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Contents

Meat Industry

• Lamb exports to the Middle East expected to grow significantly
• Cattle futures market given the ‘chop’
• Cattle slaughter numbers significantly down on last year
• Feedlotters’ head for uncertain times

Wine Industry

• Vineyard sector to ‘remain under pressure’ for the next two to three years
• Barossa Valley pioneer Seppeltsfield Wines is headed in a new direction
• Demand for new wine styles
• The CSIRO is on the verge of a major breakthrough
• Wolf Blass calls for a wine promotion levy

Fishing Industry

• Is the ugly face of crustacean crime getting uglier?

Other

• Hendra Virus and Swine Flu Outbreaks
• Climate Modelling and Rainfall
• ETS a political stalemate

 

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Meat Industry

Lamb exports to the Middle East expected to grow significantly

• According to Meat and Livestock Australia’s (‘MLA’) latest industry forecast, lamb exports to the Middle East are forecast to grow 36% this year, to 34,500 tonnes.?In the period January to May 2009, lamb exports to the Middle East increased 21% by volume and 51% by value.
• The three main reasons cited to support the forecasts are:
  • Less competition from New Zealand, where sales have been forecast to fall by 18% in the next 12 months, due to farmers culling ewe numbers because of low profitability or switching to other enterprises such as dairy. The New Zealand sheep flock is estimated to have fallen a further 2.8% to 33 million head as of June 2009.
  • There is expected to be less cheap beef flow into the Middle East from South America.
  • The Middle East should still record fairly robust economic growth despite the global financial crisis, and as such it has the money to be competitive on the international market to buy lamb.
• The above predictions are reasonably reliant on the dollar staying at fairly favourable rates. Should the dollar continue trading beyond US80 cents for the remainder of the year, it is unlikely that these predicted forecast increases will eventuate.

Cattle futures market given the ‘chop’

• The recent announcement by MLA and the Australian Securities Exchange to discontinue the cattle futures market has been greeted by many users of this product with alarm. Many users of the Futures Exchange are of the opinion that a local cattle futures market is vital for the industry to manage price risk within the market.
• One of the reasons cited for discontinuing the futures market, is the relative stability of the Eastern Young Cattle Indicator over the past year, which has hovered in the range of between 310 cents to 345 cents per/kg. The range between the highs and the lows is less than half that of past years. Accordingly, there has not been enough price volatility in the market to entice people to use the futures market.
• It is thought however, that price volatility will return and as such, stakeholders within the industry will not have a mechanism to effectively manage price risk.

Cattle slaughter numbers significantly down on last year

• Figures recently released show that the number of cattle sold for slaughter in August was 20% to 30% down on the same time last year, due to abattoirs cutting killing shifts or entire kill days due to weak demand for beef overseas.
• In contrast, the number of cattle sold to feedlots and re-stockers during August was higher than last year, due to lower grain prices and better winter rain in some areas.
• The breakdown of the August figures, as supplied by MLA were as follows:
  • 29% less yearling steers sold for slaughter, with the downfall offset by 35% more sales to feedlots and 9% increase in sales to re-stockers.
  • 16% less grown steers sold to processors
  • 21% less cows sold for slaughter.
  • 29% increase in the number of vealer steers that sold to re-stockers rather than domestic processors.

Feedlotters’ head for uncertain times

• Despite unseasonal hot conditions in northern NSW and Queensland, which has resulted in farmers being forced to sell cattle, as well as low feed prices and relatively low prices paid for cattle, the future for the feedlot industry is in doubt.
• According to a recent report released by Rabo Bank, it is predicted that feed grain prices will increase, due in part to the uncertain grain harvest, a strengthening world economy and the growth of bio-fuels in countries such as the US.
• This position is further supported by the fact that the demand for export beef is expected to remain stagnant due largely to the sluggish Korean and Japanese markets. To date, there are no signs yet of the seasonal lift in beef consumption in Japan and Korea.
• The most important factor that will ultimately determine the future of feedlots in Australia will be rainfall amounts in the next month, as it will play a big role in determining what will happen to grain prices domestically this season.

Wine Industry

Vineyard sector to ‘remain under pressure’ for the next two to three years

• So says Challenger Wine Trust (‘CWT’), asserting at the same time that it’s “well positioned” for an upturn when it arrives. CWT has 24 properties in Australia and New Zealand leased mostly to wine companies.
  • The organisation booked a net loss for 2008-09 of $24.3m compared with a net profit of $13.5m the previous financial year. However, because of the geographical diversity of its vineyard portfolio, combined with long leases to wine companies, CWT is confident it’s well placed to make the most of the first signs of an economic recovery.

