Australia is food secure – but for how long?

Australia must increase its agricultural production and improve sustainability to satisfy export growth targets, according to new research.

The Global Food and Water Crises Research Program released its latest strategic paper, ‘Consumption Patterns and Food Demand in Australia to 2050’, which found that the prospects for Australian agriculture in the period to 2050 depends on its capacity to meet the growing food demand, both domestically and in Asia.

Australia is currently food secure, yet the growth of its agricultural sector may be vulnerable towards 2050 due to decreasing competitiveness in the production of key food commodities and the effects of climate change.

According to the Department of Treasury’s 2010 Intergenerational Report, Australia’s population will rise to approximately 35.9 million people by 2050. The report states that this will increase pressure on our domestic food system to maintain an economically healthy trade surplus, whilst also meeting export demands.

A changing Australian population will affect the industry as needs and preferences change, and an aging population will affect the industry as there will be an increased need for food access and nutrition in the aged care sector. Growing ethnicity in Australia will also drive demand for a number of new and imported food products, including imported and processed fruit and vegetable products, halal-certified goods and alternative cuts of meat. It is predicted that the predominantly urban Australian population will continue consuming conveniently processed foods, raising issues such as food waste.

Some consumption trends already developing are evident through patterns of wheat, seafood and dairy consumption. Wheat consumption has increased by 55 percent per capita since the 1970s, and despite a slight drop in consumption in 2013, growth in wheat consumption from 2010 to 2013 averaged 12.6 percent.

Seafood consumption has also increased, with Australians now consuming 16 kg of seafood per person annually, making it the fifth largest industry in the agricultural sector. Demand for dairy has also increased steadily in Australia over the last five years, and has been attributed to Australia’s ‘coffee culture’. Meat consumption has also witnessed an increase, contributing to 40 percent of the total household expenditure, with Australian’s consuming 111kg of meat each, per year.

Australia must also face a growing urban population, leaving rural centres and agricultural businesses with diminished labour pools.  Land availability may also pose a problem, with Australia’s total area sown to crops remaining stagnant at 25 million hectares per year over the last two decades. These problems are compounded by climate change, which may determine if Australia can increase or maintain its agricultural production. In particular, there is a concern that droughts will affect wheat production – Australia’s largest staple crop.

The report concludes that “Treasury’s prediction that agriculture will grow from its current 2.5 percent contribution to national GDP to reach five percent by 2050, is unachievable without driving up productivity in the agricultural sector, using current, or fewer, resources.”


Global milk prices drop overnight

Global dairy prices have dropped overnight to represent the lowest levels in nine months.

Last night the average price on the online auction platform dropped by 5.2 percent to $US 46563 per tonne, representing the lowest price since mid-June last year, The Weekly Times reports.

Of the different dairy products, anhydrous milk fat experienced the biggest fall, lowering 10.7 percent to $US4578 per tonne, whole milk saw a 5.8 percent decline to $US4439 per tonne – the lowest price since last year, while cheddar dropped 4.1 percent to $US4641 per tonne.

Milk protein concentrate and butter milk powder however were the only two products to record a price rise with a 4.6 percent increase to $US5253, and 3.7 percent increase to $US8837 per tonne respectively.

The total amount sold came to 39,008 tonnes, compared to 41,086 tonnes sold last fortnight.


SA grain business enters external administration

South Australian grain company, Sapphire Pty Ltd has been placed in external administration.

It is unclear how much the Murray Bridge grain business is indebted to farmers at this stage, however the Weekly Times reports that Sapphire was owed $366,000 with the collapse of One World Grain in late 2012, in addition to $206,000 from Convector Grain, a Laverton based grain packer last year.

Sapphire was owned and operated by Brenton Strauss, a highly experienced grain trader, with offices in Moama NSW and Toowoomba Queensland, as well as Murray Bridge in South Australia.

Anthony Matthews & Associates has been appointed as the external administrator.


Global food price index up 2.6 percent, UN

According to the United Nations, world food prices have jumped by 2.6 percent in February, representing the sharpest incline since mid 2012.

The United Nations food agency, The Food and Agriculture Organisation (FAO) said that unfavourable weather conditions in the Southern hemisphere and parts of the United States were key to the price rises, The West Australian reports.

FAO’s senior economist, Abdolreza Abbassian said that further volatility in prices could continue through March due to unrest in Ukraine – the world’s 6th largest exporter of wheat.

"The situation in the Black Sea has created a certain level of worry in the markets. It's difficult to predict how this is going to unfold but obviously we are in a very short-term price shock situation," Abbassian said.

