Duxton’s Agri Bits and Pieces – Special Report

S&P GSCI Agriculture Inflation-Adjusted Index

As shown in the graph below, the S&P GSCI Agriculture Inflation-Adjusted Index is currently at its lowest level since the inception of the index. Since its peak in September 1974, the index has declined 5.3% p.a.

Source: Bloomberg
Inflation Adjusted Price of Wheat

As shown in the graph below, the inflation adjusted price of wheat per tonne is currently the lowest it has been on record. As the market proverb goes “the best cure for low prices is low prices” and as such, the USDA reports that this year’s USA wheat planting will be the lowest since 1882. Driven by these dynamics, the World Bank is predicting an increase in wheat prices over the next 10 years.

Source:…

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Duxton’s Agri Bits and Pieces Vol. 322

 

QUOTE OF THE WEEK

This week’s quote comes from AgFunder’s AgTech Investing Report 2016 and provides an insight into where AgTech deals are taking place and the challenges facing AgTech start-ups.

“While there has been an increase in deal reporting from around the globe, deal activity has picked up outside of the US and 51 countries were represented in this year’s data…Accelerators around the globe will give rise to greater geographic diversity. In the past year, start-up resources launched in geographies such as Australia, Argentina/Uruguay, Brazil, and Eastern Europe to help incubate local companies, with many designed to tackle local market challenges. Scaling those companies and providing them with resources will be an obstacle, but not insurmountable…Investment activity remained local: investors tended to fund start-ups in their geographies with fewer investors stretching across borders.”

ANALYSTS FORECAST FARMER MILK PRICES WILL INCREASE NEXT SEASON

Despite a stalling world market, analysts are…

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Duxton’s Agri Bits and Pieces Vol. 321

 

QUOTE OF THE WEEK

Globally, agriculture consumes 70% of the world’s fresh water resources. This week’s quote comes from the journal article ‘Water limits to closing yield gaps’ and explores the increase in water required to meet the needs of a growing population.

“In regions of the world affected by seasonal or chronic water scarcity, yield gap closure is strongly dependent on irrigation. Global yield gap assessments have often ignored whether the water required to close the yield gap is locally available…We find that, to close the yield gap, human appropriation of freshwater resources for irrigation would have to increase at least by 146%. Most study countries would experience at least a doubling in irrigation requirement, with 71% of the additional irrigation being required by only four crops – maize, rice, soybeans, and wheat. Further, in some countries (e.g., Algeria, Morocco, Syria, Tunisia, and Yemen) the total volume of irrigation required for yield gap closure would exceed sustainable levels of freshwater consumption.”

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Duxton’s Agri Bits and Pieces Vol. 320

 

QUOTE OF THE WEEK

This week’s quote comes from Rabobank’s Dairy Quarterly Q4 2016 report and highlights the changing dynamic in the global dairy industry.

“Milk supply from dairy export regions has fallen sharply, by 2.6m tonnes in 2H 2016, with milk volumes from Oceania and Europe severely challenged. In addition, domestic demand in the US and Europe continued to strengthen, negating the need for further stock growth and reducing volumes available for export by 4.5m tonnes in LME terms. As a result, global dairy prices have rocketed upwards, increasing by over 45% in 2H 2016.”

 

U.S. TAKES STEP TO BOOST ORGANIC FOOD PRODUCTION

The U.S. Department of Agriculture has taken a step toward increasing the production of organic foods – which has not kept pace with demand – by launching a program to certify farmland that growers are in the process of switching to organic.

Obtaining certification under the program…

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Duxton’s Agri Bits and Pieces Vol. 319

 

QUOTE OF THE WEEK

This week’s quote comes from the January 2017 Browning World Climate Bulletin and highlights the interesting weather patterns experienced across the globe.

“You know that this will be a strange winter when Switzerland’s ski resorts are plagued by the lack of snow while tourists are taking photos of snow in the Sahara. The problems of Swiss snow is a combination of the overall changes in climate brought on by the Atlantic AMO and an obnoxious anticyclone (high pressure area) that has squatted over the Alps. While Eastern Europe has shivered with sub-zero temperatures Western Europe has basked in the warm Atlantic air mass. The best Alpine snow is on the southern slopes. Meanwhile, even further south, there has been a snowfall on the dunes of the Sahara Desert – the first such snow in 40 years! They sometimes get snow in the Atlas Mountains, but not on the desert. The camels are freaking.”

