Victorian Food and Fibre Export Performance 2011-12

Author:

Lucy Ridley, Project Officer Market Analysis, Farm Services Victoria

Editors:

Clare Purcell, Program Manager Market Access and Competitiveness, Farm Services Victoria

Brian Kearns Project Leader International Market Access - Middle East and India

Executive Summary

This report is prepared to provide information on the value of Victorian and Australian food and fibre exports. The report is prepared by Farm Services Victoria and is focused on export performance by commodity groups and key export markets for the 2007-08 to 2011-12 financial years.

Victorian food and fibre exports were valued at $9 billion in 2011-12. Export value increased by $909 million (11%) from 2010-11. The value of food exports from Victoria in 2011-12 was $7 billion, an increase of $745 million (12%) from the previous financial year. The value of fibre products (including animal fibre and skins and hides) increased by $164 million, or 9% from 2010-11, to be valued at $1.94 billion. In 2011-12 Victoria accounted for 29% of Australia’s total food and fibre exports and was Australia’s largest state exporter. Victoria had a 26% share of Australia’s total food exports and a 52% share of Australia’s total fibre products exports (including animal fibre and skins and hides).

Table 1. Australian Food^ and Fibre^ Exports by State of Origin (A$ million)

State of Origin	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Victoria	6,449	7,140	6,763	8,067	8,977	909	11%	29%
New South Wales	3,407	4,589	4,471	4,862	5,725	864	18%	18%
Queensland	4,542	5,294	4,599	5,038	5,296	257	5%	17%
South Australia	3,878	3,911	3,329	4,596	4,762	167	4%	15%
Western Australia	3,832	5,327	4,056	4,317	4,076	-240	-6%	13%
Tasmania	518	580	537	567	551	-16	-3%	2%
Other***	3,064	2,111	1,352	1,556	1,899	343	22%	6%
Total Australia	25,691	28,953	25,107	29,002	31,287	2,284	8%	100%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ***Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports and exports for which no state details are released for confidentiality reasons. ** Prepared foods are classified as those which has been substantially transformed from their raw product basis and may have input from more than one food production industry. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Figure 1. Value of Victorian Food and Fibre Exports (A$ million)

Export Performance by Commodity Group

The key food and fibre commodity groups for Victoria’s exports in 2011-12 were dairy and grains, accounting for 41% of the total value of food and fibre exports.

Table 2. Victorian Food and Fibre Exports by Commodity Group (A$ million)

Industry	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Dairy	2,346	2,304	1,761	1,955	1,928	-28	-1%	21%
Grain^	470	626	684	1,126	1,811	685	61%	20%
Meat^	1,428	1,650	1,545	1,652	1,576	-76	-5%	18%
Animal fibre^	525	561	891	1,274	1,451	177	14%	16%
Prepared foods**	487	649	720	810	868	58	7%	10%
Skins and hides	413	445	410	498	485	-13	-3%	5%
Horticulture	406	549	427	372	479	107	29%	5%
Wine	270	255	234	226	221	-5	-2%	2%
Seafood^	105	100	92	154	158	4	3%	2%
Total Victoria	6,449	7,140	6,763	8,067	8,977	909	11%	100%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ***Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports and exports for which no state details are released for confidentiality reasons. ** Prepared foods are classified as those which has been substantially transformed from their raw product basis and may have input from more than one food production industry. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Victorian dairy exports were valued at $1.93 billion in 2011-12, decrease of 1% from 2010-11. Victoria accounted for 86% of the value of Australia’s dairy exports. Milk and cream products were valued at $940 million, and cheese and whey products valued at $699 million were the most valuable dairy export categories.

Japan remained the largest market for Victorian dairy exports, valued at $428 million in 2011-12. Other significant markets included Singapore ($190 million), China ($144 million) and Indonesia ($138 million).

Victorian grain exports were valued at $1.81 billion in 2011-12, increasing by 61% compared with 2010-11. Victoria accounted for 16% of the value of Australia’s grain exports. Reported wheat exports were valued at $1.12 billion, making up 62% of Victoria’s grain exports.

Vietnam was Victoria's most valuable export market for reported grain exports in 2011-12, valued at $233 million. Grain exports to Indonesia were valued at $150 million and exports to the Philippines were valued at $100 million. Partner country details were not provided for $721,870 worth of grain exports from Victoria in 2011-12.

Note: Grain exports are affected by confidentiality restrictions and statistics should be used with caution.

Victorian meat exports were valued at $1.58 billion in 2011-12 a decrease of $76 million or 5% from 2010-11, with Victoria accounting for 20% of the value of Australia’s meat exports. Beef exports from Victoria decreased by 10% to be valued at $606 million. Sheep meat exports decreased by 8% to be valued at $601 million, accounting for 38% of Victoria’s meat exports. Offal exports increased by 22% to be valued at $171 million.

Exports to the United States were valued at $242 million in 2011-12, an increase of 1% from 2010-11. Other key export destinations included Japan and China with exports valued at $151 million and $100 million respectively.

Note: Export statistics relating to live beef cattle, have been affected by the misreporting of state of origin.

Victorian animal fibre products were valued at $1.45 billion in 2011-12, increasing by 14% compared to 2010-11.

In 2011-12 Victoria accounted for 54% of the value of Australia’s wool exports.

Medium wool (20-23µm) exports were valued at $679 million. Fine wool (<19µm) exports were valued at $559 million. Exports of coarse wool of 24-27µm, were valued at $107 million. Exports of coarse wool greater than 27 µm were valued at $93 million.

Demand for wool has remained strong despite higher prices.

Note: Animal fibre includes wool and other animal fibre products. Some animal fibre statistics are restricted by confidentiality agreements and statistics should be used with caution.

Victoria Food Export Performance 2011-12

Exports of prepared food products from Victoria were valued at $868 million in 2011-12. Victoria accounted for 47% of Australia’s prepared food products. Exports of cereal-based products were valued at $407 million and exports of confectionary were valued at $129 million.

In 2011-12 New Zealand remained the key market for prepared food, valued at $275 million, followed by China at $144 million.

Victorian skins and hides exports decreased by 3% in 2011-12 to be valued at $485 million. Victoria accounted for 46% of Australia’s skins and hides exports. Skins and hides from sheep were valued at $296 million and skins and hides from cattle were valued at $154 million.

Victoria’s largest market for skins and hides was China, with exports valued at $371 million, followed by Russia valued at $31 million

Victorian horticulture exports were valued at $479 million in 2011-12, an increase of $107 million (29%) from 2010-11 with Victoria accounting for 37% of Australia’s horticulture exports. Fruit (fresh or dried), valued at $194 million made up 40% of Victoria's horticultural exports. Nut exports were valued at $106 million making up 22% of Victoria’s horticulture exports. Processed horticulture exports were valued at $79 million. Vegetable exports (fresh or dried) were valued at $71 million.

