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‘ The Australian Feedgrain Partnership : industry R and D agencies working together’
This web site was supported by the Advancing Australia program, and GRDC on behalf of the Partnership
The Global Feed grain Industry
Overview of the Australian Feedgrain Industry
The Feedgrain Partnership R&D Strategy
- Purpose
- Duration
- Snapshot of the Australian Feedgrain Industry
- The role of R and D/tests to be met
- Baseline Feedgrain R and D Program
- Cross Agency Integration and New Project Development
Measuring Feedgrain Partnership Effectiveness
Partnership Outputs to Date
About Us
The Partnership was formed to bring together the organisations with involvements in the Australian feedgrain industry so that a whole of supply chain R and D strategy could be developed based on industry guidance, and by integrating the resources of R and D agencies.
The Partnership comprises 2 levels of membership and involvement:
* An annual (October) Forum of industry participants at which R and D results are communicated, and industry inputs on further R and D requirements obtained
- The Group of R and D agencies (Grains Research and Development Corporation; Australian Pork Limited; Meat and Livestock Australia; Dairy Australia and the Australian Egg Corporation) that have agreed to collaborate on feedgrain related R and D
- The following contact details are provided for Partnership members and management
Key Objectives
The Partnership has identified the following goals for the R and D program:
1) Achieving substantial increases in average yields, and yield robustness, for sorghum, barley and triticale
2) Improving the utility of feedgrains to end-users
3) Trial, and to the extent practicable, commercialise feedgrain quality identification technologies
4) Maintain a core data collection capability, and consult with industry/ government on data collection and dissemination issues
5) Review supply chain efficiency to identify bottlenecks and initiate collective action where that can improve efficiency
6) Act as focal point for organised industry consultation on R and D related issues
7) Foster alliance building and communication across industry sectors
The Global Feed grain Industry
“ The global feed grain industry involves the growing, transport, storage and consumption of grains for livestock feeding.
The global industry is thoroughly reported through internet web sites. Without precluding many other sites, the following links will be useful ;
The Australian Bureau of Agricultural and Resource Economics (ABARE)
The annual ABARE Commodity Statistics publication is a useful summary of the key indicators of the global feedgrain industry
USDA Foreign Agricultural Service
The FAS site contains the latest news on global feedgrain markets, and statistics on the production and marketing of feedgrains.
Food and Agriculture Organisation of the United Nations
The FAO site provides up to date coverage of discussions and related meetings applicable to the feedgrain industry, and there are links within the site to relevant statistics
Organisation for Economic Cooperation and Development
The OECD site has a broader focus than the above sites; however, it, along with the FAO site, is a useful source of information on the global debate on policy issues such as the global concerns over future availability of affordable grain( for example, a recently released joint FAO/ OECD Ag Outlook 2007-2016 study ) This issue is also the subject of extensive coverage in the World Bank site.
More specific information on particular aspects of the feedgrain industry, such as the interface between biofuels production and feedgrain markets can be readily accessed through search engines such as Google.
Overview of the Australian Feedgrain Industry
“ABARE publishes a variety of regularly updated statistics on the Australian feedgrain industry; statistics include crop updates; quarterly activity indicators and forecasts; and farm survey data can be accessed through the ABARE site( insert site link )
Information is also available from private crop forecasters, State departments of agriculture, and major grain companies
Rural Press web site (http://www.ruralpress.com/) contains latest news.
The Bureau of Meteorology web site (http://www.bom.gov.au/) has weather forecasts and hourly rainfall information by region.
GRDC commissioned a baseline study of the implications for growth in demand in Australia for feedgrains for growers, including how best to meet that demand. Data from that study, which is yet to be released in full, is included in the R and D strategy paper available through this web site
The Feedgrain Partnership R&D Strategy
The Partnership has prepared the following draft feedgrain R and D strategy which also contains statistical information on the Australian industry, and a summary of R and D projects supporting the feedgrain industry funded by Partnership agencies.
Draft Feedgrain R&D strategy
The Feedgrain Partnership
The Partnership was formed to bring together the organisations with involvements in the Australian feedgrain industry so that a whole of supply chain R and D strategy could be developed based on industry guidance, and by integrating the resources of R and D agencies.
