Australia: Livestock Farming

Innovation

October 2016

WHY AUSTRALIA?

As one of the world’s leading agricultural producers, renowned for safe, healthy and high quality food, Australia is located close to markets in Asia that are driving growing global demand.

EMPLOYMENT, EXPENDITURE, EXPORTS AND TURNOVER

EMPLOYMENT(PERSONS: FULL TIME & PART TIME)

298,945

213,065

TOTAL: 512,010

BUSINESS R&D EXPENDITURE(A$ MILLION)

$205.537

$689.006

TOTAL: $894.543

EXPORTS(A$ BILLION)

$21.441

$20.206

TOTAL: $41.647

TURNOVER(A$ BILLION)

$73.392

$99.976

TOTAL: $173.368

6.1% GROWTH

IN 12 MONTHS

8% GROWTH

IN 12 MONTHS

Sources: EMPLOYMENT – ABS Catalogue 6291.0.55.003 Labour Force, Australia, August 2015. TURNOVER – ABS Catalogue 8155 Australian Industry 2013-2014, June 2015. R&D EXPENDITURE – ABS Catalogue 8104.0 Research and

Experimental Development, Businesses, Australia 2013-2014. EXPORTS – Based on DFAT, Composition of Trade, Australia 2013-2014. Note: figures exclude forestry.

unprocessed

processed

COMPOSITION OF AGRIBUSINESS EXPORTS

4Source: Based on DFAT publication, Trade in Primary and Manufactured Products, Australia 2013-2014

TOP EXPORT DESTINATIONS FOR AUSTRALIAN AGRIBUSINESS PRODUCTS

5Source: DFAT. Country and Commodity pivot table – FY2006 to FY2014

GROWTH OF THE MIDDLE CLASS (2009 VERSUS 2030 FORECAST)

6Source: Kharas, H. 2010. Working Paper No 285: The emerging middle class in developing countries. OECD Development Centre

A SOPHISTICATED LOGISTICS NETWORK

7

AUSTRALIAN FARMLAND TOPS THE GLOBAL TABLE FOR INVESTMENT

OPPORTUNITIES

8Source: Savills Research, International Farmland Focus 2012.

A REPUTATION FOR SAFE, QUALITY FOOD

9

• Uses lowest amount of agricultural chemicals per hectare in the world (2014 World Ranking: Food Safety Performance; Conference Board of Canada)

• World-leading regulatory standards and quarantine policies

• Free of many pests and diseases, including BSE and foot and mouth disease.

WORLD-CLASS R&D DELIVERS EXCELLENCE

10

• Broad deployment of high-quality technology

• Global best-practice farming techniques

• High degree of professionalism and technical expertise.

Asia and the Pacific: comparison of FTAs in force Australia USA Canada EU NZ

ASEAN ● ●

Brunei ● ●

Chile ● ● ● ● ●

China ● ●

Hong Kong ●

Japan ●

Korea ● ● ● ● ●

Malaysia ● ●

Singapore ● ● ●

Thailand ● ●

Trans-Pacific Partnership Agreement* ● ●

FREE TRADE AGREEMENTS

11

*Negotiations concluded

OPPORTUNITIES BY SECTOR

• Clean and green image, disease-free status

• Individual, electronic traceability system

(NLIS)

• Comprehensive grading system (MSA)

• Efficient farm production methods

• Diversity of production regions and systems

• Low-cost land supports grass-fed production

• Innovation well supported by R&D

infrastructure

• Proximity to key Asian markets confers a

freight advantage in terms of cost and time to

market

Total output 2,464,700 tonnes

Volume of exports 1,732,100 tonnes

Share of world trade 18%

Output exported 75%

Top three markets Japan, USA, China

SECTOR ATTRIBUTES AT A GLANCE

BEEF

13

• Investing in northern farm infrastructure to improve stocking rates

• Developing integrated supply chains through joint ventures to supply growing export

markets

• Commercialising processing and product technologies to improve cost-competitive

delivery

• Developing value-added meat exports based on grass-fed, organic and provenance

attributes

• Commercialising world-leading sensing and objective measurement technologies in

processing to improve cost-competitiveness of supply chains

INVESTMENT OPPORTUNITIES

BEEF - OPPORTUNITIES

14

AUSTRALIA'S TOP FIVE BEEF MARKETS VERSUS COMPETITORS

15Source: UN Comtrade (United Nations Commodity Trade Statistics Database). Accessed September 2015.