In 2011-12 Hong Kong and New Zealand were Victoria’s largest markets for horticulture exports, valued at $70 million and $56 million respectively.

Victorian wine exports decreased by 2% to be valued at $221 million in 2011-12. Victoria accounted for 11% of the value of Australia’s wine exports. Red wine remained Victoria’s strongest performer, accounting for 60% of the state’s wine exports at a value of $133 million. White wine exports were valued at $61 million and sparkling wines were valued at $16 million.

The United Kingdom and China were Victoria’s largest wine export markets, valued at $66 million and $48 million respectively in 2011-12. Other important markets included the United States of America (USA) ($17 million) and Canada ($12 million)

Victorian seafood exports increased by 3% in 2011-12 to be valued at $158 million Victoria accounted for 16% of the value of Australian seafood exports. Abalone exports were valued at $46 million. Lobster exports increased by $9 million totalling $68 million worth of exports in 2011-12.

Hong Kong and Japan were Victoria’s major markets for seafood exports in 2011-12, valued at $75 million and $24 million respectively.

Note: Export statistics relating to, abalone and lobster have been affected by the misreporting of state of origin.

Table 3. Australian Food ^ Exports by State of Origin (A$ million)

State of Origin	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Victoria	5,511	6,134	5,462	6,296	7,041	745	12%	26%
Queensland	4,317	5,056	4,370	4,765	5,045	280	6%	18%
New South Wales	2,940	4,095	3,749	4,010	4,847	837	21%	18%
South Australia	3,705	3,769	3,190	4,409	4,604	195	4%	17%
Western Australia	3,484	4,965	3,614	3,749	3,601	-147	-4%	13%
Tasmania	486	549	506	527	516	-11	-2%	2%
Other***	1,682	1,454	1,341	1,543	1,877	335	22%	7%
Total Australia	22,125	26,024	22,233	25,297	27,532	2,235	9%	100%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. % total is based on % of 2011-12 total. ***Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports and exports for which no state details are released for confidentiality reasons. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Table 4. Victorian Food Exports by Commodity Group (A$ million)

Industry	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Dairy	2,346	2,304	1,761	1,955	1,928	-28	-1%	27%
Grain^	470	626	684	1,126	1,811	685	61%	26%
Meat^	1,428	1,650	1,545	1,652	1,576	-76	-5%	22%
Prepared foods**	487	649	720	810	868	58	7%	12%
Horticulture	406	549	427	372	479	107	29%	7%
Wine	270	255	234	226	221	-5	-2%	3%
Seafood^	105	100	92	154	158	4	3%	2%
Total Victoria	5,511	6,134	5,462	6,296	7,041	745	12%	100%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ** Prepared foods are classified as those which has been substantially transformed from their raw product basis and may have input from more than one food production industry. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Table 5. Top Ten Markets for Victorian Food^ Exports (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Japan	805	857	731	722	776	54	7%	11%
China	235	337	366	444	509	65	15%	7%
New Zealand	412	415	422	428	475	46	11%	7%
Indonesia	304	343	345	423	441	17	4%	6%
Malaysia	266	276	241	244	340	96	39%	5%
Singapore	303	297	276	302	331	29	10%	5%
USA	524	611	390	337	329	-8	-2%	5%
South Korea	191	239	189	246	297	51	21%	4%
Hong Kong	213	280	236	267	286	19	7%	4%
Vietnam	85	108	113	227	284	57	25%	4%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Victoria Fibre Export Performance 2011-12

Until February 2009 several wool export statistics and skins and hides statistics were affected by state and country detail restrictions and this should be considered when examining changes in export values.

Table 6. Australian Fibre^ Exports by State of Origin (A$ million)

State of Origin	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Victoria	938	1,006	1,302	1,772	1,936	164	9%	52%
New South Wales	468	494	721	851	878	27	3%	23%
Western Australia	349	362	442	568	475	-93	-16%	13%
Queensland	225	238	230	274	251	-23	-8%	7%
South Australia	174	142	139	187	158	-28	-15%	4%
Tasmania	31	31	31	40	35	-5	-12%	1%
Other***	1,382	657	11	13	22	8	63%	1%
Total Australia	3,566	2,930	2,875	3,705	3,755	50	1%	100%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ***Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports and exports for which no state details are released for confidentiality reasons. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Table 7. Victorian Fibre Exports by Commodity Group (A$ million)

Industry	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Animal fibre^	525	561	891	1,274	1,451	177	14%	75%
Skins and hides	413	445	410	498	485	-13	-3%	25%
Total Victoria	938	1,006	1,302	1,772	1,936	164	9%	100%
^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Table 8. Top Ten Markets for Victorian Fibre^ Exports (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
China	570	710	909	1,171	1,355	184	16%	70%
India	61	65	97	123	128	5	4%	7%
Italy	32	34	45	105	98	-7	-7%	5%
Czech Republic	22	10	18	35	42	7	19%	2%
Japan	18	18	18	34	40	6	16%	2%
Taiwan	1	11	22	37	38	1	2%	2%
South Korea	2	10	29	28	32	4	14%	2%
Russia	29	22	18	48	31	-17	-35%	2%
Malaysia	0	3	9	19	28	9	47%	1%
Austria	11	4	12	27	25	-2	-6%	1%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Export Performance by Market

The five most valuable markets for Victorian food and fibre exports accounted for 44% of food and fibre exports in 2011-12. Victoria’s ten most valuable food and fibre export markets in 2011-12 were China, Japan, New Zealand, Indonesia, Malaysia, United States of America (USA), Singapore, South Korea, Hong Kong, and Vietnam.

Table 9. Top Ten Markets for Victorian Food^ and Fibre Exports (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
China	806	1,047	1,275	1,615	1,864	249	15%	21%
Japan	823	875	750	756	816	59	8%	9%
New Zealand	415	419	427	433	484	51	12%	5%
Indonesia	306	345	345	424	441	17	4%	5%
Malaysia	266	279	250	263	367	104	40%	4%
USA	532	617	400	351	340	-10	-3%	4%
Singapore	303	297	276	302	332	30	10%	4%
South Korea	193	250	217	275	329	55	20%	4%
Hong Kong	215	287	242	280	290	10	3%	3%
Vietnam	86	110	116	230	285	55	24%	3%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Victorian food and fibre exports to China in 2011-12 were valued at $1.86 billion and accounted for 21% of Victoria’s total food and fibre exports. Key export commodities to China include animal fibre, skins and hides products (73% combined), and dairy products and prepared foods valued at 8% of export value each.

Victorian food and fibre exports to Japan were valued at $816 million, and accounted for 9% of food and fibre exports in 2011-12 an increase of $59 million from 2010-11. Key export commodities to Japan included dairy products (51%) and meat (18%).

Victorian food and fibre exports to New Zealand were valued at $484 million in 2011-12 and accounted for 5% of Victoria’s total food and fibre exports. Key export commodities to New Zealand included prepared foods (57%) and grain (15%).

