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FINDING THE ROAD FORWARD

OPPORTUNITIES TO INCREASE WA AGRIFOODS EXPORTS


FINAL
September 2015; v0.96

DOCUMENT OBJECTIVE/PURPOSE
This document seeks to bring new perspectives to the challenge of increasing Western Australias agrifood
exports
Coriolis is a management consulting and market research firm that
focuses on agriculture, FMCG (fast moving consumer goods) and
retailing, servicing clients across the Asia Pacific region. Coriolis
have recently opened an office in Perth, Western Australia as an
endorsement of the regions capability and potential to be an
agrifood leader in the Asia Century. This document represents our
first contribution to assisting Western Australia's agrifood
potential.
Western Australia has huge potential for agrifood growth. The
State is the size of Western Europe with the population of Jamaica.
It is four times the size of Texas, five times the size of the Ukraine
and six times the size of California.
For a range of historical reasons, this massive region is not
currently intensively farmed. As one example, Israel with 1% of the
land and 5% of the water produces twice as much food &
beverages as Western Australia.
As well as having spare capacity to produce more, Western
Australia has location. The state is on the doorstep of South-East
Asia (a third of world population) and close to East Asia (one
quarter of world population).

As outlined in this document, we believe Western Australia has


anywhere from $4b to $40b in incremental agrifood value upside.
We are not alone in believing that Western Australia has huge
potential for growth. The Western Australia Government is
investing $300m of the Royalty for Regions funding into their
Seizing the Opportunity program. This investment is intended to
catalyse and encourage growth in the agrifood sector in the State.
The objective of this document is to assist the growth of the
industry by bringing new perspectives to the challenge of
increasing Western Australias agrifood exports.
The research takes a big picture point of view of the agrifoods
sector and identifies key drivers for growth. While its an overused
clich, from our research we believe that many in Western
Australia are missing the forest for the trees in terms of the size
and nature of the opportunity. This document looks at the big
picture of the forest and scale of the potential size of the prize.

DOCUMENT OBJECTIVE/PURPOSE
As this is an internal pro bono project, scope is kept relatively tight and focused; the objective is to frame
the questions rather than answer them in detail

IN SCOPE

OUT OF SCOPE

- Identifying macro drivers for industry value growth

- Detailed analysis of specific sectors and products

- Focused on growing exports rather than selling more in


the relatively small domestic market
- Comparisons of Western Australia with select, relevant
peer group countries to provide perspective

- Excessive discussion of barriers or challenges to


growth
- Proposing detailed solutions, business plans or
business advice

- Food agriculture and seafood

- Policy advice to government


- Fibres (wool, cotton, etc.), forestry, pearls and other
non-food incomes streams

DEFINING RELEVANT COMPARISONS


In order to develop a better perspective on the Western Australian situation and opportunity, this report
uses a range of peer group countries for comparisons depending on their relevance to the question

Economic development peers


but not climatic peers

Economic development peers


and climatic peers

Climatic peers
but not economic development peers

Relevant to economic comparisons


(e.g. value-added to agrifood exports)
Not relevant to climatic comparisons

Relevant to economic
and climatic comparisons

Only relevant to climatic comparisons


(e.g. water use, irrigation)

United Kingdom
Canada
New Zealand
France
Germany
Denmark
Switzerland
Other Northern Europe

Israel
Spain
Italy
Portugal
Chile
Parts of the United States
(e.g. Arizona)
Parts of Argentina

Mexico
Turkey
Morocco
Egypt
South Africa
Peru
Kazakstan
Kenya
Tunisia
Lebanon
Saudi Arabia
Syria
Somalia
Botswana
Algeria

Yemen
Oman
Iran
Mozambique
Ethiopia
Iraq
Sudan
Uzbekistan
Chad
Azerbaijan
Turkmenistan
Eretria
Jordan
Libya

OUTLINE

What we want to achieve


How we could achieve it

VALUE OF PRODUCTION
Western Australia has grown the value of agrifood production from $1.9b in 1983 to $6.6b in 2013, achieving
a 4.2% compound annual growth rate (CAGR) over the period (non-inflation adjusted)
GROSS VALUE OF AGRI-FOOD1 PRODUCTION IN WESTERN AUSTRALIA: AGRICULTURE AND SEAFOOD
A$m; 82/83-12/13
$7,000

$6,613m

30y CAGR
(83-13)
4.2%

$6,000

3.4 x

Wheat

$5,000

Barley

$4,000

Oats
Other grains
Oilseeds
Wheat
Legumes
Hay, etc.
Nursery/other
Vegetables
Grapes
Fruit & nuts (x grapes)
Eggs
Milk

$3,000

$2,000

$1,924m

Meat

$1,000

Other wild seafood


Rock lobster
Aquaculture2

$2012-13

2011-12

2010-11

2009-10

2008-09

2007-08

2006-07

2005-06

2004-05

2003-04

2002-03

2001-02

2000-01

1999-00

1998-99

1997-98

1996-97

1995-96

1994-95

1993-94

1992-93

1991-92

1990-91

1989-90

1988-89

1987-88

1986-87

1985-86

1984-85

1983-84

1982-83

1. Focus is food; chart excludes fibre (wool and cotton) and forestry; 2. Food aquaculture, excludes pearls; Source: ABS 7503.0 Value of Agricultural Commodities Produced (various); ABS
7501.0 Value of Principal Ag Commodities Preliminary (various); ABARE Australian Fisheries Statistics (various years); WA Statistical Yearbook (various years); Coriolis analysis and estimates

