Trips to China by an Australian farmer group and a technical mission in the past six months should provide all growers with a better understanding of the market.
The most recent delegation of Western Australian farmers from the prime soft wheat-growing area arrived back from China and South Korea in April. The research trips were made with support from the GRDC.
Australian Wheat Board (AWB) Lake Grace Regional Officer Jay Meek led the group through North Asia. "Ninety-five per cent of Australia's soft wheat is sold to China, South Korea and Malaysia," he said.
"South Korea has been the dominant importer, receiving in excess of one million tonnes over the past 10 years, but China is the market demonstrating the fastest growth."
China imported its first Australian soft wheat shipment in 1992, but since then the quantity imported by the Chinese has grown at a phenomenal 70 per cent each year. At present all Australian soft wheat exports to China are to southern provinces where it is milled for use in steamed buns.
China largest consumer of wheat
China is the world's largest producer and consumer of wheat, with most production in northern China, where wheat is the staple cereal. However, the inadequacies of the grain-handling and transport system and variable crop quality mean the mills in wealthy south-eastern coastal provinces are unable to gain access to enough quality grain domestically.
"Previously these exports were limited to the AWB joint venture flour mill with Southern Seas Grain Industries. The current ban on imports of US Western White from the US Pacific North-West, because of the outbreak of karnal bunt (TCK) has given the AWB a window of opportunity, allowing it to break into the market. Now other mills are recognising the value of Australian soft wheat," said Mr Meek.
Australian farmers met several leading millers in China and South Korea. In China they went to the high-tech private mills which are rapidly developing in the free-trade zone on the south-east coast of China. But the group also looked at several older government-owned mills, which produce the bulk of China's flour requirements.
"The Soft Wheat Growers and AWB have been doing a lot of work to improve the marketability of their product in these markets," Mr Meek said. "On this trip we found a lot of that work has been paying off."
On the challenging side, the group learned that competition will become more intense, especially if the Western White import ban is lifted, that continuity of supply is essential, and getting the right quality specifications for each customer is critical.
The grower visit was preceded by a technical mission to China late in 1997. The group was led by AWB Product Marketing Manager Tony Kent, and included Dianne Miskelly of Goodman Fielder, Graham Crosbie of Agriculture WA and Sidi Huang of BRI Australia Ltd. The group visited grain quality and research and development laboratories, food processing facilities, wheat-breeding programs, flour mills, storage and retail distribution outlets.
"The most important development in China is the shift to a market economy and the increased number of power consumers," Mr Kent said.
"The rapid development of the frozen-food sector reflects rising incomes in the coastal provinces, which presents opportunities for Australian grain producers and processors."
He reported that although China is a price-conscious market, there is a market for quality wheat. "In every segment but high-protein milling wheat, Australian quality exceeds Chinese requirements. More importantly, the Chinese goal is to develop their food-processing industry based on automated production of traditional Chinese foods rather than importing Western-style products and processes."
The technical mission was part of a three-year Asian market analysis project managed by the AWB.