Wheat markets under attack in Asia

05 Mar, 2015 01:00 AM
Our exports of soft white wheat would likely come under attack from other competitors

AUSTRALIA'S wheat industry is in danger of becoming the “white trash” of import markets in Asia.

That was the warning given to this week’s Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Outlook conference in Canberra by David Fienberg, CEO of the Australian Export Grains Innovation Centre (AEGIC).

The Perth-based AEGIC was formed as a not-for-profit company in 2012 by the WA Government and the Grains Research and Development Corporation (GRDC) with an initial five-year term to support the trade and use of Australian grain around the world.

And one of the biggest challenges, Mr Fienberg said, was protecting Australia’s $1.75 billion annual wheat sales to Indonesia which were now being eroded by the likes of Canada.

Similarly, the United States had had a stranglehold on milling wheat exports to the Philippines which were now around 2.2 million tonnes.

Australia’s share of the market was only about 150,000 tonnes and mainly used for stockfeed.

This was despite the fact that Australia’s soft white wheats offered a better, easier-to-process option than the US’s dark northern spring (DNS) wheat for noodle production, he said.

Deregulation of grain imports into Japan had also offered an opportunity for Australia to significantly expand on its current exports of around one million tonnes.

Mr Fienberg said both the Canadian International Grains Institute and the US Wheat Associates had substantial budgets to provide Asian buyers with detailed specifications about the varying quality and milling traits from each harvest and also help them make maximum profit from their grain purchases.

Australia now wasn’t doing much to match those support services, but even if we managed to oust them from the market, our exports of soft white wheat would likely come under attack from other competitors.

Major producers in the Black Sea region such as Ukraine could also supply soft white wheat and another member country, Russia, was gearing up to increase its wheat output by 30 million tonnes in the next 10 to 15 years.

Beer consumption in China was booming and Australia not only needed to supply the right kinds of barley but be able to help the Chinese produce better beer.

Luke Fraser, principal of Juturna Infrastructure, which provides advice on transport reform and investment, told the conference that freight costs for NSW growers were $20 a tonne higher than their counterparts in Canada.

He said most rail infrastructure in Australia was owned and controlled by governments which didn’t want to invest in the upgrades and improvements needed to give producers a more efficient heavy rail system.

Other sources of investment were needed along with a major rationalisation of the number of export ports in Australia.

Vernon Graham

Vernon Graham

is the group editor of Fairfax Agricultural Media
Date: Newest first | Oldest first


Jock Munro
5/03/2015 7:26:46 AM

Six years after losing the single desk and the merchants are trashing our industry. Rudd Labor and the Liberals laughed as they sat together in parliament and voted away the iconic legislation that allowed Australian growers to market their own wheat to best advantage-our quality and after sales service were bywords.
Philip Downie
5/03/2015 8:39:09 AM

"Soft white wheat" what century is David in, not this one. That is disgraceful coming from the person in charge of AEGIC, shows how little he knows about Australian wheat. Still no surprise, what a waste of money.
X Ag Socialist
5/03/2015 9:05:04 AM

Jock, it's just a QANGO facing the chop in 2017, so quoting the great late Sir Joh. "Don't you worry about that".
5/03/2015 10:30:15 AM

Actually the wheat demand needs of Indonesia are largely being served by a cooperative called CBH through the joint venture arrangement of Interflour with the Salim Group, not the multinationals like the old conspiracy theorist suggests. By Munro's rationale the poolers are actually to blame for trashing Australia's quality reputation. The reality is these organisations like to manufacture problems to justify their funding streams. The basis don't lie. Australian wheat is more expensive than American wheat today because markets prefer our wheat.
adam cannon
5/03/2015 10:54:37 AM

I thought we mostly produced hard white wheat here in Australia (ie AH, AUH, APH in eastern states)?
Philip Downie
5/03/2015 11:09:26 AM

Actually also APW Adam. The last soft white wheat released in Aust was for Udon noodle and maybe Aust Soft. It would be 20 yrs since one was released for general milling. It is the fault of the people who actually offer the job not those who get it. Trouble is they have even less idea. Aust wheat quality is a disorganised shambles but we can't fix it because it may interfere with someones business model, along with the fact they don't like to be told they have stuffed it.
Jock Munro
5/03/2015 4:55:08 PM

Yes Phillip-ask a merchant about our quality issues and all you get is a blank stare. We will be in a real mess when there is a glut. We will have no trouble explaining what the single desk receiver of last resort meant when that happens and there are stacks of unsold wheat around.
Mark Hoskinson
6/03/2015 5:48:31 AM

The loss of the Industry good functions where completely ignored by Tony Bourke and others even though we warned him the damage that will be done to our trade in Wheat if this was not addressed. Now we have no one in direct contact Except CBH that follow through to the end users like the AWB used to. The quality control, promotion, showing the end users how to extract the most value when milling the grain, blending quality control to mention a few have gone. Not to mention the growers being totally removed from the supply chain. The loss of Golden rewards and freight discounts cost us dearly.
Can't remember
6/03/2015 6:54:12 PM

Mr Downie - No Mr Fienberg is actually correct. In the Philipines they are making products which can often suit our softer white wheats eg - A variant of Calingiri would potentially be interesting (not ASF). But also interesting could be to breed for North American style wheats (but using white wheat) with higher dough strength. This would potentially mean minimal changes to the grist for mills there (Australian noodle wheats can create challenges for mills used to processing hard red North American grades. Your final sentence betrays your bias and is unhelpfully ad-hominem.
Philip Downie
7/03/2015 6:12:51 PM

Well Mark they had the iIEG which was a stitch up and was there for people to carve up the functions for their own little kingdoms. Trouble is much was allowed to be taken by the merchants and the rest has been handed to other vested interests whose main interest is making money not getting the system to work like it used to. It can be fixed but not by those around running it now. Plus a few noses would be firmly out of joint.
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