2019/20 australian agricultural trade

201

9/2

0 Australian agricultural trade

Cattle Crops Wine HorticultureSheep

Dairy Wool Seafood Cotton Misc

NZ

$1.7b

-0.8%

VIETNAM

$1.8b

+1.5%

INDONESIA

$2.1b

-0.2%

JAPAN

$5.2b

-1.0%

CHINA

$14.7b

+5.1%

SOUTHKOREA

$2.9b

-0.8%

MENA

$2.8b

-9.2%

EU$2.5b

-11.8%

USA

$4.6b

+6.0%

SINGAPORE

$1.3b

+22.1%

Australian agricultural exports 2019/20

2 AUSTRALIAN AGRICULTURAL TRADE 2019/20


Executive summary

Australia exported $50.1 billion in agricultural goods in 2019/20, the second most valuable year on record, despite a year-on-year decline of $601.4 million. Since 2010/11, Australia has added $17.1 billion in value to agriculture exports, demonstrating the quality and reliability of Australian produce.

The outlook for Australian agricultural exports in 2020/21 rests on three major factors – seasonal conditions, the quality of our key trade relationships, and the timing of a COVID-19 recovery across domestic and international markets.

Rural Bank’s Australian agricultural trade 2019/20 report examines the state of agricultural exports in the financial year at a national, state and commodity level. The report looks at trade performance in major export markets and forecasts the state of the industry in the coming year.

China remains critical to Australian exports, accounting for 30.3 per cent of total export value. For the first time, China became the top destination for Australian beef, overtaking Japan. However, Australia’s relationship with China is one to watch following the imposition of tariffs on Australian barley and the recent announcement of an anti-dumping inquiry into Australian wine imports.

China’s tariffs on Australian barley are expected to reduce the value of exports in the coming season. Reduced crop production in the 2019/20 season limited the value of exports overall however demand for lentils pushed Bangladesh into Australia’s top five cropping export destinations for the first time in 10 years.

The introduction of the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA) has boosted prospects for several key commodities. Live cattle exports and milk powder are expected to benefit due to the removal or reduction in tariffs and cropping exports will increase as the agreement allows for 500,000 tonnes of Australian feed grain to be imported duty free in the first year of the IA-CEPA.

For many farmers in Australia’s eastern states, the wetter start to 2020 has raised the prospects of stronger cropping production in both broadacre and horticulture. While cropping export values are expected to grow, it’s likely there will be a contraction in both the volume and value of exports from livestock industries, as producers focus on restocking.

The COVID-19 pandemic has fundamentally changed our way of life in 2020, and recovery remains highly uncertain.

Demand for fruit is expected to remain strong as consumers seek healthy, immune boosting foods in the wake of COVID-19. Demand for premium commodities such as seafood, wine, wool and red meat will continue to feel the impact of ongoing foodservice closures and weaker economic conditions. A global recovery from COVID-19 – which is far from certain – will be critical in improving demand for many agricultural commodities.

The trade report is designed to be used as a tool for farmers and others in the agriculture industry to examine the key trends and outlook for agricultural exports in Australia. As an agricultural specialist lender, Rural Bank understands the importance of regular updates in what is an everchanging and at times uncertain operating environment.



The total value of agricultural exports was $50.1 billion in 2019/20.

Compound annual growth of agricultural exports is 5.7% over the past 10 years.

The value of agricultural exports decreased by -1.2% in 2019/20.

The Australian dollar averaged 67.1USc in 2019/20.

Australian agricultural exports declined in value by $601.4 million in 2019/20, the first time values have fallen since 2009/10. Despite the decline, 2019/20 was still the second most valuable year for exports, following record value in 2018/19. The growth trend in agricultural exports has slowed in the last three years, with the total value of exports remaining in a tight range between $49.9 billion and $50.7 billion. Export value growth during this period has been largely subdued due to dry seasonal conditions which has led to reduced crop production while other commodities, particularly red meat, have grown enough to somewhat offset lower crop exports.

Cattle industry exports were the largest growth sector again in 2019/20 as drought-induced destocking coupled with higher prices led to a $2.0 billion (+16.6 per cent) increase in value. Destocking also led to growth in the value of sheep industry exports, up by $141.7 million (+3.3 per cent). Cropping exports recorded a modest recovery of $180.7 million (+2.4 per cent) but remained below the five-year average. Fruit was the third largest growth sector by value, up by $154.2 million (+11.1 per cent) as increased export volumes were met by strong demand. Australian sugar prices were higher as a result of a global supply deficit, which led to an increase of $149.8 million (+9.8 per cent) in export value. Recovery in dairy exports continued with a third consecutive year of growth, supported by strong demand. Cotton exports recorded the largest decline in value of $1.6 billion (-62.5 per cent), followed by wool which declined by $1.3 billion (-33.9 per cent). Both commodities were affected by reduced production and weaker demand for natural fibre products.

The average value of the Australian dollar over the 2019/20 financial year was 67.1USc, 6.2 percent below 2018/19 and 11.9 percent below the five-year average. The Australian dollar had primarily traded between 70 to 80USc over the period from January 2015 to July 2019, however in March 2020 the Australian dollar briefly fell to 55.1USc before making

National trade summary

Australian agricultural exports declined in value in 2019/20 after nine consecutive years of growth.

Strong growth in the value of cattle industry exports offset large declines in wool and cotton exports.

a recovery back above 70USc. Given the implications of COVID-19 on export pace, many agricultural sectors were unable to take full advantage of the temporary drop in the Australian dollar.

The outlook for Australian agricultural exports in 2020/21 will largely rest on three major factors: seasonal conditions, trade relationships with our key trade partners, and the timing of COVID-19 recoveries in Australia and around the world. The wetter start to 2020 in eastern states has raised prospects of stronger cropping production (both in broadacre and horticulture), however increased production and therefore export volumes will still be dependent on continued rainfall in the lead up to harvest periods. While wetter conditions could be positive for cropping export values, they are likely to lead to contractions in both the volume and value of exports from livestock industries as cattle and sheep producers focus on restocking. Demand for many agricultural commodities, particularly premium products such as seafood, wine, wool and red meat, will continue to feel the impacts of COVID-19, as a result of the ongoing closure of many foodservice outlets and weaker economic conditions. The outlook for COVID-19 recoveries around the world are highly uncertain but will be critical to improving demand for many agricultural commodities.

Australia’s relationship with China will be a significant factor to watch across the agricultural industry as China was the most valuable export market for all commodities except sugar and vegetables in 2019/20. Further changes in this important trading relationship will be a cause for concern following the imposition of tariffs on Australian barley and the anti-dumping investigation into Australian wine exports. The introduction of the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA) will provide immediate benefits for commodities such as cropping, cattle and dairy, while progress towards longer-term improvements in trade access could be made through negotiations on trade agreements with the United Kingdom and European Union.

50.1

5.7 67.1

-1.2

(USc)(%)

(%)($b)

A$

bill

ions

Value of Australian export commodities

16

6

14

12

8

10

4

2

0

Cat

tle

Cro

ps

She

ep

Win

e

Dai

ry

Woo

l

Sug

ar

Frui

t

Sea

food

Nut

s

Cot

ton

Veg

etab

les

Mis

c

2018/19

2019/20

A$

bill

ions

Value of Australian agricultural exports

55

35

50

40

45

30

15

10

5

20

25

0

20

00

/01

20

01

/02

2

00

2/0

32

00

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42

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72

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82

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0


A$

bill

ions

Australian goods and services exports

550

200

500

400

450

350

250

300

150

50

100

0

25%

15%

5%

10%

20%

0%

Metal ores and minerals exports

Other exports Ag as % of total (RHS)

Agricultural exports

20

00

/01

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62

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72

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82

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92

01

9/2

0

Compound annual growth rates and values of Australian agricultural export commodities

16

14

6

12

8

10

4

2

0

-5% 5%

10yr CAGR

10% 15% 20%0%

SUGARDAIRY

COTTON NUTS

WINEWOOLFRUITSEAFOOD

VEGETABLES

SHEEP

CROPS

CATTLE

A$

bill

ions

Value of Australian agricultural imports

22

12

20

18

14

16

10

4

2

6

8

0

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00

/01

20

01

/02

2

00

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52

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72

00

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92

00

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02

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1/1

22

01

2/1

32

01

3/1

42

01

4/1

52

01

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62

01

6/1

72

01

7/1

82

01

8/1

92

01

9/2

0

A$

bill

ions

Commodity growth comparison

The compound annual growth rate (CAGR) of Australian agricultural exports was 5.7 per cent over the last 10 years.

Nut exports were the strongest performers recording compound annual growth of 17.5 per cent. Increased production and strong demand drove annual export values to record highs in the past two years. Similar drivers have been behind the 13.7 per cent CAGR for fruit. Cattle and sheep industry exports have also been very strong growth commodities with CAGR of 9.7 per cent and 8.5 per cent, respectively.

Of the 12 major agricultural commodity sectors, six have a CAGR between 2.4 and 3.5 per cent.

Sugar is the only commodity with a negative CAGR, largely due to export values being suppressed by low prices in recent years.

Imports

The value of agricultural imports to Australia increased by $1.75 billion (+8.8 per cent) in 2019/20. This was the tenth consecutive year of growth in import value and raised the value of imports to 42.5 per cent of the value of exports.

The top import commodities were miscellaneous prepared food ($3.3 billion) and wine, whiskey and beer ($2.8 billion combined).

Australia’s largest sources of agricultural imports were the European Union (EU) ($5.8 billion), New Zealand ($3.6 billion) and the United States ($2.4 billion). These three sources accounted for 54.1 per cent of Australia’s agricultural imports in 2019/20.

Australian goods and services exports

Agricultural exports share of Australian goods and services exports declined for a fourth consecutive year in 2019/20, down to 10.5 per cent from 10.8 per cent the year before and from as high as 20.3 per cent in 1996/97.

The value of Australian goods and services exports increased by $5.9 billion (+1.3 per cent) in 2019/20, a much lower rate than the five-year CAGR of 8 per cent.

Although growth in total goods and services exports slowed in 2019/20, metal ores and minerals exports continued to grow at a strong pace, increasing by $22.0 billion (+20 per cent) to a total of $131.6 billion. Metal ores and minerals exports accounted for 27.6 per cent of Australian goods and services exports in 2019/20.

Australia imported $21.8 billion worth of agricultural products in 2019/20.

Agricultural exports accounted for 10.5 per cent of Australian goods and services exports.

The 10-year CAGR of agricultural commodities ranges from -1.2 per cent for sugar to 17.5 per cent for nuts.


A$

bill

ions

Growth of top 10 Australian export markets

16

6

14

12

8

10

4

2

0

0% 6% 10% 14% 16%2% 8% 12%4%

JAPANUSA

HONG KONG

SOUTH KOREA

MALAYSIA

INDONESIANEW ZEALAND

SINGAPORE

CHINA

VIETNAM

10yr CAGR

A$

bill

ions

Value of top 10 Australian export markets

16

6

12

14

8

10

4

2

0

Chi

na

Japa

n

US

A

Sou

th K

orea

Indo

nesi

a

Vie

tnam

New

Zea

land

Sin

gapo

re

Hon

g K

ong

Mal

aysi

a

2018/19

2019/20

Export values increased to four of Australia’s top 10 agricultural export markets in 2019/20.

