Agribusiness in australia and new zealand

Agribusiness
In
New
Zealand
and

Australia

Nic
Lees

Website:Nicleesagrifood.com

Nic Lees – NicLeesAgrifood.com Agribusiness in New Zealand and Australia
South
Island

Christchurch

Canterbury
Plains

Oceania

Main
Exports

Dairy

Products,

25%

Meat
,
11%

Logs,
wood,

7%

Crude
oil
,

4%

Mechanical

machinery
,

4%

Fruit
,
3%

Fish,
3%
Wine
,
3%

NZ
Main
Commodity
Exports

Iron
ore,

29%

Mineral

fuels
(coal),

28%

Gold,
7%

Cereals,
3%

Meat
,
3%

Machinery,

2%

Inorganic

chemicals,

2%

Aluminium,

2%

Australia

Main
Commodity
Exports

Beef
Exports

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

India
Australia
Brazil
United
States
New
Zealand
Canada
EU-‐27
Uruguay
ArgenNna
Mexico

Beef
Exports
%
Of
World

Dairy

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

World
Dairy
ProducTon
%

(FAO
2009)

0%

5%

10%

15%

20%

25%

30%

35%

40%

New

Zealand

European

Union

Australia
United

States

ArgenNna

World
Dairy
Exports
%

2009

Wheat

World
Sheep
Production
0
20
40
60
80
100
120
140
160
China European
Union Australia Former
Soviet
Union
Iran New
Zealand
Sheep
(Million
Head)
0%

10%

20%

30%

40%

50%

New
Zealand
Australia
United
Kingdom
Ireland
Spain
Belgium

Exports
of
Lamb
and
Sheepmeat
%

FAO
2010

Tropic
of
Capricorn
23°

ArcTc
Circle
66°

Temperate
Zone

Tropical
Zone

Climate
Zones

Humid subtropical climate
Desert climate
Semi-arid climate
Humid continental climate

Temperate
Climates
-‐
Where
Else?

Australian
Geology

Tectonic
Plates

Geology
of
New
Zealand

Summary

•  New
Zealand
and
Australia
are
very
diﬀerent

in
climate
and
geology

•  This
has
shaped

their
agribusiness
industries

and
their
relaNve
compeNNve
advantages.

Australian
Agribusiness

Resources
and
CompeNNve
advantage

•  Climate

•  Soils

•  Rivers

•  Land
Uses

•  Industries

Droughts,
ﬂooding
rains,
and
the
lucky
country

Some
challenges

There
are
big
quesNons
relaNng
to

sustainability
of

the
Australian
lifestyle:

1.

Water
resources

2.

Dryland
salinity

3.

DepleNng
natural
resources

(but
mineral

reserves
are

considerable)

4.

Extreme
climate
with
extreme

variability

5.

Farm
structural
problems

Size

Canbe
Sydn

Agricultural
Zones

Three
zones
–
pastoral,
wheat-‐sheep
and
high
rainfall.

2.
Wheat–sheep
zone
-‐
cropping

(principally
winter
crops),
and
the
grazing

of
sheep
(for
wool,
lamb
and
mu]on)

and
beef
ca]le.

Climate

•  Australia
–
mostly
conNnental
climate:
hot
dry

summers.
Poor
growth
of
C3
(ryegrass,
tall
fescue)

grasses.
(grow
poorer
ME
C4

[Kikuyu,
Cynadon]

grasses).
Heat
stress
can
limit
animal
performance

(especially
dairy)

•  NZ
–
temperate
mariNme
climate:
mild
summers

and
winter.
Grow
quality
C3
grasses

Agricultural
ProducNvity

NZ
ProducTvity

Water

Resources-‐
Rain
IrrigaTon

Australia

•  Australia
has
mostly
low
rainfall
and
is
extremely
variable
rainfall.
This
results

unreliable
pasture
feed
supply
and
need
for
irrigaNon

•  Limited
irrigaNon
–
reliant
on
Murray
Darling
Basin.
Low
rainfall
has
reduced
river

ﬂows
and
irrigaNon
allocaNon.

NZ

•  NZ
has
moderate
high
rainfall
and
good
reliability.
Enable
reliable
pasture
based

agriculture

•  Good
sources
of
irrigaNon
water
from
rivers,
lakes,
groundwater
and
reservoirs

Water
Resources

•  Water
–
criNcally
important
for
rice,

cogon,
grapes
fruit
and
vegetables,

sugar
and
dairy.

•  The
gross
value
of
irrigated
agricultural

producNon
(23%)
on
less
than
1%
of

agricultural
land.

•  1/3
Australian
rivers
are
degraded
by

extracNon
and
nutrient
run-‐oﬀ.