SECTOR ATTRIBUTES

• High food safety and biosecurity standards,

coupled with advanced product traceability

systems

• Globally competitive, high-quality milk

production

• Regional diversity

• Well-developed and organised R&D sector

supporting primary and processing sectors

• Smaller-scale manufacturing facilities offering

agility and flexibility

• Produces a diverse range of functional, ready-

to-consume value-added products and

ingredients

Total output 9.7 billion litres

A$13 billion incl.farm,

manufacturing & export

Farmers Over 6000

Employees 40,000

Value of exports A$3.2 billion

Share of world trade 7%

Output exported 38%

Top three markets China, Japan, Singapore

DAIRY

16

AT A GLANCE

AUSTRALIAN DAIRY IS….

• Leading rural industry in terms of adding value through downstream processing. Much of this

processing occurs close to farming areas

• Well-established industry across temperate and some subtropical areas of Australia.

While the bulk of milk production occurs in south-east states, all states have dairy industries that

supply fresh drinking milk

• A range of high-quality consumer products, including fresh milks, custards, yogurts and a wide

variety of cheese types, are produced in most Australian states. The manufacturing of longer

shelf life products, such as cheese and specialised milk powders, is becoming more

concentrated in the south-east region of Australia.

• While supplementary feeding with grains is becoming increasingly common, the Australian dairy

industry remains predominantly pasture-based.

DAIRY

17Presentation Title

• Australian manufacturers

capitalised on better returning

cheese markets, at the

expense of Whole Milk

Powder production.

• Butter production is

increasingly consumed

domestically, while liquid milk

exports saw further growth.

• Export volume trends

(Tonnes): 816,944

• Total volume change: +7%

• Liquid milk (+21%)

• Cheese (+9%)

• WMP (–17%)

• Butter and blends (– 24%)

AUSTRALIA’S OUTLOOK

OCTOBER 2016

EXPORT SIGNIFICANT PRODUCT

SHIFTS

DAIRY OUTLOOK OCTOBER 2016

SOURCE: DAIRY AUSTRALIA

18

AUSTRALIAN DAIRY INDUSTRY LOCATIONS

19Source: Dairy Australia, Dairy Industry in Focus 2014. Numbers may not add up to 100 due to rounding errors.

• Development and consolidation of dairy farms to improve productivity

• Developing dedicated supply chains offering milk-to-product specification and delivering

traceability

• Co-investment to combine cost-competitive primary production, leading processing technologies

and export market access

• Developing specialty products with existing manufacturers for high-value target markets

• Farmland investment for capital gain at prices that represent a relatively low barrier to entry

INVESTMENT OPPORTUNITIES

DAIRY - OPPORTUNITIES

20

• Animal health and welfare

• Precision livestock management

• Helping farmers breed better livestock

http://www.csiro.au/en/Research/AF/Areas/Animal-Science

CSIRO

AUSTRALIA’S CAPABILITY IN ANIMAL SCIENCE

21

Australia’s national science agency Commonwealth Scientific and Industrial Research

Organisation (CSIRO) is among the world’s most esteemed scientific institutions. It is:

• in the top 0.1% in agricultural sciences, plant and animal science, environment and

ecology, and geosciences

• In the top 1% of global research institutions in 15 of 22 research fields

• Breeding Hornless Cattle - A discovery by CSIRO scientists is central to the Australian

Poll Gene Marker test, which is helping Australian cattle breeders select the best breeding

cattle for their herds. It may also help the industry end the painful practice of dehorning beef

cattle.

• Measuring how farm animals “feel” - researching ways to improve the welfare of

livestock by developing scientific methods for assessing how animals 'feel' in response to

common management practices.

• Improving conditions for livestock on the road - working with Australia’s farming

industries to ensure objective science underpins animal welfare standards for road

transport practices.

CSIRO

INNOVATION IN ANIMAL HEALTH AND WELFARE

22Presentation Title

• Working to develop, test and demonstrate the latest thermal

remote sensing technology on an Unmanned Aerial Vehicle

(UAV) to identify the location of livestock in extensive

rangelands

• Image: Eagle quad-rotor helicopter UAV platform with a thermal imaging

camera attached.

LOCATING CATTLE WITH UNMANNED AERIAL VEHICLES

- CSIRO

INNOVATION IN PRECISION LIVESTOCK MANAGEMENT

23Presentation Title

• Remote monitoring of cattle body condition through various imaging technologies has the

potential to improve the efficiency and cost effectiveness of livestock production systems

• LiDAR – "Light Detection And Ranging". LiDAR is a laser imaging technology that

measures three-dimensional structural data with millimetre to centimetre accuracy. It can

generate a detailed 3D 'picture' of the animals shape and surface characteristics.