China was the largest growth market for Australian agricultural exports in 2019/20 and over the past 10 years.

Export markets

Australia’s top five agricultural export markets are China, the US, Japan, South Korea and Indonesia, which accounted for 61 per cent of total agricultural export. This is up from 58 per cent in 2018/19. Of these top export markets, only China and the US recorded growth in value in 2019/20. This growth did however offset declines in Japan, South Korea and Indonesia, which saw the combined value of the top five export markets increase by 3.1 per cent.

China remained a strong growth market for Australian agricultural exports, recording a fourth consecutive year of growth in value of $709.5 million (+5.1 per cent) in 2019/20. This meant that China accounted for a larger share of Australian agricultural exports at 30.3 per cent, up from 28.4 per cent in 2018/19. Beef was the largest growth commodity to China in 2019/20, increasing by $1.1 billion (+61.7 per cent). Strong growth was also recorded for sheepmeat, wheat, canola and nuts which more than offset the $903.1 million (-31.6 per cent) decline in the value of wool exports.

Japan recorded a modest decline of $52.4 million (-1 per cent) in 2019/20, ending five consecutive years of growth. A $120 million (+5.2 per cent) increase in the value of beef exports to Japan was not enough to offset a $165.1 million decline (-22.3 per cent) in cropping exports and $43.9 million (-8.3 per cent) decline in dairy exports. These trends could be reversed in 2020/21 due to expected growth in cropping and dairy exports offsetting a likely contraction in beef exports.

Growth in export value to the US of $264.2 million (+6 per cent) was almost entirely driven by growth in the value of beef exports. Beef exports to the US increased by $388.2 million (+20.1 per cent) in

2019/20, a feat that is unlikely to be repeated in 2020/21 due to reduced Australian beef exports and weaker import demand. Sheepmeat, horticulture and wine exports recorded lower export values to the US in 2019/20 which are likely to continue in 2020/21.

South Korea recorded a small decline in export value in 2019/20 of $24.8 million (-0.8 per cent). This minimal rate of decline means that 2019/20 was the second highest export value year on record, following strong growth over the last decade with a CAGR of 7.7 per cent. Lower wool and beef exports were the drivers of the overall decline, while wheat and grape exports recorded improvements.

Indonesia also recorded a modest decline in export value of $4.9 million (-0.2 per cent) as growth in cattle, cotton and dairy exports offset declines in cropping and horticulture. An expected decline in live cattle and beef exports will likely lead to a larger decline in export value in 2020/21, offsetting growth from an expected increase in crop production and improved trade access under the IA-CEPA which entered into force on 5 July 2020.

Elsewhere, exports to Vietnam recovered by $27.7 million (+1.5 per cent) in 2019/20 after two consecutive years of decline. Vietnam has been an emerging growth market with a strong 10-year CAGR of 13.3 per cent. In 2019/20, growth of $214.5 million (+58.1 per cent) in the value of live cattle exports and $73.6 million (+20.9 per cent) in crop exports more than offset a $281.1 million (-75.1 per cent) decline in cotton.


Western Australia was the only state to record a decline in the value of exports in 2019/20, which decreased by $552.3 million from the record high of $8.3 billion in 2018/19. Cropping exports were unable to match the record volumes of the previous year due to lower production and greater shipments to eastern states. As a result, the value of Western Australian cropping exports fell by $396 million (-8.3 per cent) in 2019/20. Wool and seafood exports also recorded large declines in value, down 32.4 per cent and 30.2 per cent respectively, as the impacts of COVID-19 contributed to weaker demand.

South Australian exports increased in value by $193.4 million in 2019/20, partially recovering from a 13.9 per cent decline in 2018/19. Wine remained the most valuable export commodity but recorded a 1.9 per cent decline in value in 2019/20. Growth in export value was led by wheat (+$208.2 million) and lentils (+$94.1 million) which more than offset decline in sheepmeat (-$120.6 million) and wool (-$104 million).

Tasmanian agricultural exports exceeded $1 billion in value for the first time in 2019/20 after three consecutive years of growth. The value of exports from Tasmania has grown at 6.9 per cent per year over the last 10 years, the highest CAGR of all states. Seafood exports recorded the strongest growth in 2019/20, increasing by $86.5 million, followed by beef which increased by $28.4 million. Dairy exports also continued their recovery with a second consecutive year of growth.

Exports from the Northern Territory increased by $130.8 million in 2019/20. Live cattle exports were the primary source of growth, increasing by $143.8 million (+26.4 per cent), as dry conditions led to destocking and a greater number of cattle being exported live.

All states aside from Western Australia recorded growth in the value of agricultural exports in 2019/20. Victoria remains the most valuable state by export value, at $13.7 billion in 2019/20, followed by Queensland ($9.3 billion), New South Wales ($7.8 billion) and Western Australia ($7.7 billion).

Victoria recorded a fourth consecutive year of growth in the value of agricultural exports in 2019/20, increasing by $276.2 million (+2.1 per cent). Growth in value was a consistent theme across most commodities, particularly beef, lentils and canola. Wool was a notable exception as lower export volumes and average price resulted in a decline of $677.8 million (-33.5 per cent).

Queensland recorded the largest growth in total value of agricultural exports in 2019/20, growing by $943 million (+11.2 per cent). Beef was by far the largest source of growth, increasing by $845.6 million (+15.7 per cent) as drought-induced destocking resulted in a significant increase in beef production and therefore export volumes. The value of cropping exports from Queensland fell by $32.1 million (-8.2 per cent), with declines in wheat and sorghum offsetting growth in chickpeas.

New South Wales recorded a recovery in the value of exports in 2019/20 after two years of decline. Growth of $196 million (+2.6 per cent) was led by strong increases in red meat as destocking in the state helped drive beef exports, increasing by $306.5 million (+17.2 per cent) and sheepmeat increasing by $171.2 million (+18.5 per cent). This more than offset declines in the value of wool (-$279.4 million) and wheat (-$47.7 million).

Crops

Horticulture

Seafood

Sheep

Dairy

Cattle

Wine

Wool

VIC$13.7b

+2.1%

WA$7.7b

-6.7%

QLD$9.3b

+11.2%

NSW$7.8b

+2.6%

SA$5.6b

+3.6%

TAS$1.1b

+24.7%

NT$739m

+21.5%

State export performance


Export valueAustralia exported $14.3 billion of cattle industry products in 2019/20, an increase of $2 billion (+16.6 per cent).

Export priceAverage export price of Australian beef in 2019/20 was $8,714/t, an increase of 12.3 per cent.

Export volumeAustralia exported 1.3 million tonnes of beef in 2019/20, an increase of 5.8 per cent.

OutlookTight Australian supply and lower global beef prices to drive a decline in value of exports.

Trade performance and outlook

Australian cattle industry exports recorded a third consecutive year of growth in value in 2019/20 and reached a new record high of $14.3 billion. Expanding beef demand in major export markets and increased supply, resulting from dry conditions, drove an increase in export value of $4.9 billion (+51 per cent) since 2016/17.

Australian beef supply experienced a year of two halves in 2019/20 as drought-induced destocking led to year-on-year increases in production and export volumes between July 2019 and January 2020 before supply tightened in response to improved seasonal conditions. Overall, Australian beef production was 0.9 per cent higher in 2019/20, creating a larger exportable surplus. Typically, an increase in supply would result in reduced prices, especially when global production and exports are at record highs. However, the steady increase in global beef consumption was accelerated as the outbreak of African Swine Fever caused a significant deficit in Chinese protein supply and drove greater demand for imported beef, including from Australia. Strong Chinese demand supported higher prices in late 2019 and continued in early 2020 as tight supply and resurgent restocker demand drove higher cattle prices in Australia. This offered some protection from falling global beef prices amidst the outbreak of COVID-19.

Cattle

Live cattle exports reached a new record high value of $1.9 billion in 2019/20, with an increase of 14.7 per cent, the third consecutive year of growth. Growth in export value was primarily driven by a 11 per cent increase in the number of cattle exported, as a result of northern producers destocking and utilising the live trade to sell lighter cattle. Vietnam was the largest growth market for live cattle, increasing by 58.1 per cent, while the value of exports to Indonesia declined by 5.4 per cent.

Australian cattle industry exports are expected to decline in value in 2020/21 as a result of tighter supply and weaker global beef prices. A low national cattle herd and a shift into herd rebuilding in response to improved seasonal conditions are expected to tighten the volume of beef and live cattle exports in 2020/21. While these factors are expected to keep cattle prices supported for the remainder of 2020, Australian beef will eventually succumb to the downward pressure global prices have been under in response to weaker demand from the impacts of COVID-19 and greater competition in export markets. This pressure is likely to prevent any upside movement in prices. Live cattle exports will also be affected by tight cattle supply and reduced demand in 2020/21 and are expected to record a decline in value.

Growth in 2019/20 was driven by the continuation of a drought-induced lift in supply, coupled with growing export demand supporting high prices. Lower production is expected in 2020/21 as improved seasonal conditions allow for herd rebuilding which will reduce export volumes and drive a decline in export value, combined with increased competition and lower international prices.

Donna Slevin, Rural Bank, Victoria.

Cattle industry exports reached a record high value in 2019/20 after three consecutive years of growth.

Beef recorded its second highest year for export volume and live cattle hit a new record high.

FROM THE

FIELD

A$

bill

ions

Value of Australian cattle industry exports

16

12

14

10

4

2

6

8

0

Fresh/chilledFrozen Live Offal Hides

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Volume of Australian beef and offal exports

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Fresh/chilledFrozen Live (RHS)Offal

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Cattle

Major export markets

China continued to be a rapidly expanding market for Australian cattle industry exports in 2019/20 and overtook Japan to be the top export market. Growth to China can be partially attributed to expanding wealth driving increased beef consumption, but this trend was accelerated by a greater need for imported beef to fill a 20-25 million tonne annual protein deficit caused by the outbreak of African Swine Fever. Strong import demand will continue in 2020/21 while China’s pig herd recovers, however a decline in Australian beef export volumes will likely lead to slower growth in the value of exports to China alongside competition from growing volumes of beef from South America which will put pressure on the price of Australian beef.

Exports to Japan recorded a sixth consecutive year of growth in the value in 2019/20, however the volume of beef exports to Japan declined for a second year. Despite a lower volume of exports to Japan, stronger global demand supported higher prices for beef which drove the increase in export value. Australian beef exports to Japan in 2020/21 will be constrained by tight supply and the loss of a tariff advantage over the US which is expected to have larger volumes of beef to export in the second half of 2020.

The US recorded a third consecutive year of growth in export value in 2019/20. Similar to Japan, the volume of beef exports to the US declined, but the increased competition for beef from China drove a 20.7 per cent increase in average export price to the US. Lower beef consumption and increased domestic production resulting from COVID-19 impacts in the US is expected to combine with tighter Australian supply to lead to a decline in the value of Australian beef exports to the US in 2020/21.