INFLATION-ADJUSTED
However, adjusting for inflation reveals an industry struggling to grow in real terms; a handful of sectors
stand out for having created meaningful long-term growth (particularly oilseeds)
30 YEAR REAL PRODUCTION VALUE GROWTH RATE CAGR

VALUE OF AGRI-FOOD PRODUCTION: NOMINAL & REAL

% of A$; CAGR; inflation-adjusted; 82/83-12/13

A$m; 82/83-12/13

$9,000
30y CAGR
(83-13)

$8,000

Real
0.5%
$7,000

Real value
(Inflation-adjusted)

$6,000

$5,000

$4,000
Nominal
4.2%

23.5%

Oilseeds
Grapes

6.1%

Other grains

5.9%

Aquaculture, food

5.9%

Nursery/other

3.3%

Vegetables

3.0%

Barley

2.6%

Fruit & nuts (x grapes)

2.5%

Other seafood

2.4%
1.7%

Legumes
$3,000

Nominal
(As reported on
the day)

$2,000

$1,000

$2010-11

2008-09

2006-07

2004-05

2002-03

2000-01

1998-99

1996-97

1994-95

1992-93

1990-91

1988-89

1986-87

1984-85

1982-83

Source: page prior sources; ABS 6401.0 Consumer Price Index; Coriolis analysis

Eggs

0.4%

Meat

0.1%

Milk

0.0%

Rock lobster

-0.5%

Hay, etc.

-0.8%

Wheat

-1.0%

Oats

-1.5%
Overall
0.5%
7

GROWTH TARGETS
The government has set the goal of doubling agrifood in real terms by 2025; this will require real growth of
5.9%/pa creating $6.6b in new activity; we believe this is possible and propose a stretch target of +$14b
VALUE OF AGRI-FOOD PRODUCTION IN WESTERN AUSTRALIA: HISTORICAL ACTUAL AND THREE MODELS FOR GROWTH
A$b; 82/83-12/13 actual; 12/13-24/25 model

Coriolis Think Big


stretch target
+$14.b @ 10% CAGR

$20

$15
Required real growth
+$6.6b @ 5.9% CAGR

$10
Historical Real value growth
0.5% CAGR

Business-As-Usual
+$0.4b @ 0.5% CAGR

$5

Historical nominal value growth


4.2% CAGR

$2024-25
2023-24
2022-23
2021-22
2020-21
2019-20
2018-19
2017-18
2016-17
2015-16
2014-15
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
1999-00
1998-99
1997-98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92
1990-91
1989-90
1988-89
1987-88
1986-87
1985-86
1984-85
1983-84
1982-83
Source: pages prior; DAFWA Agrifood 2025+ material (aims to double the real-term value of sales from WAs agrifood sector between 2013 and 2025; Coriolis analysis

GOVERNMENT INVESTING
The State Government recognises the challenges involved in transforming Western Australian agriculture
and is investing almost $300m in the Seizing the Opportunity program, itself building on past investment

The State Government will deliver on key


commitments in agriculture with $297.5m over four
years to help Western Australia's agriculture and
food sector to capture market opportunities in Asia.
This $297.5m from Royalties for Regions for the
Seizing the Opportunity initiative reflects
unprecedented State Government investment in
agriculture
This builds on the State Governments existing
investment in agriculture, including
- $311m Ord Expansion Project
- $30m Australian Export Grains Innovation Centre
- $10m for Muresk
- $178m investment in upgrading road and rail
infrastructure in the Wheatbelt

This is a landmark initiative that provides $297.5million to ensure our agricultural sector is positioned
to capitalise on the growing global demand for food and agricultural products - much of it right on our
doorstep. The program will focus on short and medium-term strategies to assist WA businesses to
capture the opportunities presented in Asia, the Middle East and other new markets - markets that
need to secure food supplies for their population.
Treasurer Troy Buswell, Aug 2013

60 per cent of the worlds population is in the same time zone as WA, which made the State well
placed to capitalise on demand from Asias rapidly expanding middle class. Theres never been greater
opportunity for our agriculture and food sectors to secure new markets and increase productivity and
profitability. This funding will help to promote local products and attract new investment in agriculture,
as well as build business skills, research and development and create efficient supply chains.
Agriculture and Food Minister Ken Baston, Aug 2013
There are huge opportunities for Australian agriculture, and through this unprecedented package we
hope to provide the industry with the skills and resources they need to attract investment and capitalise
on Asias growing demand for food. Just as strategic government investment in the resources sector
has underpinned economic growth in WA, this package aims to drive similar opportunities for
agriculture. This package is an important stimulus for agricultural businesses and will support them as
they present products and opportunities to markets and investors.
Regional Development Minister Brendon Grylls, Aug 2013

Source: Media Statement State Budget 2013-14: Securing our economic future - Seizing opportunities in agriculture Friday, 9 August 2013

