Grains Research and Development

Date: 01.02.2005

Crop mix set for Asia focus

AWB"s wheat product development manager Cindy Mills reports on how Australia"s principal wheat exporter is adjusting its sights for future markets

To meet its goal of selling 65 percent of Australian wheat exports to Asia by 2009, AWB National Pool is working to reshape the Australian wheat crop, using objective market criteria to ensure it is meeting the requirements of international customers.

A key tool used for adjusting the crop profile so that it is closer to users" needs is "variety classification" - segmenting the crop into commercial types or styles that are recognised for their end-use capabilities.

Variety classification is fundamental to the production of wheat suited to current and future market requirements, because the reality is that customers already indirectly classify varieties through their buying choices. End users require parcels of wheat that deliver consistent processing performance, so it is imperative that classification is undertaken with detailed knowledge of the world market and customer requirements and preferences.

AWB National Pool is ideally placed to facilitate wheat variety classification that meets end-users" needs. The incentive for AWB is to classify varieties into the most suitable grade because it directly impacts on the marketability of the grade and pool value.

From an AWB National Pool perspective, the driver is to maximise returns to growers. From an AWB Ltd perspective, the incentive is to grow pool value because this is linked to AWB Ltd remuneration.

So there is an alignment of incentives to only classify varieties into the most appropriate grades - regardless of the breeding company developing them.

With the changing wheat breeding structure in Australia, the transition from public to private commercial programs and the emergence of new breeding entities, there has been increased focus on the transparency and independence of the AWB classification process.

Over the past 18 months AWB has reviewed procedures surrounding the classification of wheat varieties to make sure the classification process is transparent and of demonstrable benefit. Initiatives include:

In this review, AWB has worked with the GCA and NSW Farmers to ensure the processes are acceptable.

The following information explains the operation of the AWB National Pool Classification Panel - the decision making process and appeals process.

The panel determines the grade(s) in which a variety can be received by AWB following analysis of data relating to physical, milling and dough rheology and end product assessment. The operation has been formalised with the key guidelines including:

If a consensus cannot be achieved, more samples and/or data will be requested from the breeding company. All samples will be assessed according to the target classification as nominated by the breeder and in comparison with established controls.

Where a breeding company is unhappy with a classification, there is scope for additional samples and data to be presented to subsequent panel meetings.

Due to changed market conditions, especially the growth in exports from what have been "non-traditional" wheat exporting countries, AWB has reviewed its current product portfolio and critically assessed where it is now and where it wants to be in the future. Does its current product mix cover all the potential opportunities in the premium and freight-advantaged markets?

As non-traditional exporters capture market share, AWB has set its sights on increasing its share of markets in north and south-east Asia, at the expense of US and Canadian imports.

Customers in these regions are prepared to pay for a premium product that meets their specific end-use requirements and is geographically suited from a sea-freight perspective.

Following a recent review, AWB has set a strategic target to increase AWB"s share of these Asian markets to 65 percent by 2009, or 10 million tonnes per year based on an average crop. From a product perspective our Asian crop-shaping strategy is:

The breeding targets coming out of this strategy include:

The Asian targets have been established because of the natural freight advantage of Australian wheat into most of these countries, and because they tend to be more quality than price conscious.

These two factors create significant opportunity for Australian growers to capture premiums and freight spreads.

For more information: Cindy Mills, AWB, 03 9209 2128,