South Korea recorded a small decline in export value in 2019/20 as an increase in the average export price of beef was unable to offset a 9.5 per cent decline in export volume. Australian beef is expected to experience another year of decline in export value in 2020/21 due

Value of Australia’s top 10 cattle industry export markets

Destination 2019/20 (A$ million)

Year-on-year % change % share

China $3,465 é +45.8% 24.2%

Japan $2,739 é +6.4% 19.1%

USA $2,366 é +19.9% 16.5%

South Korea $1,631 ê -0.9% 11.4%

Indonesia $1,191 é +6.2% 8.3%

Vietnam $722 é +51.0% 5.0%

MENA $441 ê -6.3% 3.1%

EU $300 é +10.7% 2.1%

Taiwan $221 é +17.2% 1.5%

Philippines $201 é +6.8% 1.4%

A$

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ions

Value of top five Australian cattle industry export markets

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JapanChina USA South Korea Indonesia

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Value of products exported to top five cattle industry markets

3.5

3.0

2.5

1.0

0.5

1.5

2.0

0.0

FY1

8

FY1

9

FY2

0

FY1

8

FY1

9

FY2

0

FY1

8

FY1

9

FY2

0

FY1

8

FY1

9

FY2

0

FY1

8

FY1

9

FY2

0

JapanChina USA SouthKorea

Indonesia

Fresh/chilledFrozen Live Offal Hides

Beef exports increased to all major markets except South Korea in 2019/20.

China became Australia’s top cattle industry export market in 2019/20 after growth of 168 per cent over the last three years.

to reduced import demand as domestic production increases and consumption decreases in response to the impacts of COVID-19, while competition from the United States, which already affected exports in 2019/20, is set to further accelerate.

Growth to Indonesia in 2019/20 was led by a $92.7 million (+33.8 per cent) increase in the value of beef exports which offset a $37.4 million (-5.4 per cent) decline in the value of live cattle exports. While tight Australian supply will restrict growth to Indonesia in 2020/21, both beef and live cattle exports to Indonesia are expected to benefit from the IA-CEPA which removed a five per cent tariff on 575,000 live male cattle in the first year, placed no restrictions or tariffs on live female cattle, and reduced tariffs on some boxed beef not already benefitting from zero per cent tariffs under ASEAN-Australia-New Zealand Free Trade Agreement.


Export valueAustralia exported $7.6 billion of crops in 2019/20, an increase of $180.7 million (+2.4 per cent).

Export priceAverage export price of Australian crops increased by 4.1 per cent in 2019/20.

Export volumeAustralia exported 16.7 million tonnes of crops in 2019/20, a decline of 1.6 per cent.

OutlookAnticipated increased production is expected to raise total value of exports, despite an expected drop in export price.


The value of Australian cropping exports in 2019/20 increased 2.4 per cent on 2018/19, but around 27 per cent below average. Reduced production was the major limiting factor for exports, with total value of barley and wheat exports 41 per cent and 23 percent below average respectively. Export values increased for canola (+21 per cent) and legumes (+33 per cent) but this was from a low base and remained below average.

Limited available stock for export was something of a double-edged sword. Whilst export volumes were down, average export price of all crops were up four per cent year-on-year as domestic demand supported local values, which forced a premium for exports. Average export prices increased for both wheat (+2 per cent) and canola (+11 per cent), mostly attributed to strong export demand from China. China is not a consistent buyer of wheat and canola, but it supported export values as more regular buyers were forced to compete for supply. Lack of demand for feed barley due to a decimated Chinese pig herd led to a 40 per cent reduction in total barley export value to China and was a major factor in declines of 26 per cent in value and 22 per cent in volume of total barley exports. China’s implementation of an 80.5 per cent tariff on Australian barley in May 2020 had an immediate impact on Australian barley exports, however with the tariff only in effect for the final month of 2019/20 China still consumed 53 per cent of Australia’s barley exports by volume.

Cropping

Australian cropping export value is expected to increase in 2020/21 as improved seasonal conditions are expected to see larger quantities of crops available for export. Export demand for wheat is expected to remain strong, particularly for grades grown predominantly in drought affected areas. Barley demand is likely to be reduced in the coming year due to Chinese tariffs effectively pricing Australia out of its largest export market. Demand for lentils has been supported by tariff reductions in India from 30 to 10 per cent. Whilst reduced rates only apply to vessels that landed prior to 31 August 2020, there is potential that discounted tariffs may remain in place longer should the impacts of COVID-19 continue to place pressure on food availability. Legume exports are expected to remain relatively steady with Bangladesh, Pakistan and Sri Lanka providing a baseline of demand.

The anticipated increase in total export value on the back of increased volume is expected to be somewhat dampened by a decrease in average export prices. A decline in domestic feed demand as a result of improved seasonal conditions is likely to reduce the support for local values seen in recent years in drought affected eastern states. While this would make Australian crops more attractive to export markets, they will face stiff competition from other major exporters with global ending stocks of wheat forecast to increase six per cent, and barley three per cent year-on-year at the end of 2020/21.

Drought in parts of eastern Australia limited stocks available for export in 2019/20, but increased export prices demonstrated demand for Australian cropping products. A promising start to the cropping season in parts of eastern Australia has provided optimism for improved production. Despite some concern around demand for barley, sentiment is mostly positive that increased production will result in better export opportunities in 2020/21.

Greg Kuchel, Rural Bank, Victoria.

Value of Australian crop exports increased slightly year-on-year but remain below average.

Volume of Australian crop exports was down year-on-year due to reduced production.

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Value of Australian crop exports

14

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10

4

2

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CanolaWheat Legumes Barley Other coarse grains*

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Volume of Australian crop exports

40

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15

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Cropping


China maintained its position as the most valuable market for Australian cropping exports in 2019/20 for the seventh consecutive year. Growth in 2019/20 was driven by increased demand for wheat and canola, which offset reduced demand for barley. Since barley has accounted for 68 per cent of Australia’s cropping exports to China on average over the last five years, China’s imposition of tariffs on Australian barley imports is expected to significantly reduce the value of cropping exports to China and the value of all barley exports in 2020/21.

Japan remained a consistent demand point for Australian wheat and barley, having been in the top three most valuable markets for Australian cropping exports in 24 of the past 25 years. There is potential to see Japan increase its share of Australian cropping exports of barley as a result of decreased competition from China, and wheat due to increased availability of preferred grades in eastern states. However, Japan’s appetite is limited which will put a ceiling on any increase in export demand.

South Korea came in as the third most valuable cropping export market. South Korea prefers Australian wheat for its noodle making characteristics which makes it more difficult to substitute from other sources than feed grades. Being more quality focussed than price sensitive meant exports to South Korea remained relatively steady in total volume, but due to reduced production their share of wheat export volume was up four per cent on average to 11 per cent of Australian wheat exports.

Vietnam’s share of cropping export value increased in 2019/20, but value was 13 per cent below the five-year average. Lower production and increased competition led to wheat export volumes falling 33 per cent below average. Export value to Vietnam is expected to increase in 2020/21 on the back of increased Australian production lifting wheat export volumes closer to average.

Bangladesh joined the top five cropping markets by value for the first time in 10 years. Growth was driven by a 48 per cent increase in lentil export volumes, which occurred due to increased demand for food staples resulting from the impacts of COVID-19. Competition between India

Value of Australia’s top 10 crop export markets



China $1,557 é +48.3% 20.4%

Japan $576 ê -22.3% 7.5%

South Korea $446 é +3.7% 5.8%

Vietnam $425 é +20.9% 5.6%

Bangladesh $388 é +39.0% 5.1%

Philippines $361 ê -35.0% 4.7%

Indonesia $360 ê -17.3% 4.7%

Germany $332 é +22.6% 4.3%

Thailand $315 é +27.3% 4.1%

Egypt $259 é +10.1% 3.4%

Barley makes up 68 per cent of China’s cropping exports from Australia on average.

China remains Australia’s most valuable destination for cropping exports.

and Bangladesh for Australian lentils drove a 24 per cent increase in the average price of lentil exports to Bangladesh. The value of cropping exports to Bangladesh is expected to decline in the coming year under the assumption that Indian tariffs on lentils are reinstated, which will ease demand before new crop supply is available for export.

Indonesia dropped out of the top five export destinations for the first time in twelve years. Being a price sensitive market rather than quality focussed, Indonesia sourced cheaper wheat from other origins in 2019/20. It will be difficult for Australia to regain market share with alternate sellers and supply chains now established. However, the IA-CEPA which entered into force on 5 July 2020 allows for 500,000 tonnes of Australian feed grain to be imported duty free in the first year and increasing five per cent per annum will aid grain exports to Indonesia in the coming year.

*‘other coarse grains’ includes sorghum, oats, maize, buckwheat, millet, rye and rice

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Value of top five Australian crop export markets

5.0

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Value of products exported to top five markets

2.2

1.0

0.4

1.6

0.2

0.6

0.8

1.2

1.4

1.8

2.0

0.0

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8

FY1

9

FY2

0

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8

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9

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8

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9

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8

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9

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JapanChina SouthKorea

Vietnam Bangladesh



Export valueAustralia exported $4.5 billion of sheep industry products in 2019/20, an increase of $141.7 million (+3.3 per cent).

Export priceAverage export price of Australian sheepmeat was $8,785/tonne in 2019/20, an increase of 11.1 per cent.

Export volumeAustralia exported 463,019 tonnes of sheepmeat in 2019/20, a decline of 5.2 per cent.

OutlookLower export volumes to drive a lower value of exports in 2020/21 but strong demand will offer some price support.


The value of sheep industry exports increased for a fourth consecutive year in 2019/20 and reached a new record high of $4.5 billion. Growth in value was driven by continued strong demand which supported higher average prices and offset a reduced volume of sheepmeat exports.

The volume of sheepmeat exports declined in 2019/20 and reflected the 4.8 per cent decline in lamb production and 8.9 per cent decline mutton production. Reduced production, and subsequent tighter export supplies, were the result of record low flock numbers and drought conditions in late 2019 and further restricted by restocking activity in early 2020 in response to favourable seasonal conditions.

The average export price of both lamb and mutton increased in 2019/20 by 6.8 per cent and 19.5 per cent, respectively. This resulted in record highs of $9,620/tonne for lamb and $7,502/tonne for mutton. Growing demand for Australian sheepmeat was accelerated by a significant protein deficit left by African Swine Fever in China. This combined with reduced supply to prompt stronger competition for Australian sheepmeat, particularly into China. Demand for sheepmeat was weakened by the impacts of COVID-19 due to major disruptions to foodservice channels as part of control measures. While lamb remains a high end, niche product

Sheep

in a global setting, mutton remains a more staple product in many export markets as relatively cheaper protein.

Live sheep exports increased in volume by 15.6 per cent with an additional 144,145 head being exported in 2019/20. This was an improvement from 2018/19 which had the lowest live sheep export levels since the 1960s. The increased number of sheep exported live combined with a 10.1 per cent increase in average export price to drive a 27.3 per cent increase in the value of live sheep exports to a total of $154.1 million.

