A bigger need for feed
Growing industries in need of grain
WE ARE often well versed on how much grain Australia produces each season and with good reason. Namely, the interannual supply swings are the primary drivers of price. The demand side of the equation, particularly domestic feed demand, is often put aside as a function of the supply with relatively low fluctuation between seasons. However, few years of incremental increase will equate to having a significant impact on the Australian grain balance sheet. Let’s take a rudimentary look at how the Australian feed demand has grown over the past five years and its impact by focusing on the four key feed demand sectors.
Across the grain-dependent feed industries of feedlots, piggery and poultry, we have seen substantial increases in the number of heads these companies are processing each year. The table included depicts the absolute change in head and slaughter numbers and a rough estimate of this impact on feed demand.
The other large feed sector to consider is dairy which has been the ugly duckling of the feed industry and ABS figures indicate roughly an 8 per cent reduction in the number of dairy cows which translates to an estimated decrease of feed demand of 300,000 mt.
The combined effect is an increased feed demand of over 1 million metric tonnes since 2013. This includes protein meals that are commonly supplemented with grains in many of the rations, but given the bulk of the rations are composed of grains, the demand increase will largely come out from wheat, barley and sorghum supply and demand.
Next time we meet a cow, pig or chicken, we should thank them for their positive contribution to the Australian grain market.
DEMAND RISING: ABS graph showing the change in slaughter numbers and feed demand in the feedlot, poultry, piggery and dairy industries.