s 2016–17 f 2017–18 f 2018–19 z 2019–20 z 2020–21 z 2021–22 z

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

Tuna a 161 174 167 173 170 169 168 169

– real b 165 176 167 169 163 157 153 150

Salmonids c 631 702 775 772 755 721 730 756

– real b 649 712 775 757 722 673 666 672

Other fish 434 523 505 460 472 484 497 510

– real b 446 530 505 452 452 452 453 453

Prawns 358 373 375 357 362 370 378 388

– real b 369 378 375 350 346 346 345 345

Rock lobster d 668 692 690 744 762 799 834 872

– real b 687 702 690 730 730 747 760 775

Other crustaceans 65 64 66 67 68 69 69 70

– real b 67 65 66 66 65 64 63 62

Abalone 164 171 178 183 191 198 205 211

– real b 169 173 178 180 183 185 187 187

Other molluscs 212 224 217 211 210 219 220 220

– real b 218 228 217 207 201 205 201 196

Other nei 68 44 46 49 47 51 47 48

– real b 70 45 46 48 45 47 43 42

Total value 2,761 2,967 3,028 3,000 3,036 3,079 3,152 3,247

– real b 2,840 3,010 3,028 2,944 2,907 2,876 2,872 2,887

Fisheries export value

Tuna 151 163 153 161 159 157 157 157

– real b 155 166 153 158 152 147 143 140

Salmonids 48 80 86 84 67 67 62 66

– real b 50 81 86 82 64 63 56 58

Other fish 72 111 107 89 91 93 95 98

– real b 74 113 107 87 87 87 87 87

Abalone 174 182 185 193 199 204 210 216

– real b 179 185 185 190 190 191 192 192

Prawns 94 114 109 101 102 104 106 109

– real b 97 116 109 99 97 97 97 97

Rock lobster 691 693 673 716 750 786 821 859

– real b 711 703 673 703 718 734 749 763

Pearls 111 96 95 94 93 92 91 90

– real b 114 97 95 92 89 86 83 80

Other crustaceans and molluscs 62 74 53 55 57 59 60 62

– real b 64 75 53 54 55 55 55 55

Other fisheries products 36 28 28 31 29 29 30 29

– real b 37 28 28 30 28 27 27 26

Total fisheries products 1,440 1,542 1,489 1,524 1,546 1,591 1,633 1,686

– real b 1,481 1,564 1,489 1,496 1,481 1,487 1,488 1,499

Outlook for fisheries

Gross value of fisheries products

a Exports of tuna landed in Australia. Excludes tuna transhipped at sea or captured under joint venture or bilateral agreements. b In 2016–17 Australian dollars. c Predominantly salmon. Includes trout and salmon-like products. d Includes Queensland bugs. nei Not elsewhere included. f ABARES forecast. s ABARES estimate. z ABARES projection.Sources: ABARES; Australian Bureau of Statistics

Fish

Crustaceans

Molluscs

Crustaceans and molluscs

Fish

Articles


Farm performance: broadacre and dairy farms, 2014–15 to 2016–17Peter Martin, Walter Shafron and Paul Phillips

Summary• In 2016–17 farm cash income for broadacre farms nationally is projected to

average $216,000 per farm, the highest recorded in the past 20 years.• Record winter grain production in most regions, high prices for beef cattle

and good sheep, lamb and wool prices have driven expected record broadacre farm cash incomes in 2016–17.

• Average farm cash income is projected to increase for broadacre farms in all states except Tasmania in 2016–17.

• Farm cash income for dairy farms is projected to decline by 17 per cent nationally to an average of $105,000 per farm in 2016–17, reflecting lower farmgate milk prices and reduced milk production.

OverviewIn 2016–17 favourable seasonal conditions resulted in record winter crop yields and increased pasture production for grazing beef cattle and sheep throughout most of Australia’s agricultural regions. Record winter crop production and high prices for beef cattle, sheep, lamb and wool are projected to result in the highest average farm cash incomes for broadacre farms in the 20 years since 1996–97. Average farm cash income for broadacre farms nationally is projected to increase from $182,500 per farm in 2015–16 to $216,000 per farm in 2016–17 (Box 1).

Broadacre farms grow grains, oilseeds or pulses or run beef cattle or sheep (Box 2) and are located in all regions across Australia. In aggregate, broadacre farms accounted for 65 per cent of Australian farm businesses and an estimated 60 per cent of the total gross value of Australian agricultural production in 2015–16.

Expected higher average farm cash income (Box 3) for broadacre farms in 2016–17 follows increases in 2014–15 and 2015–16. These increases were mainly driven by higher prices for beef cattle combined with high beef cattle turn-off, partly in response to dry seasonal conditions in northern Australia in 2014–15 and 2015–16 and in parts of New South Wales, Victoria, South Australia and Tasmania in 2015–16. Beef cattle production is by far the most common and widely dispersed agricultural activity in Australia, with around 57 per cent of all Australian farms carrying beef cattle. Increases in average farm cash income in 2014–15 and 2015–16 were also supported by high overall winter crop production; strong oilseed and pulse prices; higher sheep, lamb and wool prices; a relatively small increase in farm input costs; and lower interest rates on farm borrowing.

Farm performance: broadacre and dairy farms, 2014–15 to 2016–17


Box 1 Farm survey methodologyEach year, as part of its annual farm survey programme, ABARES interviews operators of around 1,600 broadacre farm businesses in its Australian Agricultural and Grazing Industries Survey (AAGIS) and 300 dairy farm businesses in the Australian Dairy Industry Survey (ADIS). The AAGIS is targeted at commercial-scale broadacre farms—those that grow grains or oilseeds or run sheep or beef cattle and have an estimated value of agricultural output exceeding $40,000. Broadacre industries covered in this survey include wheat and other crops, mixed livestock–crops, sheep, beef and sheep–beef industries. The ADIS is targeted at commercial-scale milk-producing farms.

The information collected provides a basis for analysing the current financial position of farmers in these industries and expected changes in the short term. Data from the AAGIS and ADIS were analysed to gain insights into the performance of Australian broadacre and dairy farms in 2015–16, including projected farm financial performance in 2016–17.

ABARES uses the latest data available to produce estimates from its surveys. This means estimates are revised as new information becomes available. Preliminary estimates previously published are recalculated to reflect updated benchmark information obtained from the Australian Bureau of Statistics (ABS).

ABARES surveys are designed, and samples selected, on the basis of a framework drawn from the ABS Business Register. This framework includes agricultural establishments in each statistical local area, classified by size and major industry.

Data provided in this article were collected through on-farm interviews and incorporate detailed farm financial accounting information. The estimates presented were calculated by appropriately weighting the data collected from each sample farm.

Sample weights are calculated so estimates of number of farms, areas of crops and numbers of livestock in various geographic regions and industries correspond as closely as possible with the most recently available ABS data, as collected in agricultural censuses and updated annually with data collected in agricultural commodity surveys.

Estimates for 2014–15 and earlier years are final. All data from farmers, including accounting information, have been reconciled. Final production and population information from the ABS has been included and no further change is expected in the estimates.

The 2015–16 estimates are preliminary, based on full production and accounting information from farmers. However, editing and addition of sample farms may be undertaken and ABS production benchmarks may also change.

The 2016–17 projections are based on data collected through on-farm interviews and telephone interviews from between October 2016 and January 2017. The estimates include crop and livestock production, receipts and expenditure up to the date of interview, together with expected production, receipts and expenditure for the remainder of the financial year. Modifications have been made to expected receipts and expenditure for the remainder of 2016–17 where prices have changed significantly since the interview.



Box 2 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 cereal grains, coarse grains, oilseeds and pulses.

Sheep industry: specialised producers of sheep and wool. Sheep industry farms account for only 30 per cent of Australia’s wool production. Most wool and sheep meat production occurs on mixed enterprise farms, particularly on mixed livestock–crops industry farms.

Beef industry: properties engaged mainly in running beef cattle, which currently account for around 65 per cent of Australia’s beef production. This industry includes many small farms.

Sheep–beef industry: properties engaged in running sheep and beef cattle. This industry includes many small farms.

Box 3 Major financial performance indicatorsTotal cash receipts: total revenues received by the business during the financial year

Total cash costs: payments made by the business for materials, services, finance costs and for permanent and casual hired labour (excluding owner–manager, partner and family labour)

Farm cash income: total cash receipts – total cash costs

Farm business profit: farm cash income + change in trading stocks – depreciation – imputed labour costs

Profit at full equity: return produced by all the resources used in the business farm business profit + rent + interest + finance lease payments – depreciation on leased items

Rate of return to total capital used: efficiency of businesses in generating returns from all resources used (profit at full equity/total opening capital) x 100

Rate of return to owner equity: profit and capital gain generated from all resources used (profit at full equity including capital appreciation/total opening capital) x 100



Farm cash receiptsHigh beef cattle turn-off for the three years ending 2015–16 resulted in a reduction in average herd size in most regions of Australia. Better seasonal conditions in 2016–17 are expected to result in lower turn-off of cattle for slaughter, higher calf branding rates and a small increase in the size of beef cattle herds in most regions. Competition between farms to purchase cattle to restock contributed to the maintenance of high cattle prices in 2016–17.

Nationally in 2016–17, receipts from beef cattle are projected to increase slightly compared with 2015–16 due to a forecast increase in cattle prices but to decline for farms undertaking significant herd rebuilding as they reduce cattle sales.

Increased winter grain, oilseed and pulse production in 2016–17 is projected to result in higher average crop receipts compared with those recorded in 2015–16. Higher wheat and barley production together with higher pulse prices are projected to more than offset lower prices for wheat, barley and oilseeds and a reduction in grain sorghum production. A large increase is projected in receipts for Victorian grain-producing farms. Record winter crop production is expected in 2016–17 after dry seasonal conditions reduced production in 2014–15 and 2015–16.

Average farm cash receipts in all states are also projected to be boosted by higher prices for sheep, lambs and wool.

In 2016–17 average farmgate milk prices are forecast to remain low in southern dairy regions. Dairy cow numbers and farm inputs are projected to decrease in response to lower prices, resulting in reduced milk production and milk receipts.

Farm costsAverage farm cash costs for broadacre farms are projected to increase nationally by around 7 per cent in 2016–17. Higher farm cash costs are partly a result of higher prices paid for store and breeding cattle and sheep, and fertiliser and crop chemicals. Grain freight, handling and marketing costs are projected to increase with the harvest of a larger winter grain crop in 2016–17. Improved crop and pasture production is projected to result in reduced use of purchased fodder and in combination with lower fodder prices to result in a reduction of around 15 per cent in expenditure on purchased fodder. Average interest rates paid on farm debt are forecast to be around 2 per cent lower in 2016–17.

For dairy farms, expenditure on purchased fodder increased in 2015–16 as a result of dry seasonal conditions and reduced availability of irrigation water in Victoria, South Australia and Tasmania. Lower hay and feed grain prices—together with favourable seasonal conditions in spring and early summer, increased availability of irrigation water and reduced dairy cow numbers—are projected to result in lower average farm cash costs in most dairy-farming regions in 2016–17.



Farm income and profitNationally, average farm cash income for broadacre farms has been high in recent years compared with incomes recorded historically. Farm cash income increased from $159,640 in 2014–15 to $182,500 in 2015–16. In 2016–17 farm cash income is projected to increase further to average $216,000 per farm (Table 1), just over double the 10-year average to 2015–16 of $104,000 in real terms. If achieved, it would be the highest average farm cash income for broadacre farms in over 20 years (Figure 1).

In 2016–17 average broadacre farm cash incomes are projected to increase in all states except Tasmania and in all industries compared with those recorded historically. However, average farm cash incomes differ significantly across industries, states and regions.

TABLE 1 Financial performance, all broadacre industries, Australia, 2014–15 to 2016–17 average per farm

Measure Unit 2014–15 2015–16p 2016–17y

Total cash receipts $ 505,800 548,500 (13) 594,000

Total cash costs $ 346,150 366,000 (16) 377,000

Farm cash income $ 159,640 182,500 (8) 216,000

Farms with negative farm cash income % 14 14 (10) 13

Farm business profit $ 24,300 68,600 (24) 112,000

Profit at full equity

–excluding cap. appreciation $ 65,040 110,000 (16) 152,000

–including cap. appreciation $ 195,050 398,500 (17) na

Farm capital at 30 June a $ 4,451,650 4,976,300 (3) na

Net capital additions $ 58,580 62,500 (45) na

Farm debt at 30 June b $ 536,450 560,500 (5) 571,000

Change in debt – 1 July to 30 June b % 5 7 (25) 1

Equity at 30 June bc $ 3,698,840 3,977,700 (3) na

Equity ratio bd % 87 88 (1) na

Farm liquid assets at 30 June b $ 194,190 209,300 (8) na

Farm management deposits (FMDs) at 30 June b $ 58,910 66,000 (10) na

Share of farms with FMDs at 30 June b % 26 27 (7) na

Rate of return e

–excluding cap. appreciation % 1.5 2.4 (15) 3.1

–including cap. appreciation % 4.5 8.6 (16) na

Off-farm income of owner–manager and partner b $ 36,860 36,200 (11) 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



Farm cash income is a measure of cash funds generated by the farm business for farm investment and consumption after paying all costs incurred in production. This includes interest payments but excludes depreciation and payments to family workers. It is a measure of short-term farm performance because it does not take into account depreciation or changes in farm inventories. A measure of longer-term profitability is farm business profit, because it takes into account capital depreciation and changes in inventories of livestock, fodder, grain and wool.

In 2016–17 increases in beef cattle and sheep numbers and increases in on-farm grain stocks in most states will increase farm inventory values and result in a larger increase in farm business profit compared with that for farm cash income. Farm business profit for Australian broadacre farms is expected to average $112,000 per farm in 2016–17. If achieved, this would be the highest farm business profit for broadacre farms in the 20 years since 1996–97.

FIGURE 1 Financial performance, all broadacre industries, Australia, 1996–97 to 2016–17 average per farm

2016–17$’000

Farm cash incomeFarm business profit

y Provisional estimates.Source: ABARES Australian Agricultural and Grazing Industries Survey

0

–50

50

100

150

200

250

2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

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 2). Strong demand for rural land during most of the 2000s resulted in a sharp increase in land values in most agricultural regions. This raised the total capital value of farms. Rapidly rising farm capital values resulted in high rates of return, including capital appreciation. However, from 2007–08 land values generally did not increase and reported land values declined in several regions in the five years to 2013–14. The reduction in reported land values during this period resulted in lower estimates of average rate of return to total farm capital, including capital appreciation for broadacre and dairy farms.



In 2014–15 and 2015–16 a slight rise in land values was recorded in some high rainfall and pastoral zone regions. The value of beef and dairy cattle also increased significantly. This resulted in an increase in average farm capital value and added around 3.0 per cent to the average rate of return, including capital appreciation, for broadacre farms in 2014–15 and around 6.2 per cent in 2015–16 (Table 2).

Increases in total farm capital values resulting from the general increase in land values during the 2000s also acted to reduce rates of return, excluding capital appreciation.

FIGURE 2 Return on capital, average all broadacre industries, Australia, 1996–97 to 2016–17 average per farm

%

Rate of return, includingcapital appreciation


0

2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

Rate of return, excludingcapital appreciation

2

4

6

8

10

12

The average rate of return, excluding capital appreciation, for Australian broadacre farms is estimated to have been 2.4 per cent in 2015–16 and is expected to increase in 2016–17 to average 3.1 per cent as profit increases for many farms.

In 2016–17 rates of return, excluding capital appreciation, are expected to be positive across all states. The Northern Territory is projected to have the highest average rate of return, excluding capital appreciation, at 9.5 per cent.

The projected average rate of return, excluding capital appreciation, is highest in the wheat and other crops industry, at 4.3 per cent. Since 2013–14 rates of return for the beef, sheep and sheep–beef industries have increased.

The dairy industry is the lowest ranked industry for 2016–17, with a projected average rate of return, excluding capital appreciation, of 0.3 per cent compared with 1.3 per cent in 2015–16. In 2016–17 the average rate of return is expected to be highest in Western Australia (2.7 per cent), similar in Queensland (2.2 per cent) and lowest in Victoria (–0.4 per cent).



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Generally, larger farms generate higher rates of return as a result of increasing returns to scale, greater access to superior technologies and greater management skill (Jackson & Martin 2014).

Large wheat and other crops industry farms (Box 4) generated an average rate of return, excluding capital appreciation, of 5.7 per cent over the five years ending 2014–15, compared with 3.2 per cent for medium-sized wheat and other crops industry farms and –0.5 per cent for small farms (Table 3). In 2015–16 the average rate of return for large wheat and other crops industry farms increased to 6.0 per cent and is expected to increase to 6.8 per cent in 2016–17. Large sheep industry farms generated an average rate of return of 4.9 per cent over the five years ending 2014–15 and 4.1 per cent in 2015–16. This is expected to increase to 7.0 per cent in 2016–17.

The largest increase in rate of return, excluding capital appreciation, in recent years was for large beef industry farms. Rates of return increased from an average of 2.0 per cent for the five years ending 2014–15 to a projected 7.6 per cent in 2016–17.

For additional information on farm financial performance by farm size, see ‘Disaggregating farm performance statistics by size’ in this publication.

TABLE 3 Rate of return to total capital (excluding capital appreciation) by industry and farm size, Australia, 2010–11 to 2016–17 average per farm

IndustryBusiness size

Five years ending

2014–15 2015–16p 2016–17p

% % RSE %

Wheat and other crops Small –0.5 –0.5 (147) 1.1

Medium 3.2 2.1 (22) 4.9

Large 5.7 6.0 (7) 6.8

Mixed livestock–crops Small –0.4 –0.3 (116) 1.5

Medium 2.8 1.8 (23) 4.2

Large 4.5 3.7 (15) 4.8

Sheep Small –0.3 –0.9 (50) 0.5

Medium 2.9 1.8 (40) 4.5

Large 4.9 4.1 (15) 7.0

Beef Small –0.9 0.0 (168) 1.0

Medium 1.6 2.4 (16) 4.0

Large 2.0 4.0 (10) 7.6

Sheep–beef Small –0.1 0.7 (68) 3.2

Medium 2.1 2.3 (29) 4.4

Large 3.5 4.6 (11) 6.7

All broadacre farms 1.8 2.4 (5) 3.2

Dairy Small 0.5 –0.9 (147) –2.5

Medium 2.8 0.3 (234) 0.2

Large 4.8 2.9 (11) 1.5

All dairy farms 3.7 1.3 (33) 0.3

p Preliminary estimates. Source: ABARES Australian Agricultural and Grazing Industries Survey



Performance, by stateProjected farm financial performance in 2016–17, and its rank in historical terms, varies markedly across states and regions (Table 4 and Table 5).

Box 4 Farm 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 around 49 per cent of the total value of sales from broadacre and dairy farms. The majority of large farms are family owned and operated, but complex ownership and operating arrangements are more common among large farms. Typically, the total capital invested in large farms exceeds $10 million. Off-farm income usually accounts for only a small proportion of the disposable cash income of farm operators.

MAP 1 Broadacre zones and regions, Australia average per farm

Pastoral zone

Wheat–sheep zone

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

1 1 11 21

1 22

1 23

1 31

222 223231

311

31 2

31 3

31 4

321

322 331

332

411

421

422

431

511

51 2

521

522

531

631

711

71 2

71 3

71 4

1 32221



TABLE 4 Financial performance, broadacre farms, by region, Australia, 2014–15 to 2016–17 average per farm

ABARES region Farm cash incomeRate of return to total capital

(excluding capital appreciation)

Year 2014–15 2015–16p 2016–17y 2015–16p 2016–17y

Unit $ $ RSE $ % RSE %

New South Wales

111: NSW Far West 178,860 271,900 (17) 383,000 5.3 (21) 9.6121: NSW North West Slopes and Plains 108,260 245,200 (15) 282,000 3.9 (15) 3.4122: NSW Central West 196,210 152,400 (12) 186,000 2.7 (17) 2.6123: NSW Riverina 210,850 227,700 (12) 244,000 3.8 (12) 3.5131: NSW Tablelands 81,940 148,400 (12) 143,000 1.8 (22) 1.7132: NSW Coastal 27,540 43,400 (22) 60,000 0.1 (99) 0.6

Victoria

221: VIC Mallee 126,860 49,800 (49) 207,000 –1.0 (99) 3.6222: VIC Wimmera 73,760 7,500 (99) 228,000 –1.5 (23) 3.4223: VIC Central North 108,780 90,300 (17) 104,000 –0.6 (85) 1.3231: VIC Southern and Eastern Victoria 96,480 99,300 (11) 112,000 0.6 (49) 1.7

Queensland

311: QLD Cape York and the Gulf 321,880 424,200 (30) 1,000,000 1.6 (109) 3.9312: QLD West and South West 144,830 227,600 (68) 162,000 0.1 (99) 1.6313: QLD Central North 133,390 209,400 (27) 418,000 0.7 (160) 3.1314: QLD Charleville - Longreach 142,800 252,600 (23) 287,000 2.4 (50) 4.4321: QLD Eastern Darling Downs 107,830 199,500 (13) 173,000 4.0 (18) 2.9322: QLD Darling Downs and Central Highlands 157,070 250,900 (10) 331,000 3.9 (14) 4.9331: QLD South Queensland Coastal 51,060 73,200 (23) 60,000 0.1 (99) 1.0332: QLD North Queensland Coastal 84,400 124,400 (19) 127,000 –1.5 (63) 0.8

South Australia

411: SA North Pastoral 255,690 279,600 (34) 378,000 4.0 (44) 5.4421: SA Eyre Peninsula 299,790 218,000 (23) 286,000 2.9 (34) 4.5422: SA Murray Lands and Yorke Peninsula 275,210 263,900 (14) 300,000 2.8 (17) 3.0431: SA South East 126,200 144,800 (10) 173,000 1.6 (26) 2.5

Western Australia

511: WA Kimberley 1,120,380 2,132,400 (21) 2,163,000 4.3 (16) 5.8

512: WA Pilbara and Southern Rangelands 451,010 744,200 (50) 1,181,000 10.3 (27) 12.9

521: WA Central and South Wheat Belt 370,700 306,500 (11) 336,000 3.4 (18) 3.5522: WA North and East Wheat Belt 352,050 352,700 (18) 377,000 6.8 (21) 4.4531: WA South West 86,570 166,300 (27) 139,000 1.9 (26) 2.0

Tasmania 144,490 147,800 (9) 103,000 1.0 (38) 1.4

Northern Territory

711: NT Alice Springs District 398,490 548,900 (33) 1,153,000 0.4 (99) 7.6712: NT Barkly Tablelands 3,600,620 6,545,200 (6) 7,051,000 10.7 (8) 11.4713: NT Victoria River District - Katherine 337,720 1,728,900 (30) 1,416,000 4.7 (21) 8.7714: NT Top End Darwin and the Gulf 159,690 215,500 (99) 287,000 3.7 (73) 4.3p ABARES preliminary estimates. y ABARES provisional estimates. RSE Figures in parentheses are standard errors expressed as a percentage of the estimate provided. Source: ABARES Australian Agricultural and Grazing Industries Survey



New South WalesAverage farm cash incomes were high in New South Wales in 2014–15 and increased further in almost all regions in 2015–16 as a result of higher prices for beef cattle and increased crop production, particularly in the North West Slopes and Plains region (Table 4 and Map 1).

In 2016–17 average farm cash incomes are projected to increase further in all regions of New South Wales as a result of record winter crop production and higher prices for beef cattle, sheep, lambs and wool. In the Riverina region, increased rice production as a result of increased availability of irrigation water in 2016–17 is also projected to contribute to the increase in average farm receipts.

Average broadacre farm cash income in New South Wales is projected to increase to average $203,000 per farm in 2016–17. If achieved, this would be more than 150 per cent above the 10-year average to 2015–16 of $79,000 and the highest average farm cash income recorded in New South Wales in the 20 years since 1996–97 (Figure 3).

FIGURE 3 Farm cash income, all broadacre farms, New South Wales and Queensland, 1996–97 to 2016–17 average per farm

2016–17’000

New South Wales


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

Queensland

50

100

150

200

250



TABLE 5 Financial performance, all broadacre industries, by state, Australia, 2014–15 to 2016–17

State New South Wales Victoria

2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y

Total cash receipts $ 471,020 533,800 (4) 568,000 311,610 312,700 (5) 379,000

Total cash costs $ 330,050 352,900 (5) 366,000 213,400 232,400 (5) 245,000

Farm cash income $ 140,970 180,900 (6) 203,000 98,210 80,300 (10) 135,000

Farms with negative farm cash income % 13 12 (20) 11 16 21 (20) 12

Farm business profit $ 27,390 95,300 (11) 106,000 –16,580 –33,100 (22) 48,000


–excluding cap. appreciation $ 62,610 132,900 (8) 144,000 8,790 –4,600 (169) 77,000

–including cap. appreciation $ 132,070 522,900 (32) na 186,010 164,500 (15) na

Farm capital at 30 June a $ 4,060,120 4,879,900 (5) na 3,283,830 3,688,200 (4) na

Net capital additions $ 60,900 75,000 (64) na 74,640 6,100 (336) na

Farm debt at 30 June b $ 500,520 549,300 (8) 590,000 290,680 339,700 (9) 356,000

Change in debt – 1 July to 30 June b % 9 14 (27) 3 10 6 (43) 1

Equity at 30 June bc $ 3,429,350 3,821,300 (4) na 2,925,860 3,094,400 (5) na

Equity ratio bd % 87 87 (1) na 91 90 (1) na

Farm liquid assets at 30 June b $ 178,520 237,700 (18) na 155,260 145,300 (12) na

Farm management deposits (FMDs) at 30 June b $ 41,410 57,100 (14) na 44,980 39,300 (20) na

Share of farms with FMDs at 30 June b % 22 25 (13) na 22 20 (20) na

Rate of return e

–excluding cap. appreciation % 1.6 3.0 (8) 3.0 0.3 –0.1 (171) 2.1

–including cap. appreciation % 3.4 11.9 (31) na 6.1 4.7 (16) na

Off-farm income of owner–manager and partner b $ 42,680 38,400 (8) na 34,880 33,900 (15) na

continued ...