Victorian food and fibre exports to Indonesia were valued at $441 million in 2011-12 and accounted for 5% of Victoria’s total food and fibre exports. Key exports to Indonesia were grain (34%), and dairy products (30%).

Victorian food and fibre exports to Malaysia were valued at $367 million in 2011-12 and accounted for 4% of Victoria’s total food and fibre exports. Key exports to Malaysia were grain (28%) and dairy products (25%).

Victorian food and fibre exports to the United States of America (USA) continued to decrease, to be valued at $340 million in 2011-12. The USA accounted for 4% of Victoria’s total food and fibre exports. Key exports to the USA included meat (71%) and horticulture products (8%).

Victorian food and fibre exports to Singapore were valued at $332 million in 2011-12 and accounted for 4% of Victoria’s total food and fibre exports. Key exports to Singapore were dairy (57%) and meat (18%).

Victorian food and fibre exports to South Korea were valued at $329 million in 2011-12 and accounted for 4% of all Victoria’s total food and fibre exports. Key exports to South Korea were grain (36%) and dairy products (26%).

Victorian food and fibre exports to Hong Kong were valued at $290 million in 2011-12 and accounted for 3% of Victoria’s total food and fibre exports. Key exports to Hong Kong were seafood (26%) horticulture (24%) and dairy products (21%).

Victorian food and fibre exports to Vietnam were valued at $285 million in 2011-12 and accounted for 3% of Victoria’s total food and fibre exports. The primary export to Vietnam was grain (82%).

Figure 2. Top 5 Markets for Victorian Food and Fibre Exports (A$ million)

Other Markets of Interest

Victorian food and fibre exports to Thailand were valued at $282 million in 2011-12. Key exports to Thailand were grain (40%) and dairy (24%). Thailand ranked as Victoria's 11th most valuable export destination.

Victorian food and fibre exports to the United Arab Emirates were valued at $253 million in 2011-12. Key exports to the United Arab Emirates were meat (34%) and prepared foods (26%). The United Arab Emirates ranked as Victoria's 12th most valuable export destination.

Victorian food and fibre exports to India were valued at $202 million in 2011-12. The key exports to India were animal fibre (62%) and horticulture products(25%). India ranked as Victoria's 13th most valuable export destination.

Victorian food and fibre exports to Taiwan were valued at $193 million in 2011-12. Key exports to Taiwan were dairy (28%) and grain (25%). Taiwan ranked as Victoria's 14th most valuable export destination.

Victorian food and fibre exports to the Philippines were valued at $193 million in 2011-12. Key exports to the Philippines were grain (52%) and dairy( 29%). The Philippines ranked as Victoria's 15th most valuable export destination.

Victorian food and fibre exports to Saudi Arabia were valued at $132 million in 2011-12. Key exports to Saudi Arabia were dairy (54%) and meat (33%). Saudi Arabia ranked as Victoria's 16th most valuable export destination.

Victorian food and fibre exports to the United Kingdom (UK) were valued at $108 million in 2011-12. The key exports to the UK were wine products (61%) and meat (14%). The United Kingdom ranked as Victoria's 17th most valuable export destination.

Victorian food and fibre exports to Russia were valued at $97 million in 2011-12. The key exports to Russia were meat (47%) and skins and hides (32%). Russia ranked as Victoria's 18th most valuable export destination.

Victorian food and fibre exports to Sri Lanka were valued at $96 million in 2011-12. Key exports to Sri Lanka were dairy (52%) and grain (30%). Sri Lanka ranked as Victoria's 19th most valuable export destination.

Regions

Victorian food and fibre exports to North Asia were valued at $3.5 billion in 2011-12.

Victorian food and fibre exports to South East Asia were valued at $1.94 billion in 2011-12.

Victorian food and fibre exports to the Middle East and North Africa were valued at $1.1 billion in 2011-12.

Victorian food and fibre exports to South Asia were valued at $443 million in 2011-12.

Export Performance by Commodity Group

Impact of the high Australian Dollar on our exports

Brian Kearns and Nicki Marks, Farm Services Victoria

The United States Dollar (USD) is the major currency used in international trading. The sharp rise in the value of the Australian Dollar (AUD) against the USD since 2008 has posed a major concern for the agricultural sector and agri-food exporters. DPI are currently conducting a project funded by Rural Industries Research and Development Corporation to assess the impact of a sustained high AUD against the other major currencies and what companies, exporters and importers are doing in response. 

To assess the impact and ascertain what companies and exporters are doing DPI has interviewed companies from the horticulture, meat, dairy, grains industries as well as a consolidator and exporter of food products. Findings from these interviews indicate that the impact of a high AUD varies considerably. Often export sales were greatly impacted. However, some industries could maintain sales and pass through the lower price to the grower, while others were impacted just as much by other factors like weather and competitor production. For example, the high AUD has coincided with record high lamb prices and record high exports, a reflection of strong demand and increasing production over recent years. Therefore the impact of the AUD has to date been very minimal in the lamb industry.

Exporters commented that they generally felt they were in uncharted territory. The lessons learnt from the dramatic fluctuations in the AUD prior to the Global Financial Crisis were however serving them well in the current climate. Many companies, particularly larger ones, realised the value of planning and regular reviews of forecast sales and the development of a currency hedging policy as a risk management strategy.

Impact on exporters

Some industries have done considerable work in quantifying the impact of dollar movements. In the highly competitive fresh and commodity markets the impact of currency movements has been identified to be the greatest. For the dairy industry, Dairy Australia has done extensive analysis indicating that a 5c movement in the value of the AUD impacts farm gate milk price by 6-7%. However it should be noted that price movements for commodities such as butter, processed cheese and milk powder are not always highly correlated with dollar value.

In the grains industry the grains price is largely determined by world supply. Grain exporting companies find that a high AUD makes sourcing from growers more difficult as many growers prefer to store grain for longer in anticipation of better prices when world supply is lower and the AUD more competitive. Volatility of the AUD was more of a concern for grain exporters because the price of “call options” increase, increasing hedging costs as a result. Currency movements are passed on to farmers through price.

As a result of the high AUD the horticulture industry has faced strong competition from other southern hemisphere exporters, particularly on price, with some markets lost or significantly reduced. While losses on individual consignments have been mostly avoided, particularly where the company markets on behalf of the grower, the low prices received by growers sometimes did not cover overhead costs.

While most companies involved in export traded in USD this has made little difference to minimising the impacts of the high AUD as the USD is a reference point in international markets.

What can companies do to reduce the impact?

The high value of the AUD is currently just one, albeit significant, impact on export and industry profitability. Reducing costs and increasing value in a period of high AUD can be achieved to offset this by a number of means. Interviewees mentioned the following strategies as ways in which they were seeking to minimise the impact of the high AUD on their business. The following strategies also include information sourced for a literature review on other periods of a sustained high currency value.

