Weekly Agribusiness New Recap

By Georgia Devenish - Agricultural Research Analyst at JLL

Australian Dairy Nutritionals Groups - an ASX-listed, vertically integrated dairy business - has announced possible extensions to the Camperdown Dairy project on the eve of construction beginning on stage one of development. The first stage of the Camperdown Dairy project (costing somewhere between $6 million and $8 million) is weeks away from being built on a 4 hectare greenfield site near Camperdown in the Corangamite Shire of south-west Victoria. If expansion plans are approved, the project value may grow up to $50 million.

Australian Dairy Nutritionals Group also recently announced the company had secured the exclusive right to manufacture, distribute and sell The Collective branded products in Australia. The deal is expected to increase revenue by between $7 million to $9 million over the next 12 months.

Namoi Cotton, like many agribusiness' across Australia, has suffered a challenging 12 months. The company has reported a $10.99 million loss for the year ended 29 February 2020. This is $10.43 million unfavourable to the prior comparative period. Severe drought, particularly in core growing regions, saw Namoi Cotton's ginning volumes fall from 1.2 million bales in FY19 to less than 450,000 bales in FY20.

CEO Michael Renehan commented on the 2020 season saying that the company was estimating a cotton crop of approximately 600,000 bales. This equates to approximately 17% of the average Australian cotton crop over the past 10 years. Namoi Cotton forecast's its company will gin between 100,000 and 160,000 bales from the 2020 crop.

Coles has reported 13.10% comparable sales growth for the third quarter - the highest quarterly comparable sales growth in Coles' history. The growth has been driven by demand for groceries amid the COVID-19 outbreak. The retailer has reported that sales returned to normal in April.

Amongst the myriad of implications of COVID-19, people's shopping behaviour has also changed. Coles CEO Steven Cain said, “People are shopping less times per week, and they’re buying more when they shop, and so with less trips you get less impulse items being purchased.” As a result convenience meals appeared to be taking hit, but a highlight has been, as Cain pointed out, “[Consumers] are eating more fresh food… Veg sales are the highest penetration they have ever been in our business.”

There has been an influx of sheep from Western Australia into eastern Australia. It is understood that the last time a shift of this proportion was seen was following the breaking of the Millennium Drought. Since August 2019, approximately 800,000 head of Western Australian sheep have been sold across the country. In March 2020 alone 274,000 head of sheep and lambs were sent east. Majority have been lambs.

The major reason for this significant movement of livestock has been that one side of the country appears to be emerging from some of the worst drought conditions that have afflicted them over the past 18 months, while the other faces water deficiencies and a late seasonal break. On the upside for Western Australian producers, prices being received make the pain of forced selling just a little more bearable.

A $19 million state-of-the-art Riverland Wine and Food Centre may be on the cards for the South Australian River Murray community. Ernst and Young were engaged by the Marshall Liberal Government to undertake a business case for the proposed centre. The findings included the creation of up to 117 direct and indirect jobs and value-add of $14.5 million to the states economy. The business case is publicly available on the Primary Industries and Regions SA website.

ABARES released its 'Fisheries and aquaculture statistics 2018' report this week. The report contains comprehensive information on commercial fishing and aquaculture in Australia covering fisheries production, trade data and consumption and employment statistics. The key highlights included an increase of 4% percent in the Gross Value of Production as well as in total production volume during 2017/18.

Under the new mandatory Dairy Code of Conduct, dairy processors must include a statement justifying minimum prices offered in new milk supply agreements. The new code came into effect on 1 January 2020, however, it did not apply to contracts entered into before that date, so there will be significant interest in the new milk supply agreements that processors must publish on their websites by June 1. The code requires processors (other than those defined as a small business) to publish the agreements and prices, as well as reports on any disputes with suppliers, by 2pm on that day as well.

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