WA OAT growers are in for a win with high demand for the cereal crop pushing up domestic prices due to dry seasonal conditions and the need for livestock feed.
That’s if producers have enough to sell off after meeting their own on- farm requirements.
However, with access to the Chinese market for exporters only six months away, due to China abolishing its tariffs on January 1, 2019, there may be more opportunity for WA growers than previously experienced.
The removal of tariffs would make it commercially viable for Australian traders to enter China and could see Wagin oat mill owner UniGrain boost its production if it can source enough of the crop.
Prices for oats have been volatile over the past four years, with producers seeing price variations of between $60-$140 per tonne within seasons over the past three years, according to data from independent commodity advisors Market Ag.
Last week Grainmarket published figures in Farm Weekly that showed 2017 oats peaked at more than $300 per tonne at Kwinana.
The export opportunities for oats may have an affect on UniGrain’s WA production, more so than other States, due to 100 per cent of production at the Wagin mill going to export.
UniGrain director of corporate development Andrew May said the family-owned and operated business, based in Victoria, was looking to the future after its takeover of the old Morton Seed and Grain site at Wagin in 2014.
It is believed that UniGrain has invested an estimated $20 million in the past four years to upgrade its equipment and expand its operating capacity at the site, although Mr May refused to disclose the total amount and would only confirm that it was “a multi-million dollar investment”.
The estimated figure is consistent with what Quakers Mill paid for its new mill in Forrestfield, Perth a few years ago.
UniGrain Wagin general manager Brent Hope said when the upgrade of the flaking mill was undertaken in 2016 the infrastructure was set in place to expand operations – which, when it occurs, could mean an additional 10 people eomployed on site.
UniGrain employs 43 permanent and casual staff from the Wagin area.
The Wagin mill is a 38 metre, four storey-high plant, which is fully computer operated.
Its new flaking mill works on a three-phase, gravity fed system and runs seven days a week.
Mr Hope said it was “tough to get oats at the moment” due to it being in-between harvests and also because of competition in the marketplace.
“It is an extremely sensitive market,” Mr Hope said.
“It is a very competitive export market for oat flakes, so we have invested strongly in equipment to ensure that we are an efficient, low cost operator.
“It is a high volume, very low margin business.
“Australian oats have come back to be competitive in the market after being at historically high levels for a few years – it has really swung around in the past six months.”
Mr Hope said continuity depended upon the quality of the harvest, the extra crops available or the crops lost due to seasonal conditions.
UniGrain sources all of its product from within Australia, with its Smeaton Mill, Victoria, mainly focused on the domestic market and the Wagin mill geared up to meet export demand.
Mr May said the Wagin mill could process upwards of 100,000 tonnes of milling oats per year.
“We have the capacity to grow to meet the demands of the market,” Mr May said.
He said over the years the business had developed strong trading markets in Taiwan, Japan, India and across South East Asia, including in the Philippines and Indonesia.
“Our mill in Wagin can service a large and growing Asian market,” he said.
“We will keep investing so that capacity can match the demand over time.”
Mr May said the company would always need to be a competitive player for milling oats in the market.
“Oats do well traditionally in the Wagin area and broader Wheatbelt region,” he said.
“We believe a sufficient level of oats have been grown this season but there is naturally always a level of uncertainty awaiting seasonal conditions.
“To secure oats we need to keep delivering strong and consistent value for local growers.
“We have a strong relationship with growers to ensure that they will want to continue supplying UniGrain on a sustainable, long-term basis.”
Mr May said in general oat production was increasing.
“Over the medium-term oat production is increasing, but year-to-year it is influenced by seasonal conditions and the market at the time,” Mr May said.
“The market for oats is firming due to the dry conditions.”
Grains Industry WA reported the May estimates for WA’s oat crop for 2018 was 290,000 hectares.
This was up from the May 2017 estimate of 217,000ha.
Mr Hope said UniGrain was a sponsor of the Wagin Woolorama and other events and groups within the Wagin community.