EXPORT GROWTH REQUIRED


With low domestic food expenditure growth, achieving this target growth will require strong export growth
to fill the gap

Likely real
domestic
food expenditure
growth

1-3%

2-3% pa Population
1-3% pa Food $/capita
2-3% pa Food inflation

Required real
Western Australian
food export
value growth

6-12%

Target
growth

=
6-10%

Discussed page prior


Exports needed
to fill the gap

10

PEERS REAL EXPORT GROWTH


Growing agrifood exports at a 6-12% CAGR is not impossible; many climatic and cultural peers have
achieved growth rates in this range over the past decade, through production growth and demand from Asia
10 YEAR REAL GROWTH COMPOUND ANNUAL GROWTH RATE IN TOTAL FOOD & BEVERAGE EXPORTS: WESTERN AUSTRALIA PEERS
CAGR on US$; inflation-adjusted; 2003-2013

10.6%

11.4%

11.8%

High
12%

3.4%

United Kingdom

France

Spain

3.5%

4.8%

Italy

Morocco

5.1%

5.6%

Kenya

Greece

Canada

Australia

Netherlands

USA

Mexico

Chile

New Zealand

Argentina

Portugal

Israel

South Africa

5.7%

6.4%

6.5%

6.9%

7.0%

7.2%

7.6%

7.8%

8.2%

8.4%

8.5%

8.6%

8.8%
Kazakhstan

Turkey

Peru

Source: UN Comtrade database (custom job); US BLS (US$ food price inflation); Coriolis analysis

Low
6%

11

OUTLINE

What we want to achieve


How we could achieve it

12

KEY DRIVERS
Broadly speaking, there are three key drivers available to increase the turnover of the agrifood industry in
Western Australia

1. MORE FARM LAND


ha

Re-evaluate viability of
non-ag crown lands
Bring more private land
into agriculture

Improving yields
KEY DRIVERS TO
INCREASE AGRIFOOD
INDUSTRY TURNOVER

2. INTENSIFICATION
t/ha

Changing land use


Increasing irrigation
Using high intensity
production systems

3. ADDING VALUE
$/t

Improving products
Improve positioning
Transforming product

13

SOURCES OF GROWTH
Our analysis suggests these big picture drivers have the ability to create all the required growth (+$6.6b to
+$14b); our straw man model (developed later) suggests up to $40b is available
ESTIMATED INCREMENTAL VALUE OF DRIVERS/SOURCES OF AGRIFOOD GROWTH AVAILABLE TO WESTERN AUSTRALIA
A$b; model

$46.1
S
CCES
H SU RIO
G
I
H
USES H SCENA
LIS
BUL

$8.0
$0.1

$0.1

Further
long-term
+$25.5 incremental
upside
available

$10.0

Bullish
Scenario
Total
Potential
upside
+$40

$10.0
To stretch
+$7.4 target +$14b

$5.0
$0.3

$1.0
+$6.6

$5.0

$6.6

Required +$6.6b

$6.6
2012-13

More Crown More private


Land into
land into
agriculture agriculture

1. More farm land


Source: Coriolis

Improving Changing land Increasing


yields
use
irrigation

2. Intensification

More high
intensity
production
systems

Improving
existing
products

Current

Improving Transforming High Success


regional
products
"Bullish
positioning
Scenario"

3. Adding value
14

SOURCES OF GROWTH
Our straw man analysis suggests anywhere from $4b to $40b in potential agrifood
industry growth upside is available to Western Australia

Likely

PRELIM
subjec INARY
t to s
revisio ignificant
n

Incremental Size of the prize beyond business-as-usual


Low success
Bear scenario

High success
Bullish scenario

More than a third of the state is unallocated


government land and ~15% is non-ag/non-park $0

Not much that is viable; slow


process
+$500m

Infrastructure and irrigation


change the equation
+$5b

Bring more private lands into


agriculture

An unclear amount of private land not farmed


$0

All good land already used


+$-

New infrastructure enables new


private land use
+$200-300m

Improving yields

Yields typically trail key competitors for a range of


reasons

Competed away; maintain statusquo


+$-

Get to US yields overall


20% increase
+$1b

Changing land use

832,000 sq km farmed at $72/ha

Good land already all in crops/


hort; hard to change land use
+$500m

Infrastructure and irrigation


change the equation
+$5b

Increasing irrigation

$800-900m
(46,252ha x $17-20k/ha)

Get to Mozambique
Double area
+$1b

Get to Libya or Algeria


10x area
+$10b

Using high intensity production


systems

Very limited use of high intensity systems


Greenhouses $40m; food aquaculture $16m
Intensive chicken/pork/beef/lamb ~$250m (TBC ?)