Favourable seasonal conditions across much of eastern Australia in 2020 has allowed sheep producers to begin rebuilding flocks, particularly in New South Wales. Improved lambing rates and good lambing conditions will help drive a forecast four per cent increase in lamb production in 2019/20, however the existing low flock size and expected retention of ewe lambs for breeding stock will put pressure on supply in 2020/21, particularly mutton supply. Demand is expected to remain strong and offer some support for prices at existing high levels, however the uncertainty created by COVID-19 will continue to weigh on sheep and lamb prices until restrictions on foodservice channels ease in major export markets.

Australian sheep industry exports increased to a record high value in 2019/20 with a fourth consecutive year of growth. Growth in value was driven by increased average prices for lamb and mutton which offset the impact of reduced export volumes coming off the back of drought conditions. The value of exports is expected to decline slightly in 2020/21 as export volumes remain tight, driven by a low flock and restocking activity.

Tony Williams, Rural Bank, New South Wales.

Mutton was a significant contributor to the increase in value of sheep industry exports in 2019/20.

Australian sheepmeat export volumes trended lower in 2019/20, however a 15.6 per cent increase was seen in the number of live sheep exports.

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Value of Australian sheep industry exports

4.5

2.5

4.0

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3.5

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0.5

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1.5

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MuttonLamb Skins Live

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Volume of Australian sheep industry exports

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450

350

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MuttonLamb Live (RHS)

7

4

6

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3

5

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Sheep


A larger share of Australian sheep industry exports went to China in 2019/20 at 32.8 per cent, up from 27.1 per cent in 2018/19. Lamb exports led the way for the increase in exports to China in 2019/20 with an increase of $201.3 million (+47.1 per cent). Mutton was very close behind, with growth of $173.3 million (+39.8 per cent). The protein gap left by African Swine Fever helped drive stronger demand for Australian sheepmeat in China, however demand weakened between December 2019 and February 2020 as China responded to the outbreak of COVID-19. The earlier recovery from COVID-19 in China and continued requirement for protein imports to fill the deficit left by African Swine Fever should support continued strong demand for Australian sheepmeat in 2020/21.

The US continued to be a major export market for Australian sheepmeat, however a slight reduction in export value occurred in 2019/20 after seven consecutive years of growth. Lamb exports to the US declined by 7.4 per cent, while mutton increased by 14.1 per cent. With lamb being a premium, niche protein in the US, the weaker economic conditions and lower household incomes is expected to weaken demand for lamb in 2020/21 in addition to the continued disruptions from restrictions on foodservice outlets.

The average export unit value for sheepmeat to the US was $13.90/kg, compared to $6.90/kg to China, largely due to a significant difference in quality of cuts sent to each markets, but highlights the attractiveness of seeking to expand consumption in the US.

The value of sheepmeat exports to the MENA region declined by $92.9 million in 2019/20. A slight improvement in live exports after a sharp drop in 2018/19 helped to partially offset the decline of lamb and mutton exports which fell by 13.8 and 16.5 per cent, respectively. The impacts of COVID-19 and low oil prices will have a significant impact on average incomes in 2020/21 and is expected to drive a further decline in the value of exports to the region. The UAE accounted for 28 per cent

Value of Australia’s top 10 sheep industry export markets



China $1,463 é +24.9% 32.8%

USA $887 ê -4.7 19.9%

UAE $247 é +5.5% 5.5%

Qatar $211 ê -0.7% 4.7%

Malaysia $193 é +8.7% 4.3%

Japan $165 é +14.8% 3.7%

South Korea $155 é +4.9% 3.5%

EU $139 é +1.2% 3.1%

Kuwait $122 ê -2.4% 2.7%

Saudi Arabia $114 é +10.8% 2.6%

Increase in unit price was the main driver of the increase in the total value of exports to China as volumes reduced.

China grew for the fourth consecutive year as the main market for Australian sheep industry exports.

of sheep industry exports to the MENA region, making it the third largest export market after China and the US as a standalone country. The value of sheepmeat exported to Iran reduced by 98.6 per cent, from $75.7 million to $1.03 million in 2019/20 as demand for imported sheepmeat was significantly reduced in response to the economic recession which resulted from US imposed sanctions oil export revenue.

Malaysia, Japan and South Korea all recorded a fourth consecutive year of growth in export value in 2019/20. Although they are all relatively small markets compared to China, USA and MENA, it was a positive sign to see consistent growth from these emerging markets for Australian sheepmeat.

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Value of top five Australian sheep industry export markets

4.0

3.5

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USAChina MENA Malaysia Japan

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Value of products exported to top five sheep industry markets

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8

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9

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8

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9

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8

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9

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8

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9

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USAChina MENA Malaysia Japan

MuttonLamb Skins Live


Export valueAustralia exported $2.9 billion of wine in 2019/20, a decline of $46.2 million (-1.6 per cent).

Export priceAverage export price of Australian wine in 2019/20 was $3.90/L, an increase of 7.1 per cent.

Export volumeAustralia exported 745 million litres of wine in 2019/20, a decline of 8.1 per cent.

OutlookLower production and weaker export demand to drive a decline in value of Australian wine exports in 2020/21.


Australian wine exports declined in value in 2019/20 by 1.6 per cent after five consecutive years of growth. The modest decline meant it was still the second highest year on record for export value and more than $1 billion (+57.4 per cent) higher than the low of 2013/14.

The primary cause of the decline in export value in 2019/20 was the lower volume of exports. This was the second consecutive year of decline in export volume after a peak in 2017/18. The volume of exports was restricted by a three per cent decline in the 2019 wine grape crush, caused by a dry winter and hot summer temperatures which produced lower yields.

A rise in the average export price of Australian wine exports partially offset the impact of the lower export volume on the value of exports. Growth in export demand, particularly for red wine in China, has supported six consecutive years of growth in the average export price of Australian wine. The average export price was 52 per cent higher since 2013/14.

Red wine exports have been the strongest source of growth in wine export value since 2013/14 and recorded only a modest decline of 1.3 per cent in 2019/20. Declines in value were larger for white wine (-1.9 per cent) and sparkling wine (-8.5 per cent) which have not experienced the same surge in demand in recent years as red wine.

Wine

Australian wine exports are expected to experience a second consecutive year of decline in value in 2020/21. Dry conditions and losses from bushfires, smoke damage and other extreme weather events resulted in a 12 per cent decline in the 2020 wine grape crush and the smallest crop since 2007. This is expected to further restrict the volume of wine available for export. In addition to lower volumes, the impacts of COVID-19 are expected to lead to weaker demand for wine in export markets due to a general decline in alcohol consumption and greater price sensitivity under a weaker economic situation. However, demand for wine could benefit from the trend of consumers seeking to purchase items that provide comfort and a sense of luxury while more time is spent at home. The anti-dumping investigation into Australian wine exports to China poses a significant risk to future demand given the scale and recent growth of the Chinese market, particularly for bottled red wine.

The value of wine imports to Australia increased by 1.1 per cent in 2019/20 to $842.7 million, exceeding the record high from 2018/19. New Zealand remained the largest source of imports with 40.5 per cent of the total value of wine imports but only recorded a 0.2 per cent increase in value in 2019/20. France and Italy continued to be growing sources of wine imports, both recorded third consecutive years of growth in 2019/20.

A decline in the value of wine exports in 2019/20 came after five years of growth. The decline occurred as a rise in the average export price was not enough to offset a lower export volume which resulted from lower wine grape production. The value of exports is expected to fall again in 2020/21 due to another year-on-year decline in wine grape crush, coupled with weaker demand resulting from the impacts of COVID-19.

James Robinson, Rural Bank, WA, SA, NT and Western Victoria.

Australian wine exports fell to a value of $2.9 billion in 2019/20, the second highest value on record.

Australia wine exports in 2019/20 were the lowest volume since 2015/16.

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Value of Australian wine exports

3.0

2.0

2.5

1.5

0.5

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0

WhiteRed Sparkling Fortified Other

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Wine

Value of Australia’s top 10 wine export markets



China $1,075 ê -0.1% 37.6%

USA $445 ê -0.4% 14.7%

UK $410 é +3.1% 13.6%

Canada $188 ê -5.1% 6.5%

Hong Kong $104 ê -24.9% 3.6%

Singapore $103 é +13.6% 3.6%

New Zealand $99 ê -2.1% 3.5%

Netherlands $57 ê -11.4% 2.0%

Japan $48 ê -12.4% 1.7%

Belgium $38 é +23.1% 1.3%

Red wine exports to the UK and white wine to the US were the only growth sectors in major markets in 2019/20.

Australian wine exports to China declined in 2019/20 after five consecutive years of growth.

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Value of top five Australian wine export markets

2.5

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0.5

1.0

1.5

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USAChina UK Canada Hong Kong

20

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Value of products exported to top five wine markets

1.2

1.0

0.4

0.2

0.6

0.8

0.0

FY1

8

FY1

9

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0

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8

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9

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0

FY1

8

FY1

9

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0

FY1

8

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9

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8

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9

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0

USAChina UK Canada HongKong


Hong Kong remained Australia’s fifth largest wine export market, but export value declined by $34.3 million in 2019/20. The decline was due to a 30.1 per cent decline in the average export price which offset a 7.5 per cent increase in export volume. Singapore nearly overtook Hong Kong thanks to a $14.1 million increase in export value, mostly coming from growth in red wine exports. This continued a persistent growth trend over the last decade which has seen the value of exports to Singapore more than double.


China was the dominant growth market for Australian wine exports over the last decade but recorded a modest decline in export value in 2019/20 after five consecutive years of growth. Red wine accounted for 97 per cent of the value of Australian wine exports to China and remained unchanged in 2019/20 while all other wines recorded decreased value. Growth was constrained by lower supply of Australian wine which resulted in a 17.8 per cent decline in export volume. This was offset by a 21.5 per cent increase in average export price, indicating strong demand from a growing number of imported wine consumers. The outlook for Chinese wine demand is uncertain, given the unfolding impacts of COVID-19, however a slowdown is likely in consumption growth. Slower demand growth will be coupled with further tightening of supply from Australia, which is expected to result in a decline in the value of Australian wine exports to China.

The value of Australian wine exports declined to the US and Canada in 2019/20 due to lower export volumes which resulted from lower Australian production. Growth to these markets appears unlikely in 2020/21 as export volumes will again be restricted by lower production. Wine consumption in these markets is also trending lower, further challenging demand for Australian imports, however opportunities for growth in premium market segments may be possible.

The United Kingdom (UK) was the only market in Australia’s top five export markets to record growth in 2019/20. The value of exports to the UK was driven by a $19.4 million (+8.4 per cent) increase in the value of red wine exports which exceeded the declines in all other types of wine. Despite growth, wine exports to the UK in 2019/20 were less than half of their peak value in 2006/07.


Export valueAustralia exported $2.5 billion of dairy products in 2019/20, an increase of $50.6 million (+2 per cent).

Export priceAverage export prices increased 28.7 per cent for milk powder and 5.3 per cent for cheese and curd.

Export volumeAustralia exported 266,353 tonnes of dairy products in 2019/20, a decrease of 15.8 per cent.

OutlookMilk production growth in 2020/21 will aid export volume. However, softer prices are expected.