The Partnership comprises two levels of membership and involvement:
- An annual (October) Forum of industry participants at which R and D results are communicated, and industry inputs on further R and D requirements obtained
- The Group of R and D agencies (Grains Research and Development Corporation; Australian Pork Limited; Meat and Livestock Australia; Dairy Australia and the Australian Egg Corporation) that have agreed to collaborate on feedgrain related R and D
Purpose
This document outlines the goals, priorities and industry relevance of the cross agency R and D strategy that is planned through, and managed by, the agencies that comprise the Feedgrain Partnership.
This strategy marks the first time that all agencies with R and D funding responsibilities have worked together to develop an agreed strategy that aims to support the continued growth of the feedgrain industry.
In this strategy cross agency collaboration can include projects with multiple funding sources, as well as those that are single agency funded, but are an agreed component of the strategy
Duration
This strategy covers the period from 2008/09 to 2013/14 inclusive.
A living strategy
This strategy will normally be updated annually. However, it will be updated more frequently if industry needs, or agency requirements, necessitate such changes.
Snapshot of the Australian Feedgrain Industry
Overview
Until recently, there has been little recognition of a feedgrain industry in Australia, defined as interconnected participants in the production, transport and utilisation of feedgrains by livestock enterprises in Australia, along with agencies and governments that regulate and support that supply chain activity.
In this strategy, feedgrains encompass those grains whose end users are predominantly, or substantially, intensive livestock industries in Australia. Those grains are barley, sorghum, triticale, oats, corn and millet and various pulses, there is also a very substantial, although variable, use of wheat for livestock feeding.
These grains are mostly multi purpose; for example barley is also used for malting, and for manufacture of foodstuffs (over a thousand tonnes of pearled cooking barley annually), while wheat has a diverse range of end uses depending upon grade and market conditions
Feedgrains are produced in both the winter and summer growing seasons. In winter, feedgrain production is a part of a diverse mix of grains grown for various markets. In summer, the sorghum grown in northern NSW and Queensland is very largely used by Australian livestock enterprises.
A distinction should be drawn between feedgrains used in livestock industries, and feedstuffs. The latter term includes many ration inputs that supplement grain in livestock intensive feeding. For example, during droughts such diverse products as copra meal and tapioca pellets have been imported, and hay/silage is an ongoing and important ration component in some industries. Nevertheless, grain is the dominant component of intensive livestock industry rations and represents over half the annual production costs of intensive livestock production in Australia.
Australia is a relatively small feedgrains producer and exporter in a global context. During the 5 years ended 2006/07 Australia produced around 1% of global coarse grains output, and between 1%-7% of global exports. Australia is, however, a leading barley exporter. About two thirds of the volume of world coarse grains production is corn produced in the United States.
Livestock industries are the value adding of grain
Australian feedgrain production is of particular importance because of its integration with livestock industry production in Australia
About one third of dairy milk production is now derived from grain feeding. Over one third of beef production is sourced from cattle feedlots; grain is the major ration component in cattle feedlots. The pigmeat industry depends on grain for its operations, as does the poultry industry.
This closer integration of the Australian grain and livestock industries is a new development in the rural economy. The poultry industry began to grow strongly in the 1960's based on grain feeding. Dairy production was at that time almost entirely grass based, and cattle lot feeding in Australia has only become a key part of the beef industry over the past 20 years.
Australia is the world's third largest exporter of cheese and milk powder, and the second largest beef exporter after Brazil. Australian grainfed beef is a key component of the beef trade to Japan; the beef industry's largest export market, and represents most supermarket beef sales in Australia.
This integration at the industry level is paralleled by the mix of grain farming and livestock production in broad acre farming. ABARE farm survey data shows that many broadacre farms are mixed enterprises, combining beef and/or sheep as well as grain production operations.
Recent studies suggest that the domestic livestock industries are likely to be the fastest growing customer for the Australian grain industry The 2008 GRDC study found that if recent trends continue to 2020 livestock industries will be the major market for Australian grain. Already, almost 60% of average eastern Australia grain output is consumed by domestic customers, predominantly livestock industries
This grain is, however, the basis of the large export trade in livestock products, and should therefore be seen as being exported, and consumed in Australia, as a value added product.
This R and D strategy supports the feedgrain industry in a whole of supply chain approach.
