SE Asia to be a big wheat consumer

SE Asia to be a big wheat consumer

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 AEGIC chief economist Ross Kingwell presented an outlook on wheat export markets at the GRDC conference in Perth last week.

AEGIC chief economist Ross Kingwell presented an outlook on wheat export markets at the GRDC conference in Perth last week.

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WA wheat will continue to be key in South East Asian markets.

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BY 2030, the main destination for Western Australian wheat will continue to be key markets in South East Asia, however a second and more opportunistic market is going to be the east coast of Australia whenever it experiences prolonged and severe drought.

The outlook for wheat over the next decade was presented by Australian Export Grains Innovation Centre (AEGIC) chief economist Ross Kingwell at the Grains Research and Development Corporation (GRDC) Grains Research Update in Perth last week.

Professor Kingwell told the audience of growers, agronomists and other industry professionals that what has happened with wheat exports over the past five years is a pretty good indication of what was likely to apply over the next decade.

He said when it came to SE Asia - countries such as Indonesia, Philippines and Vietnam - the magnitude of demand coming from the region as well as its proximity to WA were the two key factors.

Professor Kingwell said Indonesia's population, as an example, over the next decade, was going to increase by the same current size as all of Australia's population.

"That means on WA's doorstep there will be a demand for wheat that is equivalent in magnitude to another Australia," professor Kingwell said.

"Indonesia, unlike Australia, can't grow it's own wheat, so as it's population and income increases, it has to import all it's wheat requirements."

The diet of people in SE Asia has also changed over the past three to four decades in that wheat-based noodles are now a key component of most peoples diets.

The sort of wheat that is produced in WA is ideally suited to making noodles, meaning it directly supports the dietary preferences of people in a lot of SE Asian countries.

"Because those markets are close to us, any freight advantage that occurs works to WA's advantage," professor Kingwell said.

"The fact that SE Asia is literally on our doorstep means that the cost of international freight is not as expensive, which means ultimately the farmgate price that can be offered to WA wheat producers is higher."

While the population of many SE Asian countries is expected to grow, so is the population of Australia, with current estimates predicting an extra five million people by 2030 - up to 80 per cent of which are going to reside on the east coast.

With a growing population comes a growing need for wheat on the east coast, and the potential for the need to import that wheat if there is a drought on that side of the country.

New South Wales, for example, only exports about 30pc of its production, whereas WA exports about 90pc.

Professor Kingwell said that 30 years ago, people mostly used to eat beef and lamb, however now they consume more chicken and pork, with both underpinned by grain feeding.

"The wheat that is produced in Australia isn't just going into bread and biscuits, but it is also going into producing eggs, chicken meat and pork," he said.

"As our population on the east coast grows and their dietary preferences continue to favour chicken and pork, that demand for wheat requires grain to occasionally be imported from other States.

"Those States on the east coast become grain-deficit regions and they have to bring in grain from grain surplus regions, such as WA."

Unlike the barley industry, the wheat industry in WA is very diversified in its market opportunities with grain being sold to a variety of destinations such as Indonesia, Vietnam, Philippines, Japan, China and occasionally to the Middle East.

"We have a portfolio of markets that we can access, so if for whatever reason we lose access to one market, we can quickly transition to seeking market opportunities in alternative destinations," professor Kingwell said.

"WA growers can plant wheat securely in the knowledge that even if one export market is no longer accessible, it doesn't mean that they're going to suffer huge price declines."

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