The Australian agriculture sector is expected to remain buoyant in 2012/13, largely
supported by export demand from Asia and higher prices for grains and oilseeds. On average, farm
exports are forecast to reach AUD35.2b n, which is significantly higher than the five-year average of
AUD28.4bn in the drought affected years of 2005/06-2010/11. Crop exports are expected to outperform
livestock as demand slows due to higher prices and greater price sensitivity for those products.
Key Forecasts
Beef production growth to 2016: 6.7% to 2.28mn tonnes. We expect Australia to remain a
strong exporter of the meat over the long term despite growing competition from the US.
Sugar production growth to 2015/16: 43.9% to 5.2mn tonnes. Industry consolidation will
encourage economies of scale and should boost output over the forecast period.
Milk production growth to 2015/16: 5.0% to 9.95mn tonnes. Improved economies of scale will
support the growth of milk production to meet growing export demand.
2012 real GDP growth: 2.1%, which is same as 2011. Forecast to average 2.2% from 2011 to
2016.
2012 consumer price index: 1.0%, down from 3.1% in 2011. Forecast to average 2.4% from
2011 to 2016.
2012 central bank policy rate (average): 3.0%, down from 4.25% in 2011. Predicted to
average 4.2% from 2011 to 2016.
Industry Developments
An update of the February-March Dairy Farmer Survey in August 2012 found a sharp drop of 13% in
dairy farmers’ positive sentiment about the industry. Only 53% of farmers were upbeat about the dairy
industry’s prospects in the near future. The regions where farmers’ confidence decreased most were in
New South Wales, Queensland and Tasmania, where herd yields have declined by about 3.7%.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecast beef
exports to the US in 2012/13 to grow by 5% year-on-year (y-o-y) to 215,000 tonnes due to tighter beef
supplies. While imports to the mainstay markets of Japan and South Korea (where exports are forecast to
fall by 9% to 112,000 tonnes) are expected to slow, shipments to other Asian emerging markets are
expected to rise by 3% overall to 313,000 tonnes.
Despite the drop in production, wheat exports should remain relatively strong at 21.0mn tonnes in
2012/13, down by 12.5% y-o-y but well above the 10-year average of 14.6mn tonnes. More specifically,
Australia Agribusiness Report Q4 2012 © Business Monitor International Ltd Page 6
Australia is likely to export significant amounts of feed wheat as demand for this lower-quality grade has
surged as a result of strong global feed grain prices. Australia has significant stocks of feed wheat after
the last two harvests were affected by floods and yielded high quantities of low-quality grain. China could
import up to 4mn tonnes of feed wheat in 2012/13, with the majority anticipated to come from Australia,
according to industry sources.
Australia remains a small player in the world ethanol market, producing only 0.4% of global ethanol
production in 2010. This is extremely low compared with 47.8% from the US and 28.4% from Brazil that
year, as well as 13.4% from Europe. In Asia, even Thailand and Indonesia had a similar or larger shares
of global production (1.0% and 0.4% respectively). Ethanol production in Australia is forecast to reach
440mn litres in 2012, about the same as in 2011. The country’s ethanol production has grown by an
annual average of 43.3% since 2007 following the announcement of the government’s Cleaner Fuels for
Australia policy in 2001. Australia’s ethanol consumption is largely equal to production. We do not
expect tremendous growth in demand as long as pressure to raise the ethanol blend at the state level is not
applied. Moreover, only E10 is available in the country (flexible E85 vehicles have been available for
many years in Europe and the US) and domestic gasoline prices have come down from their highs,
discouraging ethanol demand.
Australia Agribusiness Industry
Published: October 2012 No. of Pages: 79 Price: US $ 1175
Table of Contents
Executive Summary 5
SWOT Analysis 7
Australia Agricultural SWOT 7
Australia Business Environment SWOT 8
Supply & Demand Analysis . 9
Australia Grain Outlook 9
Australian Sugar Outlook 18
Australia Dairy Outlook .. 22
Australia Livestock Outlook . 26
Australia Rice Outlook . 29
Commodity Price Analysis 31
Monthly Softs Update ... 31
Cocoa: Momentum Waning 32
Coffee: Temporary Rally. 33
Cotton: Forming A Base . 34
Palm Oil: Underperforming The Complex .. 35
Sugar: Scope For A Moderate Rebound . 37
Monthly Grains Update ... 40
Wheat: Little Relief From Southern Hemisphere 41
Corn: Looking The Weakest 42
Australia Agribusiness Report Q4 2012
© Business Monitor International Ltd Page 4
Soybean: Prices To Stay Relatively Supported 44
Rice: Still The Underperformer .. 45
Upstream Analysis 48
Asia Machinery Outlook .. 48
Asia Fertiliser Outlook 52
Asia GM Outlook . 56
Downstream Analysis ... 60
Food. 60
Food Consumption .. 60
Confectionery.. 61
Canned Food .. 62
Functional Food . 63
Drink 64
Alcoholic Drinks . 64
Hot Drinks .. 66
Soft Drinks .. 67
Mass Grocery Retail 68
Trade ... 70
Country Snapshot . 72
BMI Forecast Modelling 76
How We Generate Our Industry Forecasts .. 76
supported by export demand from Asia and higher prices for grains and oilseeds. On average, farm
exports are forecast to reach AUD35.2b n, which is significantly higher than the five-year average of
AUD28.4bn in the drought affected years of 2005/06-2010/11. Crop exports are expected to outperform
livestock as demand slows due to higher prices and greater price sensitivity for those products.