State Queensland Western Australia

2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y

Total cash receipts $ 404,270 505,700 (5) 551,000 1,027,400 1,038,100 (5)1,088,000

Total cash costs $ 288,240 318,000 (5) 329,000 709,920 725,400 (6) 747,000

Farm cash income $ 116,030 187,700 (8) 222,000 317,490 312,700 (9) 340,000


Farm business profit $ –48,540 71,600 (23) 144,000 137,530 168,000 (17) 165,000


–excluding cap. appreciation $ –3,360 111,100 (15) 180,000 216,120 247,700 (13) 241,000



Net capital additions $ –19,270 81,200 (32) na 171,740 120,800 (40) na

Farm debt at 30 June b $ 701,900 637,300 (8) 607,000 945,640 1,027,000 (10) 1,013,000

Change in debt – 1 July to 30 June b % 1 1 (310) –2 2 5 (43) 0






Rate of return e

–excluding cap. appreciation % –0.1 2.2 (14) 3.3 3.7 4.1 (12) 3.9



continued ...

continued




State South Australia Tasmania

2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y


Total cash costs $ 373,990 370,200 (7) 369,000 283,760 289,600 (7) 271,000

Farm cash income $ 228,650 216,400 (9) 258,000 144,490 147,800 (9) 103,000


Farm business profit $ 84,750 79,900 (21) 118,000 24,940 11,500 (142) 30,000


–excluding cap. appreciation $ 127,380 121,900 (15) 160,000 59,990 43,100 (37) 60,000



Net capital additions $ 33,680 67,500 (78) na –30,480 600 (10747) na


Change in debt – 1 July to 30 June b % 3 4 (140) –3 1 –1 (322) 4






Rate of return e

–excluding cap. appreciation % 2.9 2.5 (13) 3.1 1.4 1.0 (38) 1.4



continued ...

continued




State Northern Territory Australia

2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y

Total cash receipts $ 2,283,780 3,706,200 (13)3,830,000 505,960 548,500 (2) 594,000

Total cash costs $ 1,460,190 1,673,700 (13) 1,731,000 346,530 366,000 (2) 377,000

Farm cash income $ 823,580 2,032,400 (16)2,098,000 159,420 182,500 (3) 216,000


Farm business profit $ 455,360 1,222,800 (15) 2,051,000 24,190 68,600 (9) 112,000


–excluding cap. appreciation $ 564,490 1,355,400 (14) 2,177,000 64,970 110,000 (6) 152,000

–including cap. appreciation $ 1,751,140 3,236,800 (11) na 194,590 398,500 (14) na



Farm debt at 30 June b $ 1,223,240 1,183,400 (28) 1,288,000 536,450 560,500 (4) 571,000

Change in debt – 1 July to 30 June b % –8 1 (1,291) 3 5 7 (23) 1






Rate of return e




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

continued



QueenslandFarm cash incomes increased in all Queensland regions in 2014–15 and again in 2015–16. This was achieved partly through a reduction in cattle herds as cattle turn-off increased in response to dry seasonal conditions and higher cattle prices.

Further small increases in average farm cash income are projected for some Queensland regions, with higher cattle prices offsetting reductions in cattle turn-off in 2016–17. A larger increase is expected in the Cape York and Gulf region, where a greater increase in turn-off is projected. In West and South West Queensland, South Queensland Coastal and Eastern Darling Downs, average farm cash income is projected to decline due to reduced beef cattle turn-off as herd rebuilding commences.

Farm cash incomes are projected to increase slightly for the Darling Downs and Central Highlands as a result of increased winter crop production mostly offsetting the decline in wheat and barley prices combined with a small increase in beef cattle receipts. Nevertheless, overall crop receipts are projected to decline for some farms as a result of lower yields from winter crops and an expected reduction in grain sorghum plantings in 2016–17.

Overall, for Queensland broadacre farms average total farm cash receipts are projected to increase by 8 per cent. Average total cash costs are projected to increase by around 7 per cent in 2016–17, mainly as a result of a projected increase in beef cattle purchase expenditure in some regions.

Average broadacre farm cash income in Queensland is projected to increase to $222,000 per farm in 2016–17. If achieved, this would be around 140 per cent above the 10-year average to 2015–16 and the highest recorded for Queensland in the 20 years since 1996–97 (Figure 3).

VictoriaIn 2014–15 and 2015–16 farm cash incomes for Victorian broadacre grain farms were reduced as a result of low winter grain, oilseed and pulse yields due to prolonged dry seasonal conditions, particularly in the Wimmera region.

In 2016–17 a large increase in production of wheat and barley due to record yields, together with increased production of pulse crops, is expected to more than offset lower wheat and barley prices and result in crop receipts increasing by over 60 per cent compared with 2015–16. Reduced turn-off of beef cattle in 2016–17 is projected to result in a small reduction in receipts from beef cattle, despite an increase in beef cattle prices. Overall, much higher crop receipts together with increased receipts from sheep, lambs and wool are expected to result in higher farm cash incomes for broadacre farms in all Victorian regions (Table 4). Average farm cash income for broadacre farms in Victoria is projected to increase to $135,000 per farm in 2016–17. If achieved, this would be around 65 per cent above the 10-year average to 2015–16 (Figure 4).



FIGURE 4 Farm cash income, all broadacre farms, Victoria and Tasmania, 1996–97 to 2016–17 average per farm

2016–17’000

Victoria


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

Tasmania

30

60

90

120

150

TasmaniaIn 2015–16 average farm cash income for Tasmanian broadacre farms was similar to that recorded in 2014–15. Dry seasonal conditions throughout 2015 resulted in reduced crop and wool production and a further increase in beef cattle turn-off, following an increase in 2014–15. Crop, sheep and wool receipts declined and beef cattle receipts increased due to higher turn-off and higher beef cattle prices.

In 2016–17 average farm cash incomes are projected to decrease in Tasmania as beef cattle and sheep turn-off is reduced and farms rebuild beef cattle herds and sheep flocks in response to improved seasonal conditions. Overall, crop receipts are also expected to be lower as a result of lower grain prices.

On average, farm cash income for broadacre farms in Tasmania is projected to decline to $103,000 per farm in 2016–17 (Figure 4). This would be lower than the average recorded in 2015–16 but still around 27 per cent above the 10-year average to 2015–16.

South AustraliaAverage broadacre farm cash income was high in 2014–15 and declined only a little in 2015–16, as a result of slightly lower grain yields and reduced wheat and barley prices (Figure 5).

In 2016–17 broadacre farm cash incomes are projected to increase to average $258,000 per farm. This would be around 80 per cent above the 10-year average to 2015–16.

Increased winter crop production in 2016–17 is expected to result from record yields and an increase in planted area. This is projected to result in an increase in crop receipts despite lower wheat and barley prices. Higher crop receipts together with an increase in receipts from beef cattle, sheep, lambs and wool (due to higher prices) are projected to result in average farm cash income increasing in all regions in 2016–17.



FIGURE 5 Farm cash income, all broadacre farms, South Australia and Western Australia, 1996–97 to 2016–17 average per farm

2016–17’000

Western Australia


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

South Australia

100

200

300

400

Higher receipts from lentils also contributed to higher average farm cash incomes for farms in the Murray Lands and Yorke Peninsula region in 2015–16 and 2016–17. Adverse spring weather events including frost, wind and heavy rain reduced grain yields and incomes for some farms.

Western AustraliaIn 2015–16 a decline in wheat and barley yields and lower grain prices, partly due to lower grain quality, resulted in a decrease in average broadacre receipts in Western Australia and a small decline in average broadacre farm cash income. The impact of lower grain receipts on farm cash income was partly offset by increased beef cattle and wool receipts resulting from higher beef cattle and wool prices in 2015–16.

In 2016–17 lower prices for wheat and barley are projected to largely offset the effect of increased wheat and canola production on average crop receipts. In the east of the Central and South Wheat Belt, severe frost in spring reduced grain yields and farm recepts. Pool payments received in 2016–17 for grain delivered in 2015–16 are expected to partially offset the decrease in wheat and barley receipts. As a result, only a small decrease in average broadacre crop receipts is expected.

Receipts from beef cattle, sheep and lambs are projected to increase as a result of higher cattle, sheep and wool prices. This is expected to result in higher farm cash incomes for farms with livestock, including mixed livestock–crops farms.

In the Kimberley region, higher beef cattle prices are projected to increase farm receipts and raise average farm cash income. In the Pilbara and Southern Rangelands, higher beef cattle turn-off in addition to higher cattle prices is expected to contribute to higher average farm cash income (Table 4).

Overall, broadacre farm cash income in Western Australia is projected to increase from an average of $312,700 per farm in 2015–16 to $340,000 per farm in 2016–17. If achieved, this would be around 90 per cent above the 10-year average to 2015–16.



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. The expansion of the live export trade between 2013–14 and 2015–16 resulted in cattle being sourced from a much expanded area of northern Australia.

In 2015–16 beef cattle receipts increased by 50 per cent, as a result of a 40 per cent increase in the average price received for beef cattle and a 10 per cent increase in the number of beef cattle sold. Average total cash costs increased by 15 per cent, partly offsetting higher farm receipts. Expenditure was higher on beef cattle purchases, hired labour, contracts, freight and livestock selling costs. The value of cattle transferred onto stations by businesses with properties interstate also increased.

Further increases in beef cattle prices are projected to result in a small increase in average farm cash income for the Northern Territory in 2016–17. Average farm cash income is projected to decrease in the Victoria River District – Katherine region due to reduced cattle turn-off. Overall farm cash incomes in the Northern Territory are projected to increase slightly to average $2,098,000 per farm in 2016–17, compared with the 10-year average to 2015–16 of $418,000 per farm (Figure 6).

In 2016–17 an increase in cattle numbers is expected due to favourable seasonal conditions and higher branding rates, increased purchases and transfers onto corporate properties. This is expected to result in an increase in the value of inventories and a larger increase in farm business profit.

FIGURE 6 Farm cash income, all broadacre farms, Northern Territory, 1996–97 to 2016–17 average per farm

2016–17’000


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

0

500

1,000

1,500

2,000

2,500



Performance, by industryFarm financial performance in 2015–16, projected performance in 2016–17 and historical ranking vary markedly across industries (Table 6 and Table 7).

Wheat and other crops industryAverage farm cash income for the wheat and other crops industry decreased slightly in 2014–15 and 2015–16, mainly as a result of lower grain and oilseed prices. The decline in total grain receipts was partly offset by increased receipts for pulses, particularly in 2015–16. Average farm cash costs did not increase in these two years. In 2015–16 farm cash income for wheat and other crops industry farms averaged $318,900 per farm.

In 2016–17 farm cash income for the wheat and other crops industry is projected to increase to average $398,000 per farm. This is the result of increased winter crop production in all the major grain-producing states in 2016–17 offsetting lower prices for grains and oilseeds and increased total cash costs. If realised, farm cash income will be around 70 per cent higher than the 10-year average to 2016–17 and the highest recorded in the past 20 years (Figure 7).

Wheat and other crops industry farms recorded the highest average rate of return excluding capital appreciation (4.3 per cent) of industries surveyed in 2015–16 and 2016–17.

FIGURE 7 Farm cash income, grains industries, Australia, 1996–97 to 2016–17 average per farm

2016–17’000

Wheat and other crops


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

Mixed livestock–crops

100

200

300

400

500



Mixed livestock–crops industryAverage farm cash income for the mixed livestock–crops industry decreased in 2015–16 to $131,100 per farm, mainly as a result of lower grain prices and reduced crop production in Victoria due to dry seasonal conditions. Increases in receipts for beef cattle, lambs and wool were not sufficient to offset lower crop receipts. Total cash costs decreased, driven by reductions in expenditure on crop planting and harvesting. This was the result of reduced area and production of crops in Victoria, together with lower interest rates on farm debt.

In 2016–17 crop receipts are projected to increase due to increased winter crop production and higher receipts from beef cattle, sheep, lambs and wool. This is expected to result in an overall increase in total farm cash receipts of around 17 per cent.

TABLE 6 Financial performance, by industry, Australia, 2014–15 to 2016–17 average per farm

Measure Farm cash income Farm business profit p

Year 2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y

Unit $ $ $ $ $ $

Wheat and other crops 315,990 318,900 398,000 121,810 186,500 206,000

Mixed livestock–crops 172,330 131,100 184,000 38,240 19,000 66,000

Beef industry 93,490 159,300 163,000 –31,550 48,100 96,000

Sheep 118,900 105,000 133,000 22,730 5,700 51,000

Sheep beef 128,330 182,200 202,000 16,870 77,300 144,000

All broadacre industries 159,640 182,500 216,000 24,300 68,600 112,000

Dairy 156,780 125,100 105,000 63,110 –10,200 –48,000

Financial performance measureRate of return

–excluding capital appreciation aRate of return

–including capital appreciation a

Year 2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y

Unit % % % % % %

Wheat and other crops 3.6 4.3 4.3 8.1 8.7 na

Mixed livestock–crops 2.1 1.5 2.5 6.1 4.7 na

Beef industry –0.2 1.6 2.4 1.6 11.1 na

Sheep 1.4 0.9 2.3 3.4 6.5 na

Sheep beef 1.0 2.2 3.6 4.2 9.4 na

All broadacre industries 1.5 2.4 3.1 4.5 8.6 na

Dairy 3.2 1.3 0.3 6.5 5.8 na

a Defined as profit at full equity, excluding capital appreciation, as a percentage of total opening capital. Profit at full equity is defined as farm business profit plus rent, interest and lease payments less depreciation on leased items. p Preliminary estimates. y Provisional estimates. na Not available. Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey



Total cash costs are projected to increase by around 7 per cent, because of increased expenditure on harvesting and marketing the larger 2016–17 winter crop and despite reduced expenditure on interest and fodder.

Average farm cash income for mixed livestock–crops industry farms is projected to increase to $184,000 per farm in 2016–17, around 35 per cent above the 10-year average to 2015–16.

Sheep 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 the sheep industry (Figure 8).

In 2015–16 farm cash income for sheep industry farms declined slightly due to reduced wool production to average $105,000 per farm.

In 2016–17 farm cash income for the sheep industry is projected to increase to average $133,000 per farm as a result of higher wool, lamb and sheep prices. Farm cash income will be around 70 per cent higher than the 10-year average to 2015–16 and the highest recorded in the 20 years since 1996–97 (Figure 8).

FIGURE 8 Farm cash income, sheep industries, Australia, 1996–97 to 2016–17 average per farm

2016–17’000

Sheep–beef


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

Sheep

50

100

150

200

250

Sheep–beef industryIn 2015–16 a large increase in receipts from the sale of beef cattle, together with smaller increases in receipts from the sale of sheep, lambs and wool, resulted from higher prices for beef cattle, lambs, adult sheep and wool and despite a reduction in beef cattle turn-off. In 2014–15 beef cattle turn-off increased, particularly in regions with drier seasonal conditions in Queensland, northern New South Wales, Victoria, South Australia and Tasmania. Farm cash income for sheep–beef industry farms increased to average $182,200 per farm.



In 2016–17 farm cash income for sheep–beef industry farms is projected to increase further to average $202,000 per farm as a result of higher prices for wool, lamb, sheep and beef cattle and despite a reduction in beef cattle turn-off. If achieved, this would be around 130 per cent above the 10-year average to 2015–16 and the highest average farm cash income for sheep–beef farms in the 20 years since 1996–97.

Beef 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, partly as a result of dry seasonal conditions. Average farm cash income for beef industry farms is estimated to have increased from $56,000 per farm in 2013–14 to $93,490 in 2014–15 (Figure 9).

Turn-off of beef cattle for slaughter declined sharply in 2015–16 as a result of reduced numbers of saleable cattle and as some farmers commenced herd rebuilding in response to improved seasonal conditions in regions previously affected by dry seasonal conditions. Despite reduced turn-off for slaughter, further increases in saleyard prices for beef cattle (partly driven by demand from farmers restocking) resulted in increases in beef cattle receipts and total farm receipts of around 30 per cent in 2015–16. Farm cash income for beef industry farms increased to average $159,300 per farm in 2015–16.

In 2016–17 farm cash income for beef industry farms is projected to increase only slightly and average $163,000 per farm. Turn-off of beef cattle for slaughter and live export is forecast to be further reduced and offset by a small increase in beef cattle prices.

Favourable seasonal conditions in 2016–17 are expected to result in an increase in cattle numbers through higher branding rates and reduced turn-off rates, resulting in an increase in the value of inventories and a relatively larger increase in farm business profit in 2016–17 (Table 5).

FIGURE 9 Farm cash income, beef industry, Australia, 1996–97 to 2016–17 average per farm

2016–17’000


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

30

60

90

120

150

180



TABLE 7 Financial performance, by industry, broadacre and dairy industries, Australia, 2014–15 to 2016–17 average per farm

Industry Unit Wheat and other crops industry Mixed livestock–crops industry

2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y

Total cash receipts $ 1,055,260 1,061,500 (4) 1,176,000 517,040 468,800 (6) 544,000

Total cash costs $ 739,270 742,600 (4) 778,000 344,710 337,700 (6) 360,000

Farm cash income $ 315,990 318,900 (6) 398,000 172,330 131,100 (8) 184,000


Farm business profit $ 121,810 186,500 (11) 206,000 38,240 19,000 (58) 66,000






Farm debt at 30 June b $ 1,188,790 1,144,900 (7) 1,169,000 540,380 587,200 (11) 608,000







Rate of return e




continued ...




Industry Unit Sheep industry Beef industry

2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y


Total cash costs $ 240,930 232,300 (21) 220,000 210,200 232,600 (69) 239,000

Farm cash income $ 118,900 105,000 (22) 133,000 93,490 159,300 (23) 163,000


Farm business profit $ 22,730 5,700 (503) 51,000 –31,550 48,100 (87) 96,000


–excluding cap. appreciation $ 44,740 28,500 (107) 72,000 –7,070 71,200 (64) 119,000





Change in debt – 1 July to 30 June b % 8 10 (54) 0 2 5 (94) 4






Rate of return e

–excluding cap. appreciation % 1.4 0.9 (101) 2.3 –0.2 1.6 (61) 2.4



continued ...

continued




Industry Unit Sheep–beef industry Dairy industry

2014–15 2015–16p 2016–17y 2014–15 2015–16p 2016–17y


Total cash costs $ 227,950 271,200 (8) 267,000 629,840 641,700 (4) 602,000

Farm cash income $ 128,330 182,200 (8) 202,000 156,780 125,100 (11) 105,000


Farm business profit $ 16,870 77,300 (22) 144,000 63,110 –10,200 (215) –48,000













Rate of return e




a Excludes leased plant and equipment. b Average per responding farm. c Farm capital minus farm debt. d Equity expressed as a percentage of farm capital. e Rate of return to farm capital at 1 July. p Preliminary estimates. y Provisional estimates. na Not available. Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided. Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey

continued



Dairy industryIn 2015–16 average farm cash incomes declined in Victoria, Tasmania and South Australia, driven by a decline in average farmgate milk prices and a small reduction in milk production in Victoria and Tasmania (Table 8). Dry seasonal conditions resulted in increased fodder costs and higher milk production costs in Victoria and Tasmania. Farm cash income for Victorian dairy farms declined from an average of $152,080 per farm in 2014–15 to $105,400 in 2015–16 (Figure 10). In contrast, in Western Australia higher milk prices and an increase in milk production resulted in a rise in average farm cash income for dairy farms (Figure 11). In Queensland, higher average milk prices and a small reduction in average farm cash costs (mainly due to the exit of higher cost producers) resulted in an increase in average farm cash income. Average farm cash income increased in New South Wales as result of a slight increase in average farmgate milk prices in northern and central New South Wales.

In 2016–17 average farmgate milk prices are forecast to increase slightly in southern dairy regions from 2015–16. However, average farm cash incomes are projected to decline further in New South Wales, Victoria and South Australia compared with 2015–16 as a result of lower milk prices paid by some processors and reduced milk production per farm. Farms are continuing to adjust to lower than expected prices compared with 2013–14 and 2014–15. Cold, wet conditions in early spring also contributed to lower milk production in southern regions.

Farm cash income for Victorian dairy farms is projected to decline to an average of $75,000 per farm in 2016–17. Average farm cash incomes in northern New South Wales, Queensland and Western Australia are projected to remain similar to those for 2015–16.

In 2016–17 farm cash receipts in all states have been boosted by sales of cull dairy cows and high prices for other dairy and beef cattle. This has partially offset lower milk receipts.

Lower fodder and feed grain prices, together with favourable seasonal conditions in spring and early summer and increased availability of irrigation water, are projected to result in lower average cash costs for dairy farms in most regions. In Tasmania, the reduction in farm cash costs is projected to be sufficient to result in a small improvement in average farm cash income for dairy farms from $133,900 per farm in 2015–16 to $140,000 per farm in 2016–17.

Overall, average farm cash income for Australian dairy farms is projected to decrease to average $105,000 per farm in 2015–16, around 11 per cent below the 10-year average to 2015–16.



FIGURE 10 Farm cash income, dairy industry farms, New South Wales and Victoria, 1996–97 to 2016–17 average per farm

2016–17’000

New South Wales

y Provisional estimates.Source: ABARES Australian Dairy Industry Survey

2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

Victoria

50

100

150

200

250

FIGURE 11 Farm cash income, dairy industry farms, Western Australia and Tasmania, 1996–97 to 2016–17 average per farm

2016–17’000

Western Australia


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

Tasmania

100

200

300

400



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Farm investmentProducers’ capacity to generate farm income is influenced by past investments in additional land to expand the scale of farming activities and in new infrastructure, plant and machinery to boost productivity in the longer term.

Over the decade to 2015–16 broadacre and dairy farmers invested heavily in land, plant and machinery. In 2015–16 new investment remained relatively high in historical terms for broadacre and dairy farms.

Higher farm cash incomes for broadacre farms in 2014–15 and 2015–16 led to an increase in the proportion of broadacre farms acquiring additional land through purchase or lease (Figure 12). Around 8 per cent of broadacre farms acquired additional land in 2014–15 and around 7 per cent in 2015–16. This was above the average of 5 per cent for the previous 10 years and comparable with the rates of the late 1990s and early 2000s.

FIGURE 12 Proportion of broadacre farms acquiring land, Australia, 1996–97 to 2015–16 percentage of farms

%

p Preliminary estimates.Source: ABARES Australian Agricultural and Grazing Industries Survey

2

4

6

8

10

2015–16p

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

Between 2009–10 and 2013–14 land values reported for broadacre and dairy farms declined in some regions, particularly in the pastoral zone of northern Australia (Figure 13). The increase in land sales led to a slight increase in reported broadacre land values in some regions in 2014–15 and 2015–16. This was particularly the case in high rainfall regions and some pastoral zone regions.



FIGURE 13 Land prices for broadacre farms, by zone, Australia, 1977–78 to 2015–16 average per farm

Wheat–sheepPastoral

p Preliminary estimates. Source: ABARES Australian Agricultural and Grazing Industries Survey

High rainfall

100

200

300

400

500

600

700

800

index1977–78

=100 2015–16p

2011–12

2007–08

2003–04

1999–2000

1995–96

1991–92

1987–88

1983–84

1979–80

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.

Nationally, total indebtedness of the agriculture, fishing and forestry industries to institutional lenders increased by 77 per cent, from $42.0 billion at 30 June 2001 to $74.3 billion in real terms at 30 June 2009. Total rural debt subsequently declined in real terms to $68.5 billion at 30 June 2015 before rising to $69.5 billion at 30 June 2016. Bank lending accounts for around 95 per cent of total institutional lending. Bank lending declined from $66.9 billion at 31 December 2009 to $64.4 billion at 30 September 2015 before rising to $67.9 billion at 30 September 2016 (RBA 2017a, b).

Change in farm debt over time is the balance between the amount of principal repaid and the increase in principal owed (new borrowing). The increase in broadacre and dairy industry debt is the result of increased borrowing together with reduced loan principal repayments through much of the 2000s.

Lower interest rates from the late 1990s and increased lending fuelled the boom in land prices. This raised farm equity (net wealth) and induced lenders to provide more finance. This continued until a correction in land values in some regions after 2009 and a tightening of lending practices by banks in recent years. Provision of interest subsidies to farmers in drought through exceptional circumstances arrangements supported debt servicing. In many regions this assistance was sustained for most of the 2000s.



Several factors in addition to lower interest rates contributed to the growth in debt over this period. Structural adjustment resulted in broadacre farmers changing the mix of commodities produced and increasing farm size. An increase in the average size of farm enterprises resulted in higher borrowing for ongoing working capital. Factors that contributed to increased working capital debt included movement away from less input-intensive wool production into more intensive cropping, changes in grain payment methods, higher variability in crop incomes compared with livestock incomes and movement to more intensive production technologies involving greater use of purchased inputs such as herbicides.

Loan repayment slowed and borrowing to meet working capital requirements increased during the 2000s drought. Working capital debt accounted for 30 per cent of the increase in average farm debt for broadacre farms between 2000–01 and 2014–15.

Average broadacre and dairy farm debt more than doubled from 2000–01 to 2014–15, mainly resulting from an increase in average farm size. The increase in average debt per farm was modest relative to the increase in average cash receipts per farm (Figure 14 and Figure 15). Borrowing increased most for land purchase and on-farm investment. Borrowing for ongoing working capital also rose in line with increases in average farm size and greater mechanisation and intensification of enterprises.

FIGURE 14 Farm business debt and total farm cash receipts, broadacre farms, Australia, 1996–97 to 2016–17 average per farm

Farm business debt

2016–17’000

Total farm cash receipts

100

200

300

400

500

600

700


2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99



Borrowing to fund new on-farm investment, particularly the purchase of land, machinery and vehicles, was the largest contribution to the increase in average broadacre farm debt. In particular, debt to fund land purchase accounted for the largest share (an estimated 52 per cent) of the increase in average debt for broadacre farms between 2000–01 and 2014–15.

FIGURE 15 Farm business debt and total farm cash receipts, dairy farms, Australia, 1996–97 to 2016–17 average per farm

Farm business debt

2016–17’000

Total farm cash receipts

2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99


200

400

600

800

1,000

Growth in average debt for broadacre farm businesses slowed between 2009–10 and 2013–14 as a result of a reduction in new borrowing and continued debt repayments.

However, average farm business debt is estimated to have increased for broadacre and dairy industry farms in 2015–16. Broadacre debt is estimated to have increased by 7 per cent during 2015–16 to average $560,500 per farm at 30 June 2016. Dairy industry debt also increased by around 7 per cent to average $937,600 per farm (Figure 14 and Figure 15).

Most new borrowing during 2015–16 for broadacre and dairy farms funded new on-farm investment (Figure 16). The proportion of new borrowing to cover operating expenses was higher in the dairy industry (23 per cent) than the broadacre industries (19 per cent). This was partly a result of lower farm cash incomes in 2015–16 for many dairy farms. However, a higher proportion of borrowing for operating expenses is common for more intensive farm enterprises.