Hedging price and currency – Hedging the price of some major commodities such as wheat and canola are vital tools for grain exporters. This is however not a mechanism available to exporters in most other industries such as horticulture and meat. Futures markets in the dairy industry are emerging however, with the New Zealand stock exchange operating a futures market for common dairy products. Currency hedging is also a standard tool for many exporters who wish to ensure that the AUD of an expected sale in USD is maintained. Call options (the right to buy AUD) is commonly used.

Managing movement of USD - Payment in USD received by Australian exporters often necessitate opening a USD account. Timing the movement of this money back to Australia to pay suppliers when the AUD falls is a common strategy. Paying as many costs as possible billed in USD (such as freight) when the AUD is high may also provide an advantage.

Drive out other costs – Tight margins caused by the high AUD can necessitate a focus on driving out other costs along the value chain. It may come in the form or changing packing practice or logistics. Citrus growers have been encouraged to focus on low cost management measures to ensure larger and higher value fruit.

Company structure and focus – Smaller companies with few overheads can often compete in low price environments as they can survive on tighter margins. Horticulture companies providing a packing and exporting service rather than purchasing the product can reduce their exposure. Meat processors can do the same if they have the ability to contract process as well as export.

Re-negotiating with suppliers – When pressure is on price, companies may be able to negotiate with suppliers requesting that they take on packing or processing activities that may assist to cut costs, or even accept a lower price to maintain the business relationship.

Re-negotiation with buyers – Supply contracts for products such as lamb should allow some re-negotiation of price after a period of time. Re-setting of prices can therefore account for the changes in the AUD. Negotiating on acceptable product standards is another strategy. Horticulture exporters are often able to supply a ‘composite’ grade of fruit with slightly more imperfections, with a minor impact on price and almost negligible quality difference.

Focus on using advantages – Examining the advantage the business holds and how this may relate to a high AUD can be beneficial. For example, Asian fruit markets can pay higher prices at season opening and gaining this as a point of difference can help maintain a higher price. With a high AUD other options such as air freighting fruit becomes more economic as this high cost is cheaper for an Australian exporter relative to competitors.
Communicating the impact – Findings from the interviews indicated that the horticulture and dairy industries both saw this as vital so that suppliers realise the impact of currency movements and are therefore less aggrieved by price falls.

Investing in marketing activities – Comments from the food consolidator indicated that they saw benefits of increasing brand awareness by undertaking promotions with retailers in store. Understanding the consumer better has also been a catalyst for developing a brand to better suit a certain consumer segment in the market and gaining an advantage over competitors.

Vertical integration – Locating staff in the market or establishing a warehouse or processing facility can allow a company to export to themselves and manage the value chain and customer relationships better. This is a strategy that occurred commonly between companies in Japan and the USA in the 80’s and 90’s when exchange rate volatility was impacting US exports. Findings from the interviews indicated that investment in the market to achieve vertical integration was minimal.

The future impact of a high Australian dollar value

Many interviewees had protected the viability of their company by passing the impact of the high AUD on to their suppliers. Some were able to market produce on behalf of their supplier. However, most were concerned about the long term impact of the high AUD on their respective industries. Some general observations about the long term impact gathered from interviewees and analysis follow:

Grain –If the AUD crept above $1.20, Australian grain would still be exported to markets where the price is set internationally. However, growers would receive a lower price.

Dairy – Exports would be hit hard. This would result in a greater focus on the domestic market and companies would put more effort into product development, which is more resistant to changes in the value of the AUD.

Meat – More time is needed to determine what the impact would be, if any, given the issues such as supply and market access are influencing this sector more than the AUD.

Horticulture – Some products would simply be uncompetitive over $1.10, causing loss of markets. Products with a clear marketing advantage such as Honey Murcotts, Crimson Seedless grapes and mangoes, would be more resistant.

Branded food products – If the dollar got to $1.20 there would still be a market for Australian exports but more international sourcing would occur and investment in product promotion would need to increase.

Findings of the project to date indicate that the sustained high AUD has reduced the income of Australian producers and exporters, resulted in the loss of markets and has increased the volume of imported product. Longer term impact will not be the same across all industries and all companies. It will be dependent on the market mix, product and commodity balance, the quality produced and structure of companies which export. The impact of a high dollar must also be balanced with other influences on production and export performance, particularly supply and market access conditions.

Dairy

David Shambrook, Farm Services Victoria

Victoria's milk production for 2011-12 was 5% higher than 2010-11; lifting to a total of 6.2 billion litres that makes up 66% of Australia’s total production. This was a 4% increase in Australia’s overall milk production on the previous year. The increased milk production in Victoria came from Western Victoria, producing 23% of Australia’s milk, Gippsland at 23% and a much improved performance from the North at 20% of Australia’s total production.

The increased production achieved over the year led to increased sales of packaged milk of 3% on the previous year in volume terms. However, the increased milk production did not lead to an increase in the amount of income generated. There was a drop in export income, from Victorian export manufactured product. Even though Australian dairy export returns were up 1% from a decrease of 0.7% in dairy export volumes, coming mainly from an increase in average export returns of 3%. The product mix changed to suit markets and resulted in Australian wide exports of cheddar cheese volumes declining by 18%, butter anhydrous milk fat was down 12%, skim milk powder/butter milk powder were down 9% and whole milk powder was down 8% in volumes sold. On the positive side the export volumes of non-cheddar cheese increased by 11%, mainly from fresh cheese going into the Asian markets and an increase in whey products.

Much of the drop in export sales values came from the lower return for butter (fats and oils), milk extracts, fermented milk products and powders. There were increased returns from sales of cheese and whey products, fresh milk and cream and yoghurt.

Seasonal conditions, although mostly very wet up until mid-September are expected to be more favourable for milk production across Victoria through spring but grain prices appear to be remaining high. This combined with the lower milk prices may impact on the ability for dairy farmers to profitably provide supplementary feed in the latter half of 2012-13.

