annual report 2011-12 - australian oilseeds federation ... · australian oilseeds federation annual...

AnnualReport2011-12

Australian Oilseeds Federation

1Australian Oilseeds Federation Annual Report 2011-2012

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AOF Office BearersStrategic Plan OverviewPresident’s ReportExecutive Director’s ReportCommittee ReportsStatistics

Contents

AOF Office BearersTrent Potter – PresidentJon Slee – Vice President

Robert Wilson – Vice PresidentCharles Aldersey – Treasurer

AOF ExecutiveTrent Potter - PresidentJon Slee - Vice PresidentRobert Wilson - Vice PresidentCharles Aldersey - TreasurerAdam Davis - trading sectorSally Porter - export sector (to March 2012)Dane Robertson - export sector (April-Oct)

Mike O'Hare - production sectorDon McCaffery - canola sub-committeeGrame Tooth - sunflower sub-committeeBrendan Farrer - stockfeed sectorRobert Quinn - crushing sectorAshley Palmer - refining sectorMoira Rowland - retail/food service sector

Acknowledgments

Goodman Fielder Unilever AustralasiaPeerless Foods Cargill AustraliaRiverland Oilseeds Alba Edible OilsCootamundra Oilseeds CBH GroupMacSmith Milling

The Australian Oilseeds Federation sincerely thanks the contributors to the OilseedDevelopment Fund for their ongoing support:


Australian Oilseeds Federation Annual Report 2011-2012

Strategic Plan Overview

6. To be recognised by all stakeholders as the 'go to' organisation for Australian oilseed information, strategic direction, advice and support.

Organisationalcapability

5. To contribute to the development and profitable access for Australian oilseed and derived products to all new andexisting domestic and international markets.

Market support

3. To work with value chain sectors to improve the market opportunity and value for canola meal.

4. To ensure that market choice can be delivered through the value chain from farm gate to dinner plate.

Industry support/communication

1. To provide a whole-of-value chain approach to improving industry profitability while remaining internationally competitive.

2. To improve grower capability in efficient, sustainable and profitable oilseed production across both minor and major crops.

Sector supportfor profit

Our Goals Strategic Thrust

Our Vision

An Australian oilseed industry valued at $3.3bln, sustainable and internationally competitive,delivering a range of high value products to satisfy market demand.

The value growth will be delivered through improved productivity, quality, and product mixcombined with value chain efficiency gains.

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12. Market and deliver the benefits of ODF contribution.

13. Continue to broaden the income base for AOF.

14. Strengthen core skills and knowledge base of ED.

Our Mission

To provide leadership to the Australian Oilseed industry and coordinate activities that willachieve optimised profitability for all sectors of the value chain.

• Stronger and more diverseincome base.

• Strategically focussed organisation

8. Respond quickly and appropriately to member raised market access issues.

9. Foster appropriate industry segregation protocols for new products.

10. Provide the two-way end user market interface to crop sequencing group as part of Objective 2.

11. Continually lift the AOF 'offer'.

• More engaged membership

• AOF viewed as oilseed industry leader

3. Increase the proportion of canola meal in the feed ration.

4. Promote Australian canola meal to the S.E. Asian markets.

5. Provide assurances to stakeholders that market choice is delivered.

6. Continue to build unity across the Value Chain

7. Provide relevant and timely response and actions when issues arise

• Improved value for meal.

• Trust in the oilseeds value chain to deliver non GM

1. Provide leadership across the value chain in addressing issues that serve to impede value creation.

2. Work cooperatively with GRDC to maintain and foster grower confidence in oilseeds as part of a properly planned broadleaf rotation.

• Improved industry profitability and LT sustainability

• Increased oilseeds in crop rotation.

Objectives Outcomes


The past year has been a very buoyant onefor the Australian oilseeds industry, with arecord canola crop, and large crops ofcotton, soybean and sunflowers bolsteredwith firm prices for oil and meal, deliveringpositive returns for growers, processors andexporters alike. The 2011/12 season wasthe most lucrative for the completeAustralian oilseeds value chain, with a totalvalue creation in excess of $2 billion.

The Australian Oilseeds Federationcontinued to be at the forefront of theindustry, working closely with members andother stakeholders to ensure maximum valuecreation can achieved for the oilseed valuechain. This mostly involved specific AOF-ledinitiatives, but also required the AOF torepresent the interests of members inbroader industry-wide initiatives.