FIGURE 16 Purpose of borrowing increases identified by farm operators, Australia, 2015–16p average per farm

Livestock purchase 1%Farm development 3%Debt consolidation 7%

Machinery, equipment and vehicles 23%

Land purchase a 42%Operating expenses 19%

Other b 5%

Livestock purchase 3%Farm development 9%Debt consolidation 9%

Machinery, equipment and vehicles 18%

Land purchase a 29%Operating expenses 23%

Other b 10%

a Includes purchase of permanent irrigation water entitlement. b Includes borrowing to fund changes in farm business ownership/partnership. p Preliminary estimates.Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey

Broadacre farms

Dairy farms

Farm equityFarm business equity on average is strong for broadacre farms (Figure 17). The average equity ratio for broadacre farms at 30 June 2016 is estimated at 88 per cent, an increase from 87 per cent at 30 June 2015. Around 82 per cent of farms had equity ratios exceeding 80 per cent at 30 June 2016.

The decline in land values from 2007–08 to 2013–14 reduced farm equity in some regions and prompted financial institutions to tighten lending. This restricted access for some farm businesses to more finance.



FIGURE 17 Farm business debt, owner equity and equity ratio, broadacre farms, Australia, 1996–97 to 2015–16 average per farm

Farm business debt

2016–17’000 %

Equity ratio (right axis)

p Preliminary estimates.Source: ABARES Australian Agricultural and Grazing Industries Survey

Equity of businessowners

1,000

2,000

3,000

4,000

5,000

60

70

80

90

100

2015–16p

2012–13

2009–10

2006–07

2003–04

2000–01

1997–98

In pastoral and other regions of northern Australia, farm equity fell significantly over the five years to June 2014. This was mainly a consequence of reported reductions in land values. However, farm equity strengthened in other regions because of reduced farm debt and increased capital investment.

Farm equity for many beef and sheep farms increased with the general rise in prices for beef cattle and sheep in 2014–15. Farm equity is also estimated to have increased with small increases in land values in high rainfall and pastoral regions in 2014–15 and 2015–16.

The average equity ratio for dairy farms nationally has declined since 2004–05 as debt levels have increased with increased herd size and milk production. This is particularly the case in regions with increased focus on dairy production for export, including Tasmania, western Victoria and South Australia. The average farm equity ratio for dairy industry farms at 30 June 2016 was 79 per cent, down 1 percentage point from 30 June 2015 and around 7 per cent lower than in 2004–05.

Change in farm equity ratios over time should also be considered against the background of the increase in average farm size. Equity ratios are typically lower for larger farms because they are generally able to service larger debts.



TABLE 9 Distribution of broadacre farms, by farm business debt and equity ratio, Australia, 30 June 2016 ap percentage of farms

New South Wales Victoria Queensland

South Australia

Western Australia Tasmania

Northern Territory Australia

Farm business debt b

<$100,000 % 52 (7) 58 (9) 54 (7) 48 (11) 34 (15) 63 (13) 38 (45) 51 (4)

$100,000 and <$250,000 % 10 (21) 14 (30) 13 (24) 9 (36) 9 (33) 8 (67) 0 – 11 (13)

$250,000 and <$500,000 % 12 (19) 10 (22) 7 (28) 13 (29) 8 (32) 13 (47) 21 (60) 10 (11)

$500,000 and <$1m % 11 (18) 8 (23) 10 (20) 16 (21) 13 (29) 2 (75) 10 (99) 11 (10)

$1m and <$2m % 8 (17) 7 (22) 8 (19) 10 (25) 22 (19) 7 (35) 10 (77) 10 (9)

≥$2m % 7 (14) 4 (17) 9 (12) 4 (30) 14 (16) 7 (29) 20 (34) 7 (7)

Total % 100 – 100 – 100 – 100 – 100 – 100 – 100 – 100 –

Average farm debt at 30 June $’000 549 (8) 340 (9) 637 (8) 492 (13) 1,027 (10) 446 (16) 1,183 (28) 561 (4)

Farm business equity ratio bc

≥90 per cent % 65 (5) 77 (3) 70 (4) 66 (7) 50 (10) 78 (5) 62 (22) 68 (2)

80 and <90 per cent % 17 (16) 11 (19) 13 (18) 12 (26) 19 (19) 13 (29) 24 (49) 14 (9)

70 and <80 per cent % 9 (20) 6 (25) 7 (24) 14 (28) 15 (24) 4 (43) 11 (62) 9 (11)

60 and <70 per cent % 6 (25) 2 (37) 5 (23) 7 (34) 8 (26) 4 (33) 0 (22) 5 (13)

<60 per cent % 3 (28) 3 (37) 5 (23) 2 (57) 8 (35) 2 (51) 3 (99) 4 (15)

Total % 100 – 100 – 100 – 100 – 100 – 100 – 100 – 100 –

Average farm business equity ratio at 30 June % 87 (1) 90 (1) 87 (1) 90 (1) 83 (2) 89 (2) 89 (2) 88 (1)

Population of farms no. 16,760 – 12,530 – 9,380 – 6,190 – 6,100 – 1,000 – 160 – 52,120 –

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



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 36 per cent of broadacre farms in Western Australia and around 30 per cent of those in the Northern Territory carried more than $1 million in debt at 30 June 2016. The high proportion of farms with debt exceeding $1 million reflects a high proportion of larger businesses in those jurisdictions.

Similarly, around 35 per cent of wheat and other crops industry farms and 31 per cent of dairy industry farms nationally carried more than $1 million in debt at 30 June 2016. Both industries have a high proportion of large farms.

TABLE 10 Distribution of farms by industry, by farm business debt and equity ratio, Australia, 30 June 2016ap percentage of farms

Wheat and other crops

Mixed livestock–

crops Sheep Beef Sheep–beef Dairy

Farm business debt b

<$100,000 % 25 (15) 40 (11) 62 (12) 69 (5) 53 (12) 15 (25)

$100,000 and <$250,000 % 10 (24) 17 (19) 10 (32) 11 (26) 6 (68) 9 (37)

$250,000 and <$500,000 % 12 (23) 10 (22) 13 (53) 5 (27) 23 (23) 14 (40)

$500,000 and <$1m % 18 (15) 13 (20) 5 (48) 8 (20) 9 (30) 31 (21)

$1m and <$2m % 20 (13) 13 (16) 6 (44) 3 (33) 7 (28) 20 (19)

≥$2m % 15 (12) 7 (17) 4 (28) 4 (17) 3 (44) 11 (20)

Total % 100 – 100 – 100 – 100 – 100 – 100 –

Average farm debt at 30 June $’000 1,145 (7) 587 (11) 320 (18) 339 (11) 361 (15) 938 (7)

Farm business equity ratio bc

≥90 per cent % 44 (9) 58 (7) 75 (5) 84 (3) 73 (7) 28 (15)

80 and <90 per cent % 22 (13) 18 (19) 10 (32) 8 (20) 18 (27) 23 (27)

70 and <80 per cent % 16 (18) 12 (20) 8 (23) 4 (27) 8 (30) 27 (24)

60 and <70 per cent % 10 (20) 8 (24) 5 (40) 2 (36) 2 (59) 10 (30)

<60 per cent % 9 (21) 4 (33) 2 (74) 2 (34) 0 (99) 13 (31)

Total % 100 – 100 – 100 – 100 – 100 – 100 –

Average farm business equity ratio at 30 June % 83 (1) 86 (2) 90 (2) 92 (1) 92 (1) 79 (2)

Population of farms no. 10,970 – 11,190 – 6,280 – 18,790 – 4,900 – 6,620 –

a Excludes debt for large corporate farms. b Average per responding farm. c Equity ratio defined as total owned business capital at 30 June less debt as a percentage of total owned business capital. p ABARES preliminary estimates. Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided. Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey



In contrast, 69 per cent of beef farms and 63 per cent of sheep–beef farms nationally were recorded as having debt of less than $100,000 at 30 June 2015. Many of these businesses are small.

Much of the aggregate broadacre sector debt is held by a relatively small proportion of mostly larger farms. At 30 June 2016 around 70 per cent of aggregate broadacre sector debt was held by just 12 per cent of farms. On average, these were large farm businesses and in aggregate they produced around 50 per cent of the total value of broadacre farm production in 2015–16.

Aggregate debt is slightly less concentrated among larger farms in the dairy industry. Nevertheless, around 70 per cent of aggregate dairy sector debt at 30 June 2016 was held by 30 per cent of farms.

Debt servicingFor the broadacre industries, the proportion of net farm income (total farm cash receipts less total cash costs excluding interest costs) needed to fund interest payments rose substantially between 2001–02 and 2006–07. This resulted from a large increase in farm debt and reduced farm receipts after extended drought conditions. Interest rate subsidies (paid to farm businesses as drought assistance) partially offset the increase in interest paid over this period.

Higher net farm income since 2009–10 and reductions in interest rates resulted in a decline in the average proportion of net income needed to fund interest payments for broadacre farms (Figure 18).

FIGURE 18 Ratio of interest payments to net farm income, broadacre farms, Australia, 1996–97 to 2016–17 average per farm

Net income

2016–17’000 %

Interest to net incomeratio (percentage of net income used to pay interest) (right axis)

2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99


50

100

150

200

250

10

20

30

40

50



Large increases in borrowing through the 2000s and a reduction in net income between 2007–08 and 2013–14 resulted in the proportion of net income needed to fund interest payments being high for the beef industry (Figure 19). The proportion of net income needed to fund interest payments peaked at just over 60 per cent in 2007–08 as northern beef industry farms commenced rebuilding herds after the end of the 2000s drought. The proportion trended downwards to 18 per cent in 2015–16 and is projected to remain at around 18 per cent in 2016–17. This is similar to the proportion recorded in 2001–02, when beef cattle prices were also historically high.

In 2016–17 the ratio of interest payments to net farm income is also projected to be historically low in the wheat and other crops and sheep industries, at around 16 per cent for both.

FIGURE 19 Ratio of interest payments to net farm income, by industry, Australia, 1996–97 to 2016–17 average per farm

BeefSheep

y Provisional estimates. Source: ABARES Australian Agricultural and Grazing Industries Survey and Australian Dairy Industry Survey

DairyWheat and other crops

%

10

20

30

40

50

60

70

80

2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

For the dairy industry, the proportion of net farm income needed to fund interest payments increased very sharply in 2002–03, 2006–07 and 2012–13. Dry seasonal conditions and low milk prices resulted in very low net farm incomes in those years (Figure 20). In 2016–17 the proportion of net farm income needed to meet interest payments is projected to increase to 33 per cent for the dairy industry nationally and to around 36 per cent in Victoria.



FIGURE 20 Ratio of interest payments to net farm income, dairy farms, Australia, 1996–97 to 2016–17 average per farm

Net income

2016–17’000 %

Interest to net incomeratio (right axis)

2016–17y

2013–14

2010–11

2007–08

2004–05

2001–02

1998–99

Note: Interest to net income ratio is percentage of net income used to pay interest. y Provisional estimates.Source: ABARES Dairy Industry Survey

40

80

120

160

200

240

280

10

20

30

40

50

60

70

ReferencesJackson, T & Martin, P 2014, ‘Trends in the size of Australian farms’, in Agricultural commodities: September quarter 2014, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

RBA 2017a, Bank lending to business—total credit outstanding by size and sector, Reserve Bank of Australia, Sydney, accessed 7 February 2017.

—— 2017b, Rural debt by lender, Reserve Bank of Australia, Sydney, accessed 7 February 2017.

http://www.agriculture.gov.au/abares/publications/display?url=http://143.188.17.20/anrdl/DAFFService/display.php?fid=pb_agcomd9abcc20140916_11a.xml


http://rba.gov.au/statistics/tables/


Productivity in Australia’s broadacre and dairy industriesCharley Xia, Shiji Zhao and Haydn Valle

Summary• From 1977–78 to 2014–15, productivity in the broadacre industries grew by

1.1 per cent per year on average as a result of declining input use (–1 per cent a year) and modest output growth (0.1 per cent a year).

• From 1977–78 to 2014–15 average annual productivity growth in the cropping industry was 1.5 per cent a year, compared with beef (1.3 per cent), sheep (0.3 per cent) and mixed livestock–crops (0.9 per cent).

• Since 2001–02 the sheep industry has exhibited strong annual productivity growth (2.7 per cent a year) compared with the cropping (2.1 per cent), beef (0.5 per cent) and mixed livestock–crops (1.2 per cent) industries.

• Climate conditions have significantly affected the productivity of cropping farms. However, adjusting for the effects of climate, the productivity of cropping farms grew strongly from 1977–78 to 1993–94 (2.5 per cent a year), slowed between 1994–95 and 2006–07 (0.2 per cent) and increased between 2006–07 and 2014–15 (1.7 per cent).

• In the dairy industry, productivity growth averaged 1.5 per cent a year between 1978–79 and 2014–15. This was a result of a 1.3 per cent a year increase in output and a 0.2 per cent a year decline in input use.

IntroductionProductivity growth is an important measure of performance for Australian agriculture because in the long term it reflects changes in the efficiency with which farmers use land, labour, capital and intermediate inputs (for example, chemicals, fodder and purchased services) to produce outputs such as crops, meat, wool and milk.

Productivity growth is the key mechanism by which farmers maintain profits. Profitability improves farmers’ livelihoods and attracts investment and resources into agriculture. It also helps farmers:• finance ongoing expenditure on farm inputs• meet debt-servicing obligations• fund investments in new technologies• earn a return on their entrepreneurial ability and capital investments.

Productivity in Australia’s broadacre and dairy industries


Productivity growth helps farmers offset the impact on profitability of a declining trend in farmer terms of trade (output prices relative to input prices) (Figure 1). Improving productivity is the main way farmers can meet the challenges of uncertain seasonal conditions and other factors beyond their control.

FIGURE 1 Agricultural total factor productivity and farmer terms of trade, Australia, 1948–49 to 2013–14

index1977–78

=100

Terms of tradeTotal factor productivity

Sources: ABARES; Sheng & Jackson 2015

50

100

150

200

250

300

350

400

2013–14

2006–07

1999–2000

1992–93

1985–86

1978–79

1971–72

1964–65

1957–58

1950–51

Productivity growth is the increase in output beyond associated increased input use (or a decrease in the quantity of inputs needed to produce a unit of that output). ABARES preferred measure of productivity is total factor productivity (TFP), the ratio of gross output to total inputs. TFP takes into account a wide range of inputs used and outputs produced (Zhao et al. 2012). Long-term TFP growth is a key indicator of the underlying efficiency of farm businesses. However, short-term variations in TFP can reflect changes in seasonal conditions, so readers should be cautious when interpreting year-to-year movements of TFP numbers.

ABARES produces productivity measures for the Australian broadacre and dairy industries (Box 1). This article updates ABARES productivity statistics to include data for 2014–15 and summarises some of the previous research on the drivers of agricultural productivity.

Drivers of agricultural productivity growthIn the long term, technological progress is the main driver of productivity growth. Public and private investment in research and development (R&D) has contributed significantly to agricultural productivity growth in Australia (Sheng et al. 2011a). Farmers have captured developments in technology and knowledge by investing in higher-yielding, pest and disease-resistant crop varieties, superior planting and harvesting techniques, and better livestock genetics.



Box 1 ABARES productivity estimatesABARES estimates total factor productivity (TFP) as the ratio of a quantity index of gross output relative to a quantity index of total input. Outputs cover crops and livestock products. Inputs include land, labour, capital, materials and services. The Fisher index is used to aggregate across different outputs and inputs into quantity indexes. Calculating average TFP growth rates is based on fitting an exponential trend line to the annual productivity indexes.

TFP estimates for the broadacre and dairy industries are based on data collected through ABARES farm surveys. ABARES surveys approximately 1,600 broadacre farms and 300 dairy farms each year. Farm data are collected through face-to-face interviews with farmers about farm business operations during the preceding financial year. Interview questions cover farm management, production of crops and livestock products, labour use, expenditure, assets and debt positions, government assistances and off-farm activities.

ABARES classifies broadacre and dairy farms in accordance with the Australian and New Zealand Standard Industrial Classification (ANZSIC) (ABS 2013):

Crops industry (ANZSIC06 class 0146 and 0149)—farms engaged mainly in growing cereal grains, coarse grains, oilseeds, rice and/or pulses.

Mixed livestock–crops industry (ANZSIC06 class 0145)—farms engaged mainly in running sheep or beef cattle (or both) and growing cereal grains, coarse grains, oilseeds and/or pulses.

Beef industry (ANZSIC06 class 0142)—farms engaged mainly in running beef cattle.

Sheep industry (ANZSIC06 class 0141)—farms engaged mainly in running sheep.

Sheep–beef industry (ANZSIC06 class 0144)—farms engaged mainly in running both sheep and beef cattle. In this article, TFP estimates are not reported separately for these farms. However, they are included within the aggregate broadacre estimates.

Dairy industry (ANZSIC06 class 0160)—farms engaged mainly in farming dairy cattle.

A farm is classified into an industry if more than 50 per cent of its receipts are generated by that particular enterprise. Farms that do not meet this criterion for any single enterprise are considered mixed livestock–crops farms. The broadacre industries accounted for about 60 per cent of the total gross value of Australian agricultural production in 2014–15.



In the short term, measures of productivity growth for agricultural industries are sensitive to climate variability (Hughes et al. 2011; Sheng et al. 2011b). Much of the productivity growth between the late 1970s and mid 1990s was the result of generally above average rainfall, which increased cropping yields and contributed to strong pasture growth. A slowdown in productivity growth since the mid 1990s is partly a result of adverse seasonal conditions, particularly during the 2000s (Sheng et al. 2011b).

Reforms in Australian agricultural industries have also affected productivity. For example, the removal of marketing and price support mechanisms has contributed directly and indirectly to productivity growth of the broadacre industries (Gray et al. 2014a). These reforms led to structural change through the amalgamation of farms, better risk management and changes in the mix of agricultural commodities produced. These changes altered the allocation of resources between farms, with more efficient producers tending to gain a greater market share over time (Sheng & Jackson 2016; Sheng et al. 2016b).

Farm size increased over the four decades to 2014–15 (Figure 2). Individual farms have expanded and some small farms have left the industry. ABARES has found that larger farms tend to have higher productivity than smaller farms, partly because they use different technologies (Sheng et al. 2014). Large farms may benefit more from adopting innovations than small farms because they have the capacity to fund investment, and technology providers are more likely to produce solutions that meet the needs of large farms (Jackson & Martin 2014).

FIGURE 2 Farm population and average farm size, all broadacre industries, Australia, 1977–78 to 2014–15

no.(’000) dse

Population ofbroadacre farmsAverage farm size(right axis)

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Note: Average farm size is measured in dry sheep equivalents (dse).Source: ABARES

20

40

60

80

100

120

140

2014–15

2009–10

2004–05

1999–2000

1994–95

1989–90

1984–85

1979–80



Farm managers also have a significant bearing on the productivity of farms. Farming is a complex production process. Managers require knowledge and a broad range of skills to maximise profits given uncertainty about seasonal conditions and future prices. Good managers are more likely to make use of information and change technology when it is advantageous to do so. This allows them to produce maximum output from a given set of inputs, leading to higher productivity (Nossal & Lim 2011).

Broadacre productivityProductivity growth in the broadacre industries averaged 1.1 per cent a year between 1977–78 and 2014–15 as a result of declining input use and modest output growth (Table 1, Figure 3). From 2001–02 to 2014–15 productivity growth increased by an average of 1.4 per cent a year as a result of a faster decline in input use than in output production (Table 1).

Total input use in the broadacre industries declined between 1977–78 and 2014–15 at an average annual rate of 1 per cent a year. Land use, which accounts for the largest share of total broadacre input use, declined on average by 1 per cent a year. Similarly, use of capital declined by 1.5 per cent and labour by 2.2 per cent a year. In contrast, use of material inputs including fertiliser, crop chemicals and fodder increased significantly, reflecting a trend towards more intensive management systems for livestock and crop production.

Despite declining input use, broadacre output increased by 0.1 per cent a year between 1977–78 and 2014–15. However, this varied substantially over time, mostly because of changing seasonal conditions.

FIGURE 3 Total factor productivity, output and input, all broadacre industries, Australia, 1977–78 to 2014–15

index1977–78

=100

Total factor productivityOutputInput

50

100

150

200

Source: ABARES Australian Agricultural and Grazing Industries Survey

2014–15

2009–10

2004–05

1999–2000

1994–95

1989–90

1984–85

1979–80



Three key trends can be identified from the varying productivity growth rates across broadacre industries. First, the cropping industry has had higher average productivity growth than livestock industries over the long term. For the cropping industry, TFP growth averaged 1.5 per cent a year between 1977–78 and 2014–15, compared with mixed livestock–crops (0.9 per cent), beef (1.3 per cent) and sheep (0.3 per cent) (Table 1). The cropping industry’s higher growth could be a result of more rapid developments in cropping technologies and reallocation of resources towards crop production in the three decades to 2006 (Mullen 2007; Sheng et al. 2016a).

TABLE 1 Total factor productivity, output and input growth, broadacre industries, Australia, 1977–78 to 2014–15

Growth rate between 1977–78 and 2014–15 (%)

Growth rate between 2001–02 and 2014–15 (%)

All broadacre

Total factor productivity 1.1 1.4

Output 0.1 –0.4

Input –1.0 –1.8

Cropping


Output 2.6 2.6

Input 1.2 0.6

Mixed livestock–crops


Output –0.8 –1.6

Input –1.8 –2.8

Sheep


Output –2.6 –3.3

Input –2.9 –5.9

Beef


Output 1.1 0.1

Input –0.2 –0.3




Second, the difference in productivity growth rates between cropping and livestock industries is narrowing (Figure 4). This can be attributed to a slowdown in the productivity growth of the cropping industry since the late 1990s (Sheng et al. 2011b) and productivity improvements in the beef industry in the 25 years to 2014–15 (Figure 4). High productivity growth in the sheep industry from 2001–02 to 2014–15 is the result of a larger decline in input use than output (Table 1). This follows the removal of the wool reserve price scheme in 1991 and subsequent industry consolidation, as well as shifts by farmers from wool production to cropping and sheep meat production.

FIGURE 4 Total factor productivity growth, by broadacre industries, Australia, 1977–78 to 2014–15

2001–02 to 2014–15 1989–90 to 2001–02 1977–78 to 1989–90

%

–1

0

1

2

3

4


SheepBeefMixedCroppingBroadacre

Third, from 1977–78 to 2014–15 the mixed livestock–crops industry experienced modest productivity growth of 0.9 per cent a year on average. The increase in productivity in this industry was a result of a fall in output (–0.8 per cent a year) and a greater decline in the use of input (–1.8 per cent a year). In the two decades to 2014, mixed livestock–crops farms have tended to specialise in either crop or livestock enterprises (McKenzie 2014). This structural change has shifted inputs away from this industry and into specialised crop and livestock production.

CroppingProductivity in the cropping industry grew on average by 1.5 per cent a year between 1977–78 and 2014–15. This was driven by strong output growth (2.6 per cent a year) relative to input growth (1.2 per cent a year) (Table 1, Figure 5).



FIGURE 5 Total factor productivity, output and input, cropping industry, Australia, 1977–78 to 2014–15

index1977–78

=100


50

100

150

200

250

300

350


2014–15

2009–10

2004–05

1999–2000

1994–95

1989–90

1984–85

1979–80

Jackson (2010) and Knopke et al. (2000) attributed strong productivity growth in the cropping industry in the 1980s and 1990s to developments in technology such as larger machinery, new plant varieties, improved water management and a better understanding of harvesting and planning strategies. Productivity growth in the cropping industry has slowed since the late 1990s (Sheng et al. 2011b). This has been attributed to drought, the slower spread of new technology, a slowdown in the development of breakthrough technologies, the effects of knowledge constraints, loss of a profitable break crop and a shift in research priorities away from productivity-related factors (Jackson 2010).

Output has grown strongly in the cropping industry, but input use has also increased. This is largely due to increased land and material input use. From 1977–78 to 2014–15 cropping farms have operated larger farms, with average farm sowing areas increasing nearly threefold. Material inputs including fertiliser, fuel, crop chemicals and seed have increased by an average of 4 per cent a year. Improved understanding of cropping systems, including plant physiology and determinants of soil fertility, has expanded the use of fertiliser and crop chemicals (especially nitrogen and soil ameliorants such as lime and gypsum).

Cropping farms continue to face climate risks. A 2017 ABARES study (Hughes et al. forthcoming) quantifies the impact of climate conditions on cropping farm productivity (Box 2).

The Grains Research and Development Corporation (GRDC 2015) identifies three broad cropping regions across Australia: northern, southern and western. The three regions all experienced productivity growth between 1977–78 and 2014–15 but vary in their output and input growth (Table 2). Variations in climate conditions, soil fertility and operating environment across the regions contribute to differences in crop varieties and production systems. For example, climate and soil conditions in the northern region enable farmers to diversify crop production (GRDC 2015). In contrast, farmers in the western region have practised no-tillage extensively over the longest period (Llewellyn et al. 2012).



Box 2 Effect of climate on cropping farm productivityABARES productivity estimates are subject to significant climate effects, including large decreases in drought years. This can make it difficult to discern underlying trends in farm performance, both in the short term due to annual climate variability and in the longer term due to climate change.

Over the 20 years to 2013, the CSIRO and Australian Bureau of Meteorology have observed marked changes in Australia’s climate, including reductions in average winter rainfall in southern Australia and general increases in temperature (CSIRO & BoM 2014). Evidence suggests these trends are partly due to climate change (CSIRO 2012; CSIRO & BoM 2016). A 2017 ABARES study (Hughes et al. forthcoming) quantifies the effects of climate on the productivity of Australian cropping farms from 1977–78 to 2014–15. The research further presents climate-adjusted productivity estimates, which measure the performance of cropping farms after climate effects have been removed.

The climate-adjusted figures suggest that productivity grew strongly during the 1980s and early 1990s but slowed considerably from around 1993–94 (Figure 6). However, evidence suggests that productivity growth of cropping farms has been rising since 2006–07 at 1.7 per cent a year. Around 85 per cent of total productivity gains since 1977–78 occurred from 1987–88 to 1993–94 and from 2007–08 to 2013–14.

FIGURE 6 Average climate-adjusted productivity, cropping farms, Australia, 1977–78 to 2014–15

index

Climate-adjusted total factor productivityTotal factorproductivityClimate e�ect

50

100

150

200

Note: The method used by Hughes et al. (forthcoming) for calculating productivity di�ersslightly from that used in this article. Estimates therefore vary.Source: Hughes et al. forthcoming

2014–15

2009–10

2004–05

1999–2000

1994–95

1989–90

1984–85

1979–80

continued ...