Limited success
+$1b

More like California or Texas


+$10b

Improving products

Opportunities exist to improve the value of existing


products to the in-market customer or final consumer

Achieved slowly but competed


away to maintain status-quo
+$-

Achieve a 5% price premium on


50% of agrifood exports
+$120-130m

Improving positioning

Opportunities exist to improve the positioning of WA


agrifood to the in-market customer or the consumer

Already built in to buyer pricing;


acts to maintain status-quo
+$-

Create a 5% price premium on


50% of agrifood exports
+$120-130m

Transforming products

Most exports leave as raw material ingredients not


consumer/foodservice-ready final products

Get to Finland
+$1b

Get to Denmark
+$8b

Industry $7b / Exports $4.9b

Almost double exports


+$4b

8-10x upside on exports


+$40b

Driver

Potential lever under this driver

Current situation in Western Australia

1. More farm land

Re-evaluate the viability of nonag crown lands

2. Intensification

3. Adding value

TOTAL

Source: Coriolis analysis and estimates

15

1. MORE FARM LAND


The first potential driver is to bring new land into agriculture

1. MORE FARM LAND


ha

Re-evaluate viability of
non-ag crown lands
Bring more private land
into agriculture

KEY DRIVERS TO
INCREASE AGRIFOOD
INDUSTRY TURNOVER

16

MORE FARM LAND (+$500m to $5.3b)


The amount of agricultural land in Western Australia has been trending down
TOTAL LAND USED IN WA IN AGRICULTURAL ESTABLISHMENTS

AREA UNDER PASTORAL LEASES IN WA

120

120

Ha; m; 1900-2014

Ha; m; 1900-2014

100

100

80

80

60

60

40

40

20

20

Line of best fit to


limited available data

NOTE: Data includes land not


under agricultural use (e.g.
reserve); not directly
comparable with chart left

Source: various historical statistical publications and yearbooks; ABS; other; Coriolis analysis and estimates

2012
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1908
1904
1900

2012
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1908
1904
1900

17

MORE FARM LAND (+$500m to $5.3b)


Only a third of Western Australia is farmed and 93% of all land is owned by the government; any significant
increase in farmland would need to come from re-evaluating the crown estate
WA LAND USE IN FARMING AND SELECT OTHER USES
Sq km; 000; 2013

WA LAND OWNERSHIP
Sq km; 000; 2010

European settlers didnt want


this land 100 years ago. Does
new technology make any of
this viable? (e.g. irrigation)
Horticulture
0.3 0%

Unallocated
961
38%

Arable
84
3%

Total land
2,530
Grazing
748
30%

Parks, etc.
261
10%
Non-ag
475
19%

Government
owned
2,353
93%

Total land
2,530

Private
177
7%

Agricultural
land
33%

Source: Agricultural Commodities Australia 2012-13 (ABS; 7121.0); DPAW Annual Report 2013/14; EDOWA Fact Sheet 12 Dec 2010; Coriolis analysis

18

2. INTENSIFICATION
The second potential driver is to intensify the use of existing land to increase its output

1. MORE FARM LAND


ha

Re-evaluate viability of
non-ag crown lands
Bring more private land
into agriculture

Improving yields
KEY DRIVERS TO
INCREASE AGRIFOOD
INDUSTRY TURNOVER

2. INTENSIFICATION
t/ha

Changing land use


Increasing irrigation
Using high intensity
production systems

19

LOW EXPORTS PER SQUARE KM


Western Australia is not intensively farmed; the broad strategic direction for the state is to increase food &
beverage exports per square kilometre
FOOD & BEVERAGE EXPORTS PER SQUARE KILOMETRE: WESTERN AUSTRALIA VS. SELECT PEERS
US$; 2013; A$; 2012

$71,927

$85,944

$93,686

$105,060

$120,206

$125,878

$140,333

$44,925
$3,956

Egypt

Kenya

Kazakhstan

$4,604

Canada

$943

$4,755

Peru

Western Australia

$5,398

South Africa

$1,937

$7,531

Mexico

Morocco

$12,006

Argentina

$9,321

$14,808

Turkey

United States

$20,305

Chile

$14,875

$21,489
Greece

Portugal

New Zealand

Spain

Israel

France

United Kingdom

Italy

Source: UN Comtrade database (custom job); DAFWA WAAFFF 2013; Coriolis analysis

20

IMPROVING YIELDS ($0 to $1b)


Western Australian yields typically trail those in other regions, with the state constantly playing catch-up,
as this example from barley shows
EXAMPLE: WA BARLEY YIELD
T/ha; 1961-2012

YIELD AS A % OF USA YIELD


% of US yield; 1961-2012
180%

2.5

51 year
Absolute
Change
vs. US

160%
140%

2.0

Chile

+43%

Canada

+40%

S. Africa

+58%

120%
1.5

100%
80%

1.0
60%
WA

-3%

40%

0.5

20%
-

2012

2009

2006

2003

2000

1997

1994

1991

1988

1985

1982

1979

1976

1973

1970

1967

1964

1961

2009
2005
2001
1997
1993
1989
1985
1981
1977
1973
1969
1965
1961
Source: UN FAO AgStat database; ABS (various reports); Coriolis analysis

0%

21

IMPROVING YIELDS ($0 to $1b)


Almost across the board, Western Australia achieves low yields relative to a wide range of climatic peers
EXAMPLE: WA WHEAT YIELD VS. SELECT PEERS