• 3D imaging using stereo vision. Similar in concept to human binocular vision, stereo

vision uses two cameras to obtain two images from which 3D shape information can be

obtained.

• Connected to the Digital Homestead project which brings together new technology and

information streams from both within the farm and external to it, in order to make better

beef farm management decisions.

MEASURING CATTLE BODY CONDITION REMOTELY -

CSIRO

INNOVATION IN PRECISION LIVESTOCK MANAGEMENT

24Presentation Title

• Combines digital technologies, web-based solutions,

wireless sensor networks (WSN) , data analytics and

rural connectivity

• Collecting real-time data with cloud-based sensors

and wi-fi technology on: soil, pasture, cattle location,

activity and weight, with external data on meteo,

market pricing, etc.

• Improves productivity and profits of Australia’s

northern beef industry

• CSIRO, James Cook University, QLD Government

DAF – Department of Agriculture and Fisheries

www.digitalhomestead.org

THE DIGITAL HOMESTEAD PROJECT

INNOVATION IN PRECISION LIVESTOCK MANAGEMENT

25Presentation Title

• The Precision Pastoral Management Tools is a research project run by the Cooperative

Research Centre for Remote Economic Participation that aims to improve the productivity

and profitability of beef production by using advanced technologies to monitor and

analyse the performance of individual cattle and pastures remotely.

• Aims to develop a commercial Precision Pastoral Management System (PPMS) based on

integrated modules that are compatible with existing software and hardware. The PPMS will

integrate remotely collected, precision data on cattle and pasture performance, using

minimal labour inputs.

• Technologies: remote monitoring, pasture modelling, mapping programs and management

software.

• This system will provide crucial information to producers, helping them to make decisions

regarding destocking, timing of restocking, and pastoral care

PRECISION PASTORAL MANAGEMENT - CRC-REP

INNOVATION IN PRECISION LIVESTOCK MANAGEMENT

26Presentation Title

• The eShepherd is a fenceless farming system,

called a “virtual fence”. It is a collar and an app

that enables farmers to fence, move, or monitor

their livestock using their smartphone – from

anywhere, anytime.

• Each animal wears a GPS enabled collar

containing patented training software that trains

the animal to move or stay with a boundary set

up by the farmer.

• The system uses animal friendly patented

training software developed by the CSIRO:

each animal is trained to respond to an audio

sound that signals the fence boundary.

VIRTUAL FENCING - AGERSENS

INNOVATION IN PRECISION LIVESTOCK MANAGEMENT

27Presentation Title

• Plant gene technology can improve milk production by making more

energy available to a grazing cow.

• Research is changing the way a perennial ryegrass plant captures and

stores energy. Higher energy levels in the ryegrass result in more energy

being used by grazing cows for milk production than in rumen digestion.

• High-energy ryegrass will deliver an increase of metabolisable energy

(ME) of around 1 energy unit, translating to higher milk production.

Research modelling estimates it can increase farm productivity by at

least $200 per hectare a year.

HIGH-ENERGY RYEGRASS – DAIRY BIO

INNOVATION IN DAIRY DESIGNER FORAGES

28Presentation Title

• MLA – Meat & Livestock

Australia - the industry

representatives for the red

meat industry

www.mla.com.au

• Future Beef - to assist

graziers and the beef supply

chain in northern Australia

www.futurebeef.com.au

• Dairy Australia - the national

services body for the dairy

industry

www.dairyaustralia.com.au

• Dairy BIO - Creating a

positive future for the

Australian dairy industry

through transformational

bioscience innovations

www.dairybio.com.au

• CSIRO Animal Science

www.csiro.au/en/Research/A

F/Areas/Animal-Science

• Australian Pork Ltd

www.australianpork.com.au

• Australian Chicken Meat

Federation

www.chicken.org.au

BEEF DAIRY LIVESTOCK FARMING

KEY AUSTRALIAN STAKEHOLDERS

29Presentation Title

• Beef Australia, 6-12 May 2018,

Rockahmpton, QLD,

www.Beefaustralia.com.au

• ACV/ARV Combined Conference, 4 - 7

April 2017,Sydney, NSW

ava.com.au/cattle/events

• futurebeef.com.au/events/

• http://www.mla.com.au/News-and-

events/Events-and-workshops

• www.dairyaustralia.com.au/In

dustry-information/Dairy-

events-calendar.aspx

BEEF DAIRY

KEY EVENTS IN AUSTRALIA

30Presentation Title

SUPPORT FOR INNOVATION,

PRODUCT DEVELOPMENT AND

TESTING

AUSTRALIA OFFERS

Strong protection of intellectual property, tax incentives and clear policy settings

Access to the skills and capabilities needed for research and development

An ideal test market for new product development.