Box 2 Effect of climate on cropping farm productivity continued

In the two decades to 2014–15, climate conditions deteriorated across many grain-growing regions. Map 1 shows the average effect of climate on productivity levels from 2000–01 to 2014–15 (relative to long-term average conditions). Southern New South Wales and northern parts of the western GRDC region were significantly affected by adverse climate conditions from 2000–01 to 2014–15, due largely to declines in average winter rainfall. However, from 2000–01 onward some regions also experienced slight improvements, including the high rainfall zones of southern Australia, and parts of coastal northern New South Wales and southern Queensland. The results show that farms have become less sensitive to adverse climate shocks over the decade to 2014–15. This suggests that cropping farms are adapting to the longer-term changes in climate by focusing on technologies that improve productivity in dry years. Anecdotal evidence suggests that farmers have adopted a variety of management practices, including conservation tillage, to exploit summer soil moisture in anticipation of reduced winter rainfall.

MAP 1 Average climate effect on productivity levels, cropping farms, Australia, 2000–01 to 2014–15

GRDC regions

Greater than 10%

Sparse sample

2 to 10%

–10 to –2%–2 to 2%

–20 to –10%Less than –20%

Note: Climate e�ect is relative to the period 1914–15 to 2014–15.Source: Hughes et al. forthcoming

TABLE 2 Total factor productivity, output and input growth, cropping industry, by GRDC region, Australia, 1977–78 to 2014–15

Region TFP (%) Output (%) Input (%)

Northern 1.3 1.9 0.6

Southern 1.9 2.9 1

Western 1.4 3.7 2.3




BeefProductivity growth in the Australian beef industry averaged 1.3 per cent a year between 1977–78 and 2014–15. Output increased by 1.1 per cent and inputs declined by 0.2 per cent a year (Table 3 and Figure 7). In the four decades to 2012–13, productivity improvements in this industry were partly realised through improved pastures, herd genetics and disease management, which lowered mortalities and increased branding rates (calves marked as a percentage of cows mated) (Jackson et al. 2015).

FIGURE 7 Total factor productivity, output and input, beef industry, Australia, 1977–78 to 2014–15

index1977–78

=100


50

100

150

200


2014–15

2009–10

2004–05

1999–2000

1994–95

1989–90

1984–85

1979–80

Climate, pastures, industry infrastructure and proximity to markets vary significantly for beef enterprises in northern and southern Australia. These factors have contributed to differences in production systems such as in herd structure and farm operations.

From 1977–78 to 2014–15 productivity growth was higher for northern beef farms (1.4 per cent a year) compared with their southern counterparts (0.6 per cent a year) (Table 3). This difference was a result of reduced input use in the north and increased input use in the south, particularly of fertiliser and chemicals.

Beef farms in the southern region face a more varied climate and are more sensitive to drought conditions. This can lead to increased feed costs and destocking and restocking cycles that affect output growth. Beef farms in the southern region are also smaller and less profitable. This is likely to contribute to lower average productivity growth (Jackson & Valle 2015).



SheepProductivity growth in the sheep industry averaged 0.3 per cent a year from 1977–78 to 2014–15 (Figure 8). Sheep industry productivity declined between 1978–88 and 1993–94 but has since rebounded. Sheep industry productivity grew by an average of 2.7 per cent a year from 2001–02 to 2014–15, the highest growth within the broadacre industries (Figure 4).

The Australian sheep industry has undergone significant adjustment since the early 1990s, when price support mechanisms for wool were removed. Many farmers shifted their enterprise mix from wool to cropping, resulting in lower sheep numbers. Numbers were further reduced by farmers destocking their properties during periods of drought. Productivity growth in the sheep industry has also been attributed to advances in animal breeding and genetics and improved herd, disease and fodder management (Gray et al. 2014b).

From the early 1990s to 2013 a significant increase in the share of ewes in flocks and a corresponding decline in that of wethers contributed to long-term growth in lamb production. However, wool production declined at a faster rate (Dahl et al. 2013). During that period, increased use of non-Merino rams, first-cross ewes and specialty meat breeds, combined with increased emphasis on selection and breeding for meat production traits, boosted productivity through higher lamb growth rates and greater incidence of twinning. Improved pastures and greater use of fodder crops and supplementary feed improved ewe fertility, reduced lamb mortality rates and increased average slaughter weights.

FIGURE 8 Total factor productivity, output and input, sheep industry, Australia, 1977–78 to 2014–15

index1977–78

=100


50

100

150

200

250

Collapse of the wool reserve price scheme


2014–15

2009–10

2004–05

1999–2000

1994–95

1989–90

1984–85

1979–80

TABLE 3 Total factor productivity, output and input growth, beef industry, by region, Australia, 1977–78 to 2014–15

Region TFP (%) Output (%) Input (%)

Northern 1.4 1 –0.3

Southern 0.6 1.2 0.6




DairyProductivity growth in the Australian dairy industry averaged 1.5 per cent a year between 1978–79 and 2014–15 (Figure 9). This was driven by output increasing by an average of 1.3 per cent a year and input use declining by an average of 0.2 per cent a year.

FIGURE 9 Total factor productivity, output and input, dairy industry, Australia, 1977–78 to 2014–15

index1977–78

=100


50

100

150

200

Source: ABARES Australian Dairy Industry Survey

2014–15

2009–10

2004–05

1999–2000

1994–95

1989–90

1984–85

1979–80

The drivers of productivity growth in the dairy industry were substantially different after the deregulation reforms implemented in 2000. Throughout the 1980s and 1990s, many dairy farms transitioned to more intensive production systems. This reduced labour and land requirements but increased material inputs such as fertiliser and supplementary feed (Ashton et al. 2014). Productivity improvements during this period were driven by output increasing faster than input use, as farmers adopted new technologies such as rotary dairies, artificial insemination and improved pastures (Harris 2011).

In the 2000s many smaller farms exited the dairy industry following deregulation and total output declined. Productivity growth during this period was driven by input use declining faster than output, as resources such as land, labour and capital shifted towards the most efficient farms. In particular, deregulation appears to have facilitated the movement of resources from farms using the year-round production system, in which calving and milk production are spread evenly throughout the year, to those using the seasonal production system, in which production periods are more synchronised with pasture availability. This resource reallocation effect boosted industry productivity at a time when on-farm technological progress was slowing (Sheng & Jackson 2016).



ReferencesABS 2013 Australian and New Zealand Standard Industrial Classification ANZSIC, 2006 (revision 2.0), cat. no. 1292.0, Australian Bureau of Statistics, 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, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra, September.

CSIRO 2012, Climate and water availability in south-eastern Australia: a synthesis of findings from Phase 2 of the South Eastern Australian Climate Initiative (SEACI), Commonwealth Scientific and Industrial Research Organisation, Canberra, accessed 13 February 2017.

CSIRO & BoM 2014, State of the climate, Commonwealth Scientific and Industrial Research Organisation and the Australian Bureau of Meteorology, Canberra, accessed 13 February 2017.

—— 2016, State of the climate, Commonwealth Scientific and Industrial Research Organisation and the Australian Bureau of Meteorology, Canberra, accessed 13 February 2017.

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.

Gray, EM, Oss-Emer, M & Sheng, Y 2014a, Australian agricultural productivity growth: past reforms and future opportunities, ABARES research report 14.2, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra, February.

Gray, EM, Leith, R & Davidson, A 2014b, ‘Productivity in the broadacre and dairy industries’ in Agricultural commodities: March quarter 2014, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

GRDC 2015, Our grains industry, Grains Research and Development Corporation, Canberra, accessed 13 February 2017.

Harris, D 2011, Victoria’s dairy industry: an economic history of recent developments, report prepared for the Department of Primary Industries, Victoria and Dairy Australia Ltd, Melbourne, October.

Hughes, N, Lawson, K, Davidson, A, Jackson, T & Sheng, Y 2011, Productivity pathways: climate-adjusted production frontiers for the Australian broadacre cropping industry, paper presented at AARES 55th annual conference, Melbourne, 9–11 February

Hughes, N, Lawson, K & Valle, H 2017 forthcoming, Farm performance and climate: climate-adjusted productivity on broadacre cropping farms, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Jackson, T 2010, Harvesting productivity: a report on the ABARE–GRDC workshops on grains productivity growth, ABARE research report 10.5 prepared for the Grains Research and Development Corporation, Australian Bureau of Agriculture and Resource Economics, Canberra, April.

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http://www.agriculture.gov.au/abares/publications/display?url=http://143.188.17.20/anrdl/DAFFService/display.php?fid=pb_piadid9aasf20140904_11a.xml

http://www.agriculture.gov.au/abares/publications/display?url=http://143.188.17.20/anrdl/DAFFService/display.php?fid=pb_piadid9aasf20140904_11a.xml

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Disaggregating farm performance statistics by sizeTom Jackson and Walter Shafron

OverviewIn this article farm performance statistics are presented for 10 size categories. Each category represents 10 per cent of the farm population in each industry and region, ranked from smallest to largest according to total farm receipts. For more information about the design of these statistics see Jackson and Shafron (2016).

Statistics are presented for the broadacre, dairy and vegetable industries. The broadacre industry is split into wheat and other crops, beef, sheep, mixed livestock–crops and sheep–beef. The cropping industry is separated into the Grains Research and Development Corporation western, northern and southern regions (Map 1) and the beef industry into the Meat & Livestock Australia northern and southern regions (Map 2).

MAP 1 Grains Research and Development Corporation regions, Australia

Source: Grains Research and Development Corporation

WesternSouthernNorthern

Disaggregating farm performance statistics by size


MAP 2 Beef cattle industry, Australia

NorthernSouthern

Source: Meat & Livestock Australia

Each table contains the most recent data for a set of variables that summarise the output and economic performance of farms in each size category. The variables are:• share of total output produced• total cash receipts• total cash costs• profit at full equity• total opening capital• net capital additions• rate of return including capital appreciation, and equity ratio.

Farm returns vary significantly from year to year, reflecting factors such as seasonal conditions and commodity prices. Data are averaged over 2013–14 to 2015–16 to provide the most meaningful picture of farm performance.

Key points for 2013–14 to 2015–16• The largest 10 per cent of broadacre farms produced 46 per cent of total output,

while the smallest 50 per cent of farms produced 12 per cent of total output.• The average rate of return including capital appreciation generated by the largest

10 per cent of broadacre farms was 8.2 per cent, while the smallest 10 per cent generated average returns of –2.8 per cent.

• The largest 10 per cent of broadacre farms had the lowest average equity ratio of all farms (79 per cent), while the smallest 10 per cent of farms had the highest average equity ratio (97 per cent).



TABLE 1 Broadacre farms, Australia, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)

Cash costs ($) Profit ($) Capital ($)

Net capital additions ($)

Rate of return (%)

Equity ratio (%)

1 0.9 49,738 50,090 –48,979 1,427,717 –15,117 –2.8 97.4

2 1.6 89,410 68,697 –34,748 1,848,062 –10,667 1.1 96.4

3 2.3 124,937 93,681 –34,915 2,568,446 –11,909 0.4 96.2

4 3.0 163,256 106,915 –16,372 2,273,310 14,857 1.9 96.0

5 3.9 215,629 162,011 –19,481 3,166,183 –45,866 12.0 92.9

6 5.4 295,834 197,116 18,482 3,358,468 42,027 2.8 91.7

7 7.6 418,576 282,032 69,012 4,258,818 28,098 4.4 90.1

8 11.3 620,849 416,984 102,602 5,371,826 71,861 5.8 87.8

9 18.2 998,062 662,666 232,971 7,791,479 149,636 6.5 85.6

10 45.9 2,523,620 1,730,048 701,875 14,268,766 414,335 8.2 78.5


TABLE 2 Wheat and other crops farms, Australia, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 0.6 69,433 69,005 –47,385 1,464,836 –86,732 –1.6 97.9

2 1.6 176,802 138,143 –12,025 2,541,347 –28,773 –0.1 90.1

3 2.8 343,324 261,175 40,504 3,054,287 71,963 2.8 92.0

4 4.2 485,680 328,564 81,035 3,799,303 –9,231 6.7 84.7

5 5.8 661,204 494,349 79,639 4,619,797 109,934 8.9 84.4

6 7.9 865,149 573,721 177,061 5,365,905 22,220 5.8 85.1

7 9.4 1,147,288 757,615 297,460 7,498,020 179,967 8.0 86.3

8 13.5 1,541,323 1,024,860 453,949 7,860,840 240,701 8.8 81.1

9 18.3 2,096,165 1,489,748 574,714 9,806,254 392,274 8.8 74.2

10 35.9 4,122,128 2,812,013 1,350,205 18,255,415 783,000 9.5 75.1




TABLE 3 Beef farms, Australia, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.2 40,248 40,014 –47,714 1,539,111 6,900 –4.8 96.3

2 2.1 73,773 56,273 –25,360 1,711,330 6,934 1.2 98.6

3 2.6 94,082 85,060 –56,539 2,480,507 –32,206 0.6 98.3

4 3.1 109,464 82,023 –33,217 3,098,502 –37,506 –0.2 96.6

5 3.9 134,940 88,185 –39,080 2,437,266 –14,558 1.6 96.6

6 4.3 160,265 100,225 –29,680 2,628,336 30,531 1.7 97.0

7 6.0 215,433 148,257 –9,560 4,737,951 –157,792 19.1 94.8

8 9.4 331,304 215,384 53,691 4,399,995 –33,952 4.8 90.8

9 15.5 558,929 322,267 94,684 7,043,509 74,411 3.5 93.6

10 51.9 1,856,275 1,209,401 398,463 16,313,712 270,020 7.1 83.0


TABLE 4 Sheep farms, Australia, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.9 47,293 43,403 –40,611 995,901 687 –0.4 99.2

2 2.9 81,785 51,671 –28,982 1,164,969 20,223 0.9 95.7

3 4.4 130,257 108,946 –35,887 1,862,806 –67,603 1.9 86.4

4 5.2 147,445 77,971 7,681 1,797,216 16,759 1.5 94.6

5 6.3 173,651 136,581 –31,731 1,921,775 36,213 2.1 96.9

6 7.2 197,765 155,948 –38,283 2,276,133 62,283 1.3 91.4

7 8.7 233,982 170,266 –4,025 2,648,850 26,080 2.5 92.4

8 10.6 297,984 201,289 34,180 3,412,613 116,357 3.5 93.3

9 16.3 447,266 337,491 24,587 4,263,454 70,667 3.1 87.4

10 36.5 1,016,372 676,076 235,920 8,240,087 –105,871 6.6 86.2




TABLE 5 Mixed livestock–crops farms, Australia, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.7 94,987 86,117 –47,154 1,738,953 44,233 –1.6 95.1

2 2.7 190,656 134,328 –9,410 1,866,746 –34,683 8.0 91.9

3 4.1 250,473 198,814 –18,563 2,289,849 24,402 1.9 87.5

4 4.7 300,068 202,853 11,029 2,514,223 16,507 3.0 90.0

5 5.8 364,996 233,303 56,643 3,568,085 37,190 2.7 93.3

6 7.3 454,793 312,947 36,564 4,467,015 56,518 2.3 93.1

7 9.2 580,857 402,172 117,372 4,289,289 120,518 5.4 80.5

8 13.2 827,488 557,541 170,668 5,240,522 129,439 7.2 81.9

9 17.5 1,088,675 751,626 226,263 7,667,266 206,153 5.6 85.3

10 33.9 2,151,367 1,543,713 608,946 13,248,519 524,763 6.9 81.8


TABLE 6 Sheep–beef farms, Australia, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 2.1 65,906 59,246 –27,747 1,145,497 513 0.3 95.2

2 2.1 103,904 54,844 –23,441 1,803,143 8,876 2.7 99.6

3 4.8 160,943 109,995 –13,320 1,976,767 36,589 1.4 95.0

4 3.6 192,310 121,941 –13,356 3,008,995 7,173 2.0 97.7

5 5.0 213,217 151,361 –18,361 2,495,443 8,349 3.3 92.6

6 6.6 269,813 208,895 1,673 3,230,826 21,527 1.7 91.9

7 9.3 351,390 213,467 71,680 2,878,852 2,105 6.5 86.6

8 11.4 468,517 290,580 89,948 4,220,092 73,136 7.5 89.6

9 17.0 717,540 481,902 159,625 7,808,624 140,745 4.4 89.8

10 38.1 1,550,806 1,070,459 369,210 12,497,664 156,479 8.8 86.2




TABLE 7 Dairy farms, Australia, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 2.6 205,595 173,336 –15,992 1,765,173 108,267 0.7 85.7

2 4.1 328,879 305,787 –20,415 2,390,675 62,106 0.9 88.3

3 6.0 439,637 363,568 26,497 3,029,744 47,343 6.8 88.7

4 5.4 535,401 452,680 –7,876 4,148,271 17,332 4.3 79.1

5 7.3 588,268 419,670 84,953 3,470,997 10,022 4.3 82.3

6 9.3 693,715 530,573 93,751 3,857,740 42,750 5.5 82.7

7 9.5 876,520 712,071 119,788 3,553,227 128,892 7.1 74.7

8 13.0 1,039,411 819,566 194,999 5,214,792 37,502 6.8 73.1

9 15.7 1,324,959 1,014,169 245,872 6,063,927 140,459 6.0 78.9

10 27.0 2,239,830 1,851,870 426,098 9,219,940 190,870 7.2 75.5

Source: ABARES Australian Dairy Industry Survey

TABLE 8 Vegetable farms, Australia, 2012–13 to 2014–15

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 0.4 35,087 37,602 –77,931 909,990 0 –8.3 98.3

2 0.9 84,089 61,834 –54,380 1,529,808 950 –3.1 96.8

3 1.4 135,023 106,631 –52,392 2,367,263 –4,196 –0.2 97.1

4 1.9 195,694 136,933 –17,817 1,964,155 8,068 –0.1 92.0

5 2.7 266,835 231,106 –62,842 3,992,018 94,629 5.6 95.8

6 3.8 374,296 273,442 22,164 2,245,255 –5,092 2.4 89.3

7 5.5 543,886 433,555 36,509 3,123,033 –36,071 1.1 82.1

8 7.9 770,977 563,216 93,236 4,442,115 17,737 3.2 94.1

9 12.6 1,254,616 1,018,676 118,102 6,298,547 63,434 5.3 86.4

10 63.1 6,279,506 5,029,281 1,144,837 13,043,618 164,385 10.3 79.1

Source: ABARES Australian Vegetable Industry Survey



TABLE 9 Wheat and other crops farms, Western region, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.5 173,734 127,097 –4,855 2,035,151 15,064 0.8 96.5

2 1.9 250,536 171,562 20,962 2,576,033 28,386 3.0 93.5

3 3.4 380,509 308,410 –227 3,720,448 27,008 0.3 94.9

4 3.6 534,896 374,700 107,846 5,118,157 24,439 2.8 91.7

5 6.8 845,072 565,334 168,411 4,659,711 78,678 5.3 77.2

6 7.9 996,033 656,734 172,379 6,294,604 –31,585 2.6 91.2

7 10.8 1,334,445 962,181 357,394 7,104,497 359,409 5.8 83.6

8 13.3 1,682,940 1,314,079 316,141 8,228,609 269,082 4.1 72.7

9 17.8 2,262,297 1,666,725 585,431 10,059,089 422,939 5.5 74.7

10 33.1 4,206,360 2,892,622 1,337,392 15,645,580 561,218 9.6 74.7


TABLE 10 Wheat and other crops farms, Southern region, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.4 73,800 66,105 –55,303 1,431,989 –54,786 0.0 96.5

2 2.2 120,468 88,450 –28,429 2,299,175 58,236 –0.4 96.2

3 2.8 164,206 130,338 –38,467 1,901,696 –25,724 2.5 93.0

4 4.0 218,835 162,172 –27,015 2,505,068 –512 2.8 91.2

5 5.2 297,262 187,627 28,391 3,103,595 38,799 4.3 92.8

6 7.2 394,020 263,283 55,224 3,940,079 47,826 3.9 90.0

7 9.5 537,751 376,213 68,558 4,598,011 13,543 4.7 88.4

8 12.6 709,686 489,502 111,098 5,594,156 215,343 7.7 88.7

9 18.1 1,008,779 683,127 226,401 7,957,519 174,255 7.8 85.6

10 37.2 2,078,605 1,396,444 560,923 13,167,756 486,356 9.1 84.3




TABLE 11 Wheat and other crops farms, Northern region, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 1.1 69,494 69,560 –44,461 1,648,967 –12,658 –1.2 97.5

2 1.8 131,295 100,553 –48,814 2,280,972 1,103 0.5 95.0

3 2.7 188,926 151,480 –48,121 2,340,794 27,617 0.8 91.4

4 3.5 245,295 205,406 –24,154 2,530,158 45,249 1.5 85.1

5 4.9 320,978 219,963 25,022 2,931,966 50,113 1.5 92.4

6 5.8 420,309 289,360 57,530 4,226,537 85,106 3.9 87.8

7 8.0 559,408 384,222 121,845 4,496,082 136,770 6.7 83.5

8 11.8 814,584 543,455 187,915 5,991,519 31,568 7.3 84.5

9 17.8 1,229,521 800,480 359,429 9,080,239 216,985 7.2 82.9

10 42.6 2,981,682 2,078,693 907,298 15,904,151 590,458 9.2 75.9


TABLE 12 Beef farms, Southern region, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 2.3 55,003 50,806 –50,673 1,191,838 4,132 –2.7 97.5

2 3.1 86,831 64,320 –35,349 1,472,482 –95,821 1.3 99.5

3 4.1 96,217 94,843 –53,360 2,852,631 35,782 1.3 98.3

4 3.9 105,785 78,201 –43,383 2,017,574 –31,883 –1.9 94.0

5 5.1 124,766 70,209 –4,557 3,358,944 –12,959 1.7 98.3

6 5.2 144,638 87,308 –23,151 2,311,772 –18,211 1.1 97.2

7 6.6 174,106 114,970 –14,357 2,978,347 4,459 2.0 96.6

8 9.9 255,243 150,538 2,426 5,121,888 –382,756 28.1 96.3

9 17.0 435,267 266,187 113,261 5,510,633 –30,362 5.0 94.5

10 42.9 1,132,298 680,822 293,021 9,518,840 358,288 8.5 88.8




TABLE 13 Beef farms, Northern region, 2013–14 to 2015–16

Size decile

Output share (%)

Cash receipts ($)



Rate of return (%)

Equity ratio (%)

1 0.8 33,119 30,470 –53,400 1,769,188 10,326 –7.4 98.7

2 1.1 57,451 56,906 –52,810 1,805,172 –3,015 –1.5 96.1

3 1.6 86,037 69,339 –5,474 2,416,157 11,815 2.3 94.4

4 2.5 124,989 94,431 –68,780 3,578,955 –28,107 –0.2 97.8

5 3.2 155,946 114,574 –35,437 2,559,656 52,271 3.4 96.1

6 4.9 211,412 143,543 –23,594 4,104,800 71,600 3.0 92.8

7 5.6 311,161 241,248 14,351 5,168,894 83,847 3.9 88.8

8 9.0 455,141 272,962 87,242 5,518,672 81,362 4.8 88.8

9 15.5 757,820 491,578 100,059 9,507,488 116,444 3.0 89.2

10 56.0 2,790,413 1,835,615 538,055 24,302,033 98,002 6.5 80.0


ReferencesJackson, T & Shafron, W 2016, ‘Disaggregating farm performance statistics by size’, in Agricultural commodities: March quarter 2016, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

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The EU sheep meat industryPeter Berry, Matthew Howden and Adrian Waring

Sheep meat comprises only a small proportion of total EU meat consumption. Nonetheless, the European Union is one of the world’s largest producers and consumers of sheep meat. A long-term decline in production since the mid 2000s has been tied to changes in EU domestic support and trade policies. The consequent strong rise in sheep meat prices relative to other meats, combined with a range of other factors, has contributed to a similar decline in total EU sheep meat consumption.

The high price of sheep meat in the European Union has made it a desirable market for sheep meat exporters. However, Australia’s access to the EU market is restricted by comparatively low import quotas and high out-of-quota tariffs. This article examines the EU sheep meat market and the policies that support it to better understand how Australian exporters could benefit from improved access to this market.

EU sheep meat consumptionThe European Union is the second-largest consumer of sheep meat in the world (OECD 2017). Between 2006 and 2015, an average of 984,000 tonnes (carcase weight) of sheep meat was consumed annually. This was second only to the amount consumed in China. In 2015 total EU sheep meat consumption was 871,500 tonnes. About three-quarters of the region’s consumption was concentrated in the United Kingdom (44 per cent), Spain (13 per cent), France (11 per cent) and Ireland (6 per cent) (Figure 1).

Sheep meat is a relatively expensive meat purchased predominantly by older or wealthier consumers and for special occasions. Its consumption has been in long-term decline because of the changing European age demographic, its price relative to other meats and slow consumer income growth (MLA 2016).

Over the 10 years to 2015, total EU sheep meat consumption fell by 31 per cent (European Commission 2017a). Average per person consumption fell by 34 per cent over the same period, from 2.6 kilograms to 1.7 kilograms a year. By comparison, per person consumption of pork and poultry has been consistently higher, at 32.4 kilograms and 22.9 kilograms per person, respectively (European Commission 2017a).

The EU sheep meat industry


FIGURE 1 Total and per person sheep meat consumption, European Union, 2000 to 2015

kt (cw)

Rest of European UnionIrelandFranceSpainUnited Kingdom

300

600

900

1,200

1,500

201520122009200620032000

Source: European Commission 2017a

0.6

kg/person

1.2

1.8

2.4

3.0

European Union per person (right axis)

EU sheep flock and sheep meat productionIn 2014 the EU sheep flock was 98 million head, around 8 per cent of the global sheep flock (FAO 2017). The United Kingdom had the largest sheep flock in the European Union, with 23 million head, followed by Spain (15 million head), Romania (10 million head), Greece (9 million head), Italy (7 million head), France (7 million head) and Ireland (3 million head). Collectively, these countries accounted for 87 per cent of the total EU sheep flock (European Commission 2017a). In most countries, sheep are used for the meat and dairy industries, with the Italian and Romanian flocks more heavily skewed towards milk production (AHDB 2015a, b). Wool is largely a by-product of sheep meat production (Bertrand 2014; Rintoul 2010).

The European Union is the second-largest sheep meat producer, behind China, and accounted for about 10 per cent of world production in 2013 (FAO 2017). In 2015 it produced about 723,000 tonnes of sheep meat (carcase weight) (European Commission 2017a). Five EU member states accounted for 85 per cent of total production in that year. The United Kingdom was the largest producer, at 303,000 tonnes, followed by Spain (117,000 tonnes), France (81,000 tonnes), Ireland (58,000 tonnes) and Greece (55,000 tonnes) (Figure 2).

