Australia needs to talk about wheat quality

Jock Munro, one of Australia's longest running supporters of the single desk wheat marketing arrangement, dismantled over a decade ago, said the lack of spreads between wheat paygrades pointed to a system focusing solely on yield and not enough on quality.

"It used to be one of our biggest natural advantages that we produced a good quality grain, but now the buyers just want yield," Mr Munro said.

However, Nick Crundall, Market Check head of strategy, said there was still a premium for Aussie wheat into south-east Asia.

"It is a $5-7 tonne premium, reflecting the quicker turnaround time and the lower moisture, before you even start talking about protein."

He said it was simplistic to view quality simply in terms of protein.

"At present we've got some ASW type parcels to be put together where there is a maximum protein requirement, so it can lead to a short-term inverse where ASW can be worth more than a higher protein grade - it is not always just as simple as a premium for higher protein grain."

He said any sales Australia missed out on over coming months had far more to do with capacity constraints than a lack of marketing ability.

"If the buyers are accumulating the wheat now, the shipping stem is booked solid, they can't ship it for months and the buying patterns in Asia now mean they are not going to be buying for June now, so if buyers are in the market they have to factor in the cost of carry," he said.

Mr Munro said he believed there needed to be more focus on customer relations.

"With the multi-nationals buying a lot of our grain I don't see a lot of incentive for them to develop markets, they will just supply the customer from wherever it is easiest, rather than invest in promoting the Australian industry."

He said thought the newly formed industry good organisation Grains Australia would be limited in what it could achieve.

"It's good the industry has recognised it has a problem but unless Grains Australia is responsible for what sort of grain is exported we are going to losing out.

"It is all well and good for the buyer to arbitrage and blend the grain but it means we are delivering an inferior product compared to what we used to and that quality was previously our point of difference."

Mr Crundall said the world market still held Australia's wheat in high regard in terms of quality but said price would be the major factor.

"With the rise of the Black Sea we are always going to need to be price competitive with them, the premiums are not unlimited even if there is a slight preference for Australian grain.

"The other problem we have is our production reliability, the volatility in production means that some years our customers will have to source wheat elsewhere and get used to working with that product.

"That is not something we can do a lot about given the notorious Australian climate, but we do need to be aware of it when thinking about what our customers want."

He said logistics and port slot availability would also impact on exporters' willingness to purchase grain.