Voluntary Report - public distribution

**Date:** 3/24/2006

**GAIN Report Number:** AS6019

AS6019

**Australia**

**Agricultural Situation**

**Ag Down Under Vol 5**

**2006**

**Approved by:**

![](media/image1.wmf)Kathleen Wainio, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Kathleen Wainio, Agricultural Counselor

**Report Highlights:**

-   Cyclone Larry may reduce Australian sugar output as much as 5
    percent

-   Cyclone Larry devastates Australian banana production

-   2006/07 Wheat, barley production forecast to return to more normal
    levels following second highest crops on record

-   Australia free of PMWS

-   Fortification of cereal-based beverages allowed

-   Farmers' Federation calls for greater ethanol incentives

-   Construction to begin on 100,000 liter-capacity ethanol plant

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Canberra \[AS1\]

\[AS\]

# Cyclone Larry may reduce Australian sugar output as much as 5 percent

The far North Queensland region of Australia has been hit by category
five Cyclone Larry. North Queensland produces sugar and tropical
horticultural crops such as bananas. Australian raw sugar production
could fall as much as 250,000 MT as both crops and infrastructure have
been damaged. Prior to the cyclone, Australian sugar production for
2006/07 was forecast by ABARE at 5,203 MMT, an average sized crop. The
area affected by the cyclone (northern region) has historically
accounted for up to 20 percent of Australia's refined sugar output,
although industry sources suggest that, prior to the cyclone, the region
was expected to produce just less than 750,000, or about 14 percent of
the national crop. (For further information see GAIN AS6016)

# Cyclone Larry devastates Australian banana production 

With regard to banana production, press reports indicate more than
200,000 MT of bananas, valued at \$A300 million, have been destroyed, as
estimates as high as 90 percent crop losses have been reported. A
spokesperson for Biosecurity Australia said Australia will not be
relaxing quarantine measures to allow importation of bananas, following
reports that Cyclone Larry has destroyed most of the national crop.

# 2006/07 Wheat, barley production forecast to return to more normal levels following second highest crops on record 

Wheat production for 2006/07 is forecast at 24.0 MMT, 1.1 MMT below the
2005/06 crop. Long-range ABARE projections forecast wheat production
increasing year-on-year to 27.7 MMT in 2010/11. Barley production for
2006/07 is forecast at 8.9 MMT, down just under 1.0 MMT from the
previous year level. Australian sorghum production for 2007/08 is
forecast at 1.99 MMT, down slightly from the previous year. Australian
rice production for 2007/08 is forecast at 1.1 MMT, up slightly from the
previous year due to improved reserves of irrigation water. (For further
information see GAIN AS6017)

# Australia free of PMWS

Australian veterinary authorities have declared Australia free from the
pig disease Post-Weaning Multisystemic Wasting Syndrome (PMWS). The
Consultative Committee on Emergency Animal diseases (CCEAD) met in
October to consider ongoing disease investigations on pigs in a South
Australian property. The conclusions of that consideration have now been
made public. Australian Deputy Chief Veterinary Officer Dr. Bob Biddle
reported, "CCEAD concluded PMWS does not exist in the pig herd. It
agreed that the mortalities on the farm were caused by a range of
endemic diseases, triggered by altered management practices." Dr. Biddle
said PMWS has not been previously reported in Australia. (Source:
Biosecurity Australia News, Issue 21)

# Fortification of cereal-based beverages allowed

As part of the ongoing review of Australia's food standards, the
Australia New Zealand Food Regulation Ministerial Council recently
agreed to permit the addition of selected vitamins and minerals,
including calcium, to cereal-based beverages. (For further information
see GAIN AS6018)

# Farmers' Federation calls for greater ethanol incentives 

The National Farmers' Federation (NFF) has called on the federal
government to introduce greater incentives for biofuel production and
use in Australia. NFF has released a policy calling for an immediate and
indefinite exemption for biofuels from government taxes. Signficantly,
it proposes that the \$A 0.38 cents/liter effective tariff be removed
from imported ethanol over time. The policy also calls for the federal
government to provide greater incentives for consumers to have access to
flexible-fuel vehicles, a review of the 10 percent cap on ethanol blends
in gasoline, and an analysis of biofuel use in Australia, particularly
on why there is low take up of biofuels. (Source: The Weekly Times,
March 22, 2006)

# Construction to begin on 100,000 liter-capacity ethanol plant

The fledgling Australian ethanol industry received a show of faith with
the news that Australian Ethanol will go ahead with plans for a \$A 60
million plant at Swan Hill, Victoria. Construction begins in April on
the plant, which will consume 300,000 tons of wheat, sorghum and barely
to create an estimated 100,000 liters of fuel annually. Australian
Ethanol expects the plant to be up and running by the end of next year.
It will sell the ethanol to be blended with petrol. Upon news of the
plant, shares of Australian Ethanol rose 25 percent in one day. Ethanol
will not be the only income stream to come from the plant, according to
Australian Ethanol who reports it already has contracts in place with
feed end-users to take the high-nutrition distillers' grain left over at
the end of the ethanol-making process. (SOURCE: National grain industry
news, Rural Press.)

  ----------- -------------------------------------------------- ----------
  **Report    **Title of Report**                                **Date**
  Number**                                                       

  6004        Livestock Semi Annual                              02/08/06

  6005        Fine Food 2006 Trade Show -- Australia             01/27/06

  6006        Ag DownUnder Vol. 2                                01/27/06

  6007        Comment Period for Proposed Health Claims Standard 02/06/06
              Extended                                           

  6008        Tree Nuts Annual                                   02/09/06

  6009        Ag DownUnder Vol. 3                                02/15/06

  6010        Cotton Quarterly Update                            02/24/06

  6011        Comment Sought on Feasibility of Extending Country 02/28/06
              of Origin Lab                                      

  6012        Biosecurity Australia begins Assessment of US      03/08/06
              Stone Fruit for Import                             

  6013        The Corish Report: "Creating Our Future: Ag & Food 03/08/06
              Policy for the Next Generation"                    

  6014        New Guide Available for Country of Origin Labeling 03/09/06
              Standard                                           

  6015        AgDownUnder Vol. 4                                 03/10/06

  6016        Cyclone Larry Affects Sugar Industry               03/21/06

  6017        Grain Annual                                       03/21/06

  6018        Fortification of Cereal-Based Beverages            03/22/06
  ----------- -------------------------------------------------- ----------