"Things could come back to normal once the Ukraine situation improves. Otherwise there could be more volatility in the markets for the foreseeable future."

According to the FAO,  prices across all commodity juice with the exception of meat rose, with the strongest price hike reflected in sugar which increased by 6.2 percent from January due to crop damage in Brazil and predictions for a drop in output in India.

Global cereal stocks for 2013 however have reached record production highs with the amount updated to 2.515b tonnes on Thursday – 13m tonnes up for the FAO’s previous forecast.

The FAO also increased the global cereal stocks forecast for the end of 2014 to 578.5m tonnes, 14.5 percent above their reduced opening levels. This was due to higher estimates from Australia and increased revisions from China.

The FAO stated that it was too early to forecast global cereal output for 2014, however its first global wheat estimate is that of 704m tonnes, down 1.7 percent on 2013’s record harvest, but still representing the world’s second largest crop.


Forrest and Elders announce live export plan for China

Mining tycoon Andrew Forrest and Australian agribusiness Elders are pursuing a deal to further open up live cattle exports to China.

The deal will see Forrest and Elders capitalise on China’s increasing taste for Australian beef, and experts believe that the opening of the Chinese market will cause a surge in the value of grazing land and encourage investment in larger cattle herds – leading to an overall increase in prices, The West Australian reports.

Forrest and Elders have been working together to create a supply chain into China since last year, and recent talks with senior Chinese officials in WA surrounding the relaxing of Beijing’s strict quarantine laws represent a significant step towards the venture becoming a reality.

Both Forrest and Elders have allegedly been in talks with a number of Chinese processors in relation to the deal including a pork and chicken processor in the Hainan district.

The Western Australian state government has also been working towards developing a live export trade with China. Rob Delane, the director general of WA’s Department of Agriculture and Food said that the department was ‘optimistic’ that the Chinese government will approve the deal.

“We are very optimistic, and doing a lot of work at the moment, that a significant market for live cattle for slaughter can be opened up," he said.

Delane noted that the Australian cattle industry was already struggling to keep up with the live export trade to Indonesia and other South-East Asian countries, stating that at this stage herd numbers were “clearly a limitation”.  

Forrest however has increased his ownership of pastoral land to than 720,000ha in anticipation of such a deal coming to fruition.


Sunbeam’s proposed sultana prices a slap in the face, DFA

Peak body for the dried fruits industry, Dried Fruits Australia has urged Sunbeam Foods to review its prices, sighting that they have either remained stagnant or have become worse than last year.

Chairman of the group, Mark King says that the only proposed increase in price was that of the two highest grades of sultanas which rose by 2.5 percent. King is calling for a review of the other varieties considering that the global price of sultanas has increased and that the Australian dollar has depreciated by 15 percent.

King told The Weekly Times Now that in addition to low prices, Sunbeam had raised the penalty for brown fruit by $100 per tonne, representing between $200 and $250 per tonne less than light grade fruit. King has described the changes as a “slap in the face”.

King noted that in contrast to Sunbeam, Australian Premium Dried Fruits – sunbeam’s main competitor – had increased its prices across all grades of light and dark sultanas with the exception of the top five-crown light grade which remained at the same price.

Fruit supply manager for Sunbeam Foods, Chris Ellis has allegedly met with both representatives of Dried Fruits Australia and growers to discuss the pricing strategy for 2014.


Agricultural exports to China worth $7.3b, ABARES

According to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), agricultural exports to China have doubled in five years to represent $7.3b in 2013. 

The report states that the surge in demand is driven largely by the increase consumption of high-value products such as beef, lamb and dairy goods.

However, agriculture minister, Barnaby Joyce has warned that Australia needs to produce high quality products and continue to innovate in order to keep demand high, or risk losing the market to competing nations. He also stated that Australia can’t rely on is geographical proximity to China as a selling point, reports.

"It's not right that we think because we are here we are going to prevail," said Joyce at an ABARES conference in Canberra.

"We have to be here with the best product, the right prices, it has got to be quality or it won't sell."

Executive director of ABARES, Karen Schneider agreed with Joyce stating that while Asia provides a prime opportunity for Australian agriculture, global competition is still high and that Australia needs to increase productivity growth to remain competitive.

"That (productivity) will define the future success of Australian agriculture," she said.

The ABARES reports found that Australian exports of veal and beef reached $406m last year compared to only $10m in 2007-08, while fruit exports increased by $20m to a total of $28m over the same period.

ABARES attributes the surge in demand to China’s growing middle glass, who are demanding more Western-style foods, coupled with Australia’s reputation for clean and green food production.


