Weekly Agribusiness News Recap

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By Georgia Devenish - Agricultural Research Analyst at JLL

CNH Industrial, the parent company of Case IH and New Holland, has bought AgDNA, an Australian farm management platform company. AgDNA had a relationship with Case IH prior to the acquisition. The companies had previously partnered together to develop the farm management platform ClearVU. ClearVU, a platform designed to help growers boost on-farm productivity, efficiency and profitability, was launched last year and distributed through Case IH dealers.

Consolidated Pastoral Company (CPC) confirmed this week that a consortium led by Guy Hands (founder of Terra Firma Capital, the current majority shareholder of CPC) and his family along with the management of CPC are progressing a proposal to acquire the company. Other investors are also being invited to participate in the buyout. The deal, reportedly worth more than $600 million, follows Terra Firma decision to sell down the company in March 2018. In the interim since, CPC has sold nine of its cattle stations in the Northern Territory and Queensland, with sales totalling approximately $310 million. CPC remains the largest private cattle company in Australia, with 3.2 million hectares of land and a carrying capacity of circa 300,000 head of cattle as well as vertical integration into two feedlots in Indonesia.

Gina Rinehart's Hancock Agriculture continues to expand its presence in the New England region of New South Wales with the acquisition of 'Warrabah Station'. The purchase adds to Hancock Agriculture's footprint in the New England which includes the 3,234 hectare 'Glendon Park' acquired in November 2018. The properties have been key to Rinehart's diversification into Wagyu beef. Today, Ms Rinehart owns one of the world's biggest full-blood and pure-bred Wagyu herds, with more than 8,000 head.

Nippon Paper Industries has announced an agreement with Orora Limited to acquire its Australia and New Zealand fibre packaging division. The $1.72 billion acquisition will be made through a newly incorporated subsidiary of Australian Paper, a wholly owned subsidiary of Nippon Paper Industries. The purchase will be subject to final approval from the relevant authorities and is expected to be completed by the end of March 2020.

The Australian Competition and Consumer Commission (ACCC) has raised concerns over the proposed sale of the Tasmanian forestry assets of Resource Management Service LLC (RMS). RMS is selling its hardwood plantations and a one-third share in a woodchip marketing and export business in Tasmania by competitive tender. The ACCC has been reviewing two prospective buyers of the RMS assets: a fund managed by New Forests Asset Management and a fund advised by Global Forest Partners LP. In relation to the New Forests proposed acquisition, ACCC Commissioner, Stephen Ridgeway, said, "We are concerned that the acquisitions could impact the viability of competing export channels for hardwood plantation chips in northern Tasmania, which could lower prices paid to private growers of plantation logs." At this stage, the ACCC does not consider that the Global Forest Partners bid raises competition concerns in Burnie. The ACCC's final decision is scheduled for 5 December 2019.

An eighth consecutive year of growth in value has been recorded for Australian fruit exports. With a value of $1.39 billion in 2018/19 fruit exports have grown at a compound annual growth rate of 20 percent since 2010/11. Table grapes have recorded the largest growth in export value, increasing approximately 44 percent from $176.4 million to $580.3 million. The presence of table grapes in Australia's horticultural sector continues to grow with strong investment and improving yields evident in the 31.9 percent increase in export volume recorded over the period. Despite this growth, demand continues to outpace supply leading to an 11 percent increase in the average export price since 2010/11.

The Australian wine sector contributes $45.5 billion to the Australian economy according to an independent economic report produced by AgEconPlus released by Wine Australia. AgEconPlus found that the wine sector's economic contribution has grown by 13 percent since 2015, an average growth rate of three percent per year. Wine Australia CEO Andreas Clark commented on the results of the report, saying, "the average price of exports has increased by seven percent per year from 2015/16 to 2018/19. This contributed to an increase in total winemaking revenue to $6.3 billion and the average winemaking sector wage to $70,412, from $65,000 in 2015."

The Australian red meat and livestock industry State of the Industry Report 2019, launched last week by the Red Meat Advisory Council (RMAC). The report, compiled by Meat & Livestock Australia (MLA), highlighted that while Australia is a relatively small producer of red meat, it plays a big role in global export markets. MLA Managing Director, Jason Strong, said, "Australia exported 65 percent of beef, 73 percent of sheepmeat and 90 percent of goatmeat production in 2018, valued at more than $13.5 billion. This makes Australia the world's largest red meat exporter by value." RMAC Chief Executive Officer, Anna Campbell, also commented on the findings, highlighting the consumption trends in Australia, suggesting, "Domestically, Australia is one of the world's largest per capita consumers of beef and sheepmeat. In 2018, we consumed three and five times the global consumption averages for beef and sheepmeat respectively."

The Red Meat Advisory Council has released 'Red Meat 2030', a plan to guide and grow Australia's red meat industry over the next 10 years. The publication sets an ambitious goal to double the value of industry sales to $57 billion and triple the amount of capital invested in the sector by 2030. It was developed following consultation with industry stakeholders and organisations at forums and workshops held around Australia earlier this year.

China has edged out the US as the largest consumer of Australian lamb. China is on track to exceed imports of 70,000 tonnes of Australian lamb in 2019 compared to 56,830 tonnes exported in 2018 to our then largest market, the US. China also continues to dominate the export mutton market. In 2018 China imported 54,937 tonnes of Australian mutton, and industry expectations for the 2019 suggest it's likely exports will exceed this figure by a hefty margin. China's increase in sheepmeat imports is being driven, in large part, by the outbreak of African Swine Fever.

The ACCC has released an Issues Paper seeking views on the key issues affecting markets for tradeable water rights in the Murray-Darling Basin. Responses to the Issues Paper or Short-form Issues Paper are due by 29 November 2019. The ACCC has also made a public forum announcement which outlines the series of public forums in November to hear the views of those engaged in, or affected by, markets for   tradeable water rights in the Murray-Darling Basin.