Sheep numbers and sheep meat production in the European Union have been in long-term decline. From 2000 to 2015 the flock contracted by 16 per cent and production by 35 per cent. The most significant period of decline occurred following the global financial crisis, when rising production costs, falling per person consumption and the impact of domestic policy reforms reduced the profitability of the industry.



FIGURE 2 Sheep meat production by member state, European Union, 2000 to 2015

kt (cw)

Other member statesGreeceIrelandFranceSpain

201520122009200620032000


United Kingdom

200

400

600

800

1,000

1,200

EU support policiesCommon Agricultural PolicyThe European Union supports the sheep and goat meat industries—which it considers a single industry—through the Common Agricultural Policy (CAP). Goat meat production is only about 6 per cent of sheep meat production, and it has also been declining for many years (European Commission 2017a).

Since the early 2000s, the CAP has undergone multiple reforms aimed at increasing the market orientation of EU agriculture. In the early 2000s the Single Payment Scheme supported farmers’ incomes, leading to a reduction in sheep and goat numbers (European Commission 2003). In 2013 the scheme was replaced with the direct payments scheme under CAP reforms. The direct payments scheme continues to provide farmers with income support that is not linked to production levels. However, it provides a more uniform level of support to farmers across the European Union (European Commission 2013). Under this scheme, two measures available to sheep and goat farmers in particular are voluntary coupled support (VCS) and the Basic Payment Scheme.

Voluntary coupled supportSince 2015 VCS has been available to farming sectors that are considered important for economic, social or environmental reasons and facing certain difficulties. In some areas of the European Union, the sheep and goat meat industries meet those criteria and are eligible to receive VCS payments. Payments are linked to production.

The annual VCS budget for the period from 2015 to 2020 is €4.2 billion, which is 10 per cent of the direct payments scheme budget (European Commission 2013). In 2015 EU sheep and goat farms accounted for the third-largest share of the annual VCS budget, at 12 per cent or €486 million. VCS payments are linked to animal numbers for the sheep and goat meat industries, and farmers received an average of €12 an animal in 2015 (European Commission 2015).



Participation in VCS is optional, so the amount of support available to farmers varies significantly between member states and agricultural sectors (Menadue & Hart 2014). For example, the annual VCS budget allocated to Spain is €586 million, around 29 per cent of which is for sheep and goat farms (Figure 3). In contrast, Poland receives €507 million for its VCS budget but allocates only 1 per cent of it to sheep and goat farms.

Basic Payment SchemeMember states that opt out of the VCS can reallocate that proportion of their annual budget to the Basic Payment Scheme. This scheme provides basic income to farmers regardless of their industry or individual circumstances. For example, in 2015 Ireland and the United Kingdom opted out of the VCS and each allocated around two-thirds of their annual direct payments budget to the Basic Payment Scheme. The VCS accounted for less than 2 per cent of their total direct payment scheme budget (European Commission 2016a).

The United Kingdom is the largest sheep meat producer in the European Union but allocates only a small proportion of its annual direct payments budget to the VCS. This is because the United Kingdom has been actively supporting reforms that separate the amount of subsidy paid to producers from their levels of production since the early 2000s (Department for Environment, Food and Rural Affairs 2013).

FIGURE 3 Annual voluntary coupled support, by member state and sector, European Union, 2015 to 2020

Sheep and goat meat

€ million

MilkBeef

Source: European Commission 2015, 2016a

200 400 600 800 1,000 1,200

Other agricultural products

France

Spain

Poland

Italy

Romania

Hungary

Greece

Bulgaria

Portugal

All othermember states



EU trade policiesEU tariff-rate quotas for sheep and goat meatEU sheep and goat meat imports are limited by tariff-rate quotas (TRQs) allocated to specific trading partners. Because of the way the quotas are administered, both types of meat are imported under the quotas. However, goat meat makes up less than 1 per cent of the annual total quota volume (European Commission 2017a). In 2016 the total volume of sheep and goat meat imports permitted under the quotas was 286,800 tonnes (Table 1) (European Commission 2011).

Under the sheep and goat meat TRQs, in-quota shipments do not incur duty. Out-of-quota shipments incur the most-favoured nation tariff of 12.8 per cent and a specific duty of between €902 and €3,118 a tonne, depending on the animal and cut of meat (WTO 2016).

New Zealand has the largest quota (almost 80 per cent of the total), followed by Argentina (8 per cent), Australia (7 per cent) and Chile (7 per cent). A small tariff-free quota of 200 tonnes of sheep and goat meat, known as the erga omnes quota, is also available on a first-come, first-served basis to all exporters (European Commission 2011). A second 200-tonne quota is available to WTO members that do not already have access to the EU sheep and goat meat markets.

New Zealand, Australia, Argentina, Chile, Uruguay and Iceland are the only countries that actively used their import quotas over the five years to 2016 (Table 1). However, quota utilisation varied across these countries over the period. For example, New Zealand averaged 73 per cent utilisation over the five-year period and Australia almost fully utilised its quota, at 95 per cent, but Argentina utilised less than 5 per cent. Utilisation of the total quota averaged only 66 per cent (European Commission 2017a).



TABLE 1 Sheep and goat meat import quota allocations and utilisation, European Union, 2012 to 2016

Country Quota Unit 2012 2013 2014 2015 2016

New Zealand Allocation tonnes (cw) 228,254 228,254 228,254 228,254 228,254

Volume shipped tonnes (cw) 160,269 167,532 155,221 174,374 173,224

Utilisation % 70.2 73.4 68.0 76.4 75.9

Argentina Allocation tonnes (cw) 23,000 23,000 23,000 23,000 23,000

Volume shipped tonnes (cw) 1,814 974 1,425 534 832

Utilisation % 7.9 4.2 6.2 2.3 3.6

Australia Allocation tonnes (cw) 19,186 19,186 19,186 19,186 19,186


Utilisation % 85.6 99.6 99.0 98.8 95.5

Chile Allocation tonnes (cw) 6,800 7,000 7,200 7,400 7,600


Utilisation % 45.9 56.6 49.4 33.8 33.4

Uruguay Allocation tonnes (cw) 5,800 5,800 5,800 5,800 5,800


Utilisation % 60.4 55.2 56.4 30.8 27.3

Iceland Allocation tonnes (cw) 1,850 1,850 1,850 1,850 1,850

Volume shipped tonnes (cw) 340 432 822 1,092 1,711

Utilisation % 18.4 23.4 44.4 59.0 92.5

Norway Allocation tonnes (cw) 300 300 300 300 300

Volume shipped tonnes (cw) 0.0 0.0 0.1 0.0 0.3

Utilisation % 0.0 0.0 0.0 0.0 0.1

Turkey Allocation tonnes (cw) 200 200 200 200 200


Utilisation % 0.0 0.0 0.0 0.0 0.0

Greenland Allocation tonnes (cw) 100 100 100 100 100


Utilisation % 0.0 0.0 0.0 0.0 0.0

Faroe Islands Allocation tonnes (cw) 20 20 20 20 20


Utilisation % 0.0 0.0 4.1 7.2 1.4

Others a Allocation tonnes (cw) 200 200 200 200 200


Utilisation % 44.8 0.0 10.2 0.0 0.0

erga omnes b Allocation tonnes (cw) 200 200 200 200 200


Utilisation % 0.0 0.0 0.0 97.7 92.9

TOTAL Allocation tonnes (cw) 285,910 286,110 286,310 286,510 286,710


Utilisation % 64.9 68.2 64.0 69.6 69.1

a All other WTO members excluding Argentina, Australia, Chile, Greenland, Iceland, New Zealand and Uruguay. b All WTO members. Note: Totals may not sum to 100 due to rounding. Source: European Commission 2011, 2017b



EU sheep meat tradeExportsThe European Union is the world’s third-largest exporter of sheep meat behind New Zealand and Australia. However, volumes are small by comparison. For example, in 2015 Australia exported about 450,000 tonnes (carcase weight) of sheep meat and New Zealand 390,000 tonnes. By comparison, the European Union exported 18,500 tonnes in that year, down from a peak of 34,200 tonnes in 2013. Just over half of EU sheep meat exports to non–EU countries originate from the United Kingdom. Spain accounts for about 19 per cent of EU exports and Ireland 10 per cent (European Commission 2017a).

Over the five years to 2015, Hong Kong was the European Union’s largest non–EU export destination for sheep meat, accounting for about 45 per cent of shipments. Destinations in non–EU Europe together accounted for about 17 per cent of exports and Middle-Eastern countries for about 16 per cent (European Commission 2017a). Sheep meat exports from the European Union compete with Australian product mainly in the Middle East and Asia. However, the volume of competing supplies from the European Union in these markets remains relatively small.

ImportsThe European Union is a net importer of sheep and goat meat, and all imports must comply with EU red meat standards. These standards outline the animal health and welfare, meat-processing and residue-treatment requirements that accredited producers, processors and exporters must satisfy to export to the European Union. For a more detailed overview of the standards, see Mullumby and Howden (2016).

From 2011 to 2015 the annual volume of EU sheep meat imports (excluding goat meat) averaged 189,000 tonnes (carcase weight), 10 times the volume of exports. Over that period, New Zealand was the European Union’s main supplier, followed by Australia. New Zealand had the dominant import share as a result of its large quota. Small volumes of sheep meat were also imported from South America and from non–EU Europe (European Commission 2017b).

EU sheep meat imports have been falling since the late 2000s. Over the 10 years to 2010, import volumes averaged 248,000 tonnes a year (carcase weight) (European Commission 2017b). However, between 2010 and 2015 volumes fell by 15 per cent to 191,000 tonnes (carcase weight). The majority of the decline was from a 12 per cent drop in imports from New Zealand. Imports from South America also fell.

New ZealandNew Zealand is the largest source of imported sheep meat to the European Union, with a country-specific import quota of 228,254 tonnes (carcase weight) per calendar year. This is equivalent to 80 per cent of the total EU sheep meat and goat import quota, which gives New Zealand significantly greater market access compared with other sheep meat–exporting countries (European Commission 2011, 2017b).



New Zealand has had a comparatively high level of access to the EU market since the United Kingdom’s accession to the European Union in 1973. At that time, New Zealand’s access to the UK sheep meat market was safeguarded on the grounds that New Zealand had long and close political, cultural and trade links with the United Kingdom. Those privileges were subsequently extended to become an EU-wide commitment (European Commission 2016b).

Over the five years to 2015, the European Union imported an average of 158,700 tonnes (carcase weight) of sheep meat (excluding goat meat) a year from New Zealand (European Commission 2017b). Almost half of that was imported by the United Kingdom. The remainder was imported by Germany (14 per cent), the Netherlands (13 per cent), France (8 per cent) and Belgium (5 per cent) (European Commission 2017b) (Figure 4).

FIGURE 4 Imports of NZ sheep meat, European Union, 2000 to 2015

kt (cw)

All other member statesBelgiumFranceGermanyNetherlands

201520122009200620032000


United Kingdom

50

100

150

200

250

EU sheep meat imports from New Zealand have been falling since 2007. This is principally the result of a long-term contraction in New Zealand’s sheep meat industry in favour of its expanding dairy industry (Beef+Lamb NZ 2016) and strengthening demand from China for NZ lamb (AHDB 2015b). As a result, over the five years to 2015 New Zealand filled only an average of 73 per cent of its EU import quota allocation (European Commission 2017a).

South AmericaSome South American countries also have access to the EU market through country-specific import quotas for sheep and goat meat. Argentina has an import quota of 23,000 tonnes, Chile 7,200 tonnes and Uruguay 5,800 tonnes (carcase weight). Over the five years to 2015, Argentina exported an average of 1,800 tonnes to the European Union, Chile 3,900 tonnes and Uruguay 2,400 tonnes. Together these countries filled an average of 19 per cent of their combined import quota allocations over the period (Table 1) (European Commission 2017b; MLA 2016).



Argentina has the second-largest quota allocation but utilises a very small proportion of it (AHDB 2015b). Its quota utilisation declined from 32 per cent in 2009 to less than 4 per cent in 2016, largely because of the decline in sheep meat production (AHDB 2015a; European Commission 2017b). By 2013 Argentina had largely ceased exporting sheep meat and its production went almost entirely to the domestic market (AHDB 2015b; UN Statistics Division 2017).

In December 2015 Argentina reformed its agricultural export policies. The Argentine Government removed most of its agricultural export taxes and quantitative export restrictions on grains, oilseeds and livestock products (Williamson 2016). These reforms are expected to improve the trading environment for Argentina’s agricultural exporters, but it is unlikely that the sheep industry will grow significantly in the short to medium term (Coronato et al. 2015).

The importance of the United Kingdom to the EU sheep meat industryThe United Kingdom is the largest sheep meat producer in the European Union. In 2015 it accounted for about 42 per cent of total EU sheep meat production. It is also the largest consumer of sheep meat, accounting for 44 per cent of total EU consumption.

In 2015 per person sheep meat consumption in the United Kingdom averaged 5.9 kilograms, the second-highest in the European Union behind Greece. Per person consumption has been declining, but it has been at a much slower rate than in many other EU member states and remains significantly higher than the EU average of 1.7 kilograms per person in 2015 (Figure 1).

UK sheep meat imports over the five years to 2015 averaged 105,000 tonnes a year (carcase weight), around 88 per cent of which was sourced from outside the European Union. The remaining 12 per cent was sourced from other EU member states, of which Ireland alone accounted for almost 7 per cent. New Zealand is the largest non–EU supplier of sheep meat to the United Kingdom. Over the five years to 2015, New Zealand accounted for an average of 72 per cent of UK sheep meat imports or about 76,000 tonnes a year. Australia is the second-largest non–EU supplier to the United Kingdom, averaging 14,000 tonnes a year or 13 per cent of annual UK sheep meat imports over the same period. Small amounts of sheep meat are also imported from South America.

Annual UK sheep meat exports averaged 91,000 tonnes (carcase weight) over the five years to 2015, 88 per cent of which were shipped to other EU member states.

On 23 June 2016 the United Kingdom voted to leave the European Union (Brexit). The United Kingdom has publicly stated its intention to trigger Article 50 before the end of March 2017, after which exit negotiations with the European Union will begin. On 17 January 2017 the Prime Minister of the United Kingdom indicated the United Kingdom would leave the EU single market and customs union. This would enable the United Kingdom to strike free trade agreements with countries from outside the European Union, including Australia, once the exit process is complete. The effect on the trade of sheep meat between the United Kingdom, other EU member states and other non–EU countries will remain uncertain until the United Kingdom announces changes to its agricultural policies following the negotiated exit from the European Union.



Australia–EU sheep meat tradeAustralia is the second-largest source of EU sheep meat imports (excluding goat meat) after New Zealand. Over the five years to 2015, the European Union imported an average of 17,600 tonnes (carcase weight) a year from Australia (European Commission 2017a). The United Kingdom accounted for about 72 per cent. This was followed by France (13 per cent), Belgium (5 per cent), the Netherlands (4 per cent) and Germany (3 per cent) (European Commission 2017a).

The European Union is a relatively small market for Australian sheep meat exports, accounting for about 5 per cent of Australia’s export share by volume. Trade is constrained by the country-specific import quota for sheep and goat meat of 19,186 tonnes a calendar year. Australia has almost entirely filled this each year since 2013.

Australia exports sheep and goat meat to the European Union. Over the five years to 2015, 88 per cent of Australia’s trade under the quota consisted of sheep meat and 12 per cent goat meat. Lamb accounted for 78 per cent of the sheep meat exported and mutton the remainder (ABS 2016).

The European Union is a high-value market for sheep meat–exporting countries. For Australian exporters this is reflected in the unit export returns for sheep meat to the European Union (Figure 5). Between 2000–01 and 2015–16 the European Union was Australia’s second-highest value market after the United States. Unit export returns (in constant dollar terms) averaged 18 per cent lower than the United States but 23 per cent higher than the average across all markets (ABS 2016).

In 2015–16 the average unit export value for lamb to the European Union was $8.90 a kilogram compared with an average of $6.78 a kilogram across all export markets. The average unit export value for mutton to the European Union was $7.83 a kilogram compared with an average of $4.65 a kilogram across all of Australia’s export destinations (ABS 2016).

FIGURE 5 Sheep meat, real unit export values, main markets, Australia, 2000–01 to 2015–16

2015–16A$/kg

European Union

United States

Source: ABS 2016

World average

2

4

6

8

10

12

Middle EastChina

2015–16

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02



ConclusionEU sheep and goat meat imports were limited by a total quota of 286,800 tonnes in 2016. Over the five years to 2016 the utilisation rate averaged only 66 per cent, but quota utilisation differed significantly between supplying countries. Australia almost filled its quota each year over that period, unlike its primary competitors in the EU market.

New Zealand’s supply constraints, the limited growth prospects for Argentina’s sheep meat exports and Australia’s lack of residual quota are likely to restrict any significant growth in EU imports in the short to medium term unless the European Union adjusts quota allocations across sheep-exporting countries. Import demand from the United Kingdom and the Netherlands has been strengthening since 2012.These supply and demand factors are expected to put further upward pressure on EU sheep meat prices.

The Australian sheep meat industry has strong price incentives to seek improved market access to the European Union. Export unit returns for sheep meat to the top five EU importers (the United Kingdom, Belgium, France, Germany and the Netherlands) averaged 34 per cent higher than the EU average over the five years to 2016. However, future trade with the European Union is likely to be influenced heavily by the outcome of Brexit negotiations. The United Kingdom exports a significant volume of sheep meat to the rest of the European Union, so any change to existing trade policies between the two parties could affect import demand by all member states. Future expanded trade with the United Kingdom in its own right could benefit the Australian industry given the United Kingdom’s dominant share of total EU sheep meat consumption and imports. But opportunities for Australian sheep meat exporters will be uncertain until the European Union and the United Kingdom have reached agreement on their own post-Brexit arrangements.

ReferencesABS 2016, International Trade, Australia: September 2016 [unpublished data], cat. no. 5465.0, Australian Bureau of Statistics, Canberra, accessed 21 December 2016.

AHDB 2015a, Cattle and sheep market update, Agriculture and Horticulture Development Board, Issue 31, Kenilworth, England, January, accessed 11 January 2017.

—— 2015b, World sheep meat market to 2025, Agriculture and Horticulture Development Board, Kenilworth, England.

Beef+Lamb NZ 2016, New season outlook 2016–17, Beef + Lamb New Zealand, Wellington, September.

Bertrand, M 2014, Shepherding Britain’s wool industry towards more ethical pastures, Guardian, 4 September.

Coronato, F, Fasioli, E, Schweitzer, A & Tourrand J-F 2015, Rethinking the role of sheep in the local development of Patagonia, Argentina, Revue d’élevage et de médecine vétérinaire des pays tropicaux, vol. 68, no. 2–3, pp. 129–33.

Department for Environment, Food and Rural Affairs 2013, Common Agricultural Policy deal struck, UK Government, London, 20 March.

http://beefandlamb.ahdb.org.uk/markets/market-intelligence-publications/

http://beefandlamb.ahdb.org.uk/publications/corporate-publications/

http://www.beeflambnz.com/information/economic-reports/

https://www.theguardian.com/sustainable-business/sustainable-fashion-blog/2014/sep/04/britains-wool-industry-sheep-ethical-pastures

https://www.theguardian.com/sustainable-business/sustainable-fashion-blog/2014/sep/04/britains-wool-industry-sheep-ethical-pastures

http://remvt.cirad.fr/cd/derniers_num/2015/REMVT15_129_133.pdf

http://remvt.cirad.fr/cd/derniers_num/2015/REMVT15_129_133.pdf

https://www.gov.uk/government/news/common-agricultural-policy-deal-struck

https://www.gov.uk/government/news/common-agricultural-policy-deal-struck



European Commission 2003, Council Regulation (EC) No. 312/2003 of 18 February 2003 implementing for the Community the tariff provisions laid down in the Agreement establishing an association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, Official Journal of the European Union, L46/1, Brussels, 18 February.

——2011, Commission Implementing Regulation (EU) No. 1354/2011 of 20 December 2011 opening annual Union tariff quotas for sheep, goats, sheepmeat and goatmeat, Official Journal of the European Union, L338/36, Brussels, 20 December.

——2013, Regulation (EU) No. 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No. 637/2008 and Council Regulation (EC) No. 73/2009, Official Journal of the European Union, L347/608, 17 December, Brussels, 17 December.

——2015, Voluntary coupled support—Sectors mostly supported. Notification of decisions taken by Member States by 1 August 2014, Brussels.

—— 2016a, Direct payments 2015–2020—decisions taken by member states, June, Brussels.

—— 2016b, Press Release Database, Brussels, accessed 20 January 2017.

—— 2017a, Eurostat, Brussels, accessed 16 January 2017.

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FAO 2017, FAOSTAT, Food and Agriculture Organization of the United Nations, Rome, accessed 17 January 2017.

MLA 2016, Market snapshot European Union: Sheepmeat, MLA industry insights—European Union—February 2016, Meat & Livestock Australia, Canberra, February.

Menadue, H & Hart, K 2014, Member state implementation of the CAP for 2015–2020—a first round-up of what is being discussed, CAP2010, Institute for European Environmental Policy, London, 16 April, accessed 12 January 2017.

Mullumby, J & Howden, M 2016, ‘The EU beef industry’, in Agricultural commodities: December quarter 2016, Australian Bureau of Agricultural Resource Economics and Sciences, Canberra.

OECD 2017, Meat consumption, Organisation for Economic Co-operation and Development, accessed 17 January 2017.

Rintoul, J 2010, Europeans shun wool in favour of meat exports, Farm Weekly, Victoria Park, Western Australia, 28 May.

UN Statistics Division 2017, UN Comtrade, New York, accessed 23 January 2017.

Williamson, L 2016, 'Recent developments in Argentina’s agricultural export policies', in Agricultural commodities: March quarter 2016, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

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https://ec.europa.eu/agriculture/direct-support/direct-payments_en



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http://ec.europa.eu/eurostat/

http://ec.europa.eu/taxation_customs/dds2/taric/quota_consultation.jsp?Lang=en

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http://tariffdata.wto.org/Default.aspx

Running Main Header Milo Pro Medium 8ptRunning Sub Header Milo Pro Light 8pt

Statistical tables


Figures

1 Contribution to GDP Australia, chain volume measures, reference year 2014–15 227

2 Markets for Australian merchandise exports 227

3 Sources of Australian merchandise imports 228

4 Principal markets for Australian agricultural, forestry and fisheries exports 229

5 Contribution to exports by sector, balance of payments basis 235

Tables

1 Indexes of prices received by farmers 232

2 Indexes of prices paid by farmers, and terms of trade 233

3 Farm costs and returns 234

4 Volume of production indexes 236

5 Industry gross value added 236

6 Employment 237

7 All banks lending to business 237

8 Rural indebtedness to financial institutions 238

9 Annual world indicator prices of selected commodities 238

10 Gross unit values of farm products 239

11 World production, consumption, stocks and trade for selected commodities 240

12 Agricultural, fisheries and forestry commodity production 242

13 Gross value of farm, fisheries and forestry production 244

14 Crop and forestry areas and livestock numbers 246

15 Average farm yields 247

16 Volume of agricultural and fisheries exports 248

17 Value of agricultural and fisheries exports (fob) 250

18 Agricultural exports to China (fob) 252

19 Agricultural exports to Indonesia (fob) 253

20 Agricultural exports to Japan (fob) 254

21 Agricultural exports to the Republic of Korea (fob) 255

22 Agricultural exports to the United States (fob) 256

23 Volume of fisheries products exports 257

24 Value of fisheries products exports (fob) 258

25 Volume of fisheries products imports 259

26 Value of fisheries products imports 260

27 Value of Australian fisheries products trade, by selected countries 261

28 Volume of forest products exports 262

29 Value of forest products exports (fob) 263

30 Volume of forest products imports 264

31 Value of forest products imports 265

32 Value of Australian forest products trade, by selected countries 266


GDP, exports

FIGURE 2 Markets for Australian merchandise exports in 2015–16 dollars

1% 2%

2% 2%

0% 1%

7% 7%

28% 15%

38% 18%

1% 44%

23% 11%

4% 4%

9% 7%

18% 10%

11% 10%

11% 11%

21% 17%

16% 19%

10% 22%

6% 4%

5% 4%

6% 5%

12% 7%

8% 7%

20% 14%

31% 28%

12% 31%

United States

European Union 28

New Zealand

Japan

Other Asia

ASEAN

China

Other

United States

European Union 28

New Zealand

Japan

Other Asia

ASEAN

China

Other

New Zealand

India

United States

European Union 28

Korea, Rep. of

Japan

China

Other

New Zealand

India

United States

European Union 28

Korea, Rep. of

Japan

China

Other

New Zealand

Singapore

Indonesia

China

Japan

Hong Kong

Vietnam

Other

New Zealand

Singapore

Indonesia

China

Japan

Hong Kong

Vietnam

Other

2015–162005–06

Total $195.7b $243.4b

$37.2b $46.5bAgriculture

$2.0b $1.5bFisheries

FIGURE 1 Contribution to GDP Australia, chain volume measures, reference year 2014–15

Services 77%

Building and construction 8%

Mining 7%

Manufacturing 6%

Agriculture, fishing and forestry 2%

Services 77%

Manufacturing 8%

Building and construction 7%

Mining 5%

Agriculture, fishing and forestry 3%

2015–16

$1,660b

2005–06

$1,265.5b


Import markets

FIGURE 3 Sources of Australian merchandise imports in 2015–16 dollars

5% 5%

5% 7%

11% 10%

19% 18%

15 % 20%

31 % 24%

14% 14%

6% 3%

3% 3%

4% 4%

5% 5%

10% 7%

14% 11%

14% 23%

44% 44%

Singapore

New Zealand

Malaysia

Germany

Japan

United States

China

Other

Singapore

New Zealand

Malaysia

Germany

Japan

United States

China

Other

Other Asia

China

United States

New Zealand

ASEAN

European Union 28

Other

2015–162005–06

Total $214.9b $263.3b

$9.3b $18.1bAgriculture

$1.6b $2.1bFisheriesUnited States

Indonesia

New Zealand

Vietnam

China

Thailand

Other

Other Asia

China

United States

New Zealand

ASEAN

European Union 28

Other

United States

Indonesia

New Zealand

Vietnam

China

Thailand

Other

4% 3%

3% 5%

13% 10%

11% 12%

8% 15%

21% 20%

40 % 35%


Export markets

continued ...

FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports in 2015–16 dollars

Quantity wheat

kt

Value wheat

$m

Quantity barley

kt

Value barley

$m

Quantity sugar

kt

Value sugar

$m

Quantity wine

ML

Value wine

$m

2015–162005–06

300 600 900 1,5001,200

Indonesia

400200 600 800 1,2001,000

United Kingdom

1,000 2,000 3,000 4,000

50 100 150 200 250 300

Indonesia

China

China

Vietnam

Korea, Rep. of

Yemen

Japan

China

Vietnam

Korea, Rep. of

Yemen

Japan

Saudi Arabia

Japan

United ArabEmirates

Kuwait

Korea, Rep. of

China

Saudi Arabia

Japan

United ArabEmirates

Kuwait

Korea, Rep. of

200 400 600 800 1,000

Korea, Rep. of

Indonesia

China

Japan

Malaysia

United States

100 200 300 400 500 600 700300 600 900 1,200 1,500

500 1,000 1,500 2,000 2,500 3,000

Korea, Rep. of

Indonesia

Japan

Malaysia

China

United States

United States

China

Canada

Netherlands

New Zealand

United Kingdom

United States

China

Canada

Netherlands

New Zealand


Export markets

FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports in 2015–16 dollars 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

2015–162005–06

50 100 150 200 250 300 350 500 1,000 1,500 2,000 2,500

Japan

China

Korea, Rep. of

Malaysia

United States

Singapore

10080604020 200100 300 500400 700600 800

100 200 300 400 500 1,000 1,500 2,000 2,500 3,000

20 40 60 80 100 100 200 300 400 500

Japan

China

Korea, Rep. of

Malaysia

United States

Singapore

China

India

Korea, Rep. of

Czech Republic

Italy

Malaysia

China

India

Korea, Rep. of

Czech Republic

Italy

Malaysia

United States

Japan

Korea, Rep. of

China

Indonesia

Canada

United States

Japan

Korea, Rep. of

China

Indonesia

Canada

United States

China

United ArabEmirates

Malaysia

Saudi Arabia

Papua NewGuinea

United States

China

United ArabEmirates

Malaysia

Saudi Arabia

Papua NewGuinea

continued ...


Export markets

FIGURE 4 Principal markets for Australian agricultural, forestry and fisheries exports in 2015–16 dollars 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

2015–162005–06

250150 20010050

50 100 150 200 250

kt

50 100 150 200 250 300 350

3 6 9 12

2 4 6 8 10 700

Vietnam

100 200 300 400 500 600

United States

Japan

China

New Zealand

Vietnam

Hong Kong

United States

Japan

China

New Zealand

Vietnam

Hong Kong

New Zealand

United States

China

Malaysia

Papua NewGuinea

Japan

New Zealand

United States

China

Malaysia

Papua NewGuinea

Japan

Hong Kong

Japan

China

Taiwan

Singapore

Vietnam

Hong Kong

Japan

China

Taiwan

Singapore


TABLE 1 Indexes of prices received by farmers Australia

STATISTICS

Commodity 2012–13 2013–14 2014–15 2015–16 s 2016–17 f 2017–18 f

barley 173.4 167.9 175.6 155.8 126.6 133.6 canola 142.1 144.1 130.6 142.4 137.9 140.2 grain sorghum 148.9 177.2 178.1 154.0 126.0 130.7 lupins 173.5 176.4 149.3 148.2 132.8 140.5 oats 172.9 156.0 183.1 183.1 151.1 147.8 wheat 158.3 159.8 151.7 144.7 123.7 131.9 total grains a 147.9 149.9 147.0 142.0 125.4 129.9Cotton 98.2 103.9 104.4 111.6 119.5 121.0Hay 144.9 160.9 169.6 176.4 180.4 180.4Fruit 156.5 158.8 170.4 162.0 164.4 167.5Sugar 117.5 125.4 127.2 135.9 160.9 166.2Vegetables 172.8 174.1 179.1 172.9 175.4 178.8Total crops 129.3 131.1 131.8 129.2 123.6 126.7

cattle 164.2 156.3 196.4 295.3 315.7 315.7 lambs 182.8 201.8 233.4 256.1 288.1 295.5 sheep 200.0 250.8 337.8 329.8 423.4 440.1 live sheep for export 247.6 233.4 286.6 312.3 319.1 326.7 pigs 132.5 151.7 156.4 181.0 183.1 180.1 poultry 114.4 116.9 126.2 128.9 125.4 124.7 total livestock for slaughter 158.6 161.2 192.4 253.1 269.4 270.2

wool 147.3 153.5 159.1 186.5 196.5 208.0 milk 134.7 169.1 162.6 144.1 146.8 157.5 eggs 107.4 112.7 114.6 112.7 113.5 114.6 total livestock products 136.1 157.2 155.8 153.9 158.5 167.9Store and breeding stock 173.8 169.2 209.7 297.4 325.2 330.7Total livestock 149.0 157.4 177.8 218.1 230.9 235.1Total prices received 138.2 142.9 152.4 168.9 170.6 174.2a Total for the group includes commodities not separately listed. f ABARES forecast. s ABARES estimate.Note: The indexes for commodity groups are calculated on a chained weight basis using Fisher’s ideal index with a reference year of 1997–98 = 100. Indexes for most individual commodities are based on annual gross unit value of production. Prices used in these calculations exclude GST.Source: ABARES

Livestock products

Livestock

1IndexesofpricesreceivedbyfarmersAustraliaCrops Grains

Livestock for slaughter

Prices


TABLE 2 Indexes of prices paid by farmers, and terms of trade Australia

STATISTICS

Category 2012–13 2013–14 2014–15 2015–16 s 2016–17 f 2017–18 f

Farmers’ terms of trade a 95.3 98.2 103.9 112.7 113.3 113.6

fodder and feedstuffs 127.1 126.8 134.5 138.5 130.5 133.8

seed, seedlings and plants 128.0 130.6 130.4 129.1 122.5 125.8

store and breeding stock 173.8 169.2 209.7 297.4 325.2 330.7

total seed, fodder and livestock 137.9 136.9 151.2 173.0 172.7 176.5

Chemicals 110.3 113.6 115.0 116.2 117.5 119.2

Electricity 180.8 185.7 176.4 178.9 181.5 184.9

Fertiliser 157.9 153.2 154.7 157.8 165.0 164.1

Fuel and lubricants 216.8 221.1 196.8 179.1 175.5 175.5

Total 149.5 150.8 155.1 162.8 164.3 166.9

Labour 159.2 163.5 166.3 168.6 171.1 174.3

Marketing 153.5 159.3 152.9 148.3 149.1 152.0

Insurance 190.0 195.2 198.5 201.3 204.2 208.1

Interest paid 96.4 85.3 79.5 75.6 72.3 74.1

Rates and taxes 156.4 160.6 163.4 165.6 168.0 171.2

Other overheads 151.7 155.8 158.5 160.7 163.0 166.1

Total 117.6 110.6 107.1 104.7 102.7 105.1

Capital items 157.0 161.5 164.4 166.9 169.5 172.8

Total prices paid 145.1 145.5 146.7 149.8 150.6 153.3

Excluding capital items 143.9 143.9 144.9 148.1 148.7 151.4

Excluding capital and overheads 151.9 154.3 156.8 162.0 163.5 166.2

Excluding seed, fodder and livestock 146.5 147.3 145.5 144.8 145.7 148.2

Materials and services

Overheads

2 Indexes of prices paid by farmers, and terms of trade Australia

Seed, fodder and livestock

a Ratio of index of prices received by farmers and index of prices paid by farmers. f ABARES forecast. s ABARES estimate.Note: The indexes for commodity groups are calculated on a chained weight basis using Fisher’s ideal index with a reference year of 1997–98 = 100. Prices used in these calculations exclude GST.Sources: ABARES (compiled from various market sources); Australian Bureau of Statistics

Prices


TABLE 3 Farm costs and returns Australia

STATISTICS

Category unit 2012–13 2013–14 2014–15 2015–16 s 2016–17 f 2017–18 f

Chemicals $m 1,369 1,406 1,455 1,508 1,508 1,530Fertiliser $m 2,168 2,091 2,121 2,182 2,280 2,282Fuel and lubricants $m 2,232 2,248 1,978 1,788 1,754 1,762Marketing $m 3,849 4,108 4,118 4,152 4,901 4,334Repairs and maintenance $m 4,121 4,529 4,922 5,461 6,067 6,001Seed and fodder $m 4,619 4,650 4,938 5,089 4,908 5,165Other $m 4,545 4,711 4,727 4,754 4,999 4,989Total materials and services $m 22,903 23,741 24,259 24,933 26,416 26,062Labour $m 4,298 4,364 4,303 4,250 4,400 4,568

Interest paid $m 4,259 3,956 3,874 3,868 3,883 4,181Rent and third‐party insurance $m 537 551 561 569 577 588Total overheads $m 9,094 8,871 8,738 8,687 8,859 9,337Total cash costs $m 31,997 32,612 32,997 33,619 35,276 35,399Depreciation a $m 5,197 5,345 5,444 5,526 5,613 5,720Total farm costs $m 37,194 37,957 38,441 39,145 40,888 41,120

Gross value of farm production $m 48,684 51,494 54,431 58,907 63,791 61,296

Net value of farm production b $m 11,490 13,537 15,990 19,762 22,903 20,177Real net value of farm production c $m 12,348 14,163 16,448 20,051 22,903 19,800Net farm cash income d $m 16,687 18,882 21,434 25,288 28,515 25,897Real net farm cash income c $m 17,933 19,755 22,048 25,658 28,515 25,414

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 2016–17 Australian dollars. d Gross farm cash income less total cash costs. f ABARES forecast. s ABARES estimate.Note: Prices used in these calculations exclude GST.Sources: ABARES (compiled from various market sources); Australian Bureau of Statistics

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

2014–15Other

merchandise16%

Rural a18%

Mineralresources

66%

Othermerchandise

15%

Rural a15%

Mineralresources

70%

Mineralresources

69%

Rural a16%

Othermerchandise

15%

Services credits18%

Rural a13%

Othermerchandise

12%

Mineralresources57%

Services credits 16%

Rural a13%

Othermerchandise

12%

Mineralresources59%

Services credits20%

Rural a15%

Othermerchandise

12%

Mineralresources53%

2015–16Other

merchandise17%

Rural a20%

Mineralresources

63%

Services credits22%

Rural a15%

Othermerchandise

13%

Mineralresources50%

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%

Services credits17%

Rural a13%

Othermerchandise

12%

Mineralresources58%


TABLE 5 Industry gross value added ab Australia

STATISTICS

Industry unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Agriculture $m 32,339 32,716 32,479 32,712 32,958 30,935

Forestry and fishing $m 5,336 5,502 5,524 5,554 5,619 5,536

Total $m 37,680 38,219 38,001 38,267 38,578 36,471

Mining $m 77,878 83,741 91,548 100,426 108,178 114,236

Food, beverage and alcohol $m 25,713 26,301 26,779 26,606 25,915 25,326

Textile, clothing, footwear and leather $m 5,359 5,145 5,087 5,097 5,248 5,284

Wood and paper products $m 6,844 6,277 6,273 6,373 6,473 6,482

Printing, publishing and recorded media $m 4,171 3,749 3,705 3,528 3,349 3,264

Petroleum, coal, chemical products $m 20,195 20,557 19,425 19,176 18,613 18,081

Non-metallic mineral products $m 6,311 5,984 5,713 5,767 6,244 6,158

Metal products $m 18,030 18,406 16,912 17,204 16,660 15,690

Machinery and equipment $m 21,503 22,440 21,401 20,020 19,647 18,988

Total manufacturing $m 108,134 108,847 105,251 103,722 102,151 99,272

Building and construction $m 112,247 123,717 127,156 132,925 130,585 134,390

Electricity, gas and water supply $m 41,683 41,932 42,240 41,185 41,953 42,809

Taxes less subsidies on products $m 105,063 106,944 108,243 108,364 109,447 110,929

Statistical discrepancy $m 0 0 -1 0 -1 5,529

Gross domestic product $m 1,447,478 1,500,084 1,538,634 1,578,785 1,617,016 1,660,026

Agriculture, forestry and fishing

Manufacturing

5 Industry gross value added ab Australia

a Chain volume measures, reference year is 2014–15. b ANZSIC 2006.Note: Zero is used to denote nil or less than $0.5 million (absolute value).Sources: Australian Bureau of Statistics, Australian national accounts: national income, expenditure and product, cat. no. 5206.0, Canberra; Australian Bureau of Statistics, Balance of payments, Australia , cat. no. 5302.0, Canberra

TABLE 4 Volume of production indexes Australia

STATISTICS

Commodity unit 2012–13 2013–14 2014–15 2015–16 s 2016–17 f 2017–18 f

Grains and oilseeds index 138.4 144.9 138.8 137.2 198.0 142.7Total crops index 133.2 131.9 125.0 130.4 164.2 142.4Livestock slaughterings index 116.1 127.7 137.0 126.5 114.9 117.7Total livestock index 104.7 111.4 118.1 110.8 102.7 105.2Total farm sector index 119.6 122.3 122.3 120.7 129.8 122.5

Hardwood index 89.0 107.5 121.8 132.0 130.9 130.0Softwood index 123.0 130.4 136.2 145.9 144.4 142.9Total forestry index 106.7 119.4 129.3 139.3 137.9 136.7

Farm

4VolumeofproductionindexesAustralia

Forestry a

a Volume of logs harvested excluding firewood. f ABARES forecast. s ABARES estimate.Note: ABARE revised the method for calculating production indexes in October 1999. The indexes for the different groups of commodities are calculated on a chained weight basis using Fisher’s ideal index with a reference year of 1997–98 = 100. Sources: ABARES; Australian Bureau of Statistics

Sectors


TABLE 6 Employment ab Australia

STATISTICS

Industry unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Horticulture c ’000 59 57 57 63 51 67Sheep, beef cattle and grain ’000 133 129 107 107 116 94Other crop growing ’000 9 9 14 6 5 3Dairy cattle ’000 27 22 20 26 21 30Poultry ’000 10 10 9 4 6 13Other livestock d ’000 12 10 11 9 17 13Other agriculture nfd ’000 45 39 44 55 59 62Total agriculture ’000 294 277 261 270 275 282Forestry and logging ’000 5 8 6 6 5 6Forestry support services ’000 3 3 3 3 3 3Aquaculture ’000 4 4 3 5 7 5Fishing ’000 6 6 5 3 6 5Hunting and trapping ’000 1 0 0 0 1 0Fishing, hunting and trapping nfd ’000 1 1 1 0 0 1Agriculture and fishing support services e ’000 20 20 19 22 18 17Total agriculture, forestry and fishing ’000 337 321 301 311 318 322

Food product ’000 195 186 190 188 197 194Beverage and tobacco ’000 25 33 26 35 31 34Wood product ’000 36 38 37 48 43 42Pulp, paper and converted paper product ’000 19 15 15 14 13 13Total manufacturing ’000 970 938 934 926 913 877Total employment ’000 11,115 11,249 11,385 11,450 11,654 11,881

6EmploymentabAustralia

a Average employment over four quarters. b ANZSIC 2006. c Includes nursery, floriculture, vegetable, fruit and tree nut growing. d Includes deer farming. e Includes agriculture, forestry and fishing support services not further defined. nfd Not further defined.Notes: Australian Bureau of Statistics advises caution using employment statistics at the ANZSIC subdivision and group levels because estimates may be subject to sampling variability and standard errors too high for most practical purposes. Zero is used to denote nil or less than 500 persons.Source: Australian Bureau of Statistics, Labour force, Australia, cat. no. 6291.0.55.003, Canberra

Agriculture, forestry and fishing

Manufacturing

Employment, banks

TABLE 7 All banks lending to business a Australia

STATISTICS

Industry unit Jun–15 Sep–15 Dec–15 Mar–16 Jun–16 Sep–16Agriculture, forestry and fishing $b 65.0 64.4 63.3 64.3 66.9 67.9Mining $b 38.2 42.1 38.4 34.6 34.6 32.5Manufacturing $b 46.9 47.8 46.8 45.5 44.8 45.3Construction $b 30.4 30.3 31.2 31.7 32.0 32.8Wholesale and retail trade, transport and storage $b 109.1 114.4 113.0 114.1 115.1 117.2Finance and insurance $b 136.9 152.3 164.9 164.2 172.4 178.9Other $b 394.7 405.6 414.8 426.9 431.5 437.8Total $b 821.1 856.8 872.4 881.3 897.4 912.4

7AllbankslendingtobusinessaAustralia

a Includes variable and fixed interest rate loans outstanding plus bank bills outstanding.Source: Reserve Bank of Australia, Bank lending to business‐selected statistics, Bulletin Statistical Table D8


TABLE 8 Rural indebtedness to financial institutions Australia

STATISTICS

Institution unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

All banks a $m 60,184 59,749 61,778 62,461 64,966 66,912Other government agencies b $m 1,871 2,076 2,236 2,451 878 973

Pastoral and other finance companies $m 2,010 1,801 1,569 1,486 1,463 1,622Large finance institutional debt c $m 64,065 63,626 65,583 66,397 67,307 69,508

Farm management deposits $m 3,216 3,532 3,721 4,139 4,604 5,068

Rural debt

Deposits

8 Rural indebtedness to financial institutions Australia

a Derived from all banks lending to agriculture, fishing and forestry. b Includes the government agency business of state banks and advances made under War Service Land Settlement. c Sum of rural debt. Sources: ABARES; Department of Agriculture and Water Resources; Reserve Bank of Australia, Estimated rural debt to specified lenders, Bulletin Statistical Table D9

TABLE 9 Annual world indicator prices of selected commodities

STATISTICS

Commodity unit 2012–13 2013–14 2014–15 2015–16 2016–17 f 2017–18 f

Wheat a US$/t 348 317 266 211 190 190Corn b US$/t 312 219 174 168 155 157Rice c US$/t 565 429 419 386 382 403Soybeans d US$/t 597 547 418 373 390 382Cotton e USc/lb 88 91 71 70 78 80Sugar g USc/lb 18 17 13 17 21 22

Beef h USc/kg 440 440 551 451 435 430Wool i Ac/kg 1,035 1,070 1,102 1,253 1,360 1,440Butter j US$/t 3,727 4,498 3,483 3,146 4,125 4,580Cheese j US$/t 4,150 4,817 3,921 3,200 3,650 4,080Skim milk powder j US$/t 3,731 4,513 2,592 1,975 2,300 2,450

Crops

Livestock products

9Annualworldindicatorpricesofselectedcommodities

a US no. 2 hard red winter wheat, fob Gulf. b US no. 2 yellow corn, fob Gulf. c USDA nominal quote for Thai white rice, 100 per cent, Grade B, fob, Bangkok (August–July basis). d US no. 2 soybeans, fob Gulf. e Cotlook ‘A’ index. f ABARES forecast. g Nearby futures price (October–September basis), Intercontinental Exchange, New York no. 11 contract. h Cow 90CL US cif price. i Australian Wool Exchange eastern market indicator. j Average of traded prices (excluding subsidised sales). Sources: ABARES; Australian Bureau of Statistics; Australian Wool Exchange; Cotlook Ltd; Dairy Australia; Intercontinental Exchange; International Grains Council; Meat & Livestock Australia; New York Board of Trade; US Department of Agriculture

Farm debt, world prices


TABLE 10 Gross unit values of farm products a

STATISTICS


Barley $/t 276 267 280 248 201 213Corn (maize) $/t 238 297 330 366 328 341Grain sorghum $/t 252 300 301 261 213 221Oats $/t 236 213 250 250 206 202Rice $/t 260 340 395 410 375 394Triticale $/t 249 258 256 237 189 198Wheat $/t 313 316 300 286 245 261

Canola $/t 548 555 503 549 532 541Soybeans c $/t 468 538 588 560 640 571Sunflower seed c $/t 570 660 756 652 612 594

Chickpeas $/t 394 352 567 656 841 691Field peas $/t 406 419 413 460 375 380Lupins $/t 340 345 292 290 260 275

Cotton lint d c/kg 199 229 199 226 243 267Sugar cane (cut for crushing) $/t 37 40 40 43 52 54Wine grapes $/t 499 441 476 526 516 526

Beef cattle c/kg 318 304 382 575 614 614Lambs c/kg 371 410 474 520 585 600Pigs c/kg 262 300 310 358 362 357Poultry c/kg 205 209 226 231 225 223

Wool c/kg 568 604 626 734 773 818Milk c/L 40 50 49 43 44 47Eggs c/dozen 195 221 229 223 225 227

10 Gross unit values of farm products a

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


production Mt 658 717 730 737 750 735 consumption Mt 678 699 715 720 737 735 closing stocks Mt 171 190 205 221 234 234 exports bc Mt 142 157 153 164 167 165

production Mt 1,137 1,280 1,306 1,250 1,331 1,282 consumption Mt 1,141 1,226 1,255 1,266 1,307 1,316 closing stocks Mt 164 211 245 246 256 247 exports b Mt 123 164 186 165 186 184

production d Mt 473 478 480 472 482 486 consumption d Mt 467 479 478 473 482 485 closing stocks d Mt 117 116 118 117 118 119 exports be Mt 38 43 42 39 41 41

production Mt 475 504 537 522 555 555 consumption Mt 469 493 517 526 546 556 closing stocks Mt 68 78 93 89 97 96 exports Mt 119 134 147 153 157 158





continued ...

11 World production, consumption, stocks and trade for selected commodities a

Vegetable protein meals

Grains

Cotton

Sugar

Oilseeds and vegetable oils

Industrial crops

Wheat

Coarse grains

Rice

Oilseeds

Vegetable oils


World

TABLE 11 World production, consumption, stocks and trade for selected commodities a continued

STATISTICS


production Mt 267 271 274 277 281 287 consumption Mt 263 266 268 271 276 281 closing stocks Mt 2.9 3.1 2.8 2.8 2.8 2.9 exports b Mt 28 29 28 29 30 30

production kt 1,163 1,163 1,158 1,155 1,154 1,156 consumption ej kt 1,162 1,154 1,158 1,155 1,154 1,156 closing stocks k kt 35 35 30 33 35 37 exports l kt 553 551 549 547 548 549

production kt 9,249 9,636 9,893 10,089 10,327 10,534 consumption kt 8,716 9,023 9,175 9,405 9,689 9,883 closing stocks kt 231 250 340 347 291 259 exports kt 868 924 916 991 1,006 1,026

production kt 4,051 4,512 4,773 4,784 4,779 4,875 consumption kt 3,488 3,592 3,790 3,749 3,910 3,988 closing stocks kt 383 513 606 903 881 784 exports kt 1,759 1,968 2,077 1,968 2,127 2,170

11Worldproduction,consumption,stocksandtradeforselectedcommoditiesacontinued

a Figures sourced from external organisations may not based on precise or complete analyses. b Excludes intra‐EU trade. c Includes the grain equivalent of wheat flour. d Milled equivalent. e On a calendar year basis, e.g. 2011–12 = 2012. f ABARES forecast. g Beef and veal, mutton, lamb, goat, pig and chicken meat. h Selected countries. i Clean equivalent. j Virgin wool at the spinning stage in 65 countries. k Held by marketing bodies and on‐farm in five major exporting countries. l Five major exporting countries. m Non‐fat dry milk. s ABARES estimate. Sources: ABARES; Argentine Wool Federation; Australian Bureau of Statistics; Capewools South Africa; Commonwealth Secretariat; Economic Commission for Europe; Fearnleys; International Grains Council; International Sugar Organization; International Wool Textile Organisation; Ministry of Agriculture, Forestry and Fisheries (Japan); New Zealand Wool Board; Poimena Analysis, Melbourne; UN Food and Agriculture Organization; US Department of Agriculture; Uruguayan Association of Wool Exporters

Livestock products Meat egh

Wool i

Butter eh

Skim milk powder ehm


Australian production

TABLE 12 Agricultural, fisheries and forestry commodity production Australia

STATISTICS


barley kt 7,472 9,174 8,646 8,593 13,414 8,500 corn (maize) kt 506 390 495 439 467 370 grain sorghum kt 2,229 1,282 2,209 2,037 1,208 1,923 oats kt 1,121 1,255 1,198 1,308 1,879 1,229 rice kt 1,161 819 690 250 870 870 triticale kt 171 126 143 195 247 171 wheat kt 22,855 25,303 23,743 24,168 35,134 23,979

canola kt 4,142 3,832 3,540 2,944 4,144 3,690 cottonseed kt 1,439 1,252 746 890 1,455 1,580 soybeans kt 70 32 37 40 48 47 sunflower seed kt 38 18 30 25 33 34 other oilseeds a kt 41 27 21 24 29 23

chickpeas kt 813 629 555 1,006 1,407 947 field peas kt 320 342 290 205 415 297 lupins kt 459 626 549 607 1,031 503Total grains, oilseeds and pulses b kt 43,439 45,726 43,459 43,387 63,092 44,995

cotton lint kt 1,017 885 528 629 1,029 1,117 sugar cane (cut for crushing) kt 30,001 30,521 32,360 34,828 35,410 35,556 sugar (tonnes actual) kt 4,248 4,364 4,572 4,920 5,087 5,161 wine grapes kt 1,642 1,438 1,608 1,710 1,610 1,540

apples kt 289 267 295 300 300 300 bananas kt 330 254 252 360 370 374 oranges kt 401 350 338 420 420 345

carrots kt 272 243 261 305 310 318 onions kt 302 256 315 320 340 381 potatoes kt 1,273 1,171 1,155 1,155 1,100 1,182 tomatoes kt 456 326 389 395 395 389

cattle and calves ’000 8,457 9,473 10,103 8,796 7,450 7,525 lambs ’000 21,122 21,899 22,867 23,131 22,400 22,623 sheep ’000 8,192 10,066 9,022 8,127 6,500 6,500 pigs ’000 4,745 4,778 4,924 5,000 5,150 5,300 chickens million 563 580 591 623 651 664

cattle c ’000 634 1,133 1,379 1,258 1,015 1,050 sheep d ’000 2,000 2,020 2,180 1,859 1,875 1,900

beef and veal kt 2,245 2,464 2,662 2,344 2,033 2,091 lamb kt 457 474 507 516 503 507 mutton kt 183 228 214 196 158 156 pig meat kt 356 360 371 378 393 405 chicken meat kt 1,046 1,084 1,116 1,150 1,196 1,228 total meat produced kt 4,287 4,610 4,869 4,584 4,283 4,388

Industrial crops

continued ...