The AOF continues to operate to the goalsestablished in the 2010-15 Strategic Plan,namely:

1. Build profitability across value chain

2. Improve grower capability

3. Improve market opportunity for meal

4. Ensure market choice delivered

5. Facilitate profitable market access

6. AOF as the 'go to' organisation

In reviewing the year, it is probably best toidentify the lead achievements undertakenwithin each of the goals. The ExecutiveDirector's Report will then outline theremaining activities and achievements.

1. Build profitability across value chain:

Much of the day-to-day AOF activity fallsunder this strategic thrust, and includesactivities designed to remove barriers orimpediments to efficient and profitableoperations. Such barriers may be related tomarket access, on-farm operations, logistics,or the overall regulatory framework. Thework undertaken by the TechnicalCommittee of the AOF is invariably orientedtowards this goal, as are submissions togovernment enquiries and gaining minorcrop usage permits from the APVMA.

One of the more visible achievements withinthis goal is the development of the'Australian Canola' marketing strategy, whichwill be launched later in 2012. The primaryelement of this strategy is the developmentof an 'Australian Canola' logo which will bemade available on a no-fee licence basis tomembers of the AOF for use on packagingand promotional material, including websitesand advertising.

President’s Report 2012Trent Potter

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2. Improve grower capability:

The GRDC funded 'Better Break Crop'program is the primary activity under thisstrategic goal, and involves the developmentand delivery of high quality training materialdesigned to build grower confidence andcapabilities in the major oilseed crops ofcanola, soybean and sunflower.

With the 2010/11 year primarily focusseddelivery of the sunflower program, this last12 months has been devoted to developingthe soybean program, and identifying theappropriate skills gaps with canola growers,and developing appropriate material. By theend of the 2011/12 year, the soybeantraining manual was complete, with the firstworkshop scheduled for October 2012,while specific end-season modules forcanola were being prepared for workshopdelivery in September.

3. Improve market opportunity for meal:

Maximising the opportunity and value forcanola meal remains a key focus under thisstrategic thrust, and a core element of this isthe AOF supported work that commencedduring the year by the NSW DPI with GRDCfunding. This project is aimed at identifyinggenetic traits within many hundreds ofvarieties of canola, with the aim of isolatinggermplasm which could be used bybreeders to develop varieties better targetedto end users. A defining first step in theprocess was an end-user round table held inFebruary, hosted by the AOF, bring end-users of seed, oil and meal together withbreeders to identify desirable end-user traits.

The meal quality work undertaken in therecent past with funding from the Pork CRCcontinues to be a valuable resource formembers, and the AOF has committedadditional funds alongside the Pork CRC toupdate the reactive lysine calibration as wellas establishing calibrations for a wider rangeof NIR equipment.


President’s Report 2012 continued

4. Ensure market choice delivered:

Much of the activity throughout the yearsupporting this thrust related to non-gmcanola assurance, ensuring that the verystrong record of providing successful marketchoice to date will continue to deliverconfidence to end-users. The role of theAOF is often as a 'facilitator' to bring thevarious members of the value chain togetherto discuss and agree on processes andprocedures to ensure the principle of marketchoice remains.

5. Facilitate profitable market access:

The AOF was a member of the FederalGovernment Taskforce developing the ExportCertification Reform Package (ECRP) forgrains, which was designed to streamlineand ultimately reduce the cost of exportcertification. This project concluded this year,and saw the introduction of new fees andcharges, and new ways of operating forexporters of oilseeds.

A key outcome of the ECRP was the needfor establishment of an industry/governmentliaison body which can assess and prioritisemarket access requests from industry inorder to provide clear direction to DAFF andDFAT. The result was the establishment ofthe Grains Industry Market Access Forum(GIMAF) where AOF was a founding partner,and retains a formal seat on the board ofGIMAF.

At more of an operational level, regainingmarket access for canola to China remaineda major priority under this thrust, andincluded the AOF commissioning andcoordinating a major seed testing programacross all port zones. The results of thistesting culminated in a formal technicalpaper being submitted to the quarantineauthorities in China in October 2011, and avisit by the AOF to China, accompanyingthe Australian Government representatives.

The AOF was also instrumental in exploringways to streamline the requirement for EUcertification, and to this end, introduced theon-line pre-audit checklist for growersseeking to be audited under the ISCCscheme.