Barossa Valley pioneer Seppeltsfield Wines is headed in a new direction

• There’s a three-year plan to “resurrect” the historic gravity-fed winery to process 1000 tonnes of “ultra premium and luxury” shiraz, cabernet sauvignon and mataro, and to develop a premium red brand for the company. So says its new managing director, McLaren Vale winemaker Warren Randall, following a buy-out of the stakes of ex-directors Janet Holmes à Court and Greg Paramour.
• • Mr Randall says he’ll divide his time between running his McLaren Vale winery Tinlins and Seppeltsfield, but focusing on wine production and vineyard management at the Barossa Valley site.
  • He adds that he was approached to run the Seppeltsfield business “several months ago”.

Demand for new wine styles

• There’s a fair bit of domestic industry twitter about new and emergent wine drinkers’ preferences for fruitier styles.
• And we’re told that notably Moscato is playing “a valuable role” in encouraging these people to enjoy wine.
• In any case, winemakers are coincidentally well aware of the need to cater for emerging Asian markets, where there’s no doubt drier wines that have long been firmly entrenched in Australia, are often not enjoyed.
• The industry faces difficulty in defining the emerging fruitier styles on the shelf – where such traditional categories as dry red, dry white, Rosé or sweet wine won’t fit the bill.
  • Seemingly new categories would need to be devised for innovative fruity styles that could well embrace Pinot Gris, Gewurztraminer as well as German Riesling and some of the fruitier reds (for example, Brown Brothers Cienna).
  • Herein, according to some industry authorities, lies opportunity to define and develop new wine categories for a reported 60% of Australia’s population who, it’s said, find current offerings of wine “too dry” and “not to their taste”.

The CSIRO is on the verge of a major breakthrough

• Dr Stephen Trowell from CSIRO, who is leading a team of scientists, claims they are about to greatly improve electronic noses available to the wine industry.
• Dr Trowell says the SA scientists still have a way to go before they can develop an electronic system to match the superior sense of smell of flies. But the CSIRO team is “quite close to a breakthrough” that’ll put them well ahead of where scientists’ technology has been in the past.
• The scientists believe that in their efforts to emulate the smelling capabilities of insects, they can develop a cyber nose to recognise the earliest beginnings of tainting in wines.

Wolf Blass calls for a wine promotion levy

• Mr Blass believes the wine industry should pull together for a bigger share of the international market, rather than as individual companies or regional groups tend to do, go their own way. Mr Blass delivered this message at the launch, in his 75th year, of Liz Johnston’s warts-and-all biography, Wolf Blass – Behind the Bow Tie.
• Mr Blass says all should contribute to a special levy that would fund the Australian Wine Federation to promote “a national wine identity abroad”.
• He admits his big-picture view that Australian wine should be regarded as generic and marketed, thus internationally, would be unpopular when so many wine companies are struggling financially, and feel it’s necessary to focus on the marketing of their own products.
• Meanwhile, he travels the world four to five months of the year personally promoting the Wolf Blass-branded products of a public company owned by the Foster’s Group.

Fishing Industry

Is the ugly face of crustacean crime getting uglier?

• Now it’s the season, and police are bracing themselves for it. Last winter organised crime rings, notably in Victoria, were stepping up their poaching of freshwater species (including bass yabbies) and in Melbourne a Magistrate sentenced a man to six months’ jail for illegally catching and stocking more than 3,800 of them. Another Victorian illegal yabby operation was busted in June.
• That same month Kangaroo Island police traced a series of break-ins to people poaching marron (larger than bass yabbies) when wholesale prices were about $30 a kilo.
  • The game’s got very rough in the US. In Maine and Alaska it is reported lobstermen and crabbers are shooting increasing numbers of people who pull up their pots.
  • In Louisiana, according to St Landry Parish Sheriff Bobby Guidroz, reports of crayfish theft from local wetlands are tending to drop off. This is not because there’s any less thieving, but simply because “legal fishermen tend more often to dispense their own justice, and the worst of the thieves probably become crayfish bait”. This, the Sheriff said, appeared to be the case in a nearby parish several years ago when an entire group of suspected thieves mysteriously disappeared.