Feedgrain industry trends
1) While wheat and barley production has increased over the past 30 years, production of sorghum and triticale, has not. The following graphs from the 2008 GRDC feedgrain study illustrate the above point
2) The growth of grain dependent intensive livestock industries has meant that related demand for feedgrains has grown at a significantly faster rate than supply; Between 1993 and 2007 feedgrain demand by domestic livestock industries grew from 5.7 m.tonnes to around 9 m.tonnes As an example of this growth .the GRDC feedgrain report noted that between 1995 and 2005 SFMA surveys showed an average annual growth in feed grain demand in Victoria of 15.45, with the strongest growth evident in the dairy industry
The following graph from the 2008 GRDC report shows the strong growth in the intensive livestock industries since 1993, with the cattle feedlot industry spearheading this growth.
3) Besides the narrowing of the supply/ demand gap, crop yields have become more volatile, resulting in periodic, and more frequent, regional feedgrain shortages in eastern Australia. The following chart shows that the volatility in grain production is reflected in variability in grain exports, with domestic usage representing a steadily growing customer base
4) Various reports have drawn attention to the forecast further growing divergence between feedgrain supply and demand growth in Australia; for example, the 2004 Single Vision planning document prepared by Grains Council of Australia forecast that by 2010 domestic feedgrain demand would reach 13.1 m. tonnes, rising to16.8 m. tonnes. The 2008 GRDC feedgrains report indicated that if recent growth in feedgrain demand continued, by 2015 about 58% of all cereal grain in Australia will be used for livestock feeding.
5) There has been a decline in exports of grain from eastern Australia, as the following chart shows
With the bulk of livestock industry activity based in eastern Australia, taken with crop variability, and an exported margin average of only 38% of eastern states grain output, eastern Australia periodically experiences grain shortages, requiring shipments from interstate or, in severe droughts, overseas.
The following chart shows that eastern Australia is now predominantly an integrated livestock/ grain industry market place with the grain export trade a residual one
6) Climate change in Australia already underway may well be associated with the greater yield volatility referred to in 3 above. An updated 2007 CSIRO/ Bureau of Meteorology report on climate change concluded that:
- By 2030 droughts will become more frequent, and rainfall less regular but more intense
- Average temperatures will rise by around 1 degree C across Australia, with some regional variability
- Rainfall will decline in southern areas in winter, and in southern and eastern areas in Spring
- Compared with the earlier 2001 study precipitation forecasts have been lowered, and the earlier likelihood of increased rainfall in SW Australia discounted.
These updated studies point to the likelihood of more frequent crop failures at worst, or greater yield variability at best, unless major advances are made in crop varieties, and related agronomic practices tailored to a more variable, and hostile, growing environment.
The further implication is that security of supply for livestock industries will become more tenuous.
7) The growth in the feedgrain industry in Australia has not been associated with increased market transparency. Much data, while inherently available, is fragmented and only available in some cases by subscription to ABS. While crop forecasting is well covered demand data is fragmented and stock data of limited scope and frequency.
8) The grains industry is undergoing further deregulation. Already the domestic market is deregulated and the Australian government is committed to the abolition of the single desk for the export wheat trade.
9) Global biofuels policies, along with the escalation in oil prices and increased Asian demand, have driven global feedgrain prices to historically high levels .For the first time, there may be a robust linkage between oil prices and feedgrain prices. This linkage is currently driven by global, in particular US, biofuel policies rather than domestic factors. Current Australian government policy is to phase out the ethanol production rebate from 2011Some State governments, in particular NSW, are committed to ethanol subsidization , including content mandating.
Industry Issues
The following industry issues are taken into account in framing the strategy. This list is not exhaustive, and some of these issues are not necessarily to be addressed by R and D agencies (see comments below)
1) The pressing need to bring about substantial ongoing increases in the production of sorghum and triticale, in particular, in eastern Australia
Given the competing land use options available to farmers in the grain belt, this will have to involve shifts in the relative profitability of feedgrain production; and increased grower confidence in, and focus on, livestock producers as customers.
Substantial improvements in average yield, and in yield robustness through varying seasons will be required.
2) Climate change will require adjustments to how feedgrains are bred and grown in Australia. Increased climatic volatility implies a need for greater adaptability to higher average temperatures and less consistent growing conditions
3) Data deficiencies are widely, but not invariably, agreed to be a serious deficiency in enabling market participants to better understand market outlook and to foster more informed decision-making.
