Wheat quality concerns market

28 Mar, 2013 01:00 AM

GROWERS have been told the deregulation of Australia's wheat industry has jeopardised the quality standards of its wheat shipments into South East Asia.

While those who support the self-regulating market here in Australia continue to argue that deregulation has been successful as proven by the country's record export program in the 2010/11 season, flourishing container trade, growing number of buyers of Australian wheat, increased marketing choices for growers, reliable grower payments, expansion in grower advisory services and innovation and investment in the supply chain, it has done little to ease the minds of some of Australia's Malaysian and Indonesian customers.

While on CBH's South East Asian grower study tour earlier this month nine farmers and a handful of CBH staff were told that even though WA wheat growers undoubtedly had a freight and delivery time advantage over growers from South Australia or the Eastern States and maintained a steady reputation for upholding customer confidence, deregulation had undoubtedly caused some hiccups when it came to the standardisation of supply.

Former CBH South East Asia technical expert and Interflour executive Dr Nazir Azudin told the group the move away from a streamlined and regulated export approach by the now-dissolved Australian Wheat Board (AWB) had sometimes left South East Asian flour milling customers frustrated by the quality and performance inconsistencies of their bulk Australian wheat imports.

"It wouldn't be difficult for one unreliable, inconsistent or poor-performing cargo to damage the reputation of the entire Australian crop," Dr Naz said.

"Even if the majority of growers are producing really good material and companies are trading high quality, consistent and reliable grain one unethical trader can ruin it for the rest.

"And once a customer moves to another company or country for their supply, that business is really hard to get back."

While huge growth trends within South East Asia's food sector meant biscuit, noodle and bread manufacturers had even started to bring their own private mills online to feed the constant demand for suitable flour products, many of the region's new flour mills which contributed to the production of millions of tonnes of flour each year were currently in search of maiden wheat supplies.

Dr Naz said that buying inexperience presented a huge opportunity for CBH and its growers to continue to promote the quality of WA grain varieties and sell the message that the best choice was to buy wheat from WA.

"Since the revoking of the single desk there hasn't been much information flow from Australia's wheat industry to the customer so now our South East Asian buyers don't really know what is available to them other than the traditional wheat grades," he said.

"Most millers only talk about Australian wheat in relation to Hard, Soft and APW grades.

"Due to a lack of information they don't really appreciate how Australia's APW crop has evolved, how much better it now performs in the mill than it did previously and what particular varieties have gone into their purchased blends.

"Hence, any seller who walks into a miller's office and provides him with the specified crop quality information will most probably be the guy the miller buys from."

While on tour, growers and CBH staff visited one of Malayan Flour Mills' two flour manufacturing sites at Batu Undan in the district of Dindings, Perak, outside of Kuala Lumpur, Malaysia.

During her welcome, the mill's assistant procurement manager Tan Bee Chin told growers Malayan Flour Mills always considered the relative pricing of wheat when deciding whether to purchase from WA, South Australia or other States.

"WA wheat is very expensive," Ms Chin said.

"We only had one shipment from the Albany zone last year.

"We also need to learn more about pre-harvest quality before we can make any kind of commitment.

"Since the deregulation of AWB, Australia's crop quality has varied each and every year."

She said while the recent shipment met its minimum quality requirements it was the perfect example of the overall quality decline of Australian wheat bought by the mill, especially during the 2010/11 and 2011/12 seasons.

Growers were told the same story at PT Indofood's Bogasari Flour Mill outside Jakarta, Indonesia.

PT Indofood's director Francisus Welirang said last year the quality of its Australian shipments wasn't very good due to the late harvest.

"Our last WA cargo had lots of dust," Mr Welirang said.

"Up and down production in WA forces us to look elsewhere for supply and we will look to the east coast more than WA this season for our 60 per cent ASW requirements."

He also told the group his company would increase its Indian wheat imports.

"Although the wheat is dirty its protein is equivalent to APW and its a consistent enough supply," Mr Welirang said.

"We don't have the information about Australian wheat."

Largely, Australian crop reports ceased to exist after the wrapping up of the AWB and its privatised successor, AWB (International) Limited in 2008.

But CBH Grain's technical marketing manager Narelle Moore told Farm Weekly that CBH's marketing and trading arm disseminated its first crop report to all its loyal customers in 2009 - the first year of deregulation.