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6. AOF as the 'go to' organisation:

Activities supporting this thrust are in themain the day-to-day activities of the AOF,and include regular communication tomembers and other stakeholders throughvehicles such as Canola News and AOFWeekly News; operation of the 'Test Check'program for participating laboratories;conducting the successful 'Supply ChainAcademy'; dealing with media and otherstakeholder enquiries; being a co-host of theAustralian Grain Industry Conference,providing on-going back-office support forSoy Australia Ltd, and a plethora of otheractivities that ensure the AOF continues tobe the 'voice' for the Australian oilseedindustry.

I would like to thank my fellow members ofthe AOF Executive, and in particular the VicePresidents and Treasurer, who provide thesupport and direction needed of anorganisation of this nature.

I would also like to particularly thank theExecutive Director for all of his work over mypast three years as President. Nick hastravelled a great deal in bringing the AOF tothe forefront of many industry meetings. Hehas worked very professionally in his roleand brought a calming influence to meetingswith some of our colleagues throughout thegrains industry value chain.

Finally, this year I will step down fromPresident of the AOF, after three years, and itis with confidence that I hand the baton onto the incoming President, knowing that theAOF is leading the industry, working tomaximise value for members, and draws onits 40 plus year history as one of the mostprofessional, well respected industry bodiesin the country.


Executive Director's ReportNick Goddard

Highlights for 2011/12

• Record oilseed harvest-eclipsing the previous record by over a million tonnes.

• Over 2 million tonnes of oilseeds exported - value in excess of 1.5 billion dollars.

• 142 million dollars of crude and refined oilexported.

• Continued delivery of Market Choice - especially in relation to full acceptance of non-GM canola deliveries.

• Growing AOF membership base - 3 new members accepted to bring total membership to 68 organisations.

• Strong industry contributions to the Oilseed Development Fund.

• Successful partnership with Pulse Australia in delivering the Better Break Crop program.

• Launch of web based pre-audit checklist for ISCC EU certification.

• Stronger, more engaged membership base.

Industry performance

The past year has seen record, or nearrecord harvests for all major oilseed crops,which, while largely dependent on prevailingprices and weather, is also a testament tothe growing confidence amongst growers forgrowing oilseeds. The ability of the supplychain to manage this volume of grain is alsoa testament to the processes andcapabilities of the bulk handling system.

With a base domestic crush demand of 700-800,000 tonnes, the large harvest delivereda record export volume, which came at atime of oilseed shortages in Europe.Consequently, a ready market for canolaexports was found in the EU, with marketpremiums being achieved in many cases.The large sunflower crop negated the needto import as much sun oil from SouthAmerica, while the large local soybeanharvest ensured domestic culinary beandemand could be easily met, enabling over amillion dollars of culinary soybeans and flourto be exported.

The opportunity to export canola to EU foruse as a feedstock for bioenergy was onlypossible through the achievement ofsustainability certification by exporters underone of only 2 schemes applicable forAustralia (ISCC and 2BSvs). Whilecertification is a requirement under EUlegislation, and has proved profitable forAustralian exporters, it has imposedincreased cost and complexity on theAustralian canola value chain. There isopportunity to improve the efficiency of thecertification process, and while the AOF hasinitiated some measures to this effect, thereis more to be done.

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Exports of meal were also strong, with66,000 tonnes exported representing 18million dollars. The major markets wereKorea, New Zealand and China. Securingprofitable markets for Australian meal is acritical element for growth of the domesticcrush industry. Growing use of feedlots fordairy in Indonesia and New Zealand providegood growth opportunities for Australianmeal, while the demand for pork and poultryfeed in China will continue to create marketopportunities of oilseed meals.

The past year was also the fourth year ofcommercial production of RoundUp® readycanola, with over 140,000 hectares planted.This year continued with the success of the'Market Choice' philosophy, with the discreetsegregation for non-GM canola continuing todeliver seed, oil and meal to end users with100% of deliveries meeting end-userspecifications. The ability of the Australiansupply chain to successfully manage a non-GM segregation is the envy of many of our

trading partners, and has paved the way forestablishing appropriate protocols andpractices for the introduction of future GMcrops.

There was also significant capital investmentin the industry over the past 12 months, withincreased refining capacity in 2 states,increased automation in packing, and thecontinuing investment in the new crush plantat Wagga Wagga. National Biofuels alsoformalised their commitment to their plannedsoybean crush plant at Port Kembla with anofficial launch event attended by the Premierof NSW. The willingness of industryparticipants to continue to invest in theindustry is a strong vote of confidence in thefuture of the Australian oilseed industry. Therecent announcement by GrainCorp inSeptember 2012 to acquire the fats and oilsbusiness from Goodman Fielder and theGardner Smith business further reinforcesthe broader view that the industry haspotential to grow and create further value.