WHY AUSTRALIA FOR AGRIBUSINESS INNOVATION

GOVERNMENT SUPPORT FOR INNOVATION

R&D TAX INCENTIVES

33

45% refundable tax offset for eligible companies

40% non-refundable tax offset for all other companies.

INNOVATION ECOSYSTEM

A COLLABORATIVE APPROACH TO R&D

34

Significant public research activity:

• CSIRO

• Cooperative Research Centres

• Rural R&D Corporations

• Centres of Excellence

• Universities.

Private and joint public/private

initiatives that enhance productivity.

PRODUCT DEVELOPMENT AND TESTING

• Tap expertise including:

› Monash Universities’ Food Innovation

Centre: established by Mondelez

International, now supported by

China’s largest food company

COFCO.

› CSIRO integrated sensory flavour and

consumer research unit

AN IDEAL TEST MARKET FOR NEW FOOD PRODUCTS

35

Manage cost and risk

Test products in a market that is:

• culturally diverse

• relatively small, with a population of 24 million.

AUSTRALIA HAS THE RIGHT MIX

36

Geography Climate Regulatory, policy

and market settings

RURAL RESEARCH AND DEVELOPMENT CORPORATIONS

37

There are 15 rural RDCs, of which 5 are statutory

corporations or authorities, owned by the Commonwealth

and established under legislation. The remainder are

industry-owned, not-for-profit companies established in

accordance with Australia’s corporations law and declared

through regulation as the service providers to industry for

specific activities.

Each RDC is tasked with delivering tangible and practical

improvements for their industries in terms of productivity

and profitability, sustainability, and the community. They do

this through strategic and targeted investments in and

partnerships for research, development and adoption, and

in some cases, market access, market development and

promotion.

AUSTRALIAN RESEARCH COUNCIL (ARC) CENTRES OF EXCELLENCE

38

ARC Centres of Excellence are prestigious foci of

expertise through which high-quality researchers

maintain and develop Australia’s international

standing in research areas of national priority.

Each centre collaborates with partners from the

university sector and other organisations around

the globe, facilitating international knowledge

transfer that greatly enhances their research

outcomes.

Centres of Excellence are typically funded over a

period of up to seven years, allowing them the

flexibility to undertake comprehensive research

programs that tackle big challenges.

COOPERATIVE RESEARCH CENTRES (CRC)

39

The CRC Program supports industry-led collaborations

between industry, researchers and the community.

Australia has more than 20 CRCs linking researchers with

industry, in sectors as diverse as innovative manufacturing,

cancer therapeutics, spatial information and plant

biosecurity

The CRC Program has two elements:

• CRCs, which undertake medium- to long-term, industry-

led and high-quality collaborative research.

• CRC Projects (CRC-Ps), which undertake a short-term,

industry-identified and industry-led collaborative

research project.

There are currently 33 CRCs commercializing leading-edge

research taking place in Australian universities and

research institutions.

INDUSTRY GROWTH CENTRES

40

The Australian Government has established six Industry

Growth Centres, an industry-led approach to drive innovation,

productivity and competitiveness in areas of competitive

strength and strategic priority.

• Advanced manufacturing

• Cyber security

• Food and agribusiness

• Medical technologies and pharmaceuticals

• Mining equipment, technology and services

• Oil, gas and energy resources.

The initiative is ongoing, with A$248 million in Australian

Government funding over four years beginning in 2015–16.

FIAL is a new industry-led, government-funded initiative working to

accelerate commercially-driven collaboration and innovation in the

Australian food industry.

FIAL:

• fosters new collaborative partnerships

• translates research into positive outcomes

• establishes new trade and innovation relationships

• builds the quality and scale of the industry.

Food Innovation Australia Ltd (FIAL)

• CSIRO ON Accelerator and

Pre-Accelerator program is

open to research groups

within CSIRO, university

research centres and other

govt research institutes.

• Industry accelerator for Australian agriculture,

a series of commercialisation programs for

entrepreneurs and startups to access

support, mentors and capital

• Established by the National Farmers

Federation.