Products

Table 10. Value of Victorian Dairy Exports by Product Category and Item (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	change*	change*	total
Milk and cream	1,125	1,227	767	974	940	-34	-4%	49%
Powdered milk and cream	1,081	1,148	701	905	861	-43	-5%
Fresh milk and cream	44	79	66	70	79	9	13%
Cheese and whey products	875	716	664	640	699	59	9%	36%
Cheese	776	617	591	579	621	42	7%
Whey products	99	99	72	61	78	17	27%
Butters, fats and oils	181	221	195	229	180	-50	-22%	9%
Butter	104	134	116	136	137	1	1%
Fats and oils	76	87	79	94	43	-51	-54%
Milk extracts	125	109	102	70	48	-22	-31%	2%
Casein	124	107	87	52	46	-28	-53%
Other extracts	1	1	15	18	23	6	31%
Yoghurt and fermented milk products	40	31	33	42	39	-14	-34%	1%
Butter milk	31	23	23	31	25	-17	-56%
Yoghurt	8	9	10	11	14	3	26%
Total Victoria	2,346	2,304	1,761	1,955	1,928	-28	-1%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Markets

Table 11. Value of Victorian Dairy Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Japan	438	434	369	353	428	75	21%	22%
Singapore	205	188	163	178	190	11	6%	10%
China	128	150	122	141	144	3	2%	7%
Indonesia	181	150	123	148	138	-10	-7%	7%
Malaysia	176	115	66	72	91	18	25%	5%
Korea, South	74	100	72	93	88	-5	-5%	5%
Saudi Arabia	146	84	81	101	71	-30	-30%	4%
Thailand	100	77	60	80	70	-10	-12%	4%
Philippines	110	136	76	90	62	-28	-31%	3%
Hong Kong	58	59	55	54	62	8	14%	3%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Australia

Table 12. Value of Australian Dairy Exports by Product Category (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	change*	change*	total
Milk and cream	1,270	1,355	881	1,108	1,067	-41	-4%	48%
Cheese and whey products	1,077	910	795	801	852	51	6%	38%
Butters, fats and oils	195	232	211	252	202	-50	-25%	9%
Milk extracts	126	110	109	75	72	-3	-4%	3%
Total Australia	2,714	2,645	2,035	2,284	2,239	-45	-2%	100%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Figure 3. Australian Dairy Exports by State of Origin for 2011-12 (A$ million)

*Other refers to export data from the Australian Capital Territory, re-exports, and exports for which no state details are released for confidentiality reasons

Grain

Brian Kearns and Chris Sounness, Farm Services Victoria

In 2011-12 Victoria experienced one of the best seasons on record. This contributed to a record grain harvest for Australia. An excellent growing season with good rainfall and sub-soil moisture from the previous summer rain, as well as an increase in the sowing area were key drivers. Wheat and canola were the outstanding performers and whilst pulse production also increased, untimely rain impacted the quality of some crops.

The 2012-13 crop is off to a patchy start. Summer rain encouraged many farmers to sow early. However, a dry April and May has resulted in crop inconsistencies in the Mallee. Canola area is well up this year, while pulse areas are down slightly. Wheat prices were poor at time of sowing resulting less area being planted. However, since then grain prices have remained firm across the board.

The warmer and drier outlook for the 2012 spring will reduce grain production from the previous season. Consequently, ABARES, (Crop Report 2012) has forecasted crop production to fall by 22%, with wheat falling by 26%, mainly due to drier conditions in the Mallee. The price outlook is good, having risen following emergence of drought in Northern America and some parts of Europe, benefiting wheat and canola prices in-particular.

Products

Table 13. Value of Victorian Grain^ Exports by Product Category and Item (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	change*	change*	total
Cereals	237	314	396	698	1,125	426	61%	62%
Wheat	220	310	393	694	1,122	428	62%
Barley	14	0	0	2	1	-1	-59%
Other	3	4	2	2	2	0	4%
Oilseeds	4	2	17	130	333	204	157%	18%
Canola	1	0	16	129	331	203	157%
Other	3	1	2	1	2	1	118%
Processed grains	141	220	176	175	196	21	12%	11%
Malt	106	148	126	101	95	-6	-6%
Oils and by-products	29	56	37	58	81	23	39%
Milled products	6	16	13	16	20	4	26%
Pulses	89	91	95	124	157	34	27%	9%
Total Victoria	470	626	684	1,126	1,811	685	61%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin. Note: barley export value is significantly under reported due to above mentioned confidentiality agreements.

Markets

Table 14. Value of Victorian Grain^ Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Vietnam	45	45	59	168	233	65	39%	13%
Indonesia	18	53	41	107	150	43	40%	8%
Netherlands	0	0	0	64	129	65	100%	7%
South Korea	26	61	38	53	117	64	121%	6%
Thailand	53	48	61	56	113	57	102%	6%
Malaysia	26	45	53	45	104	59	131%	6%
Philippines	11	21	15	102	100	-2	-2%	6%
Yemen	12	13	9	4	72	68	1837%	4%
New Zealand	21	26	23	37	72	34	92%	4%
China	14	6	18	26	58	33	128%	3%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Australia

Table 15. Value of Australian Grain^ Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Cereals	4,117	5,933	4,417	6,540	7,961	1,421	22%	71%
Oilseeds	328	615	601	883	1,340	457	52%	12%
Processed grains	840	1,084	951	974	1,260	286	29%	11%
Pulses	390	600	678	676	712	36	5%	6%
Total Australia	5,676	8,232	6,647	9,074	11,273	2,200	24%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Figure 4. Australian Grain Exports by State of Origin for 2011-12 (A$ million)

*Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports, and exports for which no state details are released for confidentiality reasons

Meat

Peter Hunter and Tim Hollier, Farm Services Victoria

There was increased competition from the United States of America (USA) particularly in the Japanese and South Korean markets. The USA also had preferential advantage through its Free Trade Agreement with South Korea and some success from a marketing campaign in key Asian markets to try and win back market share at the expense of Australia.

The continued high Australian dollar is making for very challenging trading conditions for red meat particularly beef. Beef exports comparatively more expensive than our main competitors. One of Australia's major competitors in beef exports, Brazil has recorded export volumes in recent months due increased turnoff and declining value of local currency making Brazil more competitive in traditional Australian markets. The USA drought is impacting on the manufacturing beef market by increasing USA domestic supply and impacting on price, which is putting pressure on what has been a well preforming market for Australian beef in last twelve months.

Stagnant economic growth in major markets, decline in consumer demand and increased competition from cheaper protein sources, for example chicken and pork have also contributed to the decrease in Victorian meat exports. There has been a significant reduction in the boxed beef quota for Australian product imposed by the Indonesian Government which has some impacted on export performance to this market.

Products

Table 16. Value of Victorian Meat Exports by Product Category and Item (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Beef	633	759	609	675	606	-69	-10%	38%
Fresh or frozen	620	734	559	614	594	-20	-3%
Prepared or preserved	9	23	26	25	10	-15	-59%
Live Animals^	3	1	24	35	1	-34	-97%
Sheep meat	540	598	614	651	601	-50	-8%	38%
Lamb fresh or frozen	359	400	376	408	426	18	4%
Sheep fresh or frozen	138	153	179	177	153	-24	-14%
Live Animals	43	46	58	65	22	-43	-67%
Offal	119	156	143	140	171	31	22%	11%
Animal fats	16	25	46	46	64	18	38%	4%
Alternative meat	20	27	41	53	49	-3	-6%	3%
Goat	17	23	40	52	48	-3	-6%
Kangaroo	1	2	0	0	0	0	224%
Other prepared meat products	50	38	55	49	44	-5	-9%	3%
Pig meat	31	26	22	25	23	-2	-9%	1%
Fresh or frozen	28	24	20	24	21	-3	-12%
Prepared or preserved	3	2	2	2	2	1	39%
Poultry	19	21	15	13	18	4	32%	1%
Fresh or frozen	12	15	11	12	14	2	20%
Eggs	1	1	0	1	1	1	87%
Live Animals	5	4	4	1	1	1	138%
Prepared or preserved	0	0	0	1	1	1	142%
Total Victoria	1,428	1,650	1,545	1,652	1,576	-76	-5%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Markets