Executive Director's Report continued

AOF Performance

The AOF continued to deliver value to theindustry in accordance with the 2010-2015Strategic Plan. Working to a vision of anAustralian oilseed industry valued at $3.3blnbeing sustainable and internationallycompetitive, the AOF worked with itsmembership based to help them deliver arange of high value products to satisfymarket demand. The AOF also facilitatedindustry meetings and discussions aimed atcreating value through improved productivity,quality, and product mix combined withvalue chain efficiency gains.

While working to a plan of building ongoingsustainability for the industry, the AOF alsoensures that its own existence is sustainableby operating on a very low cost base, andthrough prudent project investment. TheAOF completed the 2011-12 year with astrong balance sheet with healthy cashreserves and negligible debt. Industrycontributions to the Oilseeds DevelopmentFund were broadly in line with budget.

The President's Report has already detailed

many of the key initiatives undertaken by theAOF throughout the year. There have alsobeen a number of specific activitiesundertaken by the AOF which have servedto strengthen the position of the associationin both the domestic and internationalmarkets, as well as continuing to add valuefor members.

Member communication and engagementforms a core plank of the current strategicplan, and constitutes a reasonableproportion of the AOF secretariat's time andresources. The quarterly AOF Technical andGeneral meetings provide the most valuableforum for members to openly share issuesand opportunities, for actions to bedetermined, and for working groups to beformed. These meetings continue to enjoystrong membership support, whichdemonstrates the value such gatheringsdeliver to members. Publications such asthe Monthly Crop Report, Weekly AOFNews, Soy News, Canola News and theSunflower Newsletter all play a key role inkeeping members informed of latestdevelopments and initiatives.

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Throughout the year, the AOF becameengaged in two strategically importantFederal government reviews, being the Truthin Labelling-Palm Oil Bill Inquiry conductedby the House of Representative StandingCommittee on Economics, and the NationalHealth and Medical Research Council'sreview of Australian Dietary Guidelines. Bothreviews could well have resulted in adverseconsequences for the Australian fats and oilsindustry, and the AOF was firm in it positionof arguing not to increase regulatory burdenand cost in relation to palm oil labelling,while arguing for greater recognition of therole of healthy fats in the soon-to-bereleased Dietary Guidelines.

The AOF also represented member's intereston a number of committees and workinggroups, including, but not limited to, theDAFF sponsored Australian Grains IndustryConsultative Committee (AGIC); the GrainsIndustry Market Access Forum (GIMAF); theExport Certification Review Program (ECRP)for the grains industry; the StandardsAustralia working group for an ISO standardfor biofuel sustainability; and the workinggroup providing DAFF with industry viewsand feedback on proposed CODEXchanges. The AOF also supports the mirrorgroups that work with Standards Australia inreviewing changes to ISO analytical methodsrelated to oilseeds, meals and oils.

The very successful Supply Chain Academywas conducted four times during the year,with 52 participants successfully completingthe program. Thanks go to Grains IndustryAssociation of WA (GIWA) for theirassistance in co-ordinating the Perthprogram, and for Cargill, Goodman Fielder,GrainCorp, Riverland, CBH and Inghams for

hosting plant visits. These Supply ChainAcademy sessions provide attendees withan intensive and hands-on view of theoilseeds value chain, and are designed tobuild both industry knowledge and industryleadership amongst participants.

The AOF was also represented in a numberof international forums during the year,including the International OilseedsProcessor's Dialogue (IOPD), the CanolaCouncil of Canada convention in Saskatoon,and with meetings with government officialsin China aimed at restoring market accessfor canola.

During the year, the AOF continued toentrench itself with its membership baseand the wider stakeholder group, as beingthe 'go to' place for addressing questions,queries, issues and opportunities. Mediainteraction plays a key role for the AOFaddressing issues such as crop prospects,non-GM segregation, industry rationalisationand general issues management, particularlyin relation to food safety. Over 27,000 visitswere made to the AOF website during theyear, with 90,000 page views having beenmade.

Although only a relatively small organisation,the AOF manages to exert its influence overa broad area, and to represent the many,often divergent views of the oilseed industryto stakeholders at all levels. The AOFSecretariat is extremely grateful to thesupport and guidance it receives frommembers, and looks forward to continuingto represent members with the purpose ofbuilding resilience and sustainability into theAustralian oilseed industry.

CommitteeReports


The committee structure within the AOFprovides an essential element for delivery ofAOF initiatives, while also providingopportunity for member's representatives tobecome more involved in industry strategy.

