Challenges and opportunities facing the Australian wool industry
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1 Challenges and opportunities facing the Australian wool industry Dr. Paul Swan General Manager - Research SA Sheep Blueprint Launch, Hahndorf, SA, 12 th April 2016
2 AWI investing in our future 40% of AWI s investments are in RD&E to drive wool industry profitability, competitiveness & sustainability 25% On-farm RD&E 15% Off farm RD&E 60% Marketing 45% of RD&E spend is the E - extension since practical, commercial impact is needed to generate returns 1-in-5 RD&E dollars is invested with another RDC or equivalent
3 A vibrant and productive wool industry Vibrant means. Attractive to investment capital (prospects for long-term return on investment) + Recruitment of the young (rewarding career & family prospects)
4 A vibrant and productive wool industry Productive means. The return on investment is attractive (relative to rainfall, and other land uses) which then means it is attractive to investment capital, and rewards the young!
5 Vibrant, productive & wool - requires both Clear, preferential demand for our wool and sheepmeat outputs + Tools and attitudes to achieve cost-effective productivity growth
6 Our proteins are rare & expensive to produce Mass-produced factory fibres & meat increasingly dominate supply (chicken, pork, man-made fibres, cotton ) Data source: UN (2012), IWTO (2014)
7 Rising protein demand is transforming our industry $6 Gross value of production for sheepmeat and wool (AUD billions) $5 $4 $3 $2 $1 $0 Wool Sheepmeat
8 Rising protein demand is transforming our industry $6 180 Gross value of production for sheepmeat and wool (AUD billions) $5 $4 $3 $2 $ Season opening 90 sheep number 60 (millions) 30 $0 0 Wool Sheepmeat Sheep numbers SA: 1992/93: $0.43b GVP, from 16 m sheep 2015/16: $1.45b GVP, from 11 m sheep
9 AUD production value per head has doubled in 14 years $80 $70 $60 Sheepmeat Wool Combined +5.3% pa Gross production value per season -opening sheep number (AUD) $50 $40 $30 $20 $10 Stockpile era Meat +6.1% pa Wool +4.5% pa 1991/ / / / / / / / / / / / / / / / / / / / / / / /15f $0 How do we continue to drive value growth?
10 Ewe numbers will remain low Meat industry forecast to 2030 If adult ewe numbers are to remain low our ability to grow industry wealth means growing productivity per ewe. Her lifetime: number of lambs reared fleece value, especially fleece weight
11 Sheepmeat and wool prices will remain high Tight supply = high prices 1. MISP20 foreshadows red meat prices to remain level at current high values 2. Wool price will also remain high, since driven by clean volume we supply Future GVP growth will be driven by productivity per head within a per hectare context Season average clean price (USD /kg) Actual $12 $11 $10 $9 $8 $7 $6 $5 $4 11/12 13/14 15/16f 09/10 12/13 10/11 14/15 08/09 07/08 06/07 02/03 03/04 04/05 05/06 01/02 $3 150,000, ,000, ,000,000 Clean volume sold in Australia (kgs) Forecast EMI = -3.92x10-8 x volume (R² = 75%)
12 Sheep meat and wool: the key alignments 1. Increasing production efficiency in wool sheep enterprises: Lifetime weaning rate (lower mortality) Weaner mortality Lifetime fleece value 2. Improved stock management skill levels Wool GVP Wool GVP/hd MFD GFW Australian Sheep Industry GVP Ewe numbers Lifetime weaning rate Weaner mortality Lifetime wool cut Sheepmeat GVP Meat GVP/hd Sheep turnoff Lamb CWT 3. Making life easier Sire breed choice 4. Protecting against reputational and biosecurity risks Wool COP Decisions: Management confidence, & skill Meat COP
13 LTEM as a platform LTEM is a critical foundation for industry growth. Critical that we deepen adoption, especially in SA & WA. 20% of national ewe flock to 50% by Build next levels for LTEM Lambing density project 10 SA sites, through a partnership of SA Blueprint, AWI, JS Davies Bequest (U.Ad), Elders, Landmark Alumni
14 Culling passengers, and keeping performers 16 Gain in number of lambs weaned per ewe joined (%) Sire (24%) Ewe (76%) Years Ram Genetics Keeping best 50% of old ewes Improved ewe genetics Culling ewes dry at 2 & 3 y/o 14
15 New challenges, practical skills, practice change 1. Weigh, scan, and body condition score! 2. Run adult ewes in fertility-based mobs (not age) 3. Lamb in small mobs (the smaller the better) 4. Wet/dry assessment at lamb marking. Ear tag ewes who were dry or have lost lambs 5. Don t cast for age alone (e.g. 5.5 y/o) 6. Maintain balance of meat and wool, in the context of lifetime performance
16 AWI & Practice change 45% of AWI investment in R&D is in Extension This is because R&D investment which does not need lead to change is wasted Sheep handling Forum Campbell Town, TAS Our critical challenge is to reach out to, and connect with, the next generation of wool investors 2014 Breeding Leadership Course, Clare, SA
17 Our ageing farmer population Sources: ABS Australian Social Trends, December 2012 Australian Farm Institute, Farmers are getting older, but its not a problem, October 2013
18 Some implications 1. Livestock farmers average 20 years older than the overall workforce (63 vs 43 years of age) 2. They work an average 49 hours of work per week 3. On average, they manage $3.3m of business assets 4. Over the coming decade, retirements will lead to Around $400 billion in asset transfers required Recruitment challenges
19 Farming easier is becoming our greatest challenge Labour is a constraint to profit Labour saving devices are becoming critical Whole Farm Profit ($/year) 500, , , , ,000 Potential Automation of operation is a opportunity Hours worked per day Source: Young, J. and Thompson, A.N. (2013), Scoping the benefits of saving labour in sheep enterprises in Australia, MLA Report B.LSM.0022
20 Farm automation innovation Smart ear tags: maternal pedigree (mothering up) behaviours (onset of lambing) localisation within paddock (theft, dog alerts, grazing) Farm trials start later this month A major challenge, but also opportunity
21 South Australia s role is critical 16% South Australia s share of The Australian Sheep Flock (%) 14% 12% 10% 8% 6% 4% Roughly 1-in-7 of Australia s sheep are in SA, and rising Sources: ABS Historical Selected Agricultural Commodities, by State (1861 to Present), AWPFC
22 South Australian Sheep Industry Blueprint An excellent initiative A platform for partnership and co-investment A model for other states and territories
23 Vibrant, Productive & Wool We have the foundations built for wonderful decades Yet 20% value growth by 2020 requires wide-scale practice change, and strong partnerships These will be key to managing the demographics of our young growers, and our young ewes
24 Thank you Whilst Australian Wool Innovation Ltd has used reasonable efforts to ensure that the information contained in this publication is correct, it is your responsibility to confirm its suitability for use for your purposes. To the extent permitted by law, we exclude all liability for loss or damage arising from the use of, or reliance on, the information contained in this publication. Australian Wool Innovation Ltd. All rights reserved.
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