A big­ger need for feed

Growing in­dus­tries in need of grain

The Western Star - - RURAL WEEKLY - Thomas Kim – COFCO Grain Trader North­ern Australian Re­gion

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.

PHOTO: CONTRIBUTE­D

DE­MAND RIS­ING: ABS graph show­ing the change in slaugh­ter num­bers and feed de­mand in the feed­lot, poul­try, pig­gery and dairy in­dus­tries.

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