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Duxton’s Agri Bits and Pieces Vol. 318

 

QUOTE OF THE WEEK

Australia’s agriculture sector is entering a five year “golden era” of prosperity and growth. It is expected that national agricultural production will exceed $60 billion in value this year, for the first time. This period of prosperity and growth is expected to boost the national economy, farmers’ incomes and the fortunes of sluggish regional towns and struggling country businesses. This week’s quote comes from Agriculture Minister Barnaby Joyce and describes how this year is the dawn of a “golden era” for Australian agriculture.

“Agricultural exports are now second only to iron ore and bigger than coal, in importance to the national economy; most Australians don’t realise that…We haven’t seen anything like this right across all regions and sectors — beef, lamb, grains, wool, sugar, kangaroo meat, live cattle, chickpeas, even the dairy industry is recovering — for almost a century. The good times are finally here.”

HIGH-TECH AGRICULTURE CAN…

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Duxton’s Agri Bits and Pieces Vol. 317

 

QUOTE OF THE WEEK

This week’s quote comes from the ‘Australian Grains Outlook for 2016-17 and Industry Productivity’ published this month by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). This quote highlights the improvements in production efficiency achieved by the Australian cropping industry which has been attributed to technological improvements such as superior machinery, new plant varieties, enhanced water management and a more developed understanding of harvesting and planting strategies.

“Productivity is an important measure of performance for the Australian cropping industry because it reflects improvements in the efficiency with which inputs such as land, labour and capital are used in crop production. Productivity growth is determined as an increase in output beyond any associated increase in input (or a decrease in the quantity of inputs needed to produce a unit of output). ABARES measures productivity using total factor productivity (TFP), which takes into account the full range of inputs and outputs that are generated on farm. The cropping industry has the…

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Duxton’s Agri Bits and Pieces Vol. 316

 

QUOTE OF THE WEEK

This week’s quote comes from the recently released report Lessons from the water market: The southern Murray–Darling Basin water allocation market 2000–01 to 2015–16. This report analyses the major demand and supply side drivers of water allocation market prices in the southern Murray-Darling Basin, drawing on historical data for 2000–01 to 2015–16. The report finds that higher water prices in recent years can be explained by five key factors, including changes in water demand from the irrigation sector.

“Between 2000–01 and 2015–16, there have been many structural changes in the irrigation sector affecting the demand for water and therefore market prices. In particular, there has been a steady decline in wine grape areas, an expansion in other horticultural crops, (including nuts) and a slight shift from rice to cotton. Overall, the most significant change has been an increase in demand for water from horticulture within the lower Victorian Murray region. While further research is required to confirm the effect of these changes…

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Duxton’s Agri Bits and Pieces Vol. 315

 

QUOTE OF THE WEEK

The World Bank has suggested that global production of food will need to increase by 50% by 2050 if world population continues to rise at its current pace. Yet, the effects of climate change may lead to crop yields falling by more than a quarter. Given these dynamics, farmers are exploring ways of increasing their production, more sustainably at lower cost. This week’s quote captures the “internet of plants and fields”.

“In Japan, the world’s first entirely automated lettuce farm is due for launch next year…Everything after seeding will be done by machines – watering, trimming, harvesting – on shelves stacked from floor to ceiling.. Automation has reduced labour costs by 50%, and LED lighting developed specifically for plant cultivation reduces energy costs by 30%. It doesn’t matter what the weather or climate is outside. And growing vegetables in vertical farms means you can recycle 98% of the water and produce food much closer to where people consume it, cutting down on…

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Duxton’s Agri Bits and Pieces Vol. 314

QUOTE OF THE WEEK

This week’s quote comes from ANZ’s recently released report ‘Australian Agriculture: Funding our Future’. Back in 2012, ANZ noted that Australian agriculture faced a significant capital gap of $1 trillion investment by 2050 to generate profitability and growth in Australian agriculture. This week’s quote provides an update on the situation.

“The capital gap as it stands in 2016 show that if Australia is to simply maintain its current share of exports, by 2025, the country will need an additional $109.2 billion of capital. Even moderate growth in Australia’s market share could cause this figure to increase substantially to $133.6 billion. Australia’s agriculture industry is currently supported by around $630 billion of capital (on farm and along supply chains), meaning an increase of around 21 per cent on current capital investment is required.”

 SHIPPING CONTAINERS PROVIDE FARM-FREE VEGIES: NOW WE CAN ALL EAT OUR GREENS

Shipping containers could bring farming to the heart of the city as hydroponics and mobile phone apps are harnessed…

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