Table 17. Value of Victorian Meat^ Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
USA	337	425	252	240	242	3	1%	15%
Japan	195	208	186	177	151	-26	-15%	10%
China	39	66	79	81	100	19	24%	6%
Indonesia	75	93	130	113	94	-19	-17%	6%
United Arab Emirates	72	81	97	98	87	-12	-12%	5%
Malaysia	33	52	55	62	68	6	10%	4%
South Korea	72	59	55	74	62	-12	-16%	4%
Singapore	33	32	44	51	61	10	19%	4%
Papua New Guinea	28	35	38	49	54	5	9%	3%
Hong Kong	24	39	51	45	47	2	5%	3%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Australia

Table 18. Value of Australian Meat^ Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Beef^	4,913	5,649	4,720	5,075	4,939	-135	-3%	63%
Sheep meat	1,567	1,805	1,688	1,865	1,670	-195	-10%	21%
Offal	498	600	537	562	656	94	17%	8%
Other prepared meat products	188	205	191	185	184	-1	0%	2%
Alternative meat	128	140	149	165	154	-11	-7%	2%
Pig meat	135	130	113	110	106	-5	-4%	1%
Animal fats	46	49	66	66	86	20	30%	1%
Poultry	40	53	47	50	58	8	17%	1%
Total Australia	7,515	8,631	7,511	8,078	7,854	-225	-3%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Figure 5. Australian Meat Exports by State of Origin for 2011-12 (A$ million)

*Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports, and exports for which no state details are released for confidentiality reasons

Animal Fibre

Lyndon Kubeil, Farm Services Victoria

Over the 2011-12 season, the Eastern Market Indicator (EMI) fell by 23% in $AUD terms. After starting the season at 1,399 c/kg, it reached a low of 1,054 c/kg in mid-June. The fall was spread relatively evenly between the first half and second half of the season. The largest falls were in the prices for superfine wool, with the 16.5 and 17 micron indicators falling the most, down by 40%. Most other micron indicators fell, although the 25 and 26 micron indicators lifted a little. The 2011/12 average EMI was the highest since the 1988-89 season when it averaged 1,229 c/kg.

According to the Australian Wool Exchange (AWEX), auction offerings in 2011-12 were down by 2% to 1.945 million bales and auction sales were down by 6% to 1.682 million bales. The decline in both auction offerings and sales is un-surprising given the flow of wool from on-farm stocks in response to the excellent demand conditions in the second half of 2010-11. However, the number of bales offered and sold at auction in 2011-12 is below the 2009-10 season when there were 1.961 million bales offered and 1.753 million bales sold.

Survey data throughout 2011-12 indicates that most growers intend to maintain or increase sheep numbers and this is reflected in an expectation of higher opening sheep numbers and sheep shorn than in 2011-12. While sheep numbers are expected to increase, the increase in total wool production is tempered somewhat by a forecast reduction in average greasy fleece weight, mainly a reflection of seasonal conditions.

In 2011-12 New South Wales was the biggest producer of wool, contributing 36% of the national clip, followed by Victoria at 23% and Western Australia at 19%.

Products

Table 19. Value of Victorian Animal Fibre Exports by Product Category and Item (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Wool^	516	551	883	1,266	1,438	171	14%	99%
Medium wool (20-23 µm)	437	346	402	544	679	135	25%	47%
Fine wool (<19 µm)	7	130	371	566	559	-7	-1%	38%
Coarse wool (24-27 µm)	1	18	52	84	107	22	26%	7%
Coarse wool ( >27 µm)	71	57	58	72	93	21	30%	6%
Yarn products	4	4	3	3	8	5	178%	1%
Wool grease and wastes	4	5	4	4	4	0	-11%	0%
Other animal fibres	1	1	1	1	2	1	110%	0%
Total Victoria	525	561	891	1,274	1,451	177	14%	100%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Markets

Table 20. Value of Victorian Animal Fibre^ Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
China	303	382	614	846	985	139	16%	68%
India	56	59	93	119	125	6	5%	9%
Italy	9	16	30	86	86	-1	-1%	6%
Czech Republic	22	10	18	35	42	7	19%	3%
Japan	16	16	17	33	38	5	16%	3%
Taiwan	0	5	15	29	33	5	16%	2%
South Korea	1	9	28	28	32	4	16%	2%
Malaysia	0	3	9	19	28	9	48%	2%
United Kingdom	1	2	8	8	14	6	81%	1%
Iran	5	4	12	10	12	2	18%	1%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Australia

Table 21. Value of Australian Animal Fibre^ Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Wool^	2,484	2,008	2,011	2,621	2,683	62	2%	99%
Wool grease and wastes	14	15	15	19	9	-10	-53%	0%
Yarn products	6	5	4	4	9	5	150%	0%
Other animal fibres	3	2	2	3	2	0	-20%	0%
Total Australia	2,508	2,030	2,031	2,646	2,703	57	2%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Figure 6. Australian Animal Fibre Exports by State of Origin for 2011-12 (A$ million)

*Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports, and exports for which no state details are released for confidentiality reasons

Prepared Foods

Products

Table 22. Value of Victorian Prepared Foods** Exports by Product Category and Item (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Cereal-based	78	197	265	351	407	56	16%	47%
Confectionary	153	155	151	148	129	-19	-13%	15%
Ice cream	3	3	4	4	3	-1	-18%
Other food preparations	80	91	83	78	91	13	17%	10%
Condiments	70	87	91	85	83	-2	-3%	10%
Beverages	21	36	36	42	46	4	8%	5%
Non-alcoholic	6	13	19	22	30	9	40%
Spirits	16	23	18	20	15	-5	-26%
Beer	0	0	0	0	1	0	52%
Sugars	16	11	24	32	42	10	31%	5%
Honey	1	2	1	1	1	0	34%
Bread, cakes and biscuits	46	45	45	45	39	-6	-13%	4%
Ingredients	22	26	26	29	31	2	7%	4%
Total Victoria	487	649	720	810	868	58	7%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. ** Prepared foods are classified as those which has been substantially transformed from their raw product basis and may have input from more than one food production industry.

Markets

Table 23. Value of Victorian Prepared Foods** Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
New Zealand	211	225	239	252	275	22	9%	32%
China	33	85	104	132	144	12	9%	17%
Japan	62	85	78	78	67	-11	-14%	8%
United Arab Emirates	8	10	38	45	65	20	45%	7%
Malaysia	13	40	50	50	57	6	13%	7%
Thailand	9	35	35	43	47	4	10%	5%
Indonesia	9	20	22	28	31	3	11%	4%
Singapore	21	23	23	26	30	4	13%	3%
South Korea	11	14	18	23	24	0	2%	3%
Hong Kong	20	23	22	21	23	2	7%	3%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. ** Prepared foods are classified as those which has been substantially transformed from their raw product basis and may have input from more than one food production industry.