EXAMPLE: WA POTATO YIELD VS. SELECT PEERS

T/ha; 2012

T/ha; 2012

6.6
35
5.7
30

29

28

28

27

27

4.9
26

26
24

4.1
3.7
19
2.8

14

2.7

2.6

1.4

WA

1.2

Morocco

1.5

Peru

Spain

Turkey

Israel

Greece

South Africa

Italy

Chile

Mexico

Egypt

Peru

WA

Greece

Italy

Chile

Mexico

Egypt

Turkey

Morocco

Spain

Israel

South Africa

Source: UN FAO AgStat database; ABS (various reports); Coriolis analysis

2.8

22

CHANGING LAND USE ($500m to $5b)


The vast majority of Western Australian agricultural land currently generates very low value per hectare;
only 0.1% of land generates over $1,000 per hectare
LAND- BASED AGRICULTURE IN WA: AREA USED VS. VALUE PER HECTARE
Ha; $/ha; 2012/13

$34,108

ZOOM &
STRETCH
0.1% of land

$28,143
$3,698

$8,038
$8,857

Value per hectare


$/ha; 2012/13

Milk

Grapes
Hay & silage
Fruit
Vegetables

Area filled in = distribution of $6.1b total gross value of agriculture (excludes value-added beyond farm)

$510
$606

$441

$339

Other grains
Oilseeds

Wheat

Pulses

$14
Livestock

Average
= $72

Area used
ha; 2012/13
Source: ABS (various data sets); Coriolis analysis

23

CHANGING LAND USE ($500m to $5b)


Israel demonstrates what is possible, generating twice the value of Western Australia on 1% of the land and
5% of the water
TOTAL REGIONAL AREA
Sq km; 2014

RENEWABLE WATER
Cu km; 2013

TOTAL F&B VALUE/AG HA


$/ha; 2013

37.7

TOTAL F&B INDUSTRY VALUE


A$/US$; billions; 2013

$34,824

2,529,875

More
than
400x
value
per ha

$15.5

More
than
twice
the
size

$7

Less
than 5%
of the
water

Less
than 1%
of the
land
1.8

$84 *

20,770
WA

Israel

WA

Israel

WA

Israel

* Includes value added to agricultural products (unlike $72 page prior)


Source: CIA World Fact Book; ABS (various data sets); DAFWA; National Water Commission Australian Water Resource 2005; Coriolis analysis

WA

Israel

24

CHANGING LAND USE MORE HORTICULTURE


Peer group suggest using more land in high-value horticulture is possible
AREA IN FRUIT & VEGETABLES: WESTERN AUSTRALIA VS. SELECT PEERS
Hectare; 2012

Turkey

PERCENT OF TOTAL COUNTRY/REGION AREA


% of ha; 2013

2,214,364

Iran

2.8%

1,901,239

Spain

1.2%

1,858,071

Italy

3.7%

1,575,779

France

5.2%

1,125,365

Argentina

673,930

1.8%
0.2%

Morocco

550,060

1.2%

Iraq

539,620

1.2%

South Africa

456,738

Chile

448,574

Portugal

443,527

Tunisia

373,694

Saudi Arabia

354,700

Greece

346,295

Kenya

343,670

Israel

0.4%
0.6%
4.8%
2.3%
0.2%
2.6%
0.6%

128,176

5.8%

Zambia

79,160

0.1%

Zimbabwe

68,016

0.2%

Western Australia

29,470

0.01%

Source: Agricultural Commodities, Australia, 2012-2013 (ABS; 7121.0); United Nations FAO AgStat; Coriolis analysis

25

INCREASING IRRIGATION ($1b to $10b)


While Australia may be the driest continent, Western Australia has a reasonable amount of water relative
to climatic peers
TOTAL RENEWABLE WATER RESOURCE: WESTERN AUSTRALIA VS. CLIMATIC PEERS
Cubic kilometres; 2011

217

WA DATA
PRELIMINARY

Need to review with


Department of Water

212
191

137
122

112
90
69

65

57

49

43

38

35

29

25

18

Yemen

Israel

Oman

Jordan

Libya

Algeria

Botswana

Somalia

Saudi Arabia

12

Lebanon

12

Tunisia

15

Eritrea

17

Syria

Namibia

Zimbabwe

Turkmenistan

Morocco

Azerbaijan

Western Australia

Chad

Uzbekistan

Egypt

Sudan

Portugal

Iraq

Spain

Ethiopia

Iran

Italy

Turkey

Mozambique

Source: CIA World Fact Book; National Water Commission Australian Water Resource 2005; Coriolis analysis

20

26

INCREASING IRRIGATION ($1b to $10b)


Relative to a wide-ranging peer group, Western Australia uses a small percent (3%) of its total renewable
water resource
FRESHWATER WITHDRAWAL AS A PERCENT OF TOTAL RENEWABLE WATER RESOURCE: WESTERN AUSTRALIA VS. CLIMATIC PEERS
% of cu km; 2011

WA DATA
PRELIMINARY

986%

Mining fossil
water and using
desalination to
exceed 100%

Need to review with


Department of Water

619%
115%

113%

110%

100%

100%

94%

74%

73%

68%

62%

49%

43%

43%

35%

29%

29%

24%

22%

21%

19%

18%

16%

12%

9%

5%

5%

3%

3%

2%

2%

0%

Egypt

Uzbekistan

Turklenistan

Israel

Syria

Jordan

Oman

Pakistan

Iraq

Iran

Tunisia

Algeria

Morocco

Sudan

Azerbaijan

Spain

Lebanon

Italy

Somalia

Zimbabwe

Turkey

Mexico

United States

Portugal

Eritrea

Madagascar

Ethiopia

Western Australia

Chile

Namibia

Botswana

Mozambique

Yemen

119%

170%
Libya

Saudi Arabia

Source: CIA World Fact Book; National Water Commission Australian Water Resource 2005; National Water Account Australia (ABS 4610.0); Coriolis analysis