The value of Australian dairy exports increased for the third consecutive year in 2019/20, driven by improvements in price which offset a decline in export volume as unfavourable seasonal conditions in 2019 kept overall milk production at a historically low level. Lower supply from Australia and stronger export demand, particularly for skim milk powder to China, led to a recovery in average export prices.

Cheese and curd exports continued to be Australia’s most valuable dairy export. Export value increased by $8.3 million (+0.8 per cent) to $997.5 million. A 5.2 per cent decline in export volume was offset by a 5.3 per cent rise in average export price.

Milk powder exports rebounded in 2019/20, with an increase of $22.7 million (+2.9 per cent) to $812.9 million. This was due to a 28.7 per cent increase in average export price, which more than offset a 20.1 per cent reduction in export volume. Skim milk powder increased in value by $37.5 million to $523.1 million, driven by a 36.6 per cent increase in average export price which countered a 21.2 per cent decline in export volume.

Dairy

Whole milk powder recorded a decline of $33 million (-11.9 per cent) due to a decline in volume (-17.7 per cent).

Milk and cream exports were higher for the third consecutive year, increasing by $22.1 million (+7.4 per cent) to $321.7 million. The value of exports increased due to a rise in both volume (+3.8 per cent) and average price (+3.4 per cent).

Butter exports decreased in value by $43.5 million (-32.5 per cent) to $90.2 million. This was driven by widespread reductions to demand resulting in a 43.7 per cent decline in export volume which was only partially offset by a 19.8 per cent increase in average export price.

Dairy export value is likely to be higher in 2020/21 due to increased milk production resulting from more favourable seasonal conditions and robust milk prices. While export volumes are expected to be higher, any growth in the value of exports is likely to be restrained by softer growth in global dairy commodity prices due to demand uncertainty stemming from economic constraints caused by COVID-19.

The forecast of higher milk production in Australia will contribute to an increase in export volume in 2020/21. However, world supply is also expected to be higher driven by government intervention in response to COVID-19 which will likely lead to softer prices. China and Japan will remain our largest trading partners by value, currently representing 26 per cent and 19.2 per cent respectively.

Josie Zilm, Rural Bank, Victoria.

Australian dairy exports increased in volume for the third consecutive year to a total of $2.5 billion.

Lower milk production in the first half of 2019/20 led to a decline in export volume.

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Dairy


China remained Australia’s largest trading partner for dairy products in 2019/20, increasing by $65.3 million (+11 per cent) to $662 million. Growth to China was led by an increase in the value of milk powder exports of $39.6 million (+12.2 per cent), primarily driven by a higher average export price. Milk and cream exports increased by $4.6 million (+3.9 per cent) as demand continued to grow for fluid milk imports. Cheese and curd exports increased by $1.9 million (+1.9 per cent) despite an 8.5 per cent decline in export volume. Demand for dairy products in China is expected to continue to grow and in 2020/21 Australia will be better placed to cater to that demand due to an expected increase in milk supply.

Japan remained the largest market for Australian cheese and curd exports, however total dairy export value to this market decreased by $43.9 million (-8.3 per cent) in 2019/20. Cheese and curd exports decreased by $29.5 million (-6 per cent), driven by 9.4 per cent reduction in export volume. The reduction in volume was most evident during April and May when year-on-year volume was down 20 per cent and 16.9 per cent respectively due to reduced air freight following COVID-19 reductions in international passenger travel.

The value of dairy exports to Singapore rebounded after two consecutive years of decline, recording an increase of $13.1 million (+7.6 per cent). Singapore continued to be a consistent market for all dairy product categories, and most of the growth in 2019/20 was due to a $7.1 million (+12.7 per cent) increase in fluid milk and cream exports.

The value of dairy exports to Indonesia increased by $16.3 million (+10.6 per cent). Milk powder exports were responsible for most of the growth in value, increasing by $11.6 million (+11.5 per cent). Trade relations between Australia and Indonesia have been improved via the IA-CEPA which has resulted in zero tariffs on milk powder from January 2019, moving forward this could drive demand higher.

Value of Australia’s top 10 dairy export markets



China $662 é +11.0% 26.0%

Japan $487 ê -8.3% 19.2%

Singapore $186 é +7.6% 7.3%

Indonesia $170 é +10.6% 6.7%

Malaysia $164 é +8.0% 6.4%

Thailand $119 é +12.6% 4.7%

Taiwan $102 é +4.7% 4.0%

Philippines $97 é +27.7% 3.8%

Hong Kong $97 é +6.0% 3.8%

New Zealand $94 é +7.4% 3.7%

Milk powder exports are being supported by growing demand from China and Indonesia.

Growing demand for dairy imports is helping to drive the value of Australian dairy exports higher.

Dairy exports to the Philippines surged in 2019/20, increasing by $21.2 million (+27.7 per cent) to $97.5 million. The primary driver of this growth was exports of skim milk powder which increased by $14.7 million (+102.8 per cent). The increase in skim milk powder exports was largely due to opportunistic buying in May and June 2020, taking advantage of more affordable prices and importing 4,494 tonnes compared to 271 tonnes for the same period in 2019. This trend is unlikely to continue in 2020/21 as such an increase appears unsustainable as inventories reach a satisfactory level.

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Export valueAustralia exported $2.5 billion of wool in 2019/20, a decline of $1.3 billion (-33.9 per cent).

Export priceAverage export price of Australian wool declined by 22.3 per cent to $10,256/tonne.

Export volumeAustralia exported 245,760 tonnes of wool in 2019/20, a decline of 14.9 per cent.

OutlookA slight increase in export volume will be offset by a lower average export price from depressed global demand.


A significant decline in global demand for wool, largely a result of the COVID-19 pandemic, drove the value of Australian wool exports to decline for a second consecutive year in 2019/20. Export volume also declined as a result of low global demand, coupled with a reduction in domestic wool production in 2019/20.

Wool prices trended lower for the entire season, continuing the trend that saw prices come off historic highs before the beginning of the 2019/20 season due to reduced demand resulting from trade tensions between China and the US. Following this, the Australian wool industry experienced some of the most severe impacts of the COVID-19 pandemic. The Eastern Market Indicator lost over 35 per cent of its value due to shutdowns that forced overseas processors to cease work and greatly reduced retail demand for woollen clothing. The economic implications of the pandemic will likely see a shift away from high value clothing such as woollen clothing, towards cheaper synthetic fibres as personal incomes fall.

Wool

Declines in export value were recorded for all micron ranges in 2019/20, as both a reduction in export volume and average export price contributed to the dramatic drop in export value. With Australian wool export value derived mostly from fine and medium wool, declines in global demand saw these two micron categories account for more than $1 billion of the loss of value in 2019/20.

Improved seasonal conditions and the drawdown of wool produced in 2019/20 that was held back from the market due to poor prices will likely cause an increase in wool export volume of approximately five per cent in 2020/21. Export value, however, will likely decline in 2020/21 as the average export price of wool is expected to remain depressed and record another year-on-year decline. The export value of Australian wool in 2020/21 is expected to be 10 per cent lower than 2019/20.

The Australian wool market faced significant challenges during 2019/20 as both average export price and export volume declined to result in a significant decline in export value. While a slight increase in export volume is expected in 2020/21 due to improved seasonal conditions and drawdown of high wool stocks on-farm, the average export price is likely to decline which will drive another decline in export value.

Mark Pain, Rural Bank, Queensland and Northern Rivers New South Wales.

The value of Australian wool exports dropped to levels not seen since 2013/14.

Global demand for wool weakened significantly in 2019/20, resulting in a significant drop in the volume of wool exported.

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Wool


China remained Australia’s largest value export market for wool, as has been the case since 1998/99, despite a $903.1 million decline in export value in 2019/20. While the COVID-19 pandemic began in China, the Chinese market recovered quickly from the outbreak and had begun to restart wool processing after government-imposed shutdowns just as COVID-19 began to sweep across the rest of the world. This drove a dramatic drop in demand for wool globally, and as a result Chinese processors had fewer markets where they could send processed wool. Market activity dropped as a result, with Chinese buyers almost absent from auctions as COVID-19 spread more widely. While the market recovered slightly towards the end of the season, prices remained well below where they were pre-COVID-19. Declines in export values were seen across all micron clips, with both the 20-23 micron and finer than 20 micron, utilised in higher quality clothing exports, responsible for most of the losses. Low retail demand, as a result of the shutdowns and economic implications, will likely lead to reduced spending and a shift in consumer demand to lower cost clothing options, such as faux fur and polyester, and away from higher priced options like wool. As a result, the value of wool exports to China is likely to be lower in 2020/21, and further at risk due to tensions between China and Australia (and China and the US). This could potentially cause heavy declines in demand should retaliatory tariffs be implemented on wool as they have for other agricultural commodities.

It was a similar story in Australia’s second largest export market for wool, Italy. As one of the first countries affected by COVID-19 in Europe, workplace shutdowns included clothing manufacturers across the country.

Value of Australia’s top five wool export markets



China $1,994 ê -32.1% 76.8%

Italy $149 ê -40.4% 5.7%

India $146 ê -40.4% 5.6%

Czech Republic $80 ê -36.8% 3.1%

South Korea $64 ê -45.5% 2.5%

All micron clips saw significant declines in export value across all export markets.

The reduction in Chinese export value was the key driver of decline in Australian wool export value in 2019/20.

The value of 20-23 micron wool exports declined by almost $71 million (-52 per cent) in 2019/20, after increasing by nine per cent in 2018/19. The global economic downturn is likely to see demand for high end clothing manufactured in Italy decline. This will see Italian demand for Australian wool and export value decline in 2020/21.

India and the Czech Republic also recorded a large drop in the export values of Australian wool, recording a $45.7 million and $39 million reductions in value, respectively. The largest declines in export value for India were seen in the 20-23 micron category (-$53.2 million), while the finer than 20 micron category saw the most significant drop in value (-$12 million) for the Czech Republic.

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Export valueAustralia exported $1.7 billion of sugar in 2019/20, an increase of $150 million (+9.8 per cent).

Export priceAverage export price of Australian sugar in 2019/20 was $441/t, an increase of 8.2 per cent.

Export volumeAustralia exported 3.8 million tonnes of sugar in 2019/20, an increase of 1.4 per cent.

OutlookLower Australian production and a global surplus to drive weaker prices, leading to a decline in value of Australian sugar exports in 2020/21.


Australian sugar exports recorded an increase in value in 2019/20 after two years of decline. Despite growth of 9.9 per cent, the value of exports was 6.6 per cent below the five-year average, weighed down by below average prices.

The volume of Australian sugar exports increased by 1.4 per cent in 2019/20 and contributed to the growth in export value. Increased export volume was recorded despite a 4.4 per cent decline in Australian sugar production, the result of dry conditions lowering yields. Australia exported a greater proportion of sugar production in 2019/20 (84 per cent, up from 79 per cent) as a global deficit of sugar production drew greater volumes into export markets.

The global sugar deficit, estimated at 5.4 million tonnes, also drove an 8.2 per cent increase in the average export price of Australian sugar in 2019/20. This was the second year of increase in the average export price, recovering from a 37.6 per cent decline in 2017/18. The average price of $441/tonne in 2019/20 was still 3.3 per cent below the five-year average.