Other

Hendra Virus and Swine Flu Outbreaks

• August saw a re-emergence of the Hendra virus in QLD when a Rockhampton Vet, Dr Alister Rodgers, died from the virus after attending an infected horse at Hendra.
• The virus first emerged in 1994 at a racing stable in Brisbane and saw the death of a horse trainer, 13 horses, as well as leaving a stable hand seriously ill.
• Since the initial breakout a further two people and 21 horses have died.
• The virus is transmitted by flying foxes to susceptible horses (killing over 70% of infected horses) and under rare circumstances, the virus spreads to humans who have been in very close contact to Hendra infected horses.
• While there is very strong evidence to support the bat-horse-human transmission of the disease, there is no evidence which supports any bat-human, human-human, or human-horse transmission of the virus.
• Also occurring in August, were confirmed infections of Swine Flu in a Goulburn Valley Piggery in Victoria and in a Piggery in Dalby, SE QLD.
• Overseas outbreaks have seen the confirmation of Swine Flu infect a flock of turkeys in Chile where workers noticed a significant drop in egg production.
• The genetic makeup of the Swine Flu strain H1N1, enables the virus to be carried in birds. However the genetic combination of Bird Flu and Swine Flu whilst theoretically possible, has not yet been documented.
• The Bird Flu strain H5N1 isn’t easily transmitted amongst people, however, it has killed 61% of the 423 people infected since 2003. Whilst the Swine Flu is not as deadly to humans, it has reached more than 170 countries and territories in the four months from being identified. The combination of these two attributes is concerning for officials and the general public.

Climate Modelling and Rainfall

• The Murray Darling Basin is coming to terms with a decade long rainfall decline, particularly in the Southeast where it has recorded the driest 12 year period on record.
• The average annual rainfall for this period has been 506mm since October 1994, previously beating the record of 1935-1947 when the average was 511mm.
• Dr Bertrand Timbal of the Bureau of Meteorology has identified a link between the two dry spells: both occurring during a period when the subtropical ridge intensified.
• The subtropical ridge is a high pressure band between 30-35 degrees of latitude in NSW, roughly defined by Wagga in the South and Walgett in the North.?When it intensifies, it pushes rain bearing low pressure systems off the continent and into the sea.The ridge’s patterns of intensity tend to peak in autumn, matching patterns of rainfall decline in the South East, where about 60% of the loss of rainfall has occurred in the autumn period.
• Other simulations conducted by Mr Timbal’s team have revealed links to the intensification of the ridge with the rise and fall of average global temperatures throughout the 20th Century.
• This news comes on the back of record August temperatures throughout the Eastern States, with seasonal prospects declining as many crops wilt under the heat.
• Crops throughout Northern NSW and Queensland are now desperate for rain to meet early yield expectations. On the flipside, WA is looking good with better than average winter rainfalls.

ETS a political stalemate

• The Emissions Trading Scheme (‘ETS’) and Carbon Pollution Reduction Scheme (‘CPRS’) has hit a political stalemate. Australia’s political parties are unified on the need for new legislation, but remain split on the objectives, that is to be friendlier on businesses and tougher on climate change.
• CPRS is set to start in July 2011 with a ‘cap and trade’ style scheme, whereby excessive polluters must buy the right emit pollutants above set levels.
• Currently Agriculture is excluded until 2015, however opponents are fighting for a permanent exclusion.

Contacts

Adelaide Peter Macks t +61 8 8211 7800 e pmacks@ppbsa.com.au Level 10 26 Flinders Street Adelaide SA 5000 t +61 8 8211 7800 f +61 8 8211 8922 Brisbane Grant Sparks t +61 7 3371 7244 e gsparks@ppb.com.au Level 3 167 Eagle Street Brisbane Qld 4000 t +61 7 3831 2700 f +61 7 3831 2799

Melbourne Joe Dicks t +61 3 9269 4209 e jdicks@ppb.com.au Rod Slattery t +61 3 9269 4204 e rslattery@ppb.com.au Level 21 181 William Street Melbourne Vic 3000 t +61 3 9269 4000 f +61 3 9269 4099 Perth Simon Theobald t +61 8 9382 8933 e stheobald@ppb.com.au Level 10, Parmelia House 191 St Georges Terrace Perth WA 6000 t +61 8 9382 8933 f +61 8 9481 5554

Sydney Steve Parbery t +61 2 8116 3000 e sparbery@ppb.com.au Andrew Smith t +61 2 8116 3060 e asmith@ppb.com.au Level 46 MLC Centre 19 Martin Place Sydney NSW 2000 t +61 2 8116 3000 f +61 2 8116 3111