27

INCREASING IRRIGATION ($1b to $10b)


The amount of land irrigated in Western Australia has been growing long term
AREA OF AGRICULTURAL LAND IRRIGATED IN WESTERN AUSTRALIA

Treat a

s direct

Ha; 1900-2012

ional

60,000

5 period
moving
average

50,000

40,000

30,000

20,000

10,000

1900

1920

1940

Source: various ABS publications released over the past 100 years; Coriolis analysis

1960

1980

2000

2020

28

INCREASING IRRIGATION ($1b to $10b)


Currently the North and South of the state have about the same amount of irrigated area; long term growth
in irrigated area has been stronger in the North of the state
IRRIGATION AREA BY REGION: CURRENT & IN-CONSTRUCTION
Hectare; 2015

IRRIGATION AREA BY SUPER-REGION


Ha; 1955/1974-75/2015

64,526
S/SW
34,482
53%

North
30,044
47%

Perth Metro
5,620
9%
Peel
10,426
16%

TOTAL
64,526

24,400

E. Kimberley
24,400
38%
28,100

(including inconstruction)

South West
11,297
17%

Great Southern
3,212
5%

Pilbara
2,330
Wheatbelt 4%
3,206
5%
Gascoyne
Mid West 1,600
721
2%
1%

5,198
809

W. Kimberley
1,714
3%

15,051
300
4,898

East Kimberley

1,714
3,930

West Kimberley

12,759

Other S/SW

21,723

Peel/South-West

Other North

600

6,489

15,004
9,853
1955

1974-75

2015

Note: Other North 1955 (300) and 1974 (600) currently Coriolis estimate; Source: Water For Food brochure (p3); Planning to develop sustainable irrigated agriculture in Northern Western
Australia (George, et al; 2004); State Water Strategy - Irrigation in Western Australia; ABS Gross Value of Irrigated Agricultural Production (various); various historical ABS publications; Coriolis
analysis and estimates

29

INCREASING IRRIGATION ($1b to $10b)


Western Australia does not have a lot of irrigated land relative to a wide range of climatic peers
AREA IRRIGATED: WESTERN AUSTRALIA VS. SELECT CLIMATIC PEERS
Sq km; 2013 or as available

266,440

199,900

4,700

3,970

2,896

2,250

2,000

1,735

1,181

789

589

508

216

76

14

Algeria

Libya

Tunisia

Ethiopia

Israel

Somalia

Zimbabwe

Mozambique

Jordan

Oman

Western Australia

Eritrea

Namibia

Botswana

Madagascar

5,694

10,860

Chile

Portugal

11,990

Azerbaijan

5,837

14,250

Morocco

Yemen

14,850

Saudi Arabia

6,801

16,200

Sudan

Spain

18,900

34,700

Iraq

Turklenistan

35,250

Italy

19,910

39,510

Uzbekistan

Iran

Mexico

Turkey

41,980
53,400
64,600
87,000

Pakistan
United States

30

Source: Water Use on Australian Farms (ABS 4618.0); WA Irrigation Review Final Report July 2005 (p30); CIA World Fact Book; UN FAO; Coriolis analysis

INCREASING IRRIGATION ($1b to $10b)


Relative to climatic peers, a very, very small percent of Western Australia is irrigated
PERCENT OF TOTAL LAND AREA IRRIGATED: WESTERN AUSTRALIA VS. SELECT CLIMATIC PEERS
Sq km; 2013 or as available

25.9%

17.2%

0.3%

0.3%

0.3%

0.3%

0.2%

0.2%

0.2%

0.2%

Zimbabwe

Australia

Somalia

Ethiopia

Libya

Algeria

Eritrea

Oman

Mozambique

Botswana

0.4%
Eastern Australia

0.003%

0.5%
Saudi Arabia

Namibia

0.8%
Jordan

0.01%

0.9%
Sudan

Western Australia

1.0%

Yemen

0.02%

1.3%

Chile

Tunisia

1.6%

2.6%

United States

Madagascar

2.9%

Mexico

1.9%

3.3%

Morocco
Turklenistan

3.3%
4.2%

Portugal

Iran
6.4%

Turkey

5.7%

6.9%

Spain

Italy

Israel

Uzbekistan

Iraq

7.0%
8.1%
9.9%
11.1%
13.4%

Azerbaijan
Pakistan

31

Source: WA Irrigation Review Final Report July 2005 (p30); CIA World Fact Book; UN FAO; Coriolis analysis

HIGH INTENSITY PRODUCTION SYSTEMS ($1b to $10b)


To date Western Australia has made limited moves into intensive production systems

