Consistency key for export grain

24 Mar, 2015 01:00 AM
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29
 
The winner will be who can organise and better target specific markets

AUSTRALIA is in a good position to capitalise on the burgeoning South East Asian grain market, providing it can get a consistent quality product to market, according to Rabobank grains analysts.

St Louis, United States-based Sterling Liddell, together with Graydon Chong, Australian senior commodity analyst, have been touring regional Australia over the past fortnight and the pair say it is time for Australia to take advantage of both its proximity to South East Asia and its counter-seasonal production to most of its major rivals.

“The real growth engine we see is South East Asia, there’s close enough to a billion people living there and there’s strong growth in grain consumption, similar to what we have already seen in China,” Mr Liddell said.

Moving on from protein

While Australia faces stiff competition in terms of pricing from low-cost producers through the Black Sea region, Mr Liddell, senior vice president of food and agribusiness research, said a focus on meeting customer quality needs would hold Australia in good stead.

But this does not simply mean pushing the envelope in terms of protein levels, typically synonymous with ‘quality’ in Australia.

“Australia could be pushed out in terms of the high protein market, there isn’t always going to be a desire for that type of product,” he said.

“Indeed, you look at China this season, they’ve been actively sourcing wheat with good gluten levels, not chasing protein.

“What Australia needs to do is concentrate on producing a consistent quality product.”

Mr Chong said Australia was never going to produce enough grain to satisfy South East Asia’s demands in its entirety.

“I see Australia working as a complementary grain supplier into these markets, particularly if the industry works with customers to deliver what is wanted.

“The Black Sea probably has the most scope to increase production of wheat, but the issue there has always been the variable quality of the product, so Australia’s opportunity will be tied into having a consistent product.”

Mr Liddell said grain marketers needed to be nimble to be able to meet market demand.

“With Chinese demand this year it was those marketers that could get into their millers early and offer high-gluten products that were rewarded.”

Getting Aus grain noticed

Mr Liddell said it was countries with “good organisation and enough velocity to get noticed” that would get the most out of market opportunities.

“In America we have opportunity, but Australia has even more because of its location,” he said.

He said it was crucial for Australia to understand who its competitors were.

“For Australia that is Canada, Russia and the Black Sea region is a major player, but their quality is not consistent so there will always be a role for your low-cost wheat,” he said.

“The winner will be who can organise and better target specific markets.”

He said the US was also in for some tumultuous times in the next 15-20 years, not just with its competitiveness but in storage and logistics.

Mr Chong said Australia was doing a reasonable job in its industry-wide promotion of its product, but added there was room for improvement.

“The promotion of what customers can do with Australian grain could definitely improve.”

In the future, Mr Chong said long-term partnerships throughout the supply chain would also create value.

“Closer links between the end user and the producer will mean the producer will be able to get the message out better about what they want, and it will allow growers the chance to settle with one particular variety as they know it is what their customers want.”

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READER COMMENTS

Jock Munro
24/03/2015 4:59:27 AM

Any chance of Australia being a consistent supplier of quality product disappeared when Rudd Labor and the Liberals under Nelson (and laughed while they did so) abolished the iconic single desk. Where were the so called experts then?
Mug
24/03/2015 7:03:05 AM

Jock is right. The problem is that it now looks like we need to go back to the chaos of pre AWB for the younger generation to understand. Just wait. It is going to happen. Unfortunately learning the lesson is going to be slow , painful and expensive.
GFA
24/03/2015 7:33:38 AM

Mug, it will also be fatal for too many Australian farms regardless of how clever some of them think they are at taking on the multi national corporations and foreign governments. It is pretty damning evidence that of all the once great primary industries in Australia, apart from sheep meat, the one standing up is grains which was built up during a clever regime of grower unity and control. 95% of todays infrastructure, quality control and standards, was established during that period of 60 odd years. That is the only reason it has not totally disappeared off the landscape like many others.
Jack Munro
24/03/2015 1:21:29 PM

Jock, regardless of who markets the grain, how does this impact the quality? Or did you mean perceived quality? Australian growers continue to grow quality crops & are paid a premium globally to do so. Personally I put more faith in capitalist multi-national company to get the most for Australian grain on a free marketplace as opposed to a sluggish, antiquated monopoly that had zero pressure to perform and turned out to be legally and morally flawed whilst 'representing growers' A monopoly renders people complacent & satisfied with mediocrity. Free markets are here to stay, THANKFULLY!
LTF
24/03/2015 2:05:20 PM

Unadulterated hairy chested rhetoric, Jack.
Bertyboy
24/03/2015 6:06:14 PM

People forget how big a basket case the Australian grain exports were, due to no quality controls and no independent oversight, Farmers called for gov'nt regulations in the late 60s and since then we have achieved an impressive increase in the grain quality and received a premium price because of it. However with successive gov'nts withdrawing independent oversight and replacing it with industry employed "authorised officers" we are losing this premium price and reputation, as we found out in the 60s, you can only export so many insects and rubbish before you lose money and reputation.
Bill Munro
25/03/2015 5:43:23 AM

Jack, you are so wrong. There is no "free market". Your heroes blend our wheat down to minimum specs and millers discount it accordingly. Your heroes exploit farmers to extract the maximum from the supply chain. Bulk handlers control bulk access to export markets and extort that supply chain because they have monopoly powers. For once Jock has a point! The loss of the desk was a missed opportunity because we just replaced one monopoly with another and the new one has no obligation to help growers in any way.
LTF
26/03/2015 3:06:41 AM

Looks like you have suddenly found a few relatives Jock. Bill certainly knows what he is talking about. Can't say the same about cousin Jack! Bertyboy, you are also very wise.
Frank Munro
26/03/2015 5:58:49 AM

The single desk has gone and will never come back. Thank goodness that it is gone.
Jock Munro
26/03/2015 6:18:09 AM

Welcome cousins-Frank and Jack-more sellers means lower prices-ask your local input and machinery supplier if he would like to see a competitor open another branch in your town. When you have an understanding of competition principles we can then deal with the quality issue. Cousin Bill gets it.
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My total income is from livestock production in WA as a 1 man operation and I agree completely I
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i was 15 years old when I went up to liveringa station in 1961.with j.drakebrockman . the old