Key Forecasts
Beef production growth to 2016: 6.7% to 2.28mn tonnes. We expect Australia to remain a
strong exporter of the meat over the long term despite growing competition from the US.
Sugar production growth to 2015/16: 43.9% to 5.2mn tonnes. Industry consolidation will
encourage economies of scale and should boost output over the forecast period.
Milk production growth to 2015/16: 5.0% to 9.95mn tonnes. Improved economies of scale will
support the growth of milk production to meet growing export demand.
2012 real GDP growth: 2.1%, which is same as 2011. Forecast to average 2.2% from 2011 to
2016.
2012 consumer price index: 1.0%, down from 3.1% in 2011. Forecast to average 2.4% from
2011 to 2016.
2012 central bank policy rate (average): 3.0%, down from 4.25% in 2011. Predicted to
average 4.2% from 2011 to 2016.
Industry Developments
An update of the February-March Dairy Farmer Survey in August 2012 found a sharp drop of 13% in
dairy farmers’ positive sentiment about the industry. Only 53% of farmers were upbeat about the dairy
industry’s prospects in the near future. The regions where farmers’ confidence decreased most were in
New South Wales, Queensland and Tasmania, where herd yields have declined by about 3.7%.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecast beef
exports to the US in 2012/13 to grow by 5% year-on-year (y-o-y) to 215,000 tonnes due to tighter beef
supplies. While imports to the mainstay markets of Japan and South Korea (where exports are forecast to
fall by 9% to 112,000 tonnes) are expected to slow, shipments to other Asian emerging markets are
expected to rise by 3% overall to 313,000 tonnes.
Despite the drop in production, wheat exports should remain relatively strong at 21.0mn tonnes in
2012/13, down by 12.5% y-o-y but well above the 10-year average of 14.6mn tonnes. More specifically,
Australia Agribusiness Report Q4 2012 © Business Monitor International Ltd Page 6
Australia is likely to export significant amounts of feed wheat as demand for this lower-quality grade has
surged as a result of strong global feed grain prices. Australia has significant stocks of feed wheat after
the last two harvests were affected by floods and yielded high quantities of low-quality grain. China could
import up to 4mn tonnes of feed wheat in 2012/13, with the majority anticipated to come from Australia,
according to industry sources.
Australia remains a small player in the world ethanol market, producing only 0.4% of global ethanol
production in 2010. This is extremely low compared with 47.8% from the US and 28.4% from Brazil that
year, as well as 13.4% from Europe. In Asia, even Thailand and Indonesia had a similar or larger shares
of global production (1.0% and 0.4% respectively). Ethanol production in Australia is forecast to reach
440mn litres in 2012, about the same as in 2011. The country’s ethanol production has grown by an
annual average of 43.3% since 2007 following the announcement of the government’s Cleaner Fuels for
Australia policy in 2001. Australia’s ethanol consumption is largely equal to production. We do not
expect tremendous growth in demand as long as pressure to raise the ethanol blend at the state level is not
applied. Moreover, only E10 is available in the country (flexible E85 vehicles have been available for
many years in Europe and the US) and domestic gasoline prices have come down from their highs,
discouraging ethanol demand.
Australia Agribusiness Industry
Published: October 2012 No. of Pages: 79 Price: US $ 1175
Table of Contents
Executive Summary 5
SWOT Analysis 7
Australia Agricultural SWOT 7
Australia Business Environment SWOT 8
Supply & Demand Analysis . 9
Australia Grain Outlook 9
Australian Sugar Outlook 18
Australia Dairy Outlook .. 22
Australia Livestock Outlook . 26
Australia Rice Outlook . 29
Commodity Price Analysis 31
Monthly Softs Update ... 31
Cocoa: Momentum Waning 32
Coffee: Temporary Rally. 33
Cotton: Forming A Base . 34
Palm Oil: Underperforming The Complex .. 35
Sugar: Scope For A Moderate Rebound . 37
Monthly Grains Update ... 40
Wheat: Little Relief From Southern Hemisphere 41
Corn: Looking The Weakest 42
Australia Agribusiness Report Q4 2012
© Business Monitor International Ltd Page 4
Soybean: Prices To Stay Relatively Supported 44
Rice: Still The Underperformer .. 45
Upstream Analysis 48
Asia Machinery Outlook .. 48
Asia Fertiliser Outlook 52
Asia GM Outlook . 56
Downstream Analysis ... 60
Food. 60
Food Consumption .. 60
Confectionery.. 61
Canned Food .. 62
Functional Food . 63
Drink 64
Alcoholic Drinks . 64
Hot Drinks .. 66
Soft Drinks .. 67
Mass Grocery Retail 68
Trade ... 70
Country Snapshot . 72
BMI Forecast Modelling 76
How We Generate Our Industry Forecasts .. 76
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