Greenhouses

Lot Feeding

Barn Feeding

Aquaculture

32

HIGH INTENSITY PRODUCTION SYSTEMS GREENHOUSES


Peers suggest there are opportunities to increase the amount of crop produced in greenhouses
AREA IN GREENHOUSE/UNDER COVER: WESTERN AUSTRALIA VS. SELECT PEERS
Hectare; 2014 or as available

89,600

81,000

71,698
72,800

57,444

49,049
49,746

23,770
26,000
26,500
31,800

5
8
15
15
44
60
60
60
75
80
80
89
92
100
109
115
125
140
140
140
145
150
152
166
200
200
200
203
209
243
260
303
350
418
544
688
720
733
760
800
828
850
1,000
1,075
1,200
1,341
1,574
1,600
2,100
2,200
2,286
2,600
2,700
2,700
2,700
2,790
3,100
3,278
3,739
4,000
4,000
4,670
5,000
5,400
6,200
7,560
8,895
10,000
11,759
14,981
15,000
Mongolia
Iceland
Mauritius
Jamaica
Western Australia
Saudi Arabia
Tajikistan
Bahrain
South Africa
Czech Rep.
Yemen
Estonia
Qatar
Guatemala
Latvia
Denmark
Norway
Armenia
Slovenia
Slovakia
Sweden
Ireland
Malta
Macedonia
Georgia
Uzbekistan
Costa Rica
Belarus
Switzerland
Finland
Croatia
North Korea
Azerbaijan
Austria
Moldova
New Zealand
India
Cyprus
UAE
Iraq
Kazakhstan
Dominican Rep.
Serbia
Bulgaria
Columbia
Australia
Kuwait
Belgium
Chile
Argentina
Canada
Russia
Portugal
Ecuador
Ukraine
Romania
Syria
Palestine
Jordan
Lebanon
Iran
Germany
Libya
Hungary
Algeria
Poland
Tunisia
Brazil
Mexico
Greece
United States
Morocco
Israel
France
Egypt
Japan
Turkey
South Korea
Spain
Italy
China
Netherlands

33

NOTE: Data is from a wide range of sources and may not be perfectly comparable; many countries include glasshouse, greenhouse/PE tunnel & low tunnel; range of estimates for China (up to
2,760,000ha)
Source: Cuesta Roble Consulting; Greenhouse production systems in Mediterranean area Leonardi/De Pascale May 2010; Greenhouse Technology Globally: The future of food; Coriolis
analysis

HIGH INTENSITY PRODUCTION SYSTEMS INTENSIVE FEEDING


Peers suggest Western Australia could convert more of its grain into protein
VALUE OF AGRICULTURAL COMMODITIES PRODUCED: THREE LARGE DRY STATES COMPARED

~$18b

A$/US$; b; 2012/13

$13.1

~$12b
$6.9

$3.9

$3.4
~$1b

Grain,
oilseeds &
pulses
Western Australia

$0.35

$0.46

Pigs,
poultry &
eggs

Cattle

$1.7

$1.8

Grain,
oilseeds &
pulses

Pigs,
poultry &
eggs

$3.0

$2.9
$1.7

$0.15
Milk

California

Source: USDA Census of Agriculture 2012 (various tables); ABS (7503.0); Coriolis analysis

Cattle

Milk

Grain,
oilseeds &
pulses

Pigs,
poultry &
eggs

Cattle

Milk

Texas

34

HIGH INTENSITY PRODUCTION SYSTEMS AQUACULTURE


Western Australia currently produces very little aquaculture per kilometre of coastline
AQUACULTURE PRODUCTION PER KILOMETRE OF COASTLINE: WA VS. WIDE RANGE OF PEERS
T/km; 2012
964
222

175

167
137 132

122

72

70
53
30

30

22

0.1

0.1

0.1

Western Australia

Qatar

Lebanon

Source: UN Fishstat database; ABARES Aquaculture production in 2011/12 by state; CIA World Fact Book; Wikipedia; Coriolis analysis

0.6 0.6 0.4 0.3

Uruguay

United Arab Emirates

Papua New Guinea

Argentina

Kuwait

10

Portugal

Mexico

Singapore

Malta

Italy

Jordan

Turkey

Peru

Spain

Philippines

Israel

Iran

Malaysia

Pakistan

Chile

Indonesia

Taiwan

Vietnam

10

Cyprus

15

Cuba

18

Saudi Arabia

21

Greece

21

35

3. ADDING VALUE
The third potential driver is to add more value to existing output

1. MORE FARM LAND


ha

Re-evaluate viability of
non-ag crown lands
Bring more private land
into agriculture
Improving yields

KEY DRIVERS TO
INCREASE AGRIFOOD
INDUSTRY TURNOVER

2. INTENSIFICATION
t/ha

Changing land use


Increasing irrigation
Using high intensity
production systems

3. ADDING VALUE
$/t

Improving products
Improve positioning
Transforming product

36

IMPROVING PRODUCTS ($0 to $130m)


While there are always opportunities to improve product quality and value, in most cases Western Australia
already achieves a premium, as this example from the global wheat trade shows
EXAMPLE: GLOBAL WHEAT EXPORTS: VOLUME VS. AVERAGE VALUE PER TONNE FOR TOP 11 COUNTRIES & OTHER
Tonnes; US$/tonne; 2013
$393