Australia

Table 24. Value of Australian Prepared Foods** Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Cereal-based	197	332	407	484	529	45	9%	28%
Confectionary	308	323	318	314	304	-10	-3%	16%
Other food preparations	222	240	239	227	248	22	10%	13%
Sugars	144	181	212	253	243	-10	-4%	13%
Condiments	169	175	172	166	167	1	1%	9%
Beverages	127	144	148	159	161	2	1%	9%
Bread, cakes and biscuits	144	152	161	155	150	-5	-3%	8%
Ingredients	40	45	48	61	57	-4	-6%	3%
Total Australia	1,350	1,592	1,706	1,819	1,861	41	2%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. **Prepared foods are classified as those which has been substantially transformed from their raw product basis and may have input from more than one food production industry.

Figure 7. Australian Prepared Food Exports by State of Origin for 2011-12 (A$ million)

*Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports, and exports for which no state details are released for confidentiality reasons

Skins and Hides

Maria Crawford, Farm Services Victoria

The skin and hides industry continues to be negatively impacted upon by the economic downturn across the globe, most evident in Europe and the United States of America (USA). A decrease in discretionary spending across European markets for leather from Victorian hides has reduced the marketability of the highest grade hides for shoe leather and apparel. This was particularly noted by tanners in the latter half of 2011-12.

China has been, and is expected to continue to be, the dominant market for both skins and hides, although tanners are looking to South East Asian countries to reduce their processing costs. Traders started showing a degree of nervousness towards the end of 2011-12 contributing to a slow-down in demand. A warmer winter in the USA resulted in a stockpiling of skin products out of China, particularly Ugg boots and shoe lining products, which meant a reduction of local orders in the second half of the year and a resulting price fall.

There was a decrease in the supply of hides into the market during 2011-12 as the seasonal conditions were favourable for keeping young stock to a heavier trade weight, as a result Victorian tanners were running at around 30% less turnover. The improved seasonal conditions did however provide for higher quality hides.

Products

Table 25. Victorian Skins and Hides Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Sheep	203	209	208	284	296	12	4%	61%
Cattle	101	149	152	211	154	-57	-27%	32%
Equine	107	85	49	1	19	18	2154%	4%
Other Skins and hides	2	1	0	0	15	14	4629%	3%
Goats	0	0	0	1	1	0	-27%	0%
Total Victoria	413	445	410	498	485	-13	-3%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Markets

Table 26. Value of Victorian Skins and Hides Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
China	267	328	295	326	371	45	14%	77%
Russia	29	22	18	48	31	-17	-35%	6%
Austria	11	4	12	27	25	-2	-6%	5%
Turkey	10	5	4	7	13	6	78%	3%
Italy	24	18	15	19	13	-6	-32%	3%
Taiwan	1	6	7	9	5	-4	-45%	1%
Hong Kong	2	7	6	14	4	-10	-73%	1%
Bangladesh	4	6	5	7	3	-4	-51%	1%
India	5	6	4	4	3	-1	-22%	1%
Thailand	7	6	5	8	3	-5	-62%	1%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Australia

Table 27. Value of Australian Skins and Hides Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Cattle	571	438	455	581	485	-97	-17%	46%
Sheep	315	315	295	428	435	7	2%	41%
Other skins and hides	64	58	43	46	113	66	143%	11%
Equine	107	86	50	1	19	18	1805%	2%
Goats	2	1	1	3	2	-1	-35%	<0.5%
Total Australia	1,059	899	843	1,059	1,052	-7	-1%
* $ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Figure 8. Australian Skins and Hides Exports by State of Origin for 2011-12 (A$ million)

*Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports, and exports for which no state details are released for confidentiality reasons

Horticulture

Rob Dimsey and Pam Strange, Farm Services Victoria

The 2011-12 season was a very good season for fruit growing, resulting in increased exports. This is reflected in stone fruit exports returning to the level of previous years after a decrease in 2011-12. The increase in almond exports over 2010-11 reflects a better season and increasing yields as the number of trees approaching maturity increase, with more than 50% of trees yet to reach maturity and full bearing. This increase is expected to continue for several years. Citrus fruit in 2011-12 was of better size and better skin appearance than the previous year and fruit size was 5-10mm bigger on average. Grapes are exported as both fresh table grapes and dried grapes. Fruit quality in 2011-12 was much better and better suited to export and many table grape growers took advantage of the recently opened Chinese market.

Asparagus exports declined due to the continuing high $A and the impacts of flooding, resulting in a decline in yield and quality. The outcome for the coming season is still uncertain as a result of flooding in early 2012.

Products

Table 28. Value of Victorian Horticulture Exports by Product Category and Item (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Fruit (fresh or dried)	194	283	194	152	194	42	27%	40%
Grapes	100	187	86	79	97	18	23%
Citrus	63	59	73	45	59	14	32%
Stone fruit	20	24	23	18	22	4	25%
Pome fruit	7	10	10	8	9	1	17%
Other	5	3	2	3	6	4	137%
Nuts (fresh or dried)	39	84	63	78	106	28	36%	22%
Almonds	35	83	61	74	103	30	40%
Other	4	1	2	4	3	-2	-37%
Processed	116	107	97	73	79	6	8%	16%
Fruit and vegetable juice	37	34	23	23	31	8	33%
Vegetable	37	35	38	28	24	-4	-13%
Fruit	40	36	32	19	18	-1	-7%
Other	2	3	3	2	6	4	152%
Vegetables (fresh or dried)	27	39	30	37	71	34	92%	15%
Dried and shelled vegetables	4	6	4	2	39	37	1619%
Perennial vegetables	16	24	15	17	16	-1	-6%
Roots, tubers and bulbs	2	2	4	11	10	-1	-13%
Leaf vegetables and brassica's	5	7	6	6	6	0	-6%
Oil and extracts	20	23	28	21	17	-4	-18%	4%
Olive oil	8	16	22	17	15	-2	-11%
Vegetable oils	9	5	6	3	1	-3	-77%
Extracts	2	2	1	1	1	1	70%
Coffee, tea, herbs and spices	10	13	14	12	12	1	6%	3%
Total Victoria	406	549	427	372	479	107	29%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Markets

Table 29. Value of Victorian Horticulture Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Hong Kong	51	96	48	57	70	13	23%	15%
New Zealand	80	68	76	55	56	2	3%	12%
India	16	45	34	27	50	22	82%	10%
Japan	45	54	37	45	47	1	3%	10%
Indonesia	19	27	28	26	26	0	-1%	5%
USA	33	38	40	18	26	8	43%	5%
Singapore	21	32	21	18	24	6	34%	5%
United Arab Emirates	11	28	17	15	21	6	40%	4%
Thailand	12	24	13	12	13	2	14%	3%
Vietnam	5	11	5	9	12	3	31%	3%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Australia

