Tour highlights the Black Sea’s potential

01 Sep, 2018 04:00 AM

AUSTRALIAN growers have been given an up-close insight into the farming lives of their Black Sea counterparts as part of Flexi Grain’s inaugural grower tour to the region that is emerging as the world’s largest agricultural powerhouse.

Based in Victoria, Flexi Grain is a grain marketing company offering area-based wheat, canola and barley contracts across three States, including WA.

The company hosted a group of 25 growers, agronomists and industry representatives from across the country in a 10-day tour of the Black Sea region last month, where they were given an insight into the agricultural landscape of the Ukraine and Russia.

The group spent the majority of the tour in the Ukraine, where the delegation visited the Port of Odessa, local farms and agricultural oil processors and officially became the biggest delegation of farmers to meet with the Ministry of Agrarian Policy and Food Ukraine.

According to figures presented by the ministry, the Ukraine is made up of about 42.7 million hectares of agricultural land and produced about 61.9 million tonnes of grain throughout the 2017-18 season.

Of that, 40mt of grain was exported, including 17.7mt of wheat.

In comparison, Australia exported 23.4mt of grain over the same time frame, of which 16mt was wheat.

Flexi Grain general manager Jarrod Tonkin said the tour highlighted how the region’s low cost of production had assisted Black Sea exporters to position themselves as key competitors for Australia’s traditional wheat markets in South East Asia.

“The whole region is a threat and it comes back to cost of production,” Mr Tonkin said.

“They’re producing grain for just over $100 (AUD) a tonne in comparison to what we are – we can be double that in some environments – and they’re starting to produce better quality.

“For us the take-home message was that we need to understand our costs and become more cost-efficient.

“Being mindful of the cost of production is important – if we want to be competitive against that market we have to get better at understanding that.”

According to the Australian Export Grains Innovation Centre’s (AEGIC) 2016 report into the Ukrainian supply chain, the cost of producing a tonne of Australian wheat was $207, while a tonne of Ukrainian wheat could be produced for about $133.

The report categorised the Ukraine as a “modest threat” to Australia’s wheat export industry in key markets, but described the potential threat as “large”.

AEGIC predicted wheat exports out of the country would almost double from 2016 to 2025, to a mass of about 30mt.

With several agronomic advancements, Mr Tonkin said reaching this export level was well within the country’s reach.

He said there was still plenty of room for improvement and plant genetics and farm practices still had a long way to go before the agricultural regions surrounding the Black Sea realised their full potential.

“I think with better management – which may be direct drill which we do here in Australia – and also better genetics, the upside in production is significant,” Mr Tonkin said.

“If their government does introduce better genetics that would be the biggest threat and my concern is that if they do start to replace the old genetics with newer genetics, you’re going to have better sprouting resistance, better quality, lower seeding rates – it can bring only benefits to their growers.

“It comes back to the level of engagement that the government has from a genetics perspective – that’s going to be the driver I think.”

Mr Tonkin said while growers had some concerns about the region’s emergence as a threat to Australian wheat markets, they had returned home with several ideas to improve their competitiveness.

He said they were now acutely aware of the importance of improving on-farm efficiency and driving down their production costs.

“Growers found they needed to get greater efficiencies, so potentially rather than turning equipment over so regularly, they’ll try to reduce the depreciation cost and carry them over for several extra years,” Mr Tonkin said.

“They are using conventional tillage (systems) so there would be more hours in machinery from a cultivation perspective, but we found the equipment being utilised a lot better (than in Australia).”

Flexi Grain plans to host another grower tour next year.



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