THE WA wheat industry must continue to drive supply chain efficiencies if it is to maintain its share of the growing South-East Asian market with increasing competition from the Black Sea and South America.
That was the take home message from CBH Group general manager of operations David Capper, who spoke at the Pastoralists and Graziers Association of WA (PGA) annual convention at Crown Perth last week.
The Black Sea wheat market is expected to harvest its biggest ever wheat crop this year, surpassing last year’s record total of 73.3 million tonnes.
Meantime, Argentina’s total grain production - predominantly made up of soybean - sits at about 110mt and despite facing issues with its supply chain has significant potential for improvement thanks to ongoing international investment.
Mr Capper said production and quality improvements over the past 10 years - particularly in Russia and the Ukraine - meant the Black Sea was a real threat to WA’s market share in South-East Asia.
“Production out of the Black Sea has had a really strong, consistent growth over the recent decade, we see that continuing,” Mr Capper said.
“Our influence and our volumes into the Middle East have declined quite dramatically and effectively already been replaced by the Black Sea to that market and we’re seeing over time our influence in middle Asia, China, Japan stagnating.
“In our view the Black Sea and South America are who we’re competing with and where we’re competing into is South-East Asia and that’s where our focus needs to be and we need to be very mindful as to how competitive we are and how competitive we will be in the next five to ten years into that region.”
Mr Capper said CBH was focused on investing in the network, improving transport and reducing supply chain costs to ensure WA was well placed to maintain and increase its market share.
As part of this plan, several measures would be trialled this season in a bid to drive efficiencies.
Among these was a pilot being run this year for better harvest estimates and planning.
“Today when you think about the way that we do harvest planning, it really is quite archaic, we rely almost entirely on the experience and local knowledge of our field staff to make those plans,” Mr Capper said.
“We’ve developed an online platform where growers can put in their estimate by paddock which will give us an opportunity to actually provide optimising tools to our field staff to optimise the paddock to port cost of that grain knowing exactly where it’s coming from.”
Mr Capper said other technologies such as satellite imagery were also being explored to better understand crop potential, allowing the co-operative to make “ongoing dynamic decisions” and deliver significant benefits to the growers while driving efficiencies.
Improved transport scheduling, planning and optimisation tools and increased automation at receival sites and ports are also being piloted.
“We’ve got a program going where we’re piloting an entire area up in Geraldton, where we’ve done engineering designs around automation and how we automate the harvest receival process, that will be installed during the coming summer, this harvest,” Mr Capper said.
“We should see around a 50 per cent reduction in the casual labour requirements in those sites and assuming that’s successful we’ll roll that out through the rest of the State, it will have a significant impact on supply chain costs.”
Mr Capper said by driving down supply chain costs, WA was in the best possible position to compete for the South-East Asian market which had seen demand grow by 8pc over the past decade.
“We’re in a really fantastic place, the part of the world that is growing is the part on our doorstep, we’re in with a great opportunity to capitalise on that,” Mr Capper said.
“Predominantly we have to understand that it’s up to us to manage and invest as an industry ourselves and ensure that we remain competitive and we give ourselves the best opportunity to compete.”