"AWB was a single desk so it gave its report to everybody but we focus on giving it to our key customers that return value to growers," Ms Moore said.

"We don't just hand it out generically."

While Ms Moore believed deregulation hadn't jeopardised crop quality as much as it has left customers unaware of what to expect from their purchased cargos, she also said CBH Grain had worked hard to ensure loyal customers were well aware of what to expect from the seasonal impacts on WA's wheat crops.

"Some customers will complain about grain quality but we find that once we explain the seasonal impacts they are very understanding," Ms Moore said.

"Customers who aren't stable purchasers of WA grain aren't necessarily given our crop report unless they earn the right.

"When growers on the recent South East Asia tour visited some of our top customers they would have seen that those customers were made privy to the information for being loyal to WA growers.

"We do that in the hope that they'll continue their loyalty."

Ms Moore said WA growers ultimately funded the creation and dissemination of CBH's crop report service so the company didn't want to hand out the information freely to flour mills which always looked to one of CBH's competitors for wheat supplies at a lower price.

Date: Newest first | Oldest first


28/03/2013 6:08:09 AM, on The Land

"WA wheat is very expensive" says Ms Chin. There is something seriously wrong with the present system if we can't compete into some of our closest markets. But, then again you get's what you pay's for....what makes anyone think that this would've turned out any different than it has.
Farmer Joe
28/03/2013 6:12:05 AM, on The Land

You mean Mailler was right!! You mean the deregulated wheat market is undermining cargo quality integrity? And now there is no accreditation scheme or regulator to address the issue in an orderly manner!!
Jock Munro
28/03/2013 6:25:40 AM, on The Land

Australia's wheat reputation was always going to be trashed under a multi seller arrangement. To add insult to injury a large proportion of our wheat is in the hands of foreign mega merchants who source wheat from around the globe. The consequences of our trashed reputation will have dire consequences for Australian growers and regional communities when the world is awash with wheat. It is quite conceivable that we will have vast quantities of unsold grain. What were the Rudd Government and the Liberal Party thinking when they handed control of our industry to the merchants?
28/03/2013 6:33:43 AM, on Farm Weekly

well take it up with the free trade supporters
Cake and eat it too
28/03/2013 8:32:34 AM, on Farm Weekly

So the millers have some concerns and know there are journalists in the audience. Hmmmm. I wonder if anyone bothered to ask them whether they would still rather only deal with the AWB or do they like having sellers to play off with one another? I also wonder whether they were just used to getting better quality than they paid for and now they are getting what their money actually buys them? Let's read this with a touch of realism hey?
28/03/2013 8:57:23 AM, on Farm Weekly

You blokes ever heard of basis? Obviously not because if you haven't noticed ever since deregulation, basis has traded at record highs for both high protein and noodle wheat segregations. Now I know you all probably get confused by this term 'basis' but in simple terms it is the premium built on top of the AUD converted Chicago futures prices. When buyers are chasing quality, they bid up Asutralian wheat above US futures prices. Better to stick to the facts instead of baseless, emotional rants like undereducated children.
28/03/2013 9:12:24 AM, on Farm Weekly

Sounds like the CBH South East Asia tour was a propaganda exercise. Of course Chin would say WA wheat expensive to the WA farmers. CBH need to supply correct grade of wheat to the other merchant shipments and not blend to their own advantage like they do. CBH want all the profit for themself not growers.
28/03/2013 11:46:22 AM, on The Land

This is about CBH and Western Australia wheat. A grower Co Op.
X Ag Socialist
28/03/2013 3:38:31 PM, on Farm Weekly

You can just bugger off and sell wheat on the NSW domestic market Jock and leave WA and CBH to sort out our own markets .
Joe Murphy
28/03/2013 5:07:19 PM, on Straight Furrow

Labrynth, you're right, CBH does want all the profits for itself; however, there's a hole in your logic. CBH and the Growers are one and the same. CBH is a 100% Grower owned cooperative.
1 | 2 | 3  |  next >


Screen name *
Email address *
Remember me?
Comment *


light grey arrow
I'm one of the people who want marijuana to be legalized, some city have been approved it but
light grey arrow
#blueysmegacarshowandcruise2019 10 years on Daniels Ute will be apart of another massive cause.
light grey arrow
Australia's live animal trade is nothing but a blood stained industry that suits those who