Area filled in = relative export value

$286

$293
$293
$304

$314

$318

$325

$326

$331

+7% above

Average
= $304

$252

$246

$244

Russia

Kazakhstan

Ukraine

Height:
Average export
value per tonne
$/t; 2013

Western
Australia

Other Europe

India
Brazil
Argentina

France

USA

Germany

Australia

Canada

All other

Width: Total global cross-border tonnes exported


T; 2013
Note: Currently using Australian price as a proxy for WA price; need to locate WA source
Source: UN Comtrade database; Coriolis analysis and classifications

37

IMPROVING PRODUCTS ($0 to $130m)


In some cases, Western Australia quality may actually be pricing itself out of the market, as this example
from the global avocado trade shows
EXAMPLE: GLOBAL AVOCADO EXPORTS: VOLUME VS. AVERAGE EXPORT VALUE PER KG
Tonnes; US$/kg; FOB; 2012

$3.43
$3.36
$2.78
$2.26

$1.93

$1.63

$1.58

$1.78

$1.14

$1.13

$1.05
$0.90
$0.50

Height:
Average
US$/kg
Export
price
CIF
(2012)

WA

Australia
New Zealand
USA

Spain

Chile

Mexico

Peru

Israel

Dominican Rep.

South Africa

Other
Kenya
Other C/S America

Width: Volume of avocados exported in tonnes (2012)

Source: UN Comtrade database; Coriolis analysis and classifications

38

IMPROVING POSITIONING ($0 to $130m)


There are opportunities to improve the positioning of Western Australian agrifood in export markets
IDENTIFIED TYPES OF COUNTRY, REGIONAL OR INDUSTRY LEVEL POSITIONING USED IN AGRIFOOD
Model; 2015

Ethical claims about


the production system

Health claims
about the product

Branding/positioning of the producing


country or region

Example attributes

Fair trade
Organic
Free range
Cage free
Barn laid
Sustainable

Low in fat
High in calcium
Low in salt
Heart healthy
Cures urinary tract infections
Anti-bacterial; anti-microbial

Clean & green


Safe food
Provenance
Tradition & culture
Authentic
Majestic & picturesque

Role of government

Regulating claims
In-market promotion

Regulating claims
Funding research

Regional branding
Regulation/rules

Alaska (Seafood)
Iceland (Seafood)
USA (Organic)

NZ Manuka Honey
AHA Heart Health

Anglia
Switzerland
Italy (various)
France (various)

Example certification
systems

Example of global leaders/


global best practice

Western Australia current


performance

Source: Coriolis

- Overall: LIMITED
- Some positioning around free range
- Some seafood sustainable (e.g.rock
lobster) and MSC certified
- Very limited organic

- Overall: NONE (?)


- None WA-unique/specific identified

- Overall: SOME (primarily domestic)


- Buy West Eat Best campaign targeted
locally
- Some regional identity development (e.g.
Southern Forests, Margret River wine)

39

TRANSFORMING PRODUCTS ($1b to $8b)


Rich country peer group suggest Western Australia (GDP/capita $102,232) has opportunities to transform
more of its ingredient raw materials into value-added processed foods and beverages
AGRIFOOD EXPORTS VALUE SHARE BY SEGMENT: WESTERN AUSTRALIA VS. OTHER RICH COUNTRIES
% of value; 2012/2013

11%

6%

11%

11%

11%

5%

48%
50%

47%

45%
66%

33%

2%
3%
3%
7%

10%

30%

11%

4%
2%

21%

15%
2%

4%
5%
4%
5%

0%
1%
1%

1%
2%

0%

21%
33%

28%

15%

28%

31%

2%
3%
1%

Beverages
Processed foods

16%

Oilseeds/oil & fat

56%

Grains

1%
8%

1%
1%
6%

Produce
Dairy
Seafood

12%

14%

13%

Meat

19%

15%

13%

29%

12%

3%
8%
Denmark

Ireland

Netherlands

Sweden

Argentina

Germany

Japan

Italy

United Kingdom

Switzerland

4%
3%

15%

19%

13%

10%

12%

3%
6%

2%

Source: UN Comtrade database; DAFF Australian Food Statistics (various years) Table 5.8; Coriolis analysis

34%

34%

13%
3%

11%
2%

4%
36%

2%

33%

15%

4%
16%

14%
8%
1%
6%

2%
7%

1%
4%
3%
6%

42%

31%

Finland

7%

1%
3%

3%
2%
3%
1%

37%

32%

Spain

0%
9%
0%
1%

2%

22%

23%
36%

Processed foods

5%

Western Australia

2%

Canada

Beverages

8%

USA

9%

4%
4%

40

TRANSFORMING PRODUCTS ($1b to $8b)


Transforming Western Australian ingredient raw materials into finished packaged foods & beverages has
huge potential to add significant value
Western Australia exports $2.8b
worth of this

Scotland exports $6.8b worth of


this
$37.99

152x
$37.74

$0.25
Export value of grain Value added by
in a bottle of whisky everyone else in the
value chain and tax
Source: Dan Murphys online; Grants Whisky corporate blog; UN Comtrade; Coriolis analysis

Retail price of a
bottle of whisky

41

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42