Three committees support the work of thesecretariat, with each invariably appointingspecialist sub-committees for specific tasks.The AOF also works closely with SoyAustralia Ltd on specific soybean relatedmatters.

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Technical Committee:Chair: Jonathon MackThe Technical Committee met three timesface to face throughout the year, supportedwith a number of issue specificteleconferences. Developing and agreeingrequired changes to the AOF TradingStandards constituted a key outcome fromthe Committee, with other 'standing items'including matters related to analyticalmethods, review of Test Check results,APVMA permits and associated usageissues, MRL issues and impacts ofimpending regulatory changes.

The Committee draws from people acrossthe value chain, and consequently, providesstrong technical support to the AOF, withdue consideration for 'whole of industry'implications of any decisions and actions.

Canola Committee:Chair: Don McCafferyThe Canola Committee supports the AOFwith specific advice on all matters related tocanola, in particular, in relation to agronomicadvice. Recommendations and input toAPVMA permits, chemical usage and groweradvice on topical issues form a large portionof the Committee output. The Committeealso publishes 'Canola News' on a quarterlybasis, which has wide circulation to bothgrower and industry base.

Sunflower Committee:Chair: Graham ToothThe Sunflower Committee is a very industryfocussed and committed group, withmembers from across the value chain.Members of the Committee have beenheavily involved in the development anddelivery of the GRDC funded 'BetterSunflowers' training program over recentyears. Key achievements of the Committeeover the past year was the development androllout planning for 'Better Sunflower'workshops in the irrigated areas of southernNSW, which required appropriate updates tothe industry 'bible', “The Big YellowSunflower Pack”. The Committee was alsoinstrumental in the initiation of the BetterSunflowers e-newsletter, which waslaunched during the year.

Soy Australia Ltd:Chair: Peter BrodieSoy Australia is a company established in2008 to commercialise varieties of soybeansemanating from the Australian SoybeanBreeding Program. Because of its strongengagement with the soy industry, SoyAustralia provides a useful vehicle for deliveryof AOF initiatives related to soybeans. Theprimary component is the development ofthe AOF initiated and GRDC funded 'BetterSoybeans' training program, which wasformulated throughout the year, culminatingin the production of a definitive guide to allaspects of soybean production, includingmarketing and storage. The first workshop isplanned for October 2012, in the MIA regionof NSW.


Table 1: Australian Oilseed Production Source: AOF

‘000 tonnes 2011/12 2010/11 2009/10 2008/09 2007/08Canola 3185 2161 1936 1878 1069Sunflowers 92 44 40 80 74Soybeans 86 45 64 105 35Cottonseed 1360 1269 550 466 200Other 10 10 10 10 10Total 4733 3529 2600 2540 1388

Table 2: Area and Production by State – Key Crops Source: AOF

2011/12 5 year average to 2011/12Area Production Area Production

‘000 ha ‘000 tonnes ‘000 ha ‘000 tonnesCanola NSW 390 720 236 381

Vic 370 770 236 412SA 255 455 192 303WA 800 1240 680 949Total 1815 3185 1344 2046

Sunflower Qld 28 36 19 24NSW 35 57 26 42Total 63 92 44 66

Soybean Qld 13 34 13 28NSW 23 52 16 38Vic 1 0 0 1Total 37 86 29 67

Statistics

Table 3: Oilseed Exports by yearSource: ABS

Av 5 years to‘000 tonnes 2011/12 11/12

Canola 2297 1306Cottonseed 662 219Canola oil 116 88

Table 4: Canola Exports by DestinationSource: ABS

Av 5 years to‘000 tonnes 2011/12 11/12Europe 2023 871Pakistan 134 229Japan 74 137Bangladesh 15 22China 0 11Other 51 37Total 2297 1306

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Table 5: Oil and Meal Imports by yearSource: ABS

Av 5 years to‘000 tonnes 2011/12 to 11/12

Canola Oil 14 14

Coconut Oil 12 12

Cottonseed Oil 4 9

Olive Oil 30 35

Palm Oil 103 125

Soy Oil 23 23

Sun & Saff Oil 42 38

Palmkernal meal 76 76

Soybean meal 604 531

Oilseed Growing Areas in Australia

Australian Oilseeds Federation Annual Report 2011-2012 16


Australian Oilseeds FederationPO Box H236, Australia Square NSW 1215

Tel 02 8007 7553 Fax 02 8007 7549www.australianoilseeds.com

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