Sugar

A lower value of Australian sugar exports is expected in 2020/21 due to a decline in Australian sugar production in 2020, coupled with a shift in the global supply and demand balance from deficit to surplus production. Good rainfall in early 2020 is expected to lead to an increase in sugarcane production, however yield is expected to be slightly lower due to a decline in average sugar content and will translate to a lower volume of sugar exported in 2020/21. Sugar prices are also expected to be lower in 2020/21 due to a return to a global surplus. The large swing back to surplus is the result of expected increased production in major producing countries such as Brazil, India and Thailand combined with reduced sugar consumption resulting from the impacts of COVID-19. The extent of reduced sugar consumption is uncertain and largely dependent on how long demand through foodservice outlets remains weakened. Therefore, the direction of prices will be strongly linked to COVID-19 outbreaks and recoveries around the world, however the increase in production will keep an overall level of downwards pressure on prices.

Australian sugar exports increased in value in 2019/20 as prices improved in response to a global sugar deficit and export volumes recorded a modest increase. Unfortunately, growth is unlikely to be repeated in 2020/21 as the impacts of COVID-19 reduce sugar consumption and global production is expected to increase. This is likely to see the global market return to a surplus and drive prices lower.

Andrew Smith, Rural Bank, Eastern Australia.

The estimated value of Australian sugar exports increased in 2019/20 to a total of $1.7 billion.

Australia exported an estimated 3.8 million tonnes of sugar in 2019/20, accounting for 84 per cent of production.

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FIELD

Note on data availability:

Official statistics on sugar exports (including export markets and state of origin) are unavailable due to confidentiality provisions. Data is published on a quarterly basis and released six months after the reference period. Estimates from the Australian Bureau for Agricultural and Resources Economics and Sciences (ABARES) have been used in this report.

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Export valueAustralia exported $1.5 billion of fruit in 2019/20, an increase of $154.2 million (+11.1 per cent).

Export priceAverage export price of Australian fruit increased by 2.6 per cent in 2019/20.

Export volumeAustralia exported 530,329 tonnes of fruit in 2019/20, an increase of 8.3 per cent.

OutlookSupply is likely to increase for several categories in 2020/21. Demand is expected to remain robust despite disruptions from COVID-19.


The value of Australian fruit exports increased for a ninth consecutive year in 2019/20, increasing by $154.2 million (+11.1 per cent). The increase in value was driven by an 8.3 per cent increase in export volume and a 2.6 per cent increase in average export price.

Table grapes recorded the largest growth in export value in 2019/20, increasing by $73.2 million (+12.6 per cent) to a record $653.5 million. Export volume increased four per cent and average export price improved by 8.2 per cent. An increase in supply resulted in a higher exportable surplus which combined with strong demand, primarily from China, to result in a standout year for table grape exports.

Mandarin exports experienced strong growth in 2019/20, export value increased by $49.7 million (+35.9 per cent) to a record $188.3 million. Export volume increased by 18,441 tonnes (+31.1 per cent), the result of increased supply stemming from new plantings reaching full production.

Horticulture – Fruit

The value of orange exports increased by $6.2 million (+2 per cent) in 2019/20 to a record $312.1 million. Average export price decreased by six per cent as more oranges were sold into markets which attract a lower unit price such as the MENA region. Demand remained robust as export volume increased by 8.5 per cent. Demand for oranges is expected to increase in 2020/21 as consumers focus on immune boosting fruits.

Stone fruit exports experienced an increase in value despite a smaller crop in 2019/20. Export value increased by $2.4 million (+1.4 per cent). Export volume decreased by 8.4 per cent, however this was offset by an increase in average export price of 10.7 per cent. Demand continues to grow following tariff reductions in China which will be conducive to supply growth in Australia should seasonal conditions allow.

Australian fruit exports have experienced strong growth over the past decade with another year of double-digit growth in the value of exports in 2019/20 despite some unfavourable growing conditions in 2019. Demand is expected to remain strong as consumers actively seek immune boosting foods, a trend that is expected to continue into 2020/21, making for a positive outlook for fruit exports.

John Reilly, Rural Bank, Western Australia.

Australian fruit exports reached a record value of $1.5 billion after a ninth consecutive year of growth in 2019/20.

The volume of Australian fruit exports was driven higher by citrus and table grape exports.

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Horticulture – Fruit


Australian fruit exports to China increased in value for a tenth consecutive year, up $59.6 million (+12.8 per cent). Growth was shared across grapes (+$56.5 million), mandarins (+$31.9 million) and stone fruit (+$4.1 million). Table grape exports were seemingly only limited by supply as demand from China continued to exceed Australia’s exportable surplus. Stone fruit demand is in a similar situation, demand is expected to continue to outstrip supply which will aid export growth in 2020/21. Tariff reductions on mandarins will continue to increase the appeal of the fruit to Chinese buyers with the next reduction due on 1 January 2021. This has combined with an increase in production which will lead to a greater volume of mandarin exports in 2020/21.

The value of fruit exports to Japan increased in 2019/20 up 5.1 per cent to $133 million, representing an eighth consecutive year of growth. Increased export value to Japan was primarily driven by growth in orange exports of $5.9 million (+10.4 per cent). In contrast, table grape exports declined by $6.2 million (-11.6 per cent). An emerging category is fresh melon exports, more than tripling in value to over $6 million after tariffs were removed in April 2019.

The value of fruit exports to Hong Kong declined due to a decrease in mandarin exports which fell $12.6 million, coupled with a decrease of $7.4 million in stone fruit exports This was likely due to a greater proportion of stone fruit instead being exported to China. A lower value of stone fruit exports was partially offset by gains in grape exports which increased by $7 million.

The value of exports to the MENA region grew significantly in 2019/20, increasing by $26.1 million (+32.6 per cent). All major categories improved, as orange exports increased by $10.1 million (+132.2 per cent), and table grape exports also increased by $9.7 million (+88 per cent). Export volume is historically variable however a desire to improve food security coupled with zero tariffs on Australian fruit could lead to further increases in export value to the MENA region in 2020/21.

Value of Australia’s top 10 fruit export markets



China $523 é +12.8% 33.9%

Japan $133 é +5.1% 8.6%

Hong Kong $124 ê -4.3% 8.0%

MENA $106 é +32.6% 6.9%

Singapore $87 é +15.2% 5.6%

Thailand $73 é +22.1% 4.7%

Indonesia $73 ê -29.7% 4.7%

Vietnam $73 é +13.2% 4.7%

New Zealand $59 é +0.9% 3.8%

Malaysia $57 é +23.3% 3.7%

China remains the largest export market for Australian fruit.There was strong growth in four of the five top fruit export markets in 2019/20.

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Value of top five Australian fruit export markets

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Value of products exported to top five fruit markets

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Export valueAustralia exported $1.3 billion of seafood in 2019/20, a decline of $88.3 million (-6.4 per cent).

Export priceAverage export price of Australian seafood declined by 23.8 per cent in 2019/20.

Export volumeAustralia exported 52,981 tonnes of seafood in 2019/20, an increase of 22.9 per cent.

OutlookLower prices and market access will restrict growth in seafood exports in 2020/21.


The value of Australian seafood exports declined in 2019/20, driven by a significant reduction in average export price of 23.8 per cent. A decline in the average export price more than offset a 22.9 per cent increase in export volume, leading to a 6.4 per cent decline in the total value of exports.

The spread of COVID-19 since the beginning of 2020 has had a noticeable impact on the value of Australian seafood exports. The value of Australian seafood exports in the first half of the financial year was up 12.6 per cent year-on-year, whereas the second half of the financial year saw the value of seafood exports decline by 25.3 per cent year-on-year. Market access to key importers of Australian seafood became an issue which left seafood markets with effectively no option but to allocate stock previously bound for export back to the domestic market. In some instances, prices for consumers have reportedly been back at levels not seen since the turn of this century. Given the impacts of COVID-19 on both trade flows and Australia’s relationship with China, Australia’s largest seafood export market, further reductions in export value are likely for 2020/21.

Seafood

Crustaceans have been the mainstay of Australian seafood exports by value for some time but recorded a decline in value of $189.2 million (-22.5 per cent) in 2019/20. The decline in value was the result of a 24.2 per cent decline in the average export price which more than offset a 2.3 per cent increase in export volume.

The average price of fish exports increased by 0.3 per cent in 2019/20, with volume increasing by 35.6 per cent. This led to an increase in the value of fish exports of $129 million (36 per cent) which helped offset a portion of the gap left by the decline in crustacean exports.

Contrary to the events of 2019/20, average seafood export prices have been much more stable than volumes over the past five years. During this time, export prices for fish have increased 3.5 per cent while crustacean prices have declined 8.4 percent (largely due to events in the past year). The inverse is true of export volumes, with crustacean export volumes coming in 11.9 per cent below levels from five years ago and fish export volumes showing a 79.1 per cent increase across the same period.

The value of seafood exports declined by 6.4 per cent in 2019/20 as the impacts of COVID-19 resulted in a slowdown in demand from January 2020 which led to lower prices and a decline in export volumes. A further decline in the value of seafood exports is expected in 2020/21 as demand is likely to remain subdued due to the impacts of COVID-19.

James Robinson, Rural Bank, WA, SA, NT and Western Victoria.

A decline in the value of crustacean exports drove a second consecutive year of decline in the total value of Australian seafood exports in 2019/20.

The volume of Australian seafood exports increased in 2019/20, largely due to a 36 per cent rise in fish exports.

FROM THE

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Value of Australian seafood exports

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China consolidated its rapid rise to the position of top export market for Australian seafood in 2019/20. Over the past three years China has taken 56.1 per cent of Australia’s seafood exports, after having taken only 8.3 per cent in the previous three years. With crustaceans being the highest value category of Australian seafood exports, it is no surprise that crustacean exports to China remained a pillar of all seafood exports. Behind China’s rise to become Australia’s top seafood export market has been crustacean exports which accounted for 42.4 percent of the value of all seafood exports to this market. China was also the largest market for molluscs and the second largest market for fish. However year-on-year, a 23.7 per cent decline in the value of crustacean exports to China and a 13.3 per cent drop in the value of all seafood exports to China was recorded in 2019/20, primarily driven by lower average prices.

At the same time as exports to China have been rapidly rising, exports to what was previously Australia’s largest seafood export market, Vietnam, markedly decreased. In the past three years Vietnam has taken only 8.7 per cent of Australia’s seafood exports, having taken 50.5 percent in the previous three years.

Japan has maintained its place as the second largest export market for Australian seafood during this period. Japan was also able to maintain its place as the number one destination for fish in 2019/20, taking 33.4 per cent. This was in line with what has happened in recent years, with Japan

Value of Australia’s top 5 seafood export markets



China $768 ê -13.3% 59.5%

Japan $195 é +6.6% 15.1%

Hong Kong $105 ê -21.4% 8.2%

USA $49 é +42.7% 3.8%

Vietnam $38 é +46.5% 3.0%

Crustaceans exports to China declined by $170.2 million, while fish exports to China increased by $71.2 million.

