Spend Matters welcomes a guest post from Nick Peksa at Mintec.
While Australia has been riding high economically recently due to its huge mineral and fossil fuel exports, it is worth remembering that they are also a major exporter for a wide range of agricultural commodities. Ahead of Mintec’s appearance at Procurement Leaders – “Next Decade 2013” event, hosted in Sydney on 16 July 2013, we will look at the two most important, at least in terms of revenue generated, commodities – wheat and beef.
Australia is the world’s fourth largest wheat exporter, exporting about 75% of its production. Australian production is forecast to rise by 11% in 2013/14 to 24.5m tonnes due to both a 3% increase in planted area and also a return to more normal weather conditions in key growing areas, with western Australian production expected to increase by 29% year-on-year after the dryness experienced last season.
Despite this increase in production, wheat exports are expected to drop back in the coming season from 19m tonnes to 17m tonnes, as stock levels will be rebuilt after the dip in stock levels seen last season caused by the low production. Despite this drop, wheat exports are still expected to bring in more than 6.5bn Australian Dollars and continue to be Australia’s top agricultural export. The Australian and US Dollars have been roughly equivalent for the past couple of years, but the Australian Dollar has weakened recently and is now about 1.1 Australian to 1 US.
Beef is Australia’s second most important agricultural export and, as the third largest exporter in the world, is expected to bring in more than 5bn Australian Dollars in 2013/14. Beef production in 2013/14 will rise to 2.3m tonnes, up 3% year-on-year, as dry conditions in northern and eastern Australia have led to some producers reducing their herd sizes by increasing slaughter rates.
Beef exports will reach 67% of production in 2013/14, as the low growth in domestic demand has resulted in most of the increase in production being exported. The major exports markets continue to be Japan, the US and Korea. Australian exports to the US are expected to grow by 10%, chiefly due to low slaughter rates for cow beef in the US, which has led to increased import demand for lower quality beef.
In addition to wheat and beef, Australia also exports more than 1bn Australian Dollars worth each of wool, dairy products, cotton, wine, oilseeds, barley, sugar, and lamb. In total, agricultural exports reached 36.3bn Australian Dollars in 2011/12 – not bad for a country of just over 22m people.
I hope to see you in Sydney and Melbourne in mid-July!