IrrigaNon

Water

Murray
Darling
Basin

IrrigaNon

2510
2520
2530
2540
2550
2560
2570
2580
2590
2600
2610
2006 2009
('000ha)
Australian Area irrigated ('000 ha)

Murray
–
Darling
Basin
2008

Murray
–
Darling
Basin
2011

Land
of
Drought
and
Floods

Seasonal
Rains

•  Australia's
seasonal

pagern
of
rainfall

has
a
'ﬂip-‐ﬂop'

character

•  It
is
wet
in
the

tropics
and
dry
in

the
south
during
the

southern
summer,

and
the
reverse

occurs
in
the

southern
winter.

Rainfall
&
Climate
Variability

•  High
Climate
Variability

Spring
Summer

Australian
Soil
Resources

•  Australia
–
old
soils
generally
poor

quality
,
low
organic
mager,

low

ferNlity,
poor
structure
&
water

holding
capacity

•  NZ
–
recent
soils,
moderate
ferNlity,

high
organic
mager,
good
structure

and
water
holding
capacity.

Australian
Soils

•  Many
soils
aﬀected
by

salt
(sodium),
either

now
or
in
earlier

geological
Nmes

•  Sparse
sheep
and
beef

cagle
grazing
in
arid

regions

Soils

Cracking
clays
that
are
relaNvely
ferNle
but
exhibit

physical
limitaNons

Soils
–
South
Australia

•  Soils
formed
in
aeolian
(wind)
sands

Desert
Soils

•  The
remaining
ancient

land
surfaces

(parNcularly
in
northern

Australia)

have
very

deep
and
strongly

weathered
soils
with

very
low
levels
of

nutrients

Industry
groupings

•  Australian
agribusiness
industries
can
be
grouped
into
two

main
categories.

•  First
there
are
the
major
climate-‐driven
commodity
based

industries,
such
as
wheat,
beef
and
wool.

•  Then
there
is
another
set
of
industries,
such
as
dairy,
sugar,

cogon
and
rice,
that
sNll
have
a
commodity
focus
but
are

somewhat
less
climate
driven.

•  These
industries
rely
on

irrigaNon.
They
are
limited
in
scale

by
these
water
requirements.

Wheat

•  Commodity
based:
non

processed,
non
specialist,
non

branded
product,
sold
on
price

and
grade

•  Typically
low
producNon
per
ha

(1-‐2
tonnes
(14
bu/acre)

depending
on
season)

•  Very
high
producNon
per
labour

unit

•  Capital
intensive
(big
machines)

Wheat

•  Large
producNon
volaNlity
(range

from
10-‐26
million
tonnes
in

recent
years).

•  Huge
income
variability.
Hence

diﬃcult
to
service
debt.

•  Typically
10%
of
internaNonally

traded
wheat.

•  Large
increases
in
both

producNon
and
producNvity

(eﬃciency).

•  Given
the
climaNc
drivers,
this

industry
is
likely
to
always
be

commodity
based.

Beef

Meat
–
beef

•  64%
exported

•  25
million
cagle
(NZ
4
Million)

•  19%
of
world
trade

•  Australia’s
principal
export
markets
for

beef
are:

–  Japan

–  United
States

–  Korea

Beef

•  Widespread
over
Australia,
based
on
mainly
naNve
pastures.
Northern
Region
72%

of
beef

•  Australian
beef
cagle
industry
occupies
an
area
in
excess
of
200
million
hectares

(500
million
acres)

Beef

•  Makes
up
19%
of
world
trade
in
beef,
mostly
ﬁnished
on
feedlots
using

cheap
grain.

•  NZ

makes
up
7%
world
trade,
grass
fed.

•  Japan
largest
Australian
market

•  NZ
–
Industry
based
on
dairy
beef
with
majority
exported
to
USA
as

manufacturing
beef.
Blended
with
USA
beef
to
reduce
fat
in
hamburger

meat.

•  Many
of
the
beef
cagle
from
northern
Australia
are
shipped
live
to

southern
Asian
countries,
such
as
Indonesia
and
Philippines,
for
ﬁnishing

using
by-‐products
from
palm
oil
and
rice
industries.

Beef
–
ProducNon
&
ConsumpNon

•  USA
exports
about
10%
of

producNon

Feedlots

•  Increasing
amount

of
feedlot

producNon
(Japan

removed
quotas
in

early
1990’s).

•  60
%
of
feedlot

producNon
to
Japan

•  24%
DomesNc

Dairy

•  2
million
Dairy
cows

•  Produces
2%
of
global
producNon;

third
behind
EU
and
NZ
for
world
dairy

trade.