The value of seafood exports to China declined in 2019/20 after five consecutive years of growth.

having now taken 35.3 per cent of Australia’s fish exports of the past three years. Since losing its place as the number one export destination for Australian seafood (in 2005/06), the value of exports taken by Japan has been far less volatile than Hong Kong, Vietnam and now China, the successors in the number one position.

Exports to Hong Kong fell in terms of value (-21.4 per cent) and market share (1.6 percent of market share). Compared to other major markets, exports to Hong Kong are much more diversified between crustaceans, fish, molluscs and other seafood.

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Value of top five Australian seafood export markets

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Value of products exported to top five seafood markets

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Seafood


Export valueAustralia exported $992 million of nuts in 2019/20, a decrease of $48.4 million (-4.6 per cent).

Export priceAverage export price of Australian nuts increased by 6.9 per cent in 2019/20, driven by almonds.

Export volumeAustralia exported 102,021 tonnes of nuts in 2019/20, a decrease of 10.8 per cent.

OutlookIncreased supply globally will likely put pressure on prices as supply chain disruptions persist.


The value of Australian nut exports decreased by 4.6 per cent in 2019/20, driven by reduced volumes across the major varieties. The impact of lower export volumes on the value of exports was partially offset by a 6.9 per cent increase in the average export price.

Almond exports declined in value in 2019/20, decreasing by $22.6 million (-3.4 per cent) to $649 million. Export volume fell 13.5 per cent after a record high in 2018/19. This was partially offset by a 11.7 per cent increase in average export price. Exports have come under pressure in the first half of 2020 due to COVID-19 freight disruptions, with export volume for April to June 2020 down 45 per cent compared to the same period in 2019.

The value of macadamia exports decreased 6.6 per cent to $304.5 million after a record high in 2018/19. The decline in value was due to a combination of lower average export price, which decreased 4.8 per cent, and lower export volume, which decreased 1.9 per cent. Export volume declined for the third consecutive year in 2019/20. Drought in key

Horticulture – Nuts

growing areas of New South Wales and Queensland resulted in a smaller harvest over the last two years which has impacted exportable surplus. In more recent times, COVID-19 disruptions impacted export volumes for the March to April 2020 period, down 21.5 per cent compared to 2019. There were more positive signs in May and June 2020, resulting in an increase of 9.7 per cent compared to the same period in 2019.

The value of walnut exports declined for the second consecutive year, down 18.4 per cent to $14.6 million. The decline in value was primarily due to a 10.3 per cent decrease in export volume, in addition to a nine per cent fall in average export price. The decline in export volume was driven by drought conditions in New South Wales in combination with a 62.3 per cent decrease in exports for the March to May 2020 period due to COVID-19 disruption. Volume rebounded in June, increasing 33.5 per cent compared to 2019.

Australian nut exports have increased market share in China over the past two years, capitalising on trade tensions between the United States and China. Demand remains strong however increasing supply in both Australia and the United States could put downward pressure on prices in 2020/21.


The value of nut exports declined in 2019/20, impacted by COVID-19 disruptions to supply chains.

The volume of nut exports was lower in 2019/20 driven by supply chain disruptions and smaller crops.

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Value of Australian nuts exports

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Volume of Australian nuts exports

120

40

100

60

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20

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Horticulture – Nuts


China was the major growth market for Australian nuts in 2019/20 and recorded a ninth consecutive year of growth in the value of exports, increasing by $111.8 million (+30.7 per cent) to a record $476 million. The primary driver of value growth was an increase in almond and macadamia exports. The value of almond exports to China increased by $73.1 million (+27.6 per cent) to a record high of $337.8 million. This increase was primarily due to trade tensions between the US and China, resulting in China imposing large tariffs on almond imports from the US. The outlook for Australian almond exports to China is mostly positive, however COVID-19 supply chain disruptions, trade tensions between China and Australia and a bumper harvest in California are all factors that could cause uncertainty and volatility in trade performance in 2020/21.

Macadamia exports to China performed strongly in 2019/20 despite some disruption from COVID-19 late in the financial year. The value of exports increased by $38.5 million (+47.2 per cent). Export volumes lifted 33.6 per cent and average export price increased 10.2 per cent. The outlook for macadamia exports to China remains largely positive after demand remained strong in a year where supply was down. More favourable growing conditions are forecast for 2020/21 which could see a further increase in export value. However, this will be tempered by supply chain disruption and a slow rebound in foodservice demand in the second half of 2020.

The value of nut exports to the EU rebounded in 2019/20, increasing by $7.2 million (+4.7 per cent). Almond exports to the EU increased by $13.5 million (+12.7 per cent). In contrast, macadamia exports eased, down by $1.4 million (-4.1 per cent). Whilst improving, the value of nut exports to the EU remains constrained by competition from US almonds, a direct result of tariffs imposed by China causing a redirection of almonds to alternative markets such as the EU. California continues to produce bumper almond crops which will likely keep pressure on Australian nut exports to the EU in 2020/21.

Value of Australia’s top 10 nut export markets



China $476 é +30.7% 48.0%

EU $162 é +4.7% 16.3%

India $62 ê -51.9% 6.3%

Vietnam $58 ê -49.8% 5.8%

Japan $53 ê -18.3% 5.4%

USA $43 ê -32.2% 4.3%

New Zealand $32 é +19.6% 3.2%

MENA $23 ê -3.2% 2.3%

South Korea $17 ê -3.3% 1.8%

Hong Kong $2 ê -92.4% 0.2%

Almond exports continued to drive growth in China in 2019/20. China was the key growth market in 2019/20 reaching a market share of 48 per cent.

The value of nut exports to India decreased by $67 million (-51.9 per cent) to $62.1 million. Almond exports were the key driver of this decrease as Australia lost market share to the US. The value of almond exports decreased by $77.1 million (-60.9 per cent). This trend was also evident in Vietnam where almond exports decreased by $62 million (-72.4 per cent). The decline in India and Vietnam is an opportunity cost of increasing exports to China. It is unlikely that demand will rebound in these markets in 2020/21 as US growers will robustly compete to retain market share.

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Value of top five Australian nut export markets

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Export valueAustralia exported $956 million of cotton in 2019/20, a significant decline of $1.6 billion (-62.5 per cent).

Export priceAverage export price of Australian cotton was $2,862/tonne in 2019/20, a slight increase of 0.4 per cent.

Export volumeAustralia exported 334,296 tonnes of cotton in 2019/20, a decline of 62.7 per cent.

OutlookHigher production is forecast due to favourable seasonal conditions but will be offset by disruptions caused by COVID-19.


Australian cotton exports fell to their lowest value since 2009/10 as two years of low production and a drawdown of stocks significantly reduced volumes available for export. With an estimated record low 590,000 bales produced in the 2019/20 season; supply will be tight moving forward. Reduced production domestically was driven mainly by continued drought conditions in major growing areas in Queensland and New South Wales. This was coupled with high water prices due to competition for low allocations of irrigation water from other users such as nut and citrus trees, as well as the mining sector.

The average export price for cotton recorded a marginal increase of 0.4 per cent in 2019/20 to $2,862/tonne. However, the significant reduction in export volumes more than countered this to drive the decline in the total value of Australian cotton exports in 2019/20.

The world cotton indicator price is expected to decline by 12 per cent in 2020/21 as production and high stocks are anticipated to continue to vastly exceed consumption, despite a forecast 5.5 per cent decline in

global plantings. Consumption is expected to remain subdued due lower consumer expenditure resulting from COVID-19 impacts and control measures remaining in place in major milling countries such as China, India, Pakistan and Bangladesh. Low oil prices will also increase the competitiveness of synthetic fibres, further adding downward pressure to cotton prices.

Lower cotton prices are expected to temper any growth in Australian cotton plantings in 2020 despite favourable seasonal conditions and an anticipated increase in availability of irrigation water. Growers may instead plant more cost-effective crops such as corn and sorghum. The result of limited growth in production, coupled with lower prices, is expected to result in another challenging year for cotton exports in 2020/21.

Below average rainfall significantly affected Australian cotton exports in the last two years by driving record low production and a drawdown of stocks. The industry will be confronted with new challenges in 2020/21 as COVID-19 control measures are expected to disrupt milling processors, and cotton prices could succumb to pressure from low oil prices making synthetics an even cheaper alternative.

Andrew Smith, Rural Bank, Eastern Australia.

Cotton export value declined by $1.6 billion in 2019/20, driven by reduced export volumes.

Prolonged drought and low water allocations led to a significantly reduced Cotton crop in the 2019/20 season.

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Cotton



Australian cotton exports to China benefitted from trade tensions between the US and China which led China seeking alternative cotton suppliers to replace US cotton. While volumes to other markets were much lower due to reduced Australian supply, China’s share of exports increased. Phase One of the Economic and Trade Agreement between the US and China will see China import on average at least $40 billion of US food, agricultural and seafood products annually, and could lead to a recovery in US cotton exports to China, which in turn would reduce opportunities for Australian cotton.

Indonesia overtook Vietnam and Bangladesh to become Australia’s second largest export market for cotton in 2019/20. Exports to Indonesia increased by $22 million in 2019/20 after a dramatic decrease in 2017/18, which was a result of cheaper exports from the US, Brazil and Argentina. Brazil, the world’s fourth largest cotton producing country, has seen steady increases to their export prospects as large-scale production efficiencies have taken effect. Although exports have increased for a third consecutive year, value remained very low compared to historic highs of more than $200 million.

Vietnam recorded a second consecutive year of decline in export value, which was much larger in 2019/20 compared to 2018/19. This was again led by an increase in imports from Brazil and the US. Vietnam is among the top textile producing countries in the world, however domestic production of cotton only meets 2.3 per cent of total domestic demand and consumption will continue to rely heavily on imported cotton.

Exports to Bangladesh declined significantly again in 2019/20. Domestic production growth in Bangladesh has been encouraged by government and private support initiatives to incentivise growers, however Bangladesh still sources the majority of its cotton from India and elsewhere, a trend that has continued to accelerate.

Reported* value of Australia’s top 10 cotton export markets



China $611 ê -32.1% 63.9%

Indonesia $93 é 31.2% 9.8%

Vietnam $93 ê -75.1% 9.7%

Bangladesh $40 ê -79.7% 4.2%

India $37 ê -32.2% 3.9%

Malaysia $29 ê -17.8% 3.1%

Japan $18 ê -30.3% 1.9%

Thailand $16 ê -70.5% 1.7%

Pakistan $10 ê -22.6% 1.1%

Turkey $4 ê -82.1% 0.4%

Indonesia was the only country to increase the value of Australian cotton exported last year.

China continued to be Australia’s largest export market for cotton.

*the export destination for cotton exports are sometimes unreported for confidentiality purposes.

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Value of top five Australian cotton export markets

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China Bangladesh

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Value of top five Australian cotton export markets

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FY1

9

FY2

0

VietnamChina BangladeshIndonesia India

Cotton


Export valueAustralia exported $296.1 million of vegetables in 2019/20, a decrease of $15.8 million (-5 per cent).

Export priceAverage export price of Australian vegetables increased by 6.1 per cent in 2019/20.