4) The 2008 GRDC report drew attention to the disconnection between the actual importance of the livestock industries and the perceptions held by many grain growers. While those grain growers who have direct dealings with livestock industry customers have a clear appreciation of customer requirements and of livestock industries as growth opportunities, for many grain growers export markets are seen as the customer of their output even though most eastern states grain is consumed in Australia. This perception gap may be partly attributable to the specifications that are understood by growers as required for the export and milling trades compared to bulk requirements for livestock usage
5) Feedgrain objective quality measurement ( NIRS ) was one subject of the PFLG multi agency program, and some tools were developed, although not introduced into industry. Whether, and if so how, to progress this technology into the market place is an issue to be addressed.
The role of R and D/tests to be met
The agencies that are committed to this plan are subject to varying charters; in particular GRDC is subject to the PIERD Act, and in the other agencies R and D is formally integrated with other functions in multi function agency planning .All are subject to over riding corporate law governance and reporting requirements
The Australian government has identified its priorities as justifying the government funding of R and D that matches industry levy funding. Those priorities are:
a) Environmentally sustainable Australia
b) Maintaining and promoting good health
c) Frontier technologies for building and transforming Australian industries
d) Safeguarding Australia
This plan aims to support industry growth, efficiency and sustainability. The common test that is applied to expenditure under this plan is the public good test. This test asks whether the activity funded would otherwise be carried by enterprises or associations; whether expected benefits from R and D outcomes can be spread across industry/ community, or whether benefits can be narrowly captured; and whether this public investment is likely to crowd out future private investment.
The Partnership has also taken account of industry guidance from the March 2007 Forum convened by the Partnership in Melbourne and the October 2007 Forum convened by the Partnership in Canberra. From those meetings the following issues were identified as requiring further scoping, analysis and potential funding:
a) Regulatory barriers to market efficiency, particularly interstate transport
b) Potential impacts of railway line closures
c) Net benefit assessment of more liberal taxation treatment of on site grain storage
d) A cross sector approach to the issues of varietal development and quality definition and identification; pre breeding end user input was stressed
e) Improved market transparency consistent with commercial confidentiality
f) Communication and information sharing
g) Mistrust between sectors to be broken down by co-operative alliances and information sharing.
Plan Goals
Drawing from the preceding inputs, the Partnership has identified the following goals for the R and D program:
1) Achieving substantial increases in average yields, and yield robustness, for sorghum, barley and triticale
2) Improving the utility of feedgrains to end-users
3) Trial, and to the extent practicable, commercialise feedgrain quality identification technologies
4) Maintain a core data collection capability, and consult with industry/ government on data collection and dissemination issues
5) Review supply chain efficiency to identify bottlenecks and initiate collective action where that can improve efficiency
6) Act as focal point for organised industry consultation on R and D related issues
7) Foster alliance building and communication across industry sectors
Project funding criteria
The Partnership will require feedgrain related R and D projects to meet the following tests:
- They must be relevant to Plan goals as set out in this document
- Have potential benefits through the feedgrain supply chain
- Breakthrough technologies that credibly offer worthwhile improvements in feedgrain production and utilisation efficiency will have high priority.
- R and D funding to have catalytic, rather than major ongoing, roles in respect of 4-7 above
- Have likelihood of, and planned pathways towards, commercial adoption if research is successful
- Risks and benefits are understood in project methodology, are assessable, and are reviewed through project life
- The resources and capabilities of those carrying out the project match requirements for successful delivery
- End customer involvement must be embedded in design and delivery of projects
Goal Implementation
Implementation risks and bottlenecks
The following implementation risks and potential impediments are taken into account in implementation plans:
1) The Partnership agencies have varying existing R and D plans, and projects underway or committed, as well as well established communication and accountability arrangements with stakeholders. Synthesising agency resources and planning processes on feedgrain related work without cutting across those existing lines of communication and accountability is both a key to the success of the Partnership, and a potential implementation impediment.
2) In large part, goal implementation relies on bringing together previous or current disparate activities, as well as the initiation of new work, and in doing so ensuring that end users and other relevant supply chain stakeholders are integrally involved and help drive the work forward. A risk is that single agency administered and funded projects will focus on meeting the accountability requirements of the funding sector, not the entire industry which needs to take up the outputs.
3) There is downward pressure on the R and D resources available to Partnership agencies due to drought-affected harvests and the impact of historically high grain prices on livestock industry activity. Scarcer resources imply more difficult choices between R and D funding options. There is already a tension between the dominant role of livestock industry grain demand in eastern Australia and the weight given to that market in the deployment of Partnership wide R and D resources.