CSIRO ON PROGRAM SPROUT-X

ACCELERATORS AND INNOVATION ECOSYSTEM

41Presentation Title

CASE STUDIES

INNOVATION SNAPSHOT

AgriBio, Centre For

AgriBioscienceAgriBio is a A$288 million world-class facility for agricultural

biosciences research and development, and one of

Australia’s premier biosciences locations.

AgriBio brings together world-leading scientists in the fields of

plant and animal biosciences, biosecurity and soil sciences. It is a

joint initiative of the Victorian Government, through the

Department of Primary Industries, and La Trobe University.

AgriBio supports Victoria's A$11.6 billion agricultural sector

through research to:

• improve productivity

• fight disease

• reduce environmental impact.

The centre has successfully increased dairy productivity using

genetic technology and secured strategic partnerships with global

grain companies to develop novel and adaptive germplasms.

INNOVATION SNAPSHOT

Longley Farm British dairy company Longley Farm has

invested more than A$100 million in a high-tech

milk processing facility in Casino, New South

Wales, developing a unique export business

based on a patented 'fast-freeze' technology.

Under local subsidiary Richmond Dairies, the

company is exporting 10-kilogram blocks of high-

quality frozen cream for use by premium ice-cream

manufacturers, patisseries and bakeries in the

Middle East, South West Asia and Japan. The plant

also produces yoghurt concentrate and skim milk

powder.

The plant is located on the NSW north coast and is

supplied with premium milk from Jersey cows, which

is high in fat and cream.

INNOVATION SNAPSHOT

Charoen Pokphand

Group (CP Group)CP Group, Thailand's largest private company,

is signalling its confidence in Australia's

premium food brand in Asia by signing a

Memorandum of Understanding (MoU) with

Australia's largest family-owned meat

processor, Thomas Foods International.

The MoU is the first step ahead of the two

companies establishing a joint venture to build an

advanced food processing centre that will produce

ready-made beef and lamb meals for export.

The new production facility will be based in the

northern suburbs of Adelaide. It will match

Thomas Foods' supplier relationships and product

credentials with CP Group's distribution network to

prepare and package foods for distribution across

Asia and the world.

INNOVATION SNAPSHOT

ChobaniNew York yoghurt manufacturer,

Chobani, was attracted to Australia by

the availability of quality milk.

Investing A$30 million in a new plant in

Victoria, the company has tripled

production capacity to over 30,000

tonnes of yogurt per annum.

In 2013, Chobani chose Australia as the

launch market for a range of yoghurts in

a flexible plastic pouch. And in 2016,

again in Australia, the company made its

first foray into dips.

INNOVATION SNAPSHOT

JBS One of the world’s largest meat

companies, Brazil’s JBS has consistently

expanded its Australian operations since

entering the market in 2008.

The company today stands as one of

Australia’s top five agribusiness and food

companies.

As part of its expansion strategy, JBS’s local

subsidiary in 2015 completed a A$1.45 billion

acquisition of Australian Consolidated Food

Holdings (Primo), Australia’s leading producer

of ham, bacon and smallgoods.

Australia’s network of FTAs allows JBS

Australia, now integrated from feedlotting to

branded smallgoods, to competitively export

high-value branded products to Asian

markets, leveraging Australia’s logistical,

technical and provenance credentials.

INNOVATION SNAPSHOT

CJ NutraConKorean firm, CJ NutraCon, invested in Australia

because of our freedom from disease and

reputation for food safety and quality.

CJ NutraCon was looking for a BSE-free

environment for manufacturing beef extract

products. In 2006 CJ NutraCon constructed a A$27

million production facility in Queensland.

Strict quarantine regulations are important to the

company.

“It is well known that Australia has a clean

environment, and this is important for us to ensure

our products are fresh and of the best quality.”

- Mr Jay Jeong, CJ NutraCon

INNOVATION SNAPSHOT

Sense-T Sense-T is a partnership program between the

University of Tasmania, CSIRO, and Tasmanian

Government.

Sense-T is a world-first economy-wide intelligent

sensor network that integrates different data

sources.

Through user-friendly applications drawing on

real-time data, Sense-T assists producers to

improve efficiency and productivity, reduce input

costs, improve environmental sustainability and

demonstrate food provenance and safety.

WANT TO LEARN MORE?

Deborah Ponzio, Investment

Manager Austrade Milano, Italy

Deborah.Ponzio@austrade.Gov.Au

WWW.AUSTRADE.GOV.AU