Export volumeAustralia exported 216,960 tonnes of vegetables in 2019/20, a decrease of 10.5 per cent.

OutlookSupply is forecast to increase in 2020/21 which will increase export volume for key categories.


The value of vegetable exports declined for the first time in eight years in 2019/20, decreasing by $15.8 million (-5 per cent) to $296.3 million. The primary driver of the decrease was a decline in export volume across all key varieties. Vegetable production was negatively affected by drought and high-water prices in 2019/20 which caused a reduction in exportable surplus. This was compounded by freight disruptions caused by COVID-19 resulting in further declines in export volume in March and April 2020.

Carrots continued to be Australia’s most valuable vegetable export, however volume decreased in 2019/20 as a result of difficult seasonal conditions. The value of carrot exports decreased by $4.9 million (-5.1 per cent) to $91.5 million, driven by a 5.3 per cent decline in export volume.

Potato exports built on the momentum generated from a supply gap in Europe in 2018/19. The value of exports in 2019/20 increased by $5.5 million (+15.2 per cent) to a record $42 million. Average export price increased 27.8 per cent as demand remained high in a lower supply environment where export volume decreased by 9.9 per cent.

Horticulture – Vegetables

The value of onion exports decreased by $8.7 million (-22.4 per cent) to $30.4 million in 2019/20 after a record high in 2018/19. Export volume decreased by 22.7 per cent, partially offset by a 0.4 per cent increase in average export price. A combination of dry seasonal conditions and a rebound in European production contributed to the decline in export volume.

The value of asparagus exports decreased by $4.9 million (-16.4 per cent) to $24.9 million, driven by a 19.2 per cent reduction in export volume. In contrast, broccoli and cauliflower exports grew in value in 2019/20, increasing by $0.3 million (+1.3 per cent) to $21.9 million. Export volume decreased by 21.7 per cent due to the impact of drought and bushfires.

Australian vegetable production came under pressure in 2019/20 due to drought and bushfires which resulted in a reduced volume of exports. Underlying demand is expected to remain robust as export partners seek food security amid the COVID-19 pandemic. A likely return to favourable growing conditions in 2020 will boost export volume and value in 2020/21.


The value of vegetable exports decreased for the first time in eight years to $296.1 million.

Difficult seasonal conditions in Australia led to a decrease in export volume.

FROM THE

FIELD

A$

mill

ions

Value of Australian vegetables exports

350

150

300

200

250

100

50

0

Broccoli & Cauliflower Other

Carrots Potatoes

Asparagus

Onions

20

00

/01

20

01

/02

2

00

2/0

32

00

3/0

42

00

4/0

52

00

5/0

62

00

6/0

72

00

7/0

82

00

8/0

92

00

9/1

02

01

0/1

12

01

1/1

22

01

2/1

32

01

3/1

42

01

4/1

52

01

5/1

62

01

6/1

72

01

7/1

82

01

8/1

92

01

9/2

0

‘00

0 to

nnes

Volume of Australian vegetable exports

350

150

300

200

250

100

50

0

20

00

/01

20

01

/02

2

00

2/0

32

00

3/0

42

00

4/0

52

00

5/0

62

00

6/0

72

00

7/0

82

00

8/0

92

00

9/1

02

01

0/1

12

01

1/1

22

01

2/1

32

01

3/1

42

01

4/1

52

01

5/1

62

01

6/1

72

01

7/1

82

01

8/1

92

01

9/2

0


Carrots Potatoes

Asparagus

Onions



The value of vegetable exports to the MENA region increased for the twelfth consecutive year in 2019/20. Onion exports led the way, increasing by $1.9 million (+79.2 per cent). Broccoli and cauliflower exports also increased by $1.7 million (+70.5 per cent). In contrast carrot exports, which make up more than 70 per cent of exports by value, decreased by $4.9 million (-8.3 per cent). The volume of carrots exported between March and May declined 19.8 per cent in 2020 compared to the same period in 2019, driven by COVID-19 freight disruptions. Exports rebounded in June, increasing by 6.8 per cent compared to 2019. Demand for vegetables in the MENA region remains strong. The value of exports to the region in 2020/21 is likely to increase on the back of improving seasonal conditions in Australia resulting in a higher export surplus for most commodities.

The value of vegetable exports to Singapore increased slightly in 2019/20 by $0.8 million (+1.5 per cent). This marked seven consecutive years of growth. The value of onion exports increased $0.8 million (+66.4 per cent) as did potato exports, increasing $0.7 million (+20.7 per cent). In contrast, asparagus exports decreased by $1.5 million (-12.3 per cent).

Malaysia leap frogged Japan as Australia’s third most valuable export market for vegetables in 2019/20. The value of exports increased by $1.5 million (+5.8 per cent) to $27.8 million. Potato exports increased by $1.1 million (+42.4 per cent) but in contrast onion export declined by $1 million (-33.1 per cent).

The value of vegetable exports to Japan decreased by $6.7 million (-20.7 per cent) to $25.7 million. Declines were experienced across all major varieties, most notably asparagus. The value of asparagus exports declined $3.9 million (-17.8 per cent) largely due to a reduction in supply. Demand for asparagus in the Japanese market is expected to remain strong which will likely contribute to a rebound in export value in 2020/21, coupled with increased production in Australia.

Value of Australia’s top 10 vegetable export markets



MENA $74 é +1.7% 25.0%

Singapore $52 é +1.5% 17.6%

Malaysia $28 é +5.8% 9.4%

Japan $26 ê -20.7% 8.7%

Hong Kong $20 ê -3.1% 6.9%

EU $14 ê -26.9% 4.8%

Thailand $14 é +8.3% 4.8%

US $13 ê -19.1% 4.3%

South Korea $10 ê -21.7% 3.5%

Taiwan $9 é +2.3% 3.1%

The MENA group of countries continue to import the majority of Australian vegetables by value.

The value of vegetable exports was tempered by a reduction in supply in 2019/20.

Thailand represented a growing market for Australian vegetable exports in 2019/20 but sat just outside the top five in 2019/20 with a value of $14.1 million. The value of potato exports increased by $1.5 million (+51.6 per cent) despite a decline in export volume. Tariffs on potato exports to Thailand reached zero per cent in January 2020, down from two per cent in 2019. This is likely to aid export growth in 2020/21.

Horticulture – VegetablesA

$ m

illio

ns

Value of top five Australian vegetable export markets

225

175

25

75

125

200

50

100

150

0

SingaporeMENA Malaysia Japan Hong Kong

20

00

/01

20

01

/02

2

00

2/0

32

00

3/0

42

00

4/0

52

00

5/0

62

00

6/0

72

00

7/0

82

00

8/0

92

00

9/1

02

01

0/1

12

01

1/1

22

01

2/1

32

01

3/1

42

01

4/1

52

01

5/1

62

01

6/1

72

01

7/1

82

01

8/1

92

01

9/2

0

A$

mill

ions

Value of products exported to top five vegetable markets

80

70

40

30

10

20

50

60

0

FY1

8

FY1

9

FY2

0

FY1

8

FY1

9

FY2

0

FY1

8

FY1

9

FY2

0

FY1

8

FY1

9

FY2

0

FY1

8

FY1

9

FY2

0

SingaporeMENA JapanMalaysia Hong Kong


Carrots Potatoes

Asparagus

Onions


Other agricultural exports

*hay and chaff excluding lucerne

A$

mill

ions

Value of forage exports

800

300

700

600

400

500

200

100

0

Hay/chaff* Other forages

20

00

/01

20

01

/02

2

00

2/0

32

00

3/0

42

00

4/0

52

00

5/0

62

00

6/0

72

00

7/0

82

00

8/0

92

00

9/1

02

01

0/1

12

01

1/1

22

01

2/1

32

01

3/1

42

01

4/1

52

01

5/1

62

01

6/1

72

01

7/1

82

01

8/1

92

01

9/2

0

A$

mill

ions

Value of other meat and offal exports

700

300

600

400

500

200

100

0

Poultry meat and offalGoat meat Pig meat Other

20

00

/01

20

01

/02

2

00

2/0

32

00

3/0

42

00

4/0

52

00

5/0

62

00

6/0

72

00

7/0

82

00

8/0

92

00

9/1

02

01

0/1

12

01

1/1

22

01

2/1

32

01

3/1

42

01

4/1

52

01

5/1

62

01

6/1

72

01

7/1

82

01

8/1

92

01

9/2

0

2018/19 (A$ million)

2019/20 (A$ million)

Year-on-year % change Top two export destinations

Prepared foods including malts, cocoa, pet food, baked, other

4,529.3 4,256.6 -6.0% China ($1,598m) New Zealand ($805m)

Other plant products including milling products, seeds, coffee, other

1,313.6 1,297.1 -1.3% USA ($283m) Vietnam ($156m)

Other animal productsincluding fats, oils, hides, fibres, honey, eggs

1,102.4 1,131.0 +2.6% Singapore ($326m) China ($178m)

Other meat and offalincluding goat, pig, poultry, other

517.4 600.0 +16.0% USA ($157m) Singapore ($77m)

Foragesincluding hay, chaff, lucerne, straw, other

696.8 675.6 -3.0% Japan ($256m) China ($156m)

Beverages excluding wine

545.4 545.5 +0.0% New Zealand ($101m) Singapore ($71m)

Food industry residues and waste 319.7 273.5 -14.4% USA ($59m) Taiwan ($37m)

Other live animalsincluding horses, buffalo, goats, other

192.6 194.9 +1.2% Hong Kong ($96m) New Zealand ($44m)



About the research

The Australian agricultural trade research is based on the reported values and quantities of goods at Australia’s ports. The report includes all agricultural, food and fibre products including processed products. Wood and articles of wood are not included.

The reported values are quoted Free On Board (FOB) in Australian dollars, unless otherwise noted, and not adjusted for inflation or foreign exchange rates.

In some instances the export destination and/or state of origin is not identified in the data for confidentiality purposes. Figures may not reflect the actual export total.

Commodity groups may not include all products relevant to that group. For example, miscellaneous edible preparations is a significant commodity group by value and volume where individual products are not specified and therefore cannot be attributed to another commodity group.

Where appropriate, European and Middle East and North African nations are referred to as the European Union (EU) and the Middle East and North Africa (MENA).

EU includes: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.

MENA includes: Algeria, Bahrain, Djibouti, Egypt, Gaza Strip, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates, West Bank, Yemen.

This report is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Rural Bank, a Division of Bendigo and Adelaide Bank Limited, ABN 11 068 049 178 AFSL/Australian Credit Licence 237879, makes no representation as to or accepts any responsibility for the accuracy or completeness of information contained in this report. Any opinions, estimates and projections in this report do not necessarily reflect the opinions of Rural Bank and are subject to change without notice. Rural Bank has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof in the event that any opinion, forecast or estimate set forth therein, changes or subsequently becomes inaccurate. This report is provided for informational purposes only. The information contained in this report does not take into account your personal circumstances and should not be relied upon without consulting your legal, financial, tax or other appropriate professional.©Copyright Bendigo and Adelaide Bank Ltd ABN 11 068 049 178 (1493631 –1493624) (08/20)


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2019/20 australian agricultural trade

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