4) Plant breeding has now become, to a significant extent, privatised, and subject to breeder royalty payments by end users. This adds a potential problem to the task of achieving large gains through investment in new feedgrain varieties, as end user royalty collection may be at odds with the aggregation of grain, and the reality that higher yields may initially and directly reward growers, not an individual, or class of, end user
Implementation pathway
The following steps are envisaged in the transition from feedgrain R and D activities in 2007/08 to this new Plan
a) Identify all current and committed feedgrain related R and D in the pipeline to constitute a baseline inventory.
b) Restructure above inventory, if necessary, to ensure avoidance of overlaps; integration of goals; and end user involvement.
c) Additional R and D funds available for Plan period identified
d) Additional funds for 2008/09 allocated to immediate priorities
e) Evaluation made of longer-term priorities during 2008/9
Baseline Feedgrain R and D Program
Relative to the economic importance of the feedgrain industry, the number of existing R and D projects specifically addressing feedgrain industry issues is small, although many programs have application to the feedgrains industry as part of a wider suite of purposes
All Partnership agencies have feedgrain related R and D as components of R and D plans, or of agency planning goals and priorities as follows (at April 2008):
Grains Research and Devel;opment Corporation: The 5 year Strategic Plan beginning 2007 includes as Lines of New Strategies:
World leading variety-breeding programs;
Development of partnerships to deliver new technology;
Leverage R and D delivery by partnerships.
Priorities set by industry include introducing quality standards for specific end users
GRDC has brought about a restructuring and consolidation of varietal development activities. Barley Breeding Australia has been formed, and the northern component of that program refocussed from malting to feedgrains. A Winter Cereals Pre Breeding Alliance has been set up
GRDC has commissioned a wide ranging review of key developments and issues in the feedgrain industry of importance to grain growers
Australian Egg Corporation: Current research priorities include the development of strategies to improve nutrient utilisation
Dairy Australia: The DA Strategic Plan priorities include: improving feed options and utilisation; co-coordinate an integrated industry response to issues associated with climate change and variability; foresight and analysis of energy issues. DA plans envisage resources being allocated to feed base competitiveness and the impact of biofuels.
Australian Pork Limited: One of the four Strategic Plan priorities is to address feed costs and feed supply volatility.
Pork CRC: There is strong emphasis on feedgrain supply and quality issues Work is underway on triticale varietal improvement; northern sorghum production improvement; and utilisation of NIRS quality calibrations. The Pork CRC released a report in February on potential improvements in feedgrain supply and security.
Meat and Livestock Australia: The grainfed beef R and D program includes as a priority the reliable supply of grain to secure the existing industry and to service the expected industry expansion
While there are differing emphases and priorities across agency plans, there is sufficient convergence on the importance of addressing key feedgrain related issues for agencies to commit to a cross agency R and D strategy through Partnership membership that is compatible with existing agency plans. As the Partnership develops, there may well be consequential upgradings of the priority given to feedgrain work in agencies
By pulling resources and having a common set of goals and priorities, the Partnership will bring about better leverage of R and D resources, and much improved customer ownership of, and commitment to, feedgrain R and D.
Cross Agency Integration and New Project Development
In 2008/09, the Partnership proposes the following:
- All existing varietal development projects that have potential feedgrain application to be reviewed to ensure end customer involvement and agreed focus
- New sorghum related project(s) to be considered
- Two grain stock data collections to be funded, and administered by ABS through contracts with DAFF, and with rapid upgrade capacity
- Industry and government to be consulted about Partnership concerns with adequacy of industry data collection
- New project utilising cutting edge grain energy attribute enhancement technologies to be considered for long term funding
Consultation with Industry
The Partnership will consult with a broad range of industry participants in October each year at a Partnership convened Forum.
The Forum will have the following functions:
- Interchange of information relevant to the feedgrain industry R and D planning
- Report to industry participants on outputs of feedgrain related R and D carried out through Partnership members during the preceding financial year
- Obtain industry views on industry developments and trends that influence the selection of R and D projects
- Reassess the composition of the Forum, and industry/ Partnership consultative processes
Measuring Feedgrain Partnership Effectiveness
The Partnership will measure its effectiveness by the following tests:
a) Feedback from members, and Forum participants on industry relevance of Partnership funding priorities, and attendance at Forum
b) Completion of Partnership approved projects within allocated budget/ timetable, and with planned outputs
c) Industry uptake of above project outputs
Last Updated - 3 June 2008