Horticulture

Vegetables

LivestockSlaughterings

Live exports

Meat produced e

Fruit

12Agricultural,fisheriesandforestrycommodityproductionAustraliaCropsGrains

Oilseeds

Pulses


Australian production

TABLE 12 Agricultural, fisheries and forestry commodity production Australia continued

STATISTICS

12Agricultural,fisheriesandforestrycommodityproductionAustraliacontinuedCommodity unit 2012–13 2013–14 2014–15 2015–16 s 2016–17 f 2017–18 f

wool g kt 435 419 427 404 415 427 milk h ML 9,317 9,372 9,732 9,539 8,840 8,990 eggs million dozen 335 322 318 326 339 348 butter i kt 118 116 119 119 117 119 cheese kt 338 311 344 344 344 344 skim milk powder kt 224 211 242 256 211 220 whole milk powder kt 109 126 97 66 60 58 buttermilk powder kt 11 11 12 11 11 11

hardwood ’000 m3 9,029 10,899 12,356 13,390 13,279 13,183 softwood ’000 m3 13,551 14,367 14,999 16,076 15,904 15,742 total forestry products ’000 m3 22,580 25,266 27,355 29,466 29,183 28,925

tuna kt 10.6 10.7 12.4 14.2 12.6 13.2 salmonids l kt 43.0 41.8 48.6 55.0 60.4 61.0 other fish kt 106.5 101.3 101.0 113.5 109.3 100.8 prawns kt 21.3 25.0 25.1 23.4 22.2 22.8 rock lobster m kt 10.3 10.4 10.3 10.2 10.4 10.5 abalone kt 5.0 4.7 4.6 4.5 4.5 4.6 scallops kt 6.8 4.4 4.3 4.9 4.9 4.8 oysters kt 12.4 11.6 10.9 9.9 9.0 9.2 other molluscs kt 8.0 5.9 7.1 7.1 7.2 7.2 other crustaceans kt 5.3 5.5 5.6 5.6 5.6 5.6

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


barley $m 2,063 2,453 2,417 2,132 2,703 1,808 corn (maize) $m 120 116 163 160 153 126 grain sorghum $m 562 384 666 531 258 425 oats $m 265 268 300 327 388 248 rice $m 302 279 273 103 326 343 triticale $m 43 32 37 46 47 34 wheat $m 7,154 7,998 7,124 6,918 8,592 6,254 other cereals $m 110 115 90 100 105 110

canola $m 2,270 2,129 1,782 1,617 2,203 1,995 soybeans $m 33 17 22 23 31 27 sunflower seed $m 22 12 23 16 20 20 other oilseeds a $m 33 26 26 19 23 18

chickpeas $m 320 222 315 660 1,183 654 field peas $m 130 143 120 94 156 113 lupins $m 156 216 160 176 268 138 other pulses $m 347 391 425 534 881 516Total grains, oilseeds and pulses b $m 13,927 14,800 13,943 13,456 17,336 12,828

cotton lint and cottonseed c $m 2,174 2,002 1,200 1,529 2,677 2,942 sugar cane (cut for crushing) $m 1,118 1,226 1,304 1,499 1,835 1,922 wine grapes $m 858 672 765 899 831 810 total industrial crops $m 4,150 3,900 3,268 3,927 5,343 5,674

table and dried grapes $m 303 331 343 364 376 390 fruit and nuts (excl. grapes) $m 3,662 3,187 3,512 3,649 3,737 3,843 vegetables $m 3,770 3,510 3,350 3,675 3,885 4,041 nursery, cut flowers and turf $m 1,285 1,247 1,252 1,264 1,276 1,289 other horticulture nei d $m 251 233 232 241 252 263 total horticulture $m 9,271 8,507 8,689 9,193 9,527 9,826Other crops nei e $m 1,245 1,490 1,538 1,600 1,660 1,720Total crops $m 28,592 28,697 27,438 28,175 33,866 30,049

continued ...

Horticulture

13Grossvalueoffarm,fisheriesandforestryproductionAustralia

Oilseeds

Pulses

Industrial crops

GrainsCrops


Value of production

TABLE 13 Gross value of farm, fisheries and forestry production Australia continued


cattle and calves gh $m 7,136 7,495 10,175 13,468 12,491 12,847 sheep h $m 329 513 650 580 599 616 lambs h $m 1,696 1,943 2,401 2,686 2,943 3,044 pigs h $m 934 1,081 1,149 1,353 1,424 1,444 poultry $m 2,214 2,344 2,610 2,747 2,768 2,828

cattle exported live i $m 589 1,049 1,356 1,551 1,284 1,352 sheep exported live j $m 194 185 245 228 234 243Total livestock k $m 13,192 14,740 18,765 22,828 21,969 22,606

wool l $m 2,472 2,530 2,676 2,965 3,204 3,498 milk m $m 3,687 4,729 4,722 4,102 3,872 4,225 eggs $m 653 710 729 728 763 789 honey and beeswax $m 88 88 101 110 116 130 total livestock products $m 6,900 8,057 8,227 7,905 7,956 8,642Total farm $m 48,684 51,494 54,431 58,907 63,791 61,296

Hardwood $m 680 822 969 1,117 1,120 1,124Softwood $m 836 1,018 1,066 1,154 1,153 1,152Total forestry products $m 1,516 1,840 2,034 2,271 2,272 2,275

Tuna $m 176 147 161 174 167 173Salmonids p $m 518 543 631 702 775 772Other fish q $m 446 403 434 523 505 460Prawns $m 278 339 358 373 375 357Rock lobster r $m 439 586 668 692 699 729Other crustaceans $m 64 64 65 64 66 67Abalone $m 178 164 164 171 178 183Scallops $m 15 11 11 13 12 13Oysters $m 94 91 92 90 89 86Pearls $m 79 61 68 69 66 68Other molluscs $m 40 33 41 52 50 44Other nei $m 59 27 68 44 46 49Total fisheries products $m 2,385 2,470 2,761 2,967 3,028 3,000

Forestry products n

Fisheries products o

a Linseed, safflower seed and peanuts. b Total includes components not listed separately. c Value delivered to gin. d Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. e Mainly fodder crops. f ABARES forecast. g Includes dairy cattle slaughtered. h Excludes skin and hide values. i Includes all bovine for feeder/slaughter, breeding and dairy purposes. j Includes animals exported for breeding purposes. k Total livestock slaughterings includes livestock disposals. l Shorn, dead and fellmongered wool and wool exported on skins. m Milk intake by factories and valued at the farm gate. n Excludes logs harvested for firewood. o Value to fishers of product landed in Australia. p Includes salmon and trout production. q Includes an estimated value of aquaculture. r Includes Queensland bugs. s ABARES estimate. nei Not elsewhere included.Note: The gross value of production is the value placed on recorded production at the wholesale prices realised in the marketplace. The point of measurement can vary between commodities. Generally the marketplace is the metropolitan market in each state and territory. However, where commodities are consumed locally or where they become raw material for a secondary industry, these points are presumed to be the marketplace. Prices used in these calculations exclude GST. Sources: ABARES; Australian Bureau of Statistics

13 GrossvalueoffarmandfisheriesproductionAustraliacontinuedLivestockSlaughterings

Live exports

Livestock products


Areas, stock

TABLE 14 Crop and forestry areas and livestock numbers Australia

STATISTICS


barley ’000 ha 3,644 3,814 4,078 4,105 4,035 3,500

corn (maize) ’000 ha 78 52 60 67 70 61

grain sorghum ’000 ha 647 532 732 681 441 631

oats ’000 ha 729 715 854 832 909 900

rice ’000 ha 113 75 70 23 86 86

triticale ’000 ha 99 80 82 117 96 100

wheat ’000 ha 12,979 12,613 12,384 12,793 12,917 12,773

canola ’000 ha 3,272 2,721 2,897 2,357 2,327 2,800

soybeans ’000 ha 48 25 20 21 28 32

sunflower seed ’000 ha 33 17 25 23 29 30 other oilseeds a ’000 ha 33 21 13 15 15 15

chickpeas ’000 ha 574 508 425 663 814 789

field peas ’000 ha 281 245 237 238 230 227

lupins ’000 ha 450 387 443 490 515 438

Total grains, oilseeds and pulses b ’000 ha 23,856 22,583 22,934 23,318 23,739 23,590

cotton ’000 ha 443 392 197 270 557 570

sugar cane c ’000 ha 349 356 378 381 392 400

wine grapes d ’000 ha 133 127 132 133 134 140

Beef cattle million 26.46 26.30 24.60 23.29 23.96 24.49

Dairy cattle million 2.83 2.81 2.81 2.79 2.67 2.69

milking herd g million 1.69 1.65 1.69 1.66 1.60 1.61Total cattle million 29.29 29.10 27.41 26.08 26.63 27.18

Sheep million 75.55 72.61 70.91 68.70 73.60 76.55

Pigs million 2.10 2.31 2.27 2.23 2.38 2.45 sows ’000 260 266 270 275 282 287

Hardwood ’000 ha 976 963 928 na na na

Softwood ’000 ha 1,024 1,024 1,035 na na na

Total plantation area h ’000 ha 2,013 2,000 1,973 na na na

Forestry plantation area

14 Crop and forestry areas and livestock numbers Australia

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


Yields

TABLE 15 Average farm yields Australia

STATISTICS


barley t/ha 2.05 2.41 2.12 2.09 3.32 2.43 corn (maize) t/ha 6.49 7.45 8.30 6.54 6.67 6.07 grain sorghum t/ha 3.45 2.41 3.02 2.99 2.74 3.05 oats t/ha 1.54 1.76 1.40 1.57 2.07 1.37 rice t/ha 10.28 10.94 9.91 10.90 10.16 10.16 triticale t/ha 1.73 1.57 1.76 1.67 2.57 1.71 wheat t/ha 1.76 2.01 1.92 1.89 2.72 1.88

canola t/ha 1.27 1.41 1.22 1.25 1.78 1.32 soybeans t/ha 1.46 1.27 1.86 1.93 1.75 1.45 sunflower seed t/ha 1.16 1.05 1.20 1.10 1.12 1.13

chickpeas t/ha 1.42 1.24 1.31 1.52 1.73 1.20 field peas t/ha 1.14 1.40 1.23 0.86 1.80 1.31 lupins t/ha 1.02 1.62 1.24 1.24 2.00 1.15

cotton (lint) t/ha 2.30 2.26 2.68 2.33 1.85 1.96 sugar cane (for crushing) t/ha 86 86 86 91 90 89 wine grapes t/ha 12.3 11.3 12.1 12.9 12.0 11.0

wool a kg/sheep 4.47 4.37 4.50 4.43 4.55 4.53 whole milk L/cow 5,518 5,692 5,761 5,736 5,525 5,584a Shorn (including lambs). f ABARES forecast. s ABARES estimate.Sources: ABARES; Australian Bureau of Statistics; Dairy Australia; Pulse Australia

15 Average farm yields Australia

CropsGrains

Oilseeds

Pulses

Industrial crops

Livestock products


Export volumes

TABLE 16 Volume of agricultural and fisheries exports Australia

STATISTICS


barley a kt 5,165 7,124 6,208 5,498 7,389 5,500 corn (maize) kt 134 83 58 41 129 74 grain sorghum kt 1,291 701 1,205 1,075 673 374 oats kt 241 213 284 230 369 359 rice kt 584 544 461 317 210 475 wheat b kt 21,265 18,336 16,571 15,777 22,784 20,872

canola kt 3,488 3,194 2,445 1,946 3,063 2,849 cottonseed kt 754 464 167 147 184 366 other oilseeds c kt 10 14 6 10 11 15

chickpeas kt 852 562 674 1,140 1,379 983 peas d kt 208 155 179 143 240 209 lupins kt 416 274 270 220 595 349 other pulses kt 691 795 597 588 1,118 929

Total grains, oilseeds and pulses kt 35,100 32,458 29,124 27,133 38,144 33,353

raw cotton e kt 1,305 1,036 681 536 774 1,056 sugar kt 3,004 3,052 3,675 4,140 4,290 4,300 wine ML 717 717 745 727 790 800

beef and veal g kt 1,052 1,214 1,376 1,196 985 1,000 live feeder/slaughter cattle h ’000 513 1,006 1,295 1,114 915 950 live breeder cattle i ’000 121 127 83 144 100 100 lamb g kt 208 236 254 261 253 255 live sheep j ’000 2,000 2,020 2,180 1,859 1,875 1,900 mutton g kt 153 186 180 156 125 122 pig meat gk kt 27 28 29 28 29 30 poultry meat g kt 32 37 36 29 35 36

greasy ls kt 316 295 325 296 310 323 semi-processed kt (gr. eq.) 34 35 41 35 33 35 skins kt (gr. eq.) 86 97 92 86 84 84 total wool ls kt (gr. eq.) 437 428 459 417 426 442

butter m kt 54 49 44 34 32 33 cheese kt 174 151 159 172 165 168 casein kt 4 3 0 0 0 0 skim milk powder kt 147 143 186 181 140 141 whole milk powder kt 87 94 69 57 60 59

continued ...

Meat and live animals

Wool

Dairy products

16 Volume of agricultural and fisheries exports Australia

Farm

Industrial crops

CropsGrains

Oilseeds

Pulses


Export volumes

TABLE 16 Volume of agricultural and fisheries exports Australia continued


tuna kt 8.9 11.0 12.1 13.8 12.0 12.4 salmonids kt 2.6 1.8 5.0 8.0 8.1 8.1 other fish kt 6.3 5.8 6.5 20.6 14.9 7.1 abalone kt 2.8 2.7 2.6 2.6 2.6 2.7 prawns kt 3.9 7.1 6.5 6.7 6.2 6.3 rock lobster kt 7.8 8.0 8.2 8.0 8.0 8.1 other crustaceans and molluscs kt 2.9 2.5 2.4 2.4 2.4 2.5 total edible n kt 35.3 38.9 43.3 62.1 54.3 47.2a Includes the grain equivalent of malt. b Includes the grain equivalent of wheat flour. c Includes soybeans, linseed, sunflower seed, safflower seed and peanuts. Excludes meals and oils. d Includes field peas and cowpeas. e Excludes cotton waste and linters. f ABARES forecast. g In shipped weight. Fresh, chilled or frozen. h Includes buffalo. i Includes dairy cattle and buffalo. j Includes breeding stock. k Includes preserved pig meat. l Australian Bureau of Statistics recorded trade data adjusted for changes in stock levels held overseas. m Includes ghee, dry butterfat, butter concentrate and butter oil, and dairy spreads, all expressed as butter. n total non-edible export volume not avaliableNote: Zero used to denote nil or less than 500 tonnes.Sources: ABARES; Australian Bureau of Statistics; Department of Foreign Affairs and Trade; United Nations Commodity Trade Statistics Database (UN Comtrade)

16 Volume of agricultural and fisheries exports Australia continued

Fisheries products


Export values

TABLE 17 Value of agricultural and fisheries exports (fob) Australia

STATISTICS


Barley a $m 1,626 2,199 2,137 1,790 1,991 1,822Corn (maize) $m 50 36 30 22 61 36Grain sorghum $m 364 253 424 364 190 119Oats $m 83 80 106 104 130 129Rice $m 459 490 506 412 212 463Wheat b $m 6,776 6,103 5,547 5,120 6,479 5,914

Canola $m 2,094 1,929 1,349 1,097 1,749 1,637Cottonseed $m 219 168 75 69 88 175Other oilseeds c $m 13 18 14 19 19 24

Chickpeas $m 533 297 414 1,013 1,304 757Peas d $m 89 67 91 86 123 100Lupins $m 143 116 119 97 208 127Other pulses $m 418 539 541 584 861 670Total grains, oilseeds and pulses $m 12,869 12,296 11,352 10,776 13,417 11,974

Raw cotton e $m 2,695 2,355 1,546 1,269 1,976 2,672Sugar $m 1,437 1,384 1,643 1,823 2,565 2,833Wine $m 1,867 1,847 1,983 2,184 2,367 2,497Total industrial crops $m 5,999 5,587 5,172 5,277 6,909 8,002

Fruit $m 634 724 755 1,072 1,150 1,235Tree nuts $m 348 610 734 930 760 803Vegetables $m 260 270 293 344 385 411Nursery $m 12 11 12 15 20 22Other horticulture g $m 224 250 266 310 320 352Total horticulture $m 1,478 1,865 2,060 2,671 2,635 2,823Other crops and crop products $m 2,240 2,603 3,033 3,874 3,868 3,728Total crops $m 22,585 22,351 21,617 22,598 26,829 26,527

Beef and veal $m 5,052 6,422 9,040 8,495 7,100 7,195Live feeder/slaughter cattle h $m 339 795 1,163 1,280 1,124 1,167Live breeder cattle i $m 251 255 192 271 160 185Lamb $m 1,128 1,534 1,779 1,771 1,800 1,855Live sheep j $m 194 185 245 228 234 243Mutton $m 510 772 824 699 613 621Pig meat $m 90 94 110 128 134 136Poultry meat $m 43 50 56 54 54 58Total meat and live animals $m 7,516 10,011 13,300 12,797 11,085 11,324

Greasy k $m 2,261 2,212 2,497 2,590 2,936 3,244Semi-processed $m 209 238 282 281 267 300Skins $m 398 426 375 412 402 429Total wool k $m 2,869 2,877 3,154 3,283 3,605 3,972

17 Value of agricultural and fisheries exports (fob) Australia


Wool

Industrial crops

Horticulture

Oilseeds

CropsGrains

Pulses

Farm

continued ...


Export values

TABLE 17 Value of agricultural and fisheries exports (fob) Australia continued

STATISTICS


butter $m 180 243 198 156 195 216 cheese $m 784 765 823 859 891 1,007 casein $m 46 42 10 10 9 9 skim milk powder $m 467 708 682 516 446 489 whole milk powder $m 312 532 294 257 275 305 other dairy products l $m 942 904 868 1,202 1,341 1,489 total dairy products $m 2,731 3,194 2,876 3,001 3,156 3,516Other livestock and livestock products $m 2,512 2,876 3,192 3,066 3,061 3,340Total livestock exports $m 15,628 18,958 22,522 22,146 20,908 22,152Total farm exports $m 38,213 41,309 44,138 44,744 47,737 48,679

tuna $m 163 136 151 163 153 161 salmonids $m 25 17 48 80 86 84 other fish $m 70 72 72 111 107 89 abalone $m 186 170 174 182 185 193 prawns $m 52 101 94 114 109 101 rock lobster $m 447 590 691 693 673 716 other crustaceans and molluscs $m 59 52 62 74 53 55 pearls $m 152 144 111 96 95 94 other fisheries products $m 21 22 36 28 28 31Total fisheries products $m 1,175 1,304 1,440 1,542 1,489 1,524a Includes malt. b Includes wheat flour. c Includes soybeans, linseed, sunflower seed, safflower seed and peanuts. Excludes meals and oils. d Field peas and cowpeas. e Excludes cotton waste and linters. f ABARES forecast. g Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. h Includes buffalo. i Includes dairy cattle and buffalo. j Includes breeding stock. k On a balance of payments basis. Australian Bureau of Statistics recorded trade data adjusted for changes in stock levels held overseas. l Other dairy products include food preparations identified by industry as containing a high proportion of dairy products. Sources: ABARES; Australian Bureau of Statistics; Department of Agriculture and Water Resources, Canberra; United Nations Commodity Trade Statistics Database (UN Comtrade)

17 Value of agricultural and fisheries exports (fob) Australia continued

Dairy products

Fisheries products


TABLE 18 Agricultural exports to China (fob) Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

barley a $m 311 454 494 1,080 1,464 834 grain sorghum $m 14 4 98 215 410 350 wheat b $m 144 457 357 484 323 426 other grains c $m 0 1 6 0 0 1Oilseeds $m 45 116 344 627 317 14Pulses $m 3 4 1 1 17 20Total grains, oilseeds and pulses $m 516 1,036 1,300 2,407 2,531 1,645

raw cotton d $m 551 1,812 1,849 1,520 851 636 sugar $m 31 21 2 42 126 120 wine $m 178 209 241 202 269 416 total industrial crops $m 760 2,041 2,093 1,764 1,246 1,172

fruit $m 8 10 28 37 64 187 tree nuts $m 6 11 36 37 39 63 vegetables $m 2 3 3 3 4 4 nursery $m 1 1 0 0 1 1 other horticulture e $m 3 4 4 4 5 8 total horticulture $m 20 29 71 82 113 263Other crops and crop products $m 8 22 30 31 46 23Total crops $m 1,305 3,128 3,493 4,284 3,936 3,103

beef and veal $m 52 59 408 787 758 867 live breeder cattle g $m 102 133 125 180 149 221 lamb $m 76 85 120 217 191 144 mutton $m 26 30 123 229 168 86 other meat and live animals h $m 0 0 1 5 17 8 total meat and live animals i $m 358 441 902 1,598 1,433 1,546

greasy $m 1,864 1,925 1,844 1,713 1,986 2,017 semi-processed $m 21 24 18 18 32 15 skins $m 351 369 337 378 336 385 total wool $m 2,235 2,319 2,200 2,109 2,354 2,417

butter $m 4 7 6 7 11 11 cheese $m 30 37 44 74 72 85 casein $m 1 1 1 1 0 0 skim milk powder $m 37 50 35 108 59 70 whole milk powder $m 52 11 56 159 20 82 other dairy products $m 154 185 208 151 173 427 total dairy products $m 278 291 350 501 335 676Other livestock exports $m 558 614 635 778 833 653Total livestock and livestock products $m 3,330 3,531 3,962 4,820 4,826 5,093

Total agricultural exports $m 4,635 6,660 7,455 9,104 8,762 8,196a Includes malt. b Includes wheat flour. c Includes grains not separately listed. d Excludes cotton waste and linters. e Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. g Includes dairy cattle and buffalo. h Includes meat and other live animals not listed separately. i Excludes value of live feeder slaughter for October 2015. Note: Zero is used to denote nil or less than $0.5 million.Sources: ABARES; Australian Bureau of Statistics

18 Agricultural exports to China (fob) Australia

Dairy products

Farm

Industrial crops

Horticulture


Wool

CropsGrains

Agricultural exports


TABLE 19 Agricultural exports to Indonesia (fob) Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

barley a $m 9 10 7 6 5 5 wheat b $m 1,144 1,156 1,395 1,194 1,403 1,127 other grains, oilseeds and pulses c $m 15 14 12 28 14 18Total grains, oilseeds and pulses $m 1,169 1,180 1,414 1,228 1,423 1,150

raw cotton d $m 247 282 220 174 136 130 sugar $m 296 302 316 467 519 476 wine $m 4 4 5 3 4 4 total industrial crops $m 547 588 540 644 659 610


beef and veal $m 178 168 137 258 247 315 live feeder/slaughter cattle g $m 287 252 165 452 595 578 live breeder cattle h $m 3 2 9 9 5 7 lamb $m 6 9 8 4 7 8 mutton $m 1 1 2 1 4 6 other meat and live animals i $m 0 0 0 0 0 0 total meat and live animals $m 478 436 332 734 867 928Wool $m 1 0 0 1 1 0

butter $m 9 4 5 7 5 3 cheese $m 19 19 18 18 18 18 casein $m 5 7 9 10 0 0 skim milk powder $m 80 72 68 126 164 120 whole milk powder $m 40 34 18 37 8 3 other dairy products $m 34 39 28 39 56 51 total dairy products $m 187 174 148 237 251 195

Other livestock products $m 101 113 146 147 142 122

Total livestock and livestock products $m 767 724 626 1,119 1,262 1,245Total agricultural exports $m 2,536 2,549 2,656 3,074 3,434 3,147a Includes malt. b Includes wheat flour. c Includes grains, oilseeds and pulses not separately listed. d Excludes cotton waste and linters. e Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. g Includes buffalo. h Includes dairy cattle and buffalo. i Includes meat and other live animals not listed separately. Note: Zero is used to denote nil or less than $0.5 million.Sources: ABARES; Australian Bureau of Statistics

Industrial crops

19 Agricultural exports to Indonesia (fob) Australia

Dairy products

Horticulture


FarmCropsGrains



TABLE 20 Agricultural exports to Japan (fob) Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

barley a $m 260 316 292 251 177 223 grain sorghum $m 105 219 202 16 2 1 wheat b $m 408 395 392 322 305 326

canola $m 41 47 72 113 175 63 cottonseed $m 24 31 36 31 23 27Other grains and oilseeds c $m 4 9 17 10 6 5Pulses $m 10 12 10 11 8 15Total grains, oilseeds and pulses $m 853 1,030 1,021 754 697 659



beef and veal $m 1,689 1,580 1,466 1,439 1,858 1,813 live feeder/slaughter cattle gh $m 16 20 15 15 14 15 lamb $m 61 63 56 76 86 72 mutton $m 26 25 17 29 27 35 other meat and live animals i $m 3 3 3 4 5 11 total meat and live animals $m 1,795 1,690 1,558 1,562 1,990 1,946

greasy $m 9 12 8 1 0 0 semi-processed $m 23 26 21 10 14 20 skins $m 1 2 1 2 2 2 total wool $m 33 39 30 12 16 22

butter $m 6 9 4 2 4 3 cheese $m 356 423 415 343 407 410 casein $m 22 21 17 20 5 5 skim milk powder $m 2 2 5 17 30 5 whole milk powder $m 0 1 0 0 0 0 other dairy products $m 38 46 68 39 33 39 total dairy products $m 424 502 509 421 481 462Other livestock products $m 337 302 293 276 293 359Total livestock and livestock products $m 2,589 2,532 2,390 2,272 2,780 2,789Total agricultural exports $m 3,924 4,056 3,862 3,514 3,886 3,969a Includes malt. b Includes the grain equivalent of wheat flour. c Includes grains and oilseeds not separately listed. d Excludes cotton waste and linters. e Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. g Excludes breeding stock and includes buffalo for feeder/slaughter purposes. h Excludes value of live feeder slaughter for October 2015. i Includes other meat and live animals not listed separately. Note: Zero is used to denote nil or less than $0.5 million.Sources: ABARES; Australian Bureau of Statistics

20 Agricultural exports to Japan (fob) Australia

Dairy products

Industrial crops

Horticulture


Wool

FarmGrains

Oilseeds




TABLE 21 Agricultural exports to the Republic of Korea (fob) Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

barley a $m 75 94 87 116 116 96 wheat b $m 368 628 449 310 354 410 corn (maize) $m 4 12 20 23 22 13

cottonseed $m 16 26 37 30 15 19Other grains and oilseeds c $m 1 0 2 6 2 4Pulses $m 51 36 74 57 68 25Total grains, oilseeds and pulses $m 514 797 668 541 577 567


fruit $m 4 5 7 6 10 12 tree nuts $m 1 3 2 4 11 18 vegetables $m 8 9 7 5 9 17 other horticulture e $m 2 2 3 5 3 3 total horticulture $m 15 19 19 19 32 50Other crops and crop products $m 87 88 99 109 128 138Total crops $m 1,106 1,554 1,391 1,116 1,354 1,439

beef and veal $m 714 654 703 892 1,068 1,324 lamb $m 13 15 14 24 32 49 mutton $m 5 4 4 6 7 9 other meat and live animals g $m 2 1 1 1 1 3 total meat and live animals $m 734 674 721 923 1,108 1,385Wool $m 36 43 44 61 81 127

butter $m 16 9 7 6 10 14 cheese $m 37 31 30 26 32 39 casein $m 2 2 2 1 0 0 skim milk powder $m 23 23 19 27 25 14 whole milk powder $m 6 7 2 3 2 2 other dairy products $m 37 42 29 29 24 30 total dairy product $m 121 116 88 92 93 99Other livestock products $m 108 125 100 118 185 171Total livestock and livestock products $m 999 957 954 1,193 1,467 1,781Total agricultural exports $m 2,105 2,512 2,345 2,309 2,821 3,221