AACo chief operating officer moves to rival company

Australian Agricultural Company Limited’s (AACo) chief operating officer, Troy Setter, is leaving the company and taking on a position at rival firm, Consolidated Pastoral Company (CPC).

Setter will be chief operating officer at CPC, one of Australia’s largest beef producers with approximately 360,000 head of cattle across 5.6 million hectares of land.  

“I am excited about joining CPC, a business with a great reputation in the industry and significant potential. It is a great time to be joining CPC where the business is very well positioned and focused on taking advantage of increased global demand for beef. I look forward to joining and working with Keith and the team,” Setter said.

During his time at AACo, Setter successfully executed a three year strategic plan to restructure its operations and diversify sales to new markets, invest in and divest assets, develop and implement the genetic improvement strategy and increase profitability and herd size.

Keith Warren, chief executive of CPC, said “I am delighted to welcome Troy to the team. He has extensive management experience in agribusiness and has successfully led complex projects within our industry. Troy’s operational skill will be invaluable as the company develops into an operations driven market led beef company.”  

AACo has announced Setter’s position will no longer exist and his responsibilities will be reallocated amongst its “leadership team.”

Is meat the key to a sustainable Australian alpaca industry?

The Australian Alpaca industry has been growing steadily over the past two decades. Bred predominately for fleece, the industry has been focusing on maintaining a consistent high quality product through excellent breeding animals, a commitment to research and development and the fostering of future generations with the introduction of fleece classing courses in selected TAFE colleges.

But how sustainable can the industry be if it relies so heavily on producing fleece? Would it make sense for the industry to follow in the footsteps of merino sheep and create a viable meat industry?

And there lies the question… Could the future of Australian alpaca industry lie in the meat market?

Alpacas are a relatively new addition to the Australian livestock industry. The first attempt to introduce the species was back in the 1800’s, however it wasn’t until almost 200 years later in 1987 that Alpacas were re-introduced and a livestock industry actually started to come to fruition.

There are approximately 200,000 alpacas in Australia, most of which are bred for fleece. However a new market is slowly emerging for alpaca meat, which Margaret Dorsch from The Australian Alpaca association believes holds the key to creating a sustainable and viable future.

“To me, that is where building a meat industry is key because we can’t just have hundreds of Alpacas living out their lives in paddocks as fleece animals.” Mrs Dorsch explains.

As it stands, the Alpaca meat industry is in the preliminary stage with most of the meat going straight to restaurants and only a number of speciality shops in Sydney and Melbourne stocking it.

“It’s very much a niche market in the meat side of things” Said Dorsch.

“A lot of top end chefs in Sydney and Melbourne are now starting to ask for it, but similar to the introduction of kangaroo, it will be a process of educating people.”

Described as a cross between chicken and veal and containing virtually no fat, alpaca meat is ideal for weight conscious markets and a welcomed change to the Australian staples of lamb, beef and chicken.

At a recent display at the Canberra Royal Show, workers were run off their feet serving Alpaca meat samples. “The public were very curious to try it!” Muses Dorsch.

The Australian Alpaca Association aspires to reach the stage that merino sheep breeders achieved, whom with a 200 year advantage, have accomplished a highly uniform fleece as well as a profitable meat industry. However not everyone is so keen on the idea of Alpaca and three veg…

“I’ll be honest, there are a quite a few Alpaca breeders are totally opposed to the idea, but our association would really like to see a meat industry develop because without that it is quite hard to have a viable livestock industry.” Explains Dorsch.

“We are very keen to promote a high quality Australian product. We see Alpacas as clean and green, they are really good for the environment.”

Feeding Asia should be the focus

Australia needs to focus on providing high quality food to Asia’s growing middle class and increase exports to the region, Elders says.

Speaking at a business lunch in Melbourne yesterday, Elder’s chief Malcolm Jackman said Australia should not be aiming to feed the world but instead the agribusiness needed to turn its attention to the growing demand for food in the Asian market.

Weekly Times Now reports that while Australia was now feeding 60 million people from its produce, by 2050 it had the capacity to feed about 100 million people.

While Jackman conceded the high Australian dollar made it more difficult for food processors here to make a profit, he did pointed out that ‘farmers will get paid more’ as the demand for food increases, expressing concerns Australia was missing huge opportunities in supplying our closest neighbour Indonesia.

The business leader also said foreign investment was needed in Australian agriculture, although purchases by sovereign-owned companies did present "special challenges''.

Jackman also said interest rates needed to be lowered by the Reserve Bank to bring the dollar down, which would help exporters.