Funding to expand specialty grain markets

Funding to expand specialty grain markets

Agribusiness
Food and Agriculture Minister Alannah MacTiernan at the GIWA forum announcing an extra $2 million over two years for product and market research aimed at increasing Western Australia's share of South East Asia's specialty flour market.

Food and Agriculture Minister Alannah MacTiernan at the GIWA forum announcing an extra $2 million over two years for product and market research aimed at increasing Western Australia's share of South East Asia's specialty flour market.

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The extra funds will also help diversify WA's grain products & markets.

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A NEW product and market research package funded by $2 million over two years from the State government aims to expand Western Australia's share of specialty Asian flour markets.

As well as capitalising on growing Asian demand for low-protein soft wheats for biscuits and cakes, whole grain wheat and novel oat products, the extra funding to the Australian Export Grains Innovation Centre (AEGIC) also aims to help diversify WA's grain products and markets.

Agriculture and Food Minister Alannah MacTiernan chose a Grains Industry Association of WA (GIWA) forum, titled Diversifying and Value Adding Western Australian Grain, last week to announce the package.

Opening the forum, Ms MacTiernan made it clear she believed WA's grains industry faced significant challenges, not least because a lack of diversity saw two of its three biggest volume commodities - barley and canola - very exposed on global markets.

The recent punitive tariffs imposed on Australian barley and a suspension of imports of WA barley from CBH Group by China had demonstrated the risk of relying on one market to take 91 per cent of Australia's barley exports, Ms MacTiernan pointed out.

Canola exports were similarly exposed, she pointed out, with 87pc of the State's production going to European Union countries for biofuel manufacture.

A 2009 European Commission Renewable Energy Directive (RED) mandating requirement for 10pc of transport fuel to come from renewable sources by 2020 has driven Euroepean Union demand for WA canola.

Ms MacTiernan said while legislation had helped create a market for canola, a change of legislation could just as easily reduce the market.

"(WA canola to the EU) is a great market but very concentrated and that in itself is a potential vulnerability," Ms MacTiernan said.

While a second European Commission RED in 2018 lifted the original 10pc renewable transport fuel by 2020 requirement to 12pc renewable by 2030, it also moved to ban use of crop-based biofuels by 2030 with a potential to impact future WA canola exports.

A lack of domestic processing did not help reduce risk exposure for WA grains, Ms MacTiernan pointed out.

"We've got a very low rate in WA - about 16pc of agriculture product we convert to a processed state - compared to around 70pc in Queensland and most of the other States have processed grain percentages above 50pc," she said.

"We've been a little behind in that regard, possibly because we've done so well out of the bulk commodities, but we do know that if we are to get growth in our regions it is really going to be important to get more into processing."

Ms MacTiernan said she had no doubt a "deteriorating relationship between Australia and China" contributed to the challenges WA graingrowers faced into the near future.

"I think that is very unfortunate and maybe, if there is a change of administration in the US, we might see ourselves refashioning that to some extent," she said, referring to the US presidential election next month.

"But whatever happens in the US in terms of political leadership, it is quite clear that the deal that was done by China to divert US$80 billion of US imports in a trade balancing deal will continue and that is something that is going to pose a great challenge for us in Australia and particularly in WA where we export so much agricultural product into China."

In January China agreed to buy almost $80b in additional goods from the US, including about $32b in agricultural goods over the next two years, in return for the US suspending some tariffs due to come into effect and halving others on Chinese imports, to try and resolve the trade war between the two countries.

Ms MacTiernan suggested there might also be opportunities for WA graingrowers.

"That product that is going from the US to China, even if it is really coming from Canada or Brazil, frees up markets elsewhere, so even with that deal it is not all doom and gloom," she said.

"What that proves to us is that we have to be absolutely on the ball and continuing to develop trade relationships.

"The relationship we have developed over a decade with Japan and Indonesia has provided incredible opportunities for our graingrowers and we must continue that work.

"We are working very hard to develop the new malting barley market with India, working throughout South East Asia and working with the Philippines who are now taking much of our barley for feed stock.

"So the response is not despair, but to make sure that we are out there developing new markets.

"We do need to have a foot in each of these different camps, we need to ensure we have fully bred up varieties of oats, of quinoa and chia or of pulses like chickpeas, faba beans and lentils as part of this alternate protein market that is becoming huge."

It was within this context of developing new markets that the government committed the extra funding for AEGIC, in addition to the $6m provided for AEGIC's "core operations" over the next two years and matched by the Grains Research and Development Corporation, she said.

The extra funds will support three research projects led by AEGIC to help commercialise new oat rice and noodle products, develop a package to supply whole grain wheat and explore supply chains for cake and biscuit manufacturing.

Ms MacTiernan said the projects aimed to capture a share of rapidly growing demand for wheat and oat products in South East Asia and China, capitalising on WA's convenient proximity and enviable reputation as a reliable supplier of safe, premium quality grain.

Targeting just 10pc of these combined wheat markets alone, represents a two million tonne trade opportunity for WA's grains industry, worth an estimated $600m a year, she pointed out.

"These projects could generate significant trade opportunities for WA's grains industry, providing greater flexibility and diversification options for farmers," Ms MacTiernan said.

"AEGIC has already done tremendous work developing novel oat rice and noodle products, as well as laying the foundations to promote whole grain products and better understand the soft wheat market for bakery products.

"With market intelligence pointing to rising demand from our Asian neighbours for wheat and oat products, now is the time to get in on the ground floor and establish WA as a preferred supplier in this very competitive global market.

"The research by AEGIC is essential to understand the customer requirements and market potential, from which new grain varieties and farming systems can be developed so WA is in a strong position to capture emerging trade opportunities.

"Having a pipeline of new varieties, products and markets is absolutely critical to strengthen the resilience of our grains industry."

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