Horticulture


a Includes malt. b Includes wheat flour. c Includes grains and oilseeds not separately listed. d Excludes cotton waste and linters. e Other horticulture includes mainly nursery, coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. g Includes meat and other animals not listed separately. Note: Zero is used to denote nil or less than $0.5 million. Sources: ABARES; Australian Bureau of Statistics

21 Agricultural exports to Republic of Korea (fob) Australia

Dairy products

Industrial crops

CropsGrains

Oilseeds

Farm


TABLE 22 Agricultural exports to the United States (fob) Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Grains $m 0 0 1 2 0 0Oilseeds $m 0 20 50 66 22 1Pulses $m 4 5 4 5 4 5Total grains, oilseeds and pulses $m 4 25 55 73 26 6

sugar $m 92 135 66 43 60 87 wine $m 524 493 483 472 463 477 total industrial crops $m 616 628 549 515 522 564

fruit $m 33 33 25 31 24 34 tree nuts $m 12 15 28 48 65 82 vegetables $m 6 5 5 6 8 9 nursery $m 2 2 2 2 2 2 other horticulture a $m 16 15 19 28 37 44 total horticulture $m 69 69 79 115 136 171Other crops and crop products $m 168 142 191 258 246 258Total crops $m 857 864 873 962 931 1,000

beef and veal $m 709 894 970 1,360 3,233 2,488 lamb $m 333 304 303 398 532 617 mutton $m 41 24 34 51 78 94 other meat and live animals b $m 0 0 0 0 1 0 total meat and live animals $m 1,083 1,223 1,307 1,808 3,844 3,200

greasy $m 11 8 7 4 7 7 semi-processed $m 3 3 2 2 3 4 skins $m 0 0 0 0 0 na total wool $m 14 11 9 7 9 12

butter $m 3 7 13 1 13 10 cheese $m 12 3 11 9 27 32 casein $m 13 7 9 4 1 1 whole milk powder $m 4 4 5 0 1 4 other dairy products $m 18 17 22 16 17 20 total dairy products $m 51 38 60 30 59 67Other livestock products $m 125 115 136 176 289 301Total livestock and livestock products $m 1,272 1,386 1,511 2,021 4,201 3,579Total agricultural exports $m 2,129 2,251 2,384 2,983 5,132 4,579a Other horticulture includes mainly coffee, tea, spices, essential oils, vegetables for seed and other miscellaneous horticultural products. b Includes meat and live animals not listed separately. Note: Zero is used to denote nil or less than $0.5 million.Sources: ABARES; Australian Bureau of Statistics

22 Agricultural exports to the United States (fob) Australia

Dairy products

Industrial crops

Horticulture


Wool

CropsFarm



Fisheries exports

TABLE 23 Volume of fisheries products exports Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Live kt 0.9 0.9 0.8 0.9 0.8 0.8Tuna kt 7.8 8.9 8.9 11.0 12.1 13.8Salmonids kt 6.4 5.8 2.6 1.8 5.0 8.0Swordfish kt 0.4 0.5 0.5 0.4 0.5 0.6Whiting kt 1.8 0.9 0.4 0.1 0.0 0.0Other fish kt 5.5 5.1 4.7 4.4 5.3 19.2Total fish kt 22.7 22.0 17.8 18.6 23.6 42.4

Rock lobster kt 7.0 6.9 7.8 8.0 8.2 8.0Prawns kt 6.4 5.4 3.9 7.1 6.5 6.7Abalone kt 3.4 3.1 2.8 2.7 2.6 2.6Scallops kt 0.6 0.4 0.4 0.5 0.3 0.4Crabs kt 1.0 0.8 0.4 0.4 0.6 0.6Other crustaceans and molluscs kt 1.2 1.7 2.1 1.6 1.6 1.5Total crustaceans and molluscs kt 19.6 18.4 17.5 20.3 19.7 19.7Total edible fisheries products kt 42.4 40.5 35.3 38.9 43.3 62.1

Edible a


23VolumeoffisheriesproductsexportsAustralia

a Includes prepared and preserved.Note: Zero is used to denote nil or less than 50 tonnes.Source: Australian Bureau of Statistics

Fish


Fisheries exports

TABLE 24 Value of fisheries products exports (fob) Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Live $m 33.4 32.0 30.7 34.2 29.9 30.2Tuna $m 131.4 162.7 162.6 135.5 151.0 163.3Salmonids $m 54.4 41.8 25.4 17.4 48.1 79.9Swordfish $m 4.5 4.2 3.9 3.9 4.4 6.9Whiting $m 5.0 2.5 1.4 0.2 0.1 0.0Other fish $m 58.1 46.2 34.2 34.2 37.7 74.3Total fish $m 286.8 289.4 258.2 225.4 271.2 354.6

Rock lobster $m 369.3 386.7 447.3 590.3 691.2 693.2Prawns $m 77.1 66.7 51.8 101.0 94.2 114.4Abalone $m 212.0 197.3 186.0 170.0 173.8 182.0Scallops $m 15.4 15.3 10.8 13.6 10.7 11.7Crabs $m 13.4 11.0 8.2 5.5 7.9 7.6Other crustaceans and molluscs $m 16.3 34.4 40.2 32.5 43.7 54.8Total crustaceans and molluscs $m 703.6 711.3 744.2 912.9 1,021.5 1,063.7Total edible fisheries products $m 990.3 1,000.7 1,002.3 1,138.3 1,292.7 1,418.3

Marine fats and oils $m 5.4 7.3 10.0 9.1 20.9 11.2Fish meal $m 1.6 0.4 1.0 0.7 1.0 0.5Pearls a $m 241.3 206.6 151.5 144.4 110.8 95.9Ornamental fish $m 2.3 2.3 3.8 2.0 1.9 2.1Other non-edible $m 7.3 9.4 6.5 9.7 12.3 13.8Total non-edible fisheries products $m 257.9 226.1 172.8 165.9 147.0 123.5Total fisheries products $m 1,248.2 1,226.8 1,175.2 1,304.3 1,439.6 1,541.8

24 Value of fisheries products exports (fob) Australia

Edible


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 Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Tuna kt 45.6 40.8 46.9 50.1 49.2 44.9Salmonids kt 9.9 10.2 11.9 14.2 16.1 15.1Hake kt 6.7 5.3 6.1 4.5 4.9 5.1Swordfish kt 0.2 0.2 0.2 0.2 0.2 0.2Toothfish kt 0.1 0.1 0.2 0.2 0.1 0.2Herrings kt 1.0 0.9 1.8 0.9 1.1 2.2Shark kt 0.5 0.5 0.5 0.7 0.6 0.4Other fish kt 83.1 86.6 92.8 90.0 87.6 86.4Total fish b kt 147.1 144.4 160.5 160.8 159.8 154.5

Prawns kt 32.6 37.5 34.8 38.7 32.4 31.9Lobster kt 0.9 0.9 0.8 1.0 1.1 0.9Crabs kt 1.4 1.5 1.5 2.1 2.0 1.9Mussels kt 2.6 2.8 3.7 3.6 3.1 3.3Scallops kt 2.6 3.0 3.1 3.5 2.9 2.6Squid and octopus kt 15.2 17.0 19.9 23.2 22.3 23.4Other crustaceans and molluscs kt 9.4 7.3 4.1 4.8 4.0 4.2Total crustaceans and molluscs kt 64.7 69.8 67.9 76.7 67.8 68.3Total edible fisheries products abc kt 211.8 214.2 228.4 237.5 227.6 222.8

25 Volume of fisheries products imports Australia

Edible a


a Includes prepared and preserved. b Excludes live tonnage. c Includes other fisheries products not classified into fish or crustaceans and molluscs.Source: Australian Bureau of Statistics

Fish


Fisheries imports

TABLE 26 Value of fisheries products imports Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Tuna $m 200.8 205.5 258.2 296.1 283.9 274.8Salmonids $m 84.4 91.8 118.8 167.5 190.7 184.7Hake $m 27.2 20.9 23.4 19.5 21.8 23.6Swordfish $m 1.5 1.2 1.7 1.4 1.7 1.6Toothfish $m 1.4 1.3 2.2 3.0 3.5 8.2Herrings $m 4.3 4.2 5.1 4.5 3.9 5.7Shark $m 4.4 4.0 4.6 5.5 4.9 3.9Other fish $m 443.7 459.6 480.0 507.5 544.2 570.3Total fish b $m 769.1 788.6 866.5 1,004.9 1,054.6 1,072.7

Prawns $m 291.0 350.9 304.8 495.1 431.2 400.9Lobster $m 15.0 16.0 15.3 22.4 28.3 29.9Crabs $m 13.3 15.5 16.8 28.3 31.1 28.7Mussels $m 10.2 11.7 17.1 19.1 17.9 20.0Scallops $m 34.5 43.6 41.1 52.9 49.6 55.0Squid and octopus $m 74.3 90.4 97.7 114.5 111.6 134.8Other crustaceans and molluscs $m 65.3 57.0 40.7 44.0 42.9 50.7Total crustaceans and molluscs $m 503.5 585.1 533.4 776.3 712.5 720.0Total edible fisheries products abc $m 1,271.3 1,373.8 1,427.7 1,781.3 1,767.3 1,792.9

Pearls d $m 166.9 138.2 105.4 102.1 97.2 144.4Fish meal $m 46.7 34.2 43.3 43.2 64.3 61.7Ornamental fish $m 3.9 3.7 4.0 4.5 4.4 4.9Marine fats and oils $m 31.0 39.5 39.1 40.1 52.7 61.1Other marine products $m 9.9 17.1 29.0 30.4 22.2 21.3Total non-edible fisheries products $m 258.4 232.8 220.7 220.3 240.8 293.5Total fisheries products $m 1,529.7 1,606.6 1,648.4 2,001.6 2,008.1 2,086.4

26 Value of fisheries products imports Australia

Edible a


Non-edible

a Includes prepared and preserved. b Includes live value. c Includes other fisheries products not classified into fish or crustaceans and molluscs. d Mainly re-imports.Source: Australian Bureau of Statistics

Fish


Fisheries trade

TABLE 27 Value of Australian fisheries products trade, by selected countries Australia

STATISTICS

Trade unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Hong Kong $m 425.9 479.1 317.0 208.9 192.3 223.7Vietnam $m 8.4 60.5 293.2 565.6 715.6 681.7Japan $m 225.9 254.6 236.0 192.1 192.1 205.3China $m 143.2 58.5 45.2 36.6 48.7 104.6Singapore $m 41.2 42.5 31.0 34.2 35.0 35.3United States $m 35.7 23.1 17.9 22.1 28.0 44.8Taiwan $m 29.6 17.5 9.8 13.7 15.1 20.9Thailand $m 16.0 18.1 9.3 8.0 10.0 9.4New Zealand $m 9.6 10.1 9.1 14.5 13.9 19.9Malaysia $m 12.9 7.7 7.8 9.9 11.2 7.5Indonesia $m 8.7 6.1 7.4 9.9 9.3 10.0

Hong Kong $m 145.1 96.6 54.3 74.6 55.9 53.2Japan $m 43.3 44.4 33.0 26.9 23.4 24.0United States $m 8.1 22.2 21.0 19.2 16.6 21.6

Thailand $m 340.2 362.1 399.8 417.0 422.1 416.1New Zealand $m 210.0 197.3 206.3 206.8 189.6 199.8China $m 185.6 231.5 196.5 341.5 284.7 292.2Vietnam $m 161.7 174.5 163.1 231.7 233.1 243.0Malaysia $m 71.2 73.2 81.0 97.9 94.7 88.9United States $m 39.9 45.1 52.2 56.0 53.0 54.9Indonesia $m 27.9 36.3 50.9 73.5 85.6 89.5Taiwan $m 39.5 38.9 48.1 44.5 58.3 60.3South Africa $m 28.2 31.3 35.1 31.6 27.5 27.7Denmark $m 18.8 25.3 32.2 44.8 58.2 47.7Norway $m 24.7 27.1 29.9 45.4 68.1 66.8

27 Value of Australian fisheries products trade, by selected countries Australia


Exports

Imports

Edible (including live)

Non-edible

Edible (excluding live)


Forest exports

TABLE 28 Volume of forest products exports Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Roundwood ’000 m3 1,638 1,806 1,516 2,363 2,616 3,685

softwood roughsawn ’000 m3 265 198 207 268 299 247 softwood dressed ’000 m3 9 13 3 5 25 11 hardwood roughsawn ’000 m3 39 26 20 73 117 19 hardwood dressed ’000 m3 30 15 7 25 73 23 total sawnwood ’000 m3 344 252 237 371 514 300Railway sleepers ’000 m3 8 8 8 17 14 7

veneers ’000 m3 119 106 52 64 50 45 plywood ’000 m3 7 18 36 36 14 31 particleboard ’000 m3 6 4 2 6 11 11 hardboard ’000 m3 2 2 2 3 11 21 medium-density fibreboard ’000 m3 115 79 52 75 78 85 softboard and other fibreboards ’000 m3 5 5 1 1 21 4 total wood-based panels ’000 m3 254 214 146 184 185 197

newsprint kt 19 30 72 85 56 50 printing and writing kt 84 132 139 153 141 139 household and sanitary kt 39 26 12 20 23 17 packaging and industrial kt 887 933 906 950 948 924 total paper and paperboard kt 1,029 1,121 1,127 1,207 1,168 1,130Recovered paper kt 1,323 1,403 1,506 1,449 1,397 1,420Pulp kt 31 1 0 0 0 0Woodchips bcd kt 5,064 4,150 3,806 4,776 5,707 6,082

Paper and paperboard

Volume

Sawnwood a

Wood-based panels

28 Volume of forest products exports Australia

a Excludes railway sleepers. b Includes particles. c Bone dry tonnes. d Softwood woodchips are subject to ABS confidentiality restriction from March 2016 and are not included in these figures.Note: Components may not add to totals due to rounding. Zero is used to denote nil or less than 500 tonnes.Sources: ABARES; Australian Bureau of Statistics


Forest exports

TABLE 29 Value of forest products exports (fob) Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Roundwood $m 198 175 155 292 313 438

softwood roughsawn $m 67 55 61 75 74 68 softwoods dressed $m 5 3 2 3 11 7 hardwood roughsawn $m 34 23 20 22 20 17 hardwood dressed $m 10 7 6 7 5 11 total sawnwood $m 115 88 90 108 110 103Railway sleepers $m 3 3 3 3 2 2Miscellaneous forest products a $m 60 59 61 71 75 110

veneers $m 52 51 24 29 27 24 plywood $m 2 2 4 3 3 4 particleboard $m 2 1 1 1 2 2 hardboard $m 2 2 2 2 2 7 medium-density fibreboard $m 39 26 19 26 27 28 softboard and other fibreboards $m 1 1 0 0 6 1 total wood-based panels $m 98 83 51 62 67 66

newsprint $m 13 15 36 59 39 33 printing and writing $m 88 120 117 139 146 128 household and sanitary $m 94 64 33 49 60 53 packaging and industrial $m 552 518 526 605 657 683 total paper and paperboard $m 747 717 712 853 901 898Paper manufactures b $m 112 134 132 132 109 102Recovered paper $m 240 240 230 241 241 249Pulp $m 11 1 0 0 0 0Woodchips c $m 884 729 611 768 954 1,096Total wood products $m 2,469 2,229 2,044 2,529 2,772 3,063a Includes such items as wooden doors, mouldings, packing cases, parquetry flooring, builders carpentry, cork, gums, resins, eucalyptus and tea tree oils, and other miscellaneous wood articles. Excludes wooden furniture. b Includes other paper articles that have had some further processing. c Softwood woodchips are subject to ABS confidentiality restriction from March 2016 and are not included in these figures.Note: Components may not add to totals due to rounding. Zero is used to denote nil or less than $0.5 million.Sources: ABARES; Australian Bureau of Statistics

Value

Sawnwood


Wood-based panels

29 Value of forest products exports (fob) Australia


Forest imports

TABLE 30 Volume of forest products imports Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Roundwood ’000 m3 1 1 1 1 1 2

softwood roughsawn ’000 m3 290 239 247 271 291 241 softwood dressed ’000 m3 468 470 443 449 608 540 hardwood roughsawn ’000 m3 43 46 41 41 43 39 hardwood dressed ’000 m3 45 36 28 25 26 22 total sawnwood ’000 m3 846 791 759 786 968 841

veneers ’000 m3 17 15 13 9 12 14 plywood ’000 m3 278 293 278 287 341 357 particleboard ’000 m3 72 67 72 95 95 89 hardboard ’000 m3 49 69 60 86 82 91 medium-density fibreboard ’000 m3 58 91 77 65 85 89 softboard and other fibreboards ’000 m3 7 7 6 5 7 7 total wood-based panels ’000 m3 480 542 505 548 622 648

newsprint kt 222 121 85 75 76 69 printing and writing kt 1,237 1,174 1,155 1,172 1,040 960 household and sanitary kt 114 118 159 123 142 155 packaging and industrial kt 314 333 385 357 392 410 total paper and paperboard kt 1,886 1,746 1,783 1,727 1,651 1,595

Recovered paper kt 2 3 4 5 4 1Pulp kt 233 256 263 297 302 281Woodchips b kt 1 1 1 2 2 2

30 Volume of forest products imports Australia

Wood-based panels


Volume

a Excludes railway sleepers. b Bone dry tonnes.Sources: ABARES; Australian Bureau of Statistics

Sawnwood a


Forest imports

TABLE 31 Value of forest products imports Australia

STATISTICS

Commodity unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

Roundwood $m 1 1 1 1 1 2

softwood roughsawn $m 135 105 100 111 128 112 softwood dressed $m 248 248 246 281 382 361 hardwood roughsawn $m 40 44 41 46 57 55 hardwood dressed $m 50 51 35 31 34 28 total sawnwood $m 473 448 423 468 601 555Miscellaneous forest products a $m 707 756 769 946 1,102 1,304

veneers $m 21 21 19 15 22 24 plywood $m 170 183 184 210 264 300 particleboard $m 21 26 27 35 38 41 hardboard $m 40 54 48 72 67 69 medium-density fibreboard $m 34 36 32 35 45 51 softboard and other fibreboards $m 3 3 2 3 3 4 total wood-based panels $m 289 323 311 370 439 489

newsprint $m 176 91 58 49 48 44 printing and writing $m 1,347 1,217 1,151 1,194 1,123 1,036 household and sanitary $m 185 187 244 208 254 305 packaging and industrial $m 515 543 590 654 728 845 total paper and paperboard $m 2,223 2,037 2,043 2,105 2,153 2,230Paper manufactures b $m 557 486 446 537 582 662Recovered paper $m 0 1 1 2 1 0Pulp $m 180 164 154 203 217 222Woodchips $m 2 2 3 3 3 4Total wood products $m 4,431 4,217 4,151 4,636 5,099 5,468

31 Value of forest products imports Australia

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

Value

Sawnwood

Wood-based panels



TABLE 32 Value of Australian forest products trade, by selected countries a

STATISTICS

Trade unit 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16

China $m 544 534 474 542 816 1,331Hong Kong $m 42 39 16 10 12 11Japan $m 745 579 394 21 316 427Korea, Rep. of $m 40 40 33 45 38 37Malaysia $m 106 112 73 87 70 71New Zealand $m 314 305 269 290 296 317Taiwan $m 79 68 68 57 73 110

China $m 690 800 913 1,110 1,321 1,497Finland $m 143 120 205 221 184 160Germany $m 183 148 135 163 150 156Indonesia $m 332 342 313 348 427 495Malaysia $m 228 236 227 249 270 306New Zealand $m 715 634 557 605 646 673United States $m 285 298 304 339 361 347

Exports

Imports

32 Value of Australian forest products trade, by selected countries a

a Value of wood products trade to selected countries may exclude data where ABS confidentiality restrictions apply.Sources: ABARES; Australian Bureau of Statistics

Forestry trade


This section provides an overview of ABARES reports released since publication of Agricultural commodities: December quarter 2016.

Full reports can be downloaded from agriculture.gov.au/abares/publications. For more information contact [email protected].

Research reports

South America: an emerging competitor for Australia’s beef industry

Research report 16.14

Publication date: 16 December 2016

The beef sectors of Brazil, Argentina, Uruguay and Paraguay have grown significantly over the past two decades. This report profiles the beef industries of these exporting nations and that of Australia, evaluating trends and key factors behind the growth in real export values since 2000. ABARES modelled actual and hypothetical changes to policies and operating environments to assess the potential effects of competition on Australia’s beef exports.

The ABARES bilateral trade decomposition model: technical annex to ABARES report ‘South America: an emerging competitor for Australia’s beef industry’



This publication describes the quantitative economic model used in the report South America: an emerging competitor for Australia’s beef industry.

Report extracts


http://www.agriculture.gov.au/abares/publications

mailto:[email protected]


Report extracts

Australian honey bee industry: 2014–15 survey results



This report draws on data from the ABARES Australian Honey Bee Industry Survey conducted in 2016, 2008 and 2002. The data enable government and industry stakeholders to evaluate changes in the status of Australian beekeeping businesses.

Australian vegetable-growing farms: an economic survey, 2014–15 and 2015–16


Publication date: 8 February 2017

Since 2007 ABARES has conducted an annual survey of vegetable-growing farms to provide industry and government with information about farm-level production and the financial situation of vegetable growers. This report presents results from the ABARES survey of vegetable-growing farms, conducted from March to June 2016.

Other reports

Australia’s plantation log supply 2015–2059Publication date: 15 December 2016

This report presents forecasts of sawlog and pulplog volumes based on data provided by softwood and hardwood plantations. Changes in log availability have implications for Australia’s rural economies; the size, type and geographical location of wood and paper product manufacturing industries; the national supply of wood products; and Australia’s trade balance and export income.

Australian grains: outlook for 2016–17 and industry productivityPublication date: 20 December 2016

This publication summarises forecasts and data from the December 2016 issues of ABARES Australian crop report and Agricultural commodities and the 2016 report Australian grains: financial performance of grain farms, 2013–14 to 2015–16. The 2016–17 outlook was commissioned by the Grains Research and Development Corporation.


Australian fisheries and aquaculture statistics 2015Publication date: 20 December 2016

This report analyses fisheries product consumption, production and trade from 2004–05 to 2014–15. It includes 2014–15 data on the volume and value of production and trade (by destination, source and product) for state, territory and Commonwealth wild-catch and aquaculture fisheries. The report also provides data on key species, fishing methods, number of licence holders for 2013–14 and 2014–15, the recreational sector and customary fishing by Indigenous Australians.

Agricultural commodity statistics 2016Publication date: 20 December 2016

This compendium provides historical statistics for the agriculture, forestry and fisheries sectors. The comprehensive statistical tables on Australian and world prices, production, consumption and stocks and trade cover 19 commodities, including grains and oilseeds, livestock, livestock products, wool, horticulture, and forestry and fisheries products. The report also presents statistics on agricultural water use and macroeconomic indicators such as economic growth, employment, balance of trade, and exchange and interest rates.

Australian fisheries economic indicators report 2015: financial and economic performance of the Northern Prawn FisheryPublication date: 21 December 2016

This report presents results from the 2015 Northern Prawn Fishery survey. It includes survey-based estimates of the fishery’s financial and economic performance in 2012–13 and 2013–14 and non-survey-based estimates of its economic performance in 2014–15. The report also presents other indicators, including the total factor productivity index, input costs and output prices, and management costs.

Australian crop report: February 2017Publication date: 14 February 2017

This quarterly report provides primary producers with comprehensive and timely information that helps support higher farmgate returns.

Report extracts


ABARES contacts

Executive Director (A/g) Peter Gooday [email protected] (02) 6272 2138

Agricultural Commodities and TradeAssistant Secretary and Chief Commodity Analyst (A/g) Trish Gleeson [email protected] (02) 6272 2030Agricultural Trade Caroline Gunning-Trant [email protected] (02) 6272 2123Agricultural Commodities Lisa McKelvie [email protected] (02) 6272 3009Regional Outlook Programmes and Stakeholder Engagement Peter Collins [email protected] (02) 6272 2017Climate Impact Sciences Matthew Miller [email protected] (02) 6272 3527

Agricultural Productivity and Farm AnalysisAssistant Secretary (A/g) David Galeano [email protected] (02) 6271 6579 Productivity Shiji Zhao [email protected] (02) 6272 2455Water and Climate Neal Hughes [email protected] (02) 6272 2066Farm Surveys and Analysis Johanna ten Have [email protected] (02) 6272 5326Invasives and Social Sciences Sandra Parsons [email protected] (02) 6272 4828

Fisheries, Forestry and Quantitative SciencesAssistant Secretary (A/g) Bertie Hennecke [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 Tony Arthur [email protected] (02) 6272 2277Forest Sciences Steve Read [email protected] (02) 6272 5582Forestry Economics Beau Hug [email protected] (02) 6272 3929Land Use and Management Jane Stewart [email protected] (02) 6272 3541

Strategic Policy and BiosecurityAssistant Secretary (A/g) Alistair Davidson [email protected] (02) 6272 2091Regulatory Reform Unit and Corporate Performance Donna Hawkes [email protected] (02) 6272 4627Biosecurity Economics Jay Gomboso [email protected] (02) 6272 3381

Public Data TaskforceAssistant Secretary Julie Gaglia [email protected] (02) 6272 4277Agricultural Intelligence Transformation Project John Sims [email protected] (02) 6272 5732


























Executive Support and Events Amelia Haddock [email protected] (02) 6272 5329

Editing, Production, Online and Design John Wilson [email protected] (02) 6272 3811

Library Resources Karen Kidd [email protected] (02) 6272 4270

Media [email protected] (02) 6272 3232

Publication inquiries [email protected] (02) 6272 3933

ABARES contacts

Agricultural commodities March quarter 2017 was designed and produced by the Department of Agriculture and Water Resources and the Agricultural Commodities team of ABARES. Editors: Jane Wiles, Julia Church and Emma Rossiter






agriculture.gov.au/abares

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