Table 30. Value of Australian Horticulture Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Fruit (fresh or dried)	392	499	419	319	376	58	18%	29%
Vegetables (fresh or dried)	137	152	150	167	367	200	120%	29%
Nuts (fresh or dried)	185	235	202	209	229	20	10%	18%
Processed	245	223	213	179	183	4	2%	14%
Coffee, tea, herbs and spices	81	89	88	100	95	-6	-6%	7%
Oil and extracts	45	58	54	41	33	-8	-20%	3%
Total Australia	1,086	1,257	1,127	1,015	1,283	268	26%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Figure 9. Australian Horticulture Exports by State of Origin for 2011-12 (A$ million)

*Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports, and exports for which no state details are released for confidentiality reasons

Wine

Jenny Treeby, Farm Services Victoria and Mark McKenzie, Murray Valley Wine Growers

A mild season in 2011-12 with only two days when temperatures exceeded 40 degrees Celsius was ideal for steady, full colour and flavour development. Heavy rain at the tail end of vintage in the Murray Darling and Swan Hill regions created disease pressure for some growers and caused delays, but by that stage most of the fruit had already been harvested. Wine makers were pleased with the quality of fruit, with some calling it the best vintage since 2002 when mild conditions created the best fruit seen in years. Overall, the 2012 vintage produced 313t (for wine only), 320t (for wine and concentrate) across all varieties, with 117t for red varieties (wine only) 118t (wine and concentrate) and 197t (wine only) 201 t (wine and concentrate) for white varieties.

Tonnages per hectare were lower by about 15%, mostly due to the recovery from the heavy crop loads in 2010-11 and the coolness/wetness at fruit set in November 2011, but hardly any fruit was left on the vines. According to the 2012 Price Dispersion Survey, which captures prices and tonnages purchased and provided by 18 companies in Swan Hill and Murray Darling regions, the weighted average price paid for the vintage 2012 increased by 27% overall compared with 2011 (excluding post vintage bonuses or penalties). However, despite this overall price improvement a large proportion of the fruit was fetching prices below the cost of production, most notably Chardonnay and Shiraz which represent 60% of the regional plantings.

Products

Table 31. Value of Victorian Wine Exports by Product Category and Item (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Red	178	162	149	137	133	-4	-3%	60%
Bottle	154	125	112	102	54	-47	-47%
Bulk	23	35	35	34	33	-1	-2%
White	76	72	62	61	61	0	1%	28%
Bulk	8	20	15	18	32	14	77%
Bottle	68	51	45	43	16	-27	-62%
Sparkling	12	17	18	18	16	-2	-9%	7%
Other	2	3	3	8	7	-1	-12%	3%
Fortified wine	2	2	2	2	3	1	33%	1%
Total Victoria	270	255	234	226	221	-5	-2%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Markets

Table 32. Value of Victorian Wine Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
United Kingdom	80	95	88	69	66	-2	-3%	30%
China	15	22	36	41	48	7	16%	21%
USA	42	43	22	25	17	-8	-31%	8%
Canada	11	12	10	11	12	1	6%	5%
New Zealand	22	11	9	8	10	2	24%	5%
Japan	9	7	8	10	10	0	0%	4%
Hong Kong	8	6	7	10	9	-1	-13%	4%
Netherlands	4	5	7	7	6	-1	-13%	3%
Ireland	13	9	10	9	6	-3	-31%	3%
Singapore	10	6	6	5	5	0	6%	2%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Australia

Table 33. Value of Australian Wine Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Red	1,789	1,631	1,443	1,347	1,284	-63	-5%	64%
White	797	766	648	560	607	46	8%	30%
Sparkling	90	77	79	78	75	-3	-4%	4%
Other	18	19	22	24	27	3	11%	1%
Fortified wine	17	20	19	16	20	4	25%	1%
Total Australia	2,711	2,513	2,210	2,025	2,012	-13	-1%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data.

Figure 10. Australian Wine Exports by State of Origin for 2011-12 (A$ million)

*Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports, and exports for which no state details are released for confidentiality reasons

Seafood

Products

Table 34. Value of Victorian Seafood Exports by Product Category and Item (A$ million)

Product and Item	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Molluscs	70	59	56	75	72	-3	-4%	46%
Abalone^	68	57	55	75	46	-29	-39%
Prepared or preserved	0	0	0	0	9	9	0%
Other	2	2	1	1	18	17	-41%
Crustaceans^	21	26	24	62	71	10	16%	45%
Lobster^	19	24	22	60	68	9	15%
Other	2	2	2	2	3	1	50%
Fish	11	11	9	12	11	-1	-6%	7%
Prepared or preserved	7	7	6	6	5	-1	-13%
Live or fresh	3	2	2	4	4	1	18%
Frozen	2	2	2	2	1	-1	-31%
Seafood extracts and oils	3	4	3	3	3	0	-8%	2%
Other	3	4	3	3	3	0	-8%
Seaweed	0	0	1	2	0	-2	-79%	0%
Total Victoria	105	100	92	154	158	4	3%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Table 35. Value of Victorian Seafood^ Exports by Destination (A$ million)

Destination	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Hong Kong	51	52	51	79	75	-4	-5%	47%
Japan	26	20	18	21	24	4	17%	15%
Singapore	10	10	8	16	17	1	7%	11%
China	3	4	3	18	7	-11	-60%	5%
Thailand	0	0	0	5	6	1	22%	4%
Malaysia	2	1	2	4	4	0	-12%	2%
Taiwan	3	2	3	3	3	-1	-22%	2%
United States	3	3	1	3	2	0	-16%	1%
Indonesia	0	0	0	2	2	0	29%	1%
New Zealand	3	4	2	1	1	0	5%	1%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Australia

Table 36. Value of Australian Seafood Exports by Product Category (A$ million)

Product	2007-08	2008-09	2009-10	2010-11	2011-12	$ change*	% change*	% total
Crustaceans^	488	562	477	469	488	19	4%	48%
Fish	324	335	259	289	288	-2	-1%	29%
Molluscs^	252	250	253	235	224	-11	-5%	22%
Seafood extracts and oils	6	6	5	6	7	1	22%	1%
Seaweed	2	2	2	4	1	-2	-69%	0%
Total Australia	1,074	1,154	996	1,002	1,008	5	1%	100%
*$ change and % change are based on the difference between 2010-11 data and 2011-12 data. ^ Export figures need to be used with caution. Grain and wool exports are affected by confidentiality agreements. Live beef cattle, abalone and lobster have been affected by mis-reporting of state of origin.

Figure 11. Australian Seafood Exports by State of Origin for 2011-12 (A$ million)

* Other refers to export data from the Australian Capital Territory, Northern Territory, re-exports, and exports for which no state details are released for confidentiality reasons

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