The Victorian and Australian Grains

Industry

Presentation to the

Asociación de Cooperativas Argentinas

November 10, 2007

Victorian Grain Production-a typical year?

• Victoria produces between 4 and 5 million tonne of grain annually depending of course on seasonal conditions including– Wheat: 2-2.5 million tonne, with up to 21

grades of wheat across Victoria. – Barley: 1-2 million tonne, with up to 25

segregations based on grade and variety.

2007-08 Season

• Wheat – 1.7 million tonnes• Barley – 950 000 tonnes• Canola - 212 000 tonnes• 42 per cent below the five year

average (2001-02 to 2005-06)• Still almost double 2006/07

production of these crops in 2006-07.

Rainfall in 2007

Blue: Average rainfall

White: Average rainfall

Light Red: Much Below Average

Dark red: Lowest on record

Rainfall June 1 – July 31(The following Sept. and Oct. have been driest on

record)Blue: Above average rainfall

White: Average rainfall

Light Red: Much Below Average

Dark red: Lowest on record

But it wasn’t always this dry...

Wheat Production

Oilseed Production

Australian Winter Grains

• Average winter crop 32mmt– Wheat 19mmt– Barley 7.6mmt– Canola 1.3mmtHighest Winter crop 43mmt (2003/04)Lowest Winter Crop 14.6 mmt (1994/95)

• Around 300mls of growing season rainfall (April – Oct) is needed

• Spring conditions are critical in determining crop size.

Winter Crop - AreaCropped Area vs. Sheep Numbers

-

20

40

60

80

100

120

140

160

180

Sheep N

o's

(M

Head)

-2.04.06.08.010.012.014.016.018.020.022.024.0

Are

a (

MH

a)

Sheep Numbers Winter Crop Area

Seasonal Conditions

Wheat Yields vs. SOI

-20

-15

-10

-5

-

5

10

15

20

251970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

0.50

0.70

0.90

1.10

1.30

1.50

1.70

1.90

2.10

2.30

Wheat Yield SOI

Wheat Production

0.02.04.06.08.0

10.012.014.016.018.020.022.024.026.0

1990

/91

1991

/92

1992

/93

1993

/94

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

5-yr

Ave

Mill

ion T

onnes

• 19.4mmt average production• Accounts for 60% of total winter grain production• Highest 26mmt (2003), Lowest 8.9mmt (1994)• Domestic Consumption – approx 6.5mmt per year• Approx 70% of production is exported – Asia 65%, Middle East 20%

Barley Production

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

1990

/91

1991

/92

1992

/93

1993

/94

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

5-yr

Ave

Mill

ion T

onnes

• 7.5mmt average production

• Accounts for 23% total winter grains

• Approx 35% Malt Barley / 65% Feed Barley

• Domestic Consumption 3.3mmt per year

• Approx 60% of production exported annually.

Domestic Consumption - Mills

Capacity East Coast

QLD/NSW/VIC

National

Millers 3.10mmt 3.60mmt

Maltsters 0.50mmt 0.95mmt

Crushers 0.45mmt 0.50mmt

Domestic Feed Demand

• Approximately 8.0-8.5mmt of the winter crop production is used as feed – Wheat 3.5mmt– Barley 2.3mmt– Oats 1.0mmt– Triticale 0.5mmt

State Demand Sectors

QLD 3.4mmt Feedlots/Poultry

NSW 3.3mmt Feedlots/Poultry/Pigs

VIC 3.3mmt Dairy/Poultry/Pigs

SA 0.7mmt Poultry/Pigs

WA 0.8mmt Poultry/Feedlots

National 11.5mmt

Exports

• With domestic demand on the East Coast, exports are predominantly from the West Coast (WA/SA)

Wheat & Barley

02468

10121416182022242628

East Coast (QLD/NSW/VI C) West Coast (SA/WA) National

Mill

ion

To

nn

es

Supply Domestic Demand Exportable Surplus

Freight / Receival Costs

State Farm to Silo Recieval Costs Freight to port Total

QLD $ 10 $ 19 $ 26 ($15-$35) $55

NSW $ 10 $ 19 $ 41 ($17-60) $70

VIC $ 10 $ 19 $ 29 ($15-44) $58

SA $ 10 $ 15 $ 13 ($5-45) $38

WA $ 10 $ 7 $ 18 ($5-28) $35

Vic - 5 out of last 7, D > SSupply vs Demand

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09F

Ton

nes

Supply Domestic Usage

Vic : Good-Ordinary-Year?3-4 million tonnes

Victorian Production

-500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,0005,000,0005,500,0006,000,0006,500,000

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09F

Ton

nes

Wheat Barley Oats Triticale Total

Feedgrains – Who/Where/How?Victorian feedgrain usage by sector

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09F

Ton

nes

Dairy Poulty Pigs Feedlots Other

FEEDGRAINS DOMINATE EAST COAST

QLD

‘000 mt

NSW

‘000 mt

VIC

‘000 mt

Flour Mills 0.490 1.500 0.590

Maltsters 0.050 0.080 0.300

Feedgrains

(Dairy)

2.750

(.210)

3.600

(.350)

3.600

(1.800)

Current Vic. grain demand 2008

• Flour Milling 593,000

tonnes

• Malting 298,000

tonnes

• Feed Grain 3,360,000

tonnes

Region Poultry Pigs Dairy F/lots Other

N-West 90 310 700 136 16

MetEast 640 20 600 4 14

S-West 140 40 600 10 40

870 370 1900 150 70

3,360

Supply Chain - Channel Flows

Channel National Victoria

1. Ex Farm to farm

20% 25-30%

2. Truckie – Trader

40% 30%

3. Feedmill 40% 40%

Features of Vic Supply Chain

Grain Mmt To mill To Inter To Farm

Wht-mill 0.6 0.6

Bly-malt 0.3 0.3

Cont 0.3 0.3

Dairy 2.0 0.8 0.6 0.6

Poultry 0.3 0.3

Pigs 0.3 0.3

F/l-other 0.2 0.1 0.1

Total 4.0 1.4 0.9 0.7

Research and Development

• Public versus private investment• GRDC (60% grower funded, 40% taxpayer)

– 0.99 percent of net farm value for 24 grains – 0.693 per cent net farm value for maize

• State Government, Universities and State based breeding facilities

• Private companies and joint ventures• GM technology• End Point Royalties

Grain Handling

• Currently the costs of handling Victorian grain are between $40-$50 per tonne.

• Off-farm costs represent up to one third of the gross receipts on a tonnage basis for barley and wheat production.

• The main handler of grain in Victoria is GrainCorp Ltd. The customers include grain marketers who sell in both Australia and abroad and domestic grain consumers such as millers, maltsters and stock feeders.

The Brave New World...

What the VFF is doing for members

– Brokerage– Credit reference checks– Primary producer registrations– Access to technologies

Subsidy Support

0

10

20

30

40

50

60

70

EU US Canada Australia%

VFF Structure

• Represents 18,000 Victorian Farmers• 4,500 grain farmers• Provide voice for grass root grain growers• 11 District Councils within grain area• Aim is to maximise returns to members and

ensure their long-term viability, as well as helping to ensure the industry's ongoing competitiveness and profitability.

VFF Grains Group

• Advocacy for Grain Growers on:– Rail investment– Biotechnology– Contract issues

• Services for members– Credit Check Service– Marketing Decisions Table

Questions?

Questions?