•  57%
Exported

•  NZ
Ownership

Ownership

Fonterra processes 21 per cent of all Australian milk

Lamb/Sheep

Lamb/Sheep

•  45%
of
Australian
lamb
exported,
mostly
from
high
rainfall
zone

•  91%
of
NZ
lamb
is
exported,
more
reliant
on
world
prices

•  Most
Australian
sheep
ﬁne
wool
Merino
(19
–
24
micron).
Produce
50%
of

world
ﬁne
wool
trade

•  Most
NZ
sheep
cross
bred
duel
purpose.
NZ
produces
more
coarse
wool

•  Sheep
number
declining
due
to
poor
wool
prices.

•  Sheep
number
declining
due
to
poor
wool
prices
and
compeNNon
from

dairy

•  Main
markets
for
lamb
USA,
PNG,
Japan.
Has
small
EU
quota
for
lamb

(20,000
t)

•  Main
markets
for
lamb

-‐
EU,
large
favorable
quota
(230,000
t)

Sectors
–
Sheep
Meat

Meat
–
sheep

•  Aﬀected
by
wool
industry
–

wool
used
to
be
driver,
now

other
way
around.

•  53%
exported,
Good

producNvity
gains

Animal
Welfare
–
Live
Sheep
Exports

•  Every
year
millions
of
Australian
animals

are
exported
live
for
slaughter.
Ca]le,

sheep
and
goats
are
sent
all
through
the

Middle
East
and
South
East
Asia
—
to

countries
where
animal
welfare
laws
do

not
protect
them.

•  The
RSPCA
has
campaigned

against
this
trade,
arguing
the

animals
suﬀer
too
much
on
the

long
journey
and
at
the
Nme
of

slaughter

•  Tens
of
thousands
of
animals
don't
survive
the
sea
journey

and
those
that
do,
disembark
into
countries
where
they
are

transported,
handled
and
then
slaughtered
in
appalling
ways.

Most
animals
slaughtered
overseas
have
their
throats
cut

while
they
are
fully
conscious,
leading
to
an
incredibly
painful

and
prolonged
death.

http://www.banliveexport.com/1/#stories

Sectors
-‐
Wool

•  36%
of
the
ﬂock
is
in
New
South

Wales.

•  Produces
50%
of
the
world’s
Merino

wool

•  Australia
produces
nearly
a
third
of

the
world’s
raw
wool.

•  Sheep
numbers

–  1984:
150
million
(28%
WP)

–  2005:
100
million
(22%
WP)

–  2010:
75
million

•  A
major
part
of
the
decline
has
been

in
cropping
areas

Animal
Welfare
Mulesing

•  Mulesing
was
'invented'
in
1923
by
a
farmer
called

Mules
as
a
'cure'
for
ﬂystrike

•  is
done
to
remove
folds
of
skin
which
agract
the

blowﬂy
to
lay
her
eggs

Wine

•  The
Australian
wine
industry
has

been
a
major
Australian
success

story
but
it
is
now
in
major

diﬃculty.

•  Most
Australian
vineyards
are

irrigated
and
hence
producNon

variability
is
much
less
than
for

most
Australian
agribusinesses.

•  The
major
markets
are
the
EU
(over

50%)
and
USA
(35%)

The
monthly
value
of
Australian
alcoholic
beverage

exports
since
1988
(A$millions)

Sustainable
management

•  Climate
change.
Big
factor
for
Australian

agriculture.

•  Planning
and
strategies
underway
between

industry,
government
and
research
groups.

Some
Conclusions

•  Australian
agribusiness
is
climate
driven.

•  ProducNon
variability
creates
major
problems
in
developing
a

‘market
led’
approach.

•  For
most
products,
Australia’s
compeNNve
advantage
lies
in
cost

eﬃciency
combined
with
being
able
to
achieve
high
technical

speciﬁcaNons.

•  The
big
quesNon
is:
will
agricultural
commodiNes
tend
to
decline
in

price
in
the
future
as
in
the
past,
or
are
we
entering
a
new
era
of

volaNle
but
increasing
commodity
prices?

•  Long
investment
cycles
increase
risk,
parNcularly
for
branded

products

Further
InformaNon

•  Australian
Bureau
of
Agriculture
and
Resource
Economics
(ABARE)

www.abare.gov.au

(This
is
an
excellent
site
and
is
worth
navigaNng
around)

•  Rural
Industries
Research
and
Development
CorporaNon

www.rirdc.gov.au

(Mainly
for
new
industries)

•  Dairy
Australia.
www.dairyaustralia.com.au

(This
is
a
comprehensive

source
of
informaNon)

•  Grains
Research
and
Development
CorporaNon
www.grdc.com.au

•  Cogon
Research
and
Development
CorporaNon

www.crdc.com.au

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