Integrated demand, supply and market analysis for Queensland barley

Jyothi, Gali Vijaya (1998). Integrated demand, supply and market analysis for Queensland barley PhD Thesis, School of Natural and Rural Systems Management, The University of Queensland.

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Author Jyothi, Gali Vijaya
Thesis Title Integrated demand, supply and market analysis for Queensland barley
School, Centre or Institute School of Natural and Rural Systems Management
Institution The University of Queensland
Publication date 1998
Thesis type PhD Thesis
Supervisor Colin Brown
Malcolm Wegener
Total pages 406
Language eng
Subjects 0701 Agriculture, Land and Farm Management
Formatted abstract
In the context of Australia's overall agricultural sector, the Queensland barley industry is relatively small. Yet it encapsulates much of what many o f Australia's agricultural industries are currently experiencing. New demand patterns, volatile production conditions, and rapidly changing institutional arrangements, and. agribusiness environment could characterise any number of industries. To survive and prosper under these conditions, fanners and other industry participants need high quality information on the complex decisions they face. In the past, many industry studies have focussed on the either demand or supply alone, thereby
restricting the value o f the information reported. This study seeks to provide a more comprehensive investigation of demand, supply and market factors in order to provide the information needed by industry participants.

Over the past decade, feed grain use in Queensland has expanded rapidly while the demand for beer has stagnated. On the supply side, barley has traditionally been grown for malting and growers usually plant malting varieties. Due to the expansion of the feedlot industry and increased demand for feed grains in the domestic market, fanners face the dilemma of whether to plant malting or feed varieties. Malting barley varieties are relatively low yielding but command higher prices than feed barley varieties. However, due to quality variability, the malting barley varieties may not necessarily meet the malting grade standards and so not realize the associated price premiums. To compound matters, after decades of regulation, the barley market has been partly deregulated. With many more marketing channels now available to them, end-users have become more exacting in their requirements for various attributes o f barley.

The key demand parameters for the feed barley market are estimated using multivariate cointegration applied to time series data. As most previous demand studies have been carried out for Australia as a whole, these new estimates provide comprehensive information on the demand side o f the Queensland barley maket from a regional perspective. The high estimate of own price elasticity indicates the high substitutability of feed barley in the feed grain market and the competitiveness o f livestock production. Protein sourced from barley is found not to be an important economic attribute to consider in animal nutrition and so the need for an elaborate system of grades and standards for feed barley is questioned.

The supply analysis focuses on decision making of barley growers under risk. Results from a chance constrained programming model clearly set out the economic trade-off for barley growers in producing either malting or feed barley, and specifically account for the variability and risks involved in meeting the malting grade standards. Marginal value products of key barley traits such as protein levels under different production conditions are estimated using a discrete stochastic programming proach. The results from the supply analysis imply that variability associated with the quantity and quality of barley grown have a considerable impact on barley production decisions, and greatly influence the market opportunities for that barley.

Results from the detailed analysis o f demand and supply feed into an investigation of the overall barley market. Market determined or set unit protein payments are compared with the marginal cost of production and implicit value o f protein in animal nutrition. It is found that the market is not acknowledging the marginal cost o f protein production. A cointegration price analysis reveals the structure of the Queensland barley market. The feed barley market is largely isolated from the influences of the malting barley market, while the malting barley market is not delineated from the feed barley market. The conclusion is that the feed barley market is the dominant market in terms of price information.

The Queensland barley industry has undergone major restructuring in recent years. Part of the reason for the restructuring is efforts to reduce excessive or unnecessary transaction costs in the marketing system, particularly h the competitive agribusiness environment. Further efforts to tailor transaction costs to changing market circumstances are likely to continue. In this study integration of the demand, supply and market analysis lead to an identification of set o f strategies for Queensland barley growers, marketers and other market participants to maximize their opportunities in what is a volatile and rapidly changing Queensland barley market.
Keyword Queensland Barley Industry

Document type: Thesis
Collection: UQ Theses (RHD) - UQ staff and students only
Citation counts: Google Scholar Search Google Scholar
Created: Wed, 24 Sep 2014, 10:55:54 EST by Katie Cornell on behalf